Small Business Owners’ Tax Simplification Act of 2017

Summary: Small Business Owners' Tax Simplification Act of 2017  This bill amends the Internal Revenue Code, with respect to several requirements that affect small businesses and self-employed individuals, to:    align the deadlines for quarterly estimated tax payments with the calendar year quarters;  modify the dollar thresholds for various information reporting requirements;  allow certain self-employed individuals to participate in cafeteria benefit plans;   exclude from self-employment income net earnings that are less than the amount required under the Social Security Act for a quarter of coverage for the calendar year in which the tax year began;   allow certain health insurance costs of self-employed individuals to be deducted for self-employment tax purposes; and specify that voluntary tax withholding agreements, training, or group discount programs have no effect on whether an individual is classified as an employee or an employer.   The Department of the Treasury must: (1) establish uniform standards and procedures for the acceptance of digital or electronic signatures, and (2) use prenotification testing to verify recipient information before transferring a tax refund or credit through an electronic funds transfer. 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Owners' Tax Simplification Act of 2017''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Quarterly reporting of estimated tax payments.
Sec. 3. Aligning the filing thresholds for information reporting.
Sec. 4. Uniform standards for the use of electronic signatures for 
                            third-party disclosure authorizations.
Sec. 5. Pre-notification testing.
Sec. 6. Treatment of cafeteria plans for employee-owners.
Sec. 7. Excluding from self-employment income net earnings less than 
                            amount required for Social Security 
                            quarters of coverage.
Sec. 8. Allowing a deduction for certain health insurance costs for 
                            self-employment tax purposes.
Sec. 9. No effect of voluntary withholding agreements on worker 
                            classification.
Sec. 10. Effect of voluntary training and group discount programs on 
                            worker classification.

SEC. 2. QUARTERLY REPORTING OF ESTIMATED TAX PAYMENTS.

    (a) In General.--The table contained in paragraph (2) of section 
6654(c) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``June 15'' and inserting ``July 15'', and
            (2) by striking ``September 15'' and inserting ``October 
        15''.
    (b) Effective Date.--The amendments made by this section shall 
apply to installments due in taxable years beginning after December 31, 
2017.

SEC. 3. ALIGNING THE FILING THRESHOLDS FOR INFORMATION REPORTING.

    (a) Increasing the Dollar Threshold Required for Filing a 1099-
MISC.--
            (1) In general.--Subsection (a) of section 6041 of the 
        Internal Revenue Code of 1986 is amended by striking ``$600'' 
        and inserting ``$1,500''.
            (2) Inflation adjustment.--Section 6041 of such Code is 
        amended by adding at the end the following new subsections:
    ``(h) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2018, the dollar amount in 
subsection (a) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2017' for 
        `calendar year 1992' in subparagraph (B) thereof.
    ``(i) Rounding.--If any dollar amount in subsection (a) (after 
being increased under subsection (g)) is not a multiple of $100, such 
dollar amount shall be rounded to the nearest multiple of $100.''.
            (3) Conforming amendment.--The heading of subsection (a) of 
        section 6041 of such Code is amended to read as follows: 
        ``Payments Exceeding Threshold.''.
    (b) Increasing the Dollar Limit for Remuneration for Services and 
Direct Sales.--
            (1) In general.--Paragraph (2) of section 6041A(a) of the 
        Internal Revenue Code of 1986 is amended by striking ``$600'' 
        and inserting ``$1,500''.
            (2) Inflation adjustment.--Section 6041A of such Code is 
        amended by adding at the end the following new subsections:
    ``(g) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2018, the dollar amount in 
subsection (a)(2) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2017' for 
        `calendar year 1992' in subparagraph (B) thereof.
    ``(h) Rounding.--If any dollar amount in subsection (a)(2) (after 
being increased under subsection (g)) is not a multiple of $100, such 
dollar amount shall be rounded to the nearest multiple of $100.''.
    (c) Decreasing the Dollar Threshold Required for Filing a 1099-K; 
Eliminating the Transaction Threshold.--Subsection (e) of section 6050W 
of such Code is amended by striking ``only if'' and all that follows 
through the period at the end and inserting ``only if the amount which 
would otherwise be reported under subsection (a)(2) with respect to 
such transactions exceeds the dollar amount in effect for the taxable 
year under section 6041(a).''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to returns for years beginning after December 31, 
2017.

SEC. 4. UNIFORM STANDARDS FOR THE USE OF ELECTRONIC SIGNATURES FOR 
              THIRD-PARTY DISCLOSURE AUTHORIZATIONS.

    Not later than 6 months after the date of the enactment of this 
section, the Secretary of the Treasury shall publish guidance to 
establish uniform standards and procedures for the acceptance of 
signatures in digital or other electronic form for purposes of--
            (1) any request for disclosure of a taxpayer's return or 
        return information under section 6103(c) of the Internal 
        Revenue Code of 1986, and
            (2) any power of attorney executed by a taxpayer.

SEC. 5. PRE-NOTIFICATION TESTING.

    Not later than 180 days after the date of enactment of this Act, 
the Secretary of the Treasury will ensure that, for any refund or 
credit of overpayment of tax under the Internal Revenue Code of 1986 
transferred to an individual through electronic fund transfer, there 
is, prior to such transfer, a prenotification testing to verify 
recipient information and assist in preventing refund fraud.

