If a business wants to do set-aside work with the VA, it must be listed in the Center for Verification and Evaluation’s (CVE) VetBiz registry. This means inputting business information into an online portal, uploading a wide range of documents, and answering probing questions designed to determine whether the business is truly “owned” and “controlled” by a veteran.
Lately, I’ve noticed the process has seemed more messy than usual, and I believe a big part of this comes down to the additional documents the CVE has been requesting. While it appears the CVE is now requesting these documents fairly consistently, the problem is (with one exception) these are not listed in its list of required documents posted on its website:
1099 Information – Before now, the CVE only asked for information about “employees” of a business – those for whom W2s are filed. Now, however, the CVE asks for a “Federal 1099 Report,” which is a summary report of monies paid to 1099 consultants.
There are two problems with requesting this information. The first is it doesn’t tell the CVE anything – the federal form (IRS Form 1096) requested doesn’t break down who was paid what, which means that if the total is more than the amount paid to the veteran, the CVE will come back and request more information.
This is because the CVE asks for this in order to determine that the veteran is the highest paid, which leads to the second problem. The regulation the CVE cites to – 38 CFR 74.4(g) – imposes limits on compensation only on those involved in the management of the business. If the 1099 consultant doesn’t fit that role – and they probably don’t given they’re a 1099 consultant – this information isn’t even relevant to the “highest compensated” requirement.
Certificate of Good Standing – The CVE is now asking for certificates of good standing from the states where a business is registered (either incorporated/organized or registered as a foreign entity). This is also required in 8(a) BD applications, so it’s not like this requirement is particularly onerous. However, because it might take a few weeks to obtain a Certificate of Good Standing from a state that doesn’t transmit them electronically, a business risks having to withdraw its application if the CVE requests a Certificate and the business can’t obtain it in time.
Rent Checks – This is on the CVE’s list of required documents now, but it’s worth mentioning because it’s new. The CVE now wants the last three rent checks for the business. This is presumably to verify the address where the business is actually operating, as well as to make sure the veteran is signing the checks. However, this information should be clear on the business license; and it’s not unusual for the Comptroller or other employee to sign the checks, leading to the need for additional clarification.
Whether you’re going through verification or reverification, one of the things I’ve always reiterated is the need to be prepared. It is, however, hard to be prepared when you aren’t told everything you need. I hope this blog post saves you some time (and Advils!) as you navigate through the process.
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I wanted to follow up on this after receiving a call from Jeffrey Gault, the new acting director for the CVE who is very actively engaged in making sure the process moves faster and smoother as VetBiz improves (a good person to have in charge). Mr. Gault relayed that 1099 information is not “standard” for applications for the reasons stated above (regarding relevance to eligibility); however, this information might be required if the revenue information doesn’t match up on the corporate tax returns. Also, the Certificates of Good Standing are generally required only for states where the CVE can’t easily verify via a search on the state corporations website that a business is in good standing (such as Delaware and Texas).
Always, I try to make sure the information I provide to veterans is as accurate and up to date as possible. If you have something you want to share to add to the dialogue, by all means!
Great article. Thanks for the info, it’s easy to understand. BTW, if anyone needs to fill out an IRS 1096 form, I found a blank form here http://bit.ly/10C8sKf
Rent Checks? What if your organization is based from home? Also, with re: to 10-99 SMEs, can’t a case be made that you will need subject-matter expertise to a degree during a ramp up phase of a new business, and thet frankly you are dumping all of your money back into the company to keep going? How would that show up “wonky” in the revenue information if you are not breaking even the first bit?
For rent checks – if you work from home, you just need a Letter of Explanation (LOE) saying your business is home-based and therefore no lease or rent checks exist. And with the 1099 consultant getting paid a lot for some reason (supporting a contract, helping the company get started, etc.), you can cite to 38 CFR 74.4(g) to say that: 1) that person getting more $ than the veteran is good for the business (an exception to the veteran-as-highest-compensated rule); and 2) the rule on salary only applies to MANAGERS (I’ve seen the CVE not acknowledge that before).