Don't close the tax gap on our backs. That's the rallying cry of small-business advocates who this week came out against proposals by the Bush administration to close the nation's "tax gap" -- the billions of dollars in taxes that Washington estimates go unpaid each year.

They say the IRS proposals, which will be debated in Congress in coming weeks, would unfairly target small businesses, bury them under mounds of new paperwork, invade their privacy and turn them into de facto tax collectors.

"This tax thing, we're very shocked by it," said George Hanible, chief executive officer of Sacramento-based Procurement Solutions & Technology Inc., which helps provide subcontracting opportunities for small and minority-owned businesses. "Small business is already very leery of all the paperwork they need (to file).

"It's another level of fear for small business."

Most Americans -- 86 percent, according to the Department of Treasury's 124-page report explaining the administration's 2008 revenue proposals - pay their taxes on time. But somewhere out there in America, tens, even hundreds of billions of dollars in unpaid taxes are floating around waiting to be collected.

For years, momentum has been building to find more-aggressive ways to close the gap -- projected at $290 billion. Last September, Treasury and IRS officials released a tax compliance strategy that runs the gamut from increasing penalties for tax preparers who file faulty returns to expanded information reporting.

But among the numerous ideas, a handful have especially alarmed the small-business community. Specifically, those proposals would:

• Require small businesses to collect and confirm the taxpayer identification number or, TIN, of anyone they hire for more than $600 in a given year.

• Require small-business owners to withhold payroll taxes on independent contractors who provide incorrect TINs or whose TINs cannot be verified.

• Require small businesses to report payments of $600 or more to corporations of all sizes.

• Require banks that handle credit card processing to report all transactions.

Todd McCracken, president of the Washington, D.C.-based National Small Business Association, says the proposals place an undue burden on business owners already overwhelmed by paperwork and a cumbersome, complicated tax code.

"We're concerned about becoming tax enforcers," he said. "Nine of 10 business owners are the CEO, the CFO. You can't also ask them to be the chief tax enforcement officer."

McCracken's group, which wants to get the word out to small-business owners, has established a Web site, www.preventirsabuse.org, to rally opposition.

"There's a perfect storm brewing. (The administration) believes a large portion of the tax gap is on the small-business community," McCracken said. "They've got to find ways to extract revenue. Our concern is that it will be painful for people who are (already) doing what they are supposed to be doing."

Internal Revenue Service officials commented little on the proposals, saying only that the agency would enforce whatever action Congress decides to take.

"Whatever Congress chooses to do, the IRS will enforce," said Bill Steiner, IRS spokesman in Sacramento. "There's been a lot of talk over the years over what to do with the tax gap, but how any of that turns out is anyone's guess."

The credit card proposal, with its privacy implications, is particularly troubling, said some observers.

"If they did this to anybody but the small-business community, there'd be an uproar," said Paul Hense, a Grand Rapids, Mich., a certified public accountant and chairman of the NSBA's tax gap committee. "If you asked citizens to give their records, they'd freak out."

In California, Scott Hauge, president of Small Business California, an advocacy group, said, "It's scary. We're not trying to protect the guys who beat the system. We want to protect the guys who are working within the system."

For small-business owners like Hanible, who is African American, the proposals could be perceived by minority entrepreneurs as another hurdle blocking their businesses.

"A lot of minority companies are going to take offense," Hanible said. "It's going to be seen as another hit on minority- and women-owned businesses. It's an audit."