SEC. 6. TREATMENT OF CAFETERIA PLANS FOR EMPLOYEE-OWNERS.

    (a) In General.--Subsection (g) of section 125 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(5) Self-employed individuals.--
                    ``(A) In general.--Notwithstanding section 105(g), 
                for purposes of providing qualified benefits under a 
                cafeteria plan of an eligible employer (as defined in 
                subsection (j)(5)) and for purposes of any prohibition 
                on discrimination (including subsection (b)) with 
                respect to a cafeteria plan--
                            ``(i) the term `employee' includes an 
                        individual who is an employee within the 
                        meaning of section 401(c)(1) and any individual 
                        treated as a partner under section 1372(a),
                            ``(ii) an individual who owns the entire 
                        interest in an unincorporated trade or business 
                        shall be treated as his own employer, and
                            ``(iii) a partnership shall be treated as 
                        the employer of each partner who is an employee 
                        within the meaning of clause (i).
                    ``(B) Limitation.--
                            ``(i) Amounts excluded not to exceed earned 
                        income.--In the case of an individual treated 
                        as an employee by reason of subparagraph 
                        (A)(i), subsection (a) shall apply to amounts 
                        for an individual only to the extent that such 
                        amounts exceeds the individual's earned income 
                        (as defined in section 401(c)(2)) derived from 
                        the trade or business with respect to which the 
                        cafeteria plan is maintained.
                            ``(ii) Partnerships.--This paragraph shall 
                        apply in the case of any individual treated as 
                        a partner under section 1372(a), except that, 
                        for purposes of this subsection, such 
                        individual's wages (as defined in section 3121) 
                        from the S corporation shall be treated as such 
                        individual's earned income, and there shall be 
                        such adjustments in the application of this 
                        subsection as the Secretary may by regulations 
                        prescribe.
                    ``(C) Denial of double benefit.--No deduction or 
                credit shall be allowed to an employee under any 
                section of this chapter for any amount excluded from 
                gross income under subsection (a) by reason of this 
                paragraph.''.
    (b) Simple Cafeteria Plans.--Paragraph (3) of section 125(j) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subparagraph:
                    ``(E) Alternative for certain plans.--
                            ``(i) In general.--In the case of a plan 
                        that covers one or more individuals described 
                        in clause (i) of subsection (g)(5)(A), the 
                        requirements of this paragraph shall be treated 
                        as met if the average employer contribution 
                        allocable to qualified benefits under the plan 
                        on behalf of individuals who are not qualified 
                        employees does not exceed 150 percent of the 
                        average employer contribution allocable to such 
                        benefits on behalf of individuals who are 
                        qualified employees.
                            ``(ii) Additional contributions.--In the 
                        case of a plan treated under clause (i) as 
                        meeting the requirements of this paragraph, 
                        subparagraph (C) shall not apply.''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to taxable years beginning after December 31, 2017.

SEC. 7. EXCLUDING FROM SELF-EMPLOYMENT INCOME NET EARNINGS LESS THAN 
              AMOUNT REQUIRED FOR SOCIAL SECURITY QUARTERS OF COVERAGE.

    (a) In General.--Paragraph (2) of section 1402(b) of the Internal 
Revenue Code of 1986 is amended by striking ``$400'' and inserting 
``the amount required under section 213(d) of the Social Security Act 
for a quarter of coverage for the calendar year in which such taxable 
year began''.
    (b) Self-Employment Tax Returns.--Section 6017 of the Internal 
Revenue Code of 1986 is amended by striking ``$400'' and inserting 
``the amount required under section 1402(b)(2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after the date of the 
enactment of this Act.

SEC. 8. ALLOWING A DEDUCTION FOR CERTAIN HEALTH INSURANCE COSTS FOR 
              SELF-EMPLOYMENT TAX PURPOSES.

    (a) In General.--Subsection (l) of section 162 of the Internal 
Revenue Code of 1986 is amended by striking paragraph (4).
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to taxable years beginning after December 31, 2017.

SEC. 9. NO EFFECT OF VOLUNTARY WITHHOLDING AGREEMENTS ON WORKER 
              CLASSIFICATION.

    Section 3402(p) of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new paragraph:
            ``(4) Worker classification.--Agreements under paragraph 
        (3) may not be taken into account in determining whether any 
        party to such agreement is an employee or an employer for 
        purposes of any provision of this title.''.

SEC. 10. EFFECT OF VOLUNTARY TRAINING AND GROUP DISCOUNT PROGRAMS ON 
              WORKER CLASSIFICATION.

    (a) In General.--Chapter 79 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section:

``SEC. 7706. EFFECT OF VOLUNTARY TRAINING AND GROUP DISCOUNT PROGRAMS 
              ON WORKER CLASSIFICATION.

    ``(a) In General.--For purposes of this title, the determination of 
whether an individual is an employee shall be made without regard to 
the following:
            ``(1) Whether such individual is offered, and whether such 
        individual accepts, voluntary training.
            ``(2) Whether such individual is offered, or takes 
        advantage of, a discount on goods and services available by 
        reason of such individual performing services.
    ``(b) Regulations.--The Secretary shall issue such regulations as 
the Secretary determines are necessary to carry out the purposes of 
this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 79 of 
such Code is amended by inserting after the item relating to section 
7705 the following:

``Sec. 7706. Effect of voluntary training and group discount programs 
                            on worker classification.''.