A bill to amend the Internal Revenue Code of 1986 to modify the penalty for failure to disclose certain reportable transactions and the penalty for submitting a bad check to the Internal Revenue Service, to modify certain rules relating to Federal vendors, and for other purposes.

Summary: Small Business Penalty Fairness Act of 2009 - Amends the Internal Revenue Code to limit the penalty for failure to disclose a reportable transaction (a transaction determined by the Internal Revenue Service [IRS] as having a potential for tax avoidance or evasion) to 75% of the decrease in tax shown on the return as a result of such transaction. Sets forth a maximum penalty for failure to report a reportable transaction and a minimum and maximum penalty for failure to report a listed transaction (a transaction specifically identified by the IRS as a tax avoidance transaction).

Requires the Commissioner of Internal Revenue to report by June 1, 2010, and then annually, to Congress on penalties relating to abusive tax shelters and reportable transactions.

Extends the penalty for tendering a bad check to the Internal Revenue Service to any commercially acceptable payment instrument (including electronic payments).

Expands the continuous tax levy on payments to vendors for goods and services to include payments for all property, goods, or services.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Penalty Fairness Act 
of 2009''.

SEC. 2. LIMITATION ON PENALTY FOR FAILURE TO DISCLOSE REPORTABLE 
              TRANSACTIONS BASED ON RESULTING TAX BENEFITS.

    (a) In General.--Subsection (b) of section 6707A of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the amount of the penalty under subsection (a) with 
        respect to any reportable transaction shall be 75 percent of 
        the decrease in tax shown on the return as a result of such 
        transaction (or which would have resulted from such transaction 
        if such transaction were respected for Federal tax purposes).
            ``(2) Maximum penalty.--The amount of the penalty under 
        subsection (a) with respect to any reportable transaction shall 
        not exceed--
                    ``(A) in the case of a listed transaction, $200,000 
                ($100,000 in the case of a natural person), or
                    ``(B) in the case of any other reportable 
                transaction, $50,000 ($10,000 in the case of a natural 
                person).
            ``(3) Minimum penalty.--The amount of the penalty under 
        subsection (a) with respect to any transaction shall not be 
        less than $10,000 ($5,000 in the case of a natural person).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to penalties assessed after December 31, 2006.

SEC. 3. REPORT ON TAX SHELTER PENALTIES AND CERTAIN OTHER ENFORCEMENT 
              ACTIONS.

    (a) In General.--The Commissioner of Internal Revenue, in 
consultation with the Secretary of the Treasury, shall submit to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate an annual report on the penalties 
assessed by the Internal Revenue Service during the preceding year 
under each of the following provisions of the Internal Revenue Code of 
1986:
            (1) Section 6662A (relating to accuracy-related penalty on 
        understatements with respect to reportable transactions).
            (2) Section 6700(a) (relating to promoting abusive tax 
        shelters).
            (3) Section 6707 (relating to failure to furnish 
        information regarding reportable transactions).
            (4) Section 6707A (relating to failure to include 
        reportable transaction information with return).
            (5) Section 6708 (relating to failure to maintain lists of 
        advisees with respect to reportable transactions).
    (b) Additional Information.--The report required under subsection 
(a) shall also include information on the following with respect to 
each year:
            (1) Any action taken under section 330(b) of title 31, 
        United States Code, with respect to any reportable transaction 
        (as defined in section 6707A(c) of the Internal Revenue Code of 
        1986).
            (2) Any extension of the time for assessment of tax 
        enforced, or assessment of any amount under such an extension, 
        under paragraph (10) of section 6501(c) of the Internal Revenue 
        Code of 1986.
    (c) Date of Report.--The first report required under subsection (a) 
shall be submitted not later than June 1, 2010.

SEC. 4. APPLICATION OF BAD CHECKS PENALTY TO ELECTRONIC PAYMENTS.

    (a) In General.--Section 6657 of the Internal Revenue Code of 1986 
is amended--
            (1) by striking ``If any check or money order in payment of 
        any amount'' and inserting ``If any instrument in payment, by 
        any commercially acceptable means, of any amount'', and
            (2) by striking ``such check'' each place it appears and 
        inserting ``such instrument''.
    (b) Effective Dates.--The amendments made by this section shall 
apply to instruments tendered after the date of the enactment of this 
Act.

SEC. 5. APPLICATION OF LEVY TO PAYMENTS TO FEDERAL VENDORS RELATING TO 
              PROPERTY.

    (a) In General.--Section 6331(h)(3) of the Internal Revenue Code of 
1986 is amended by striking ``goods or services'' and inserting 
``property, goods, or services''.
    (b) Effective Date.--The amendment made by this section shall apply 
to levies approved after the date of the enactment of this Act.

            Passed the Senate February 9 (legislative day, February 8), 
      2010.

            Attest:

                                                             Secretary.
111th CONGRESS

  2d Session

                                S. 2917

_______________________________________________________________________

                                 AN ACT

 To amend the Internal Revenue Code of 1986 to modify the penalty for 
failure to disclose certain reportable transactions and the penalty for 
   submitting a bad check to the Internal Revenue Service, to modify 
   certain rules relating to Federal vendors, and for other purposes.