I 

111TH CONGRESS 

1ST SESSION H. R. 2490 

To amend the Internal Revenue Code of 1986 to allow certain small 

businesses to defer payment of tax. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2009 

Mr. KENNEDY (for himself, Mr. KAGEN, and Mr. PATRICK J. MURPHY of 

Pennsylvania) introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow 

certain small businesses to defer payment of tax. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Generating Reinvest5 ment Opportunities With America’s Small Businesses Act 

6 of 2009’’ or the ‘‘GROW America’s Small Businesses Act 

7 of 2009’’. 


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1 SEC. 2. DEFERRED PAYMENT OF TAX BY CERTAIN SMALL 

2 BUSINESSES. 

3 (a) IN GENERAL.—Subchapter B of chapter 62 of the 

4 Internal Revenue Code of 1986 (relating to extensions of 

5 time for payment of tax) is amended by adding at the end 

6 the following new section: 

7 ‘‘SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF TAX FOR 

8 CERTAIN SMALL BUSINESSES. 

9 ‘‘(a) IN GENERAL.—An eligible small business may 

10 elect to pay the tax imposed by chapter 1 in 4 equal in11 stallments. 

12 ‘‘(b) LIMITATION.—The maximum amount of tax 

13 which may be paid in installments under this section for 

14 any taxable year shall not exceed whichever of the fol15 lowing is the least: 

16 ‘‘(1) The tax imposed by chapter 1 for the tax17 able year. 

18 ‘‘(2) The amount contributed by the taxpayer 

19 into a GROW Account during such year. 

20 ‘‘(3) The excess of $275,000 over the aggregate 

21 amount of tax for which an election under this sec22 tion was made by the taxpayer (or any predecessor) 

23 for all prior taxable years. 

24 ‘‘(c) ELIGIBLE SMALL BUSINESS.—For purposes of 

25 this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘eligible small 

2 business’ means, with respect to any taxable year, 

3 any person if— 

4 ‘‘(A) such person meets the active business 

5 requirements of section 1202(e) throughout 

6 such taxable year, 

7 ‘‘(B) the taxpayer has gross receipts of 

8 $12,000,000 or less for the taxable year, 

9 ‘‘(C) the gross receipts of the taxpayer for 

10 such taxable year are at least 10 percent great11 er than the average annual gross receipts of the 

12 taxpayer (or any predecessor) for the 2 prior 

13 taxable years, and 

14 ‘‘(D) the taxpayer uses an accrual method 

15 of accounting. 

16 ‘‘(2) CERTAIN RULES TO APPLY.—Rules similar 

17 to the rules of paragraphs (2) and (3) of section 

18 448(c) shall apply for purposes of this subsection. 

19 ‘‘(d) DATE FOR PAYMENT OF INSTALLMENTS; IN20 TEREST.— 

21 ‘‘(1) DATE FOR PAYMENT OF INSTALLMENTS.— 

22 ‘‘(A) IN GENERAL.—If an election is made 

23 under this section for any taxable year, the first 

24 installment shall be paid on or before the due 

25 date for such installment and each succeeding 


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1 installment shall be paid on or before the date 

2 which is 1 year after the date prescribed by this 

3 paragraph for payment of the preceding install4 ment. 

5 ‘‘(B) DUE DATE FOR FIRST INSTALL6 MENT.—The due date for the first installment 

7 for a taxable year shall be whichever of the fol8 lowing is the earliest: 

9 ‘‘(i) The date selected by the tax10 payer. 

11 ‘‘(ii) The date which is 2 years after 

12 the date prescribed by section 6151(a) for 

13 payment of the tax for such taxable year. 

14 ‘‘(C) ADDITIONAL DEFERRAL WHERE EM15 PLOYMENT INCREASES.— 

16 ‘‘(i) IN GENERAL.—Subparagraph 

17 (B)(ii) shall be applied by substituting ‘3 

18 years’ for ‘2 years’ in the case of an eligi19 ble small business which meets the employ20 ment increase requirement of clause (ii) for 

21 the second taxable year following the tax22 able year for which the election is made. 

23 ‘‘(ii) EMPLOYMENT INCREASE RE24 QUIREMENT.—The employment increase 

25 requirement of this clause is met for such 


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1 second taxable year if the average daily 

2 number of full-time employees of such 

3 business for the last calendar quarter end4 ing in such taxable year is at least 10 per5 cent greater than such average number for 

6 the last calendar quarter ending before the 

7 date that the GROW Account of such busi8 ness is established. For purposes of this 

9 clause, an employee shall be considered 

10 full-time if such employee is employed at 

11 least 35 hours per week. 

12 ‘‘(iii) SALARY MAINTENANCE OF

13 CALLED-UP RESERVIST TREATED AS EM14 PLOYMENT INCREASE.—For purposes of 

15 clause (ii), an eligible small business shall 

16 be treated as having an additional full-time 

17 employee for any period for each employee 

18 who is a Ready Reserve/National Guard 

19 employee of such business serving on quali20 fied active duty for such period if the com21 pensation paid or incurred by such busi22 ness to such employee for such period is 

23 not less than the active duty wage differen24 tial of such employee for such period. For 


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1 the definition of terms used in this clause, 

2 see subsection (g). 

