When Kathy Diaz felt that her business had been mistreated by the Internal Revenue Service, she knew just where to turn: to the U.S. government. Diaz, whose former company, Monroe's Restaurants, had fallen behind on payroll taxes, sought protection from an unrelenting IRS agent by evoking a little-known federal law designed to guard entrepreneurs from overzealous government agencies.
Although the Small Business Regulatory Enforcement Fairness Act took effect in March 1996, few company owners have taken advantage of "RegFair," which affects all federal agencies that regulate small businesses. The law seemed tailor-made for Diaz, who found a receptive audience when she appeared at a RegFair "fairness board" hearing in Albuquerque, in 1997. A desperate Diaz detailed the treatment the company had received at the hands of an IRS agent who would not accept her payment plan. She testified that the agent had become verbally abusive and had repeatedly harassed the business. The RegFair board filed an inquiry on behalf of the business. The Department of the Treasury also launched an investigation of the IRS agent.
However, the wheels of justice move slowly. Diaz says Monroe's, with its two locations, is struggling to stay open after filing Chapter 11. And she is still fighting the same "renegade" IRS agent, who, she says, seems hell-bent on liquidating the business. At press time, she was awaiting word from a bankruptcy-court judge on her final offer to the IRS.
According to Judy Obermayer, a business owner and former member of a RegFair board in New Hampshire, the fairness panel's job is "not quite an appeals process, but in a way it works like one. We can bring political pressure. What's missing with all these bureaucrats is a sense of reasonableness. There are times that agencies do things without thinking about these poor companies. That's the point here."
To find a RegFair hearing near you, go to www.sba.gov/regfair to view the 2001 schedule.
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