3 ‘‘(2) INTEREST.—For purposes of determining 

4 interest under section 6601, if the time for payment 

5 of an amount of tax has been extended under this 

6 section, the due date prescribed for payment of such 

7 tax which is to be paid in an installment under this 

8 section shall be the due date for such installment. 

9 ‘‘(e) SPECIAL RULES.— 

10 ‘‘(1) APPLICATION OF LIMITATION TO PART11 NERS AND S CORPORATION SHAREHOLDERS.— 

12 ‘‘(A) IN GENERAL.—In applying this sec13 tion to a partnership which is an eligible small 

14 business— 

15 ‘‘(i) the election under subsection (a) 

16 shall be made by the partnership, 

17 ‘‘(ii) the amount referred to in sub18 section (b)(1) shall be the sum of each 

19 partner’s tax which is attributable to items 

20 of the partnership and assuming the high21 est marginal rate under section 1, and 

22 ‘‘(iii) the partnership shall be treated 

23 as the taxpayer referred to in paragraphs 

24 (2) and (3) of subsection (b). 


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1 ‘‘(B) OVERALL LIMITATION ALSO APPLIED

2 AT PARTNER LEVEL.—In the case of a partner 

3 in a partnership, the limitation under sub4 section (b)(3) shall be applied at the partner5 ship and partner levels. 

6 ‘‘(C) SIMILAR RULES FOR S CORPORA7 TIONS.—Rules similar to the rules of subpara8 graphs (A) and (B) shall apply to shareholders 

9 in an S corporation. 

10 ‘‘(2) ACCELERATION OF PAYMENT IN CERTAIN

11 CASES.— 

12 ‘‘(A) IN GENERAL.—If— 

13 ‘‘(i) the taxpayer ceases to meet the 

14 requirement of subsection (c)(1)(A), or 

15 ‘‘(ii) there is an ownership change 

16 with respect to the taxpayer, 

17 then the extension of time for payment of tax 

18 provided in subsection (a) shall cease to apply, 

19 and the unpaid portion of the tax payable in in20 stallments shall be paid on or before the due 

21 date for filing the return of tax imposed by 

22 chapter 1 for the first taxable year following 

23 such cessation. 

24 ‘‘(B) OWNERSHIP CHANGE.—For purposes 

25 of subparagraph, in the case of a corporation, 


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1 the term ‘ownership change’ has the meaning 

2 given to such term by section 382. Rules simi3 lar to the rules applicable under the preceding 

4 sentence shall apply to a partnership. 

5 ‘‘(3) PRORATION OF DEFICIENCY TO INSTALL6 MENTS.—Rules similar to the rules of section 

7 6166(e) shall apply for purposes of this section. 

8 ‘‘(f) GROW ACCOUNT.—For purposes of this sec9 tion— 

10 ‘‘(1) IN GENERAL.—The term ‘GROW Account’ 

11 means a trust created or organized in the United 

12 States for the exclusive benefit of an eligible small 

13 business, but only if the written governing instru14 ment creating the trust meets the following require15 ments: 

16 ‘‘(A) No contribution will be accepted for 

17 any taxable year in excess of the amount al18 lowed as a deferral under subsection (b) for 

19 such year. 

20 ‘‘(B) The trustee is a bank (as defined in 

21 section 408(n)) or another person who dem22 onstrates to the satisfaction of the Secretary 

23 that the manner in which such person will ad24 minister the trust will be consistent with the re25 quirements of this section. 


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1 ‘‘(C) The assets of the trust consist en2 tirely of cash or of obligations which have ade3 quate stated interest (as defined in section 

4 1274(c)(2)) and which pay such interest not 

5 less often than annually. 

6 ‘‘(D) The assets of the trust will not be 

7 commingled with other property except in a 

8 common trust fund or common investment 

9 fund. 

10 ‘‘(E) Amounts in the trust may be used 

11 only— 

12 ‘‘(i) as security for a loan to the busi13 ness or for repayment of such loan, or 

14 ‘‘(ii) to pay the installments under 

15 this section. 

16 ‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.— 

17 The grantor of a GROW Account shall be treated 

18 for purposes of this title as the owner of such Ac19 count and shall be subject to tax thereon in accord20 ance with subpart E of part I of subchapter J of 

21 this chapter (relating to grantors and others treated 

22 as substantial owners). 

23 ‘‘(3) TIME WHEN PAYMENTS DEEMED MADE.— 

24 For purposes of this section, a taxpayer shall be 

25 deemed to have made a payment to a GROW AcVerDate Nov 24 2008 06:28 May 20, 2009 Jkt 079200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2490.IH H2490

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1 count on the last day of a taxable year if such pay2 ment is made on account of such taxable year and 

is made within 31 3 ⁄2 months after the close of such 

4 taxable year. 

5 ‘‘(g) DEFINITIONS RELATING TO SALARY MAINTE6 NANCE OF CALLED-UP RESERVISTS.—For purposes of 

7 subsection (d)(1)(C)(iii)— 

8 ‘‘(1) READY RESERVE/NATIONAL GUARD EM9 PLOYEE.— 

10 ‘‘(A) IN GENERAL.—The term ‘Ready Re11 serve/National Guard employee’ means any em12 ployee— 

13 ‘‘(i) who is a member of the Ready 

14 Reserve or of the National Guard, and 

15 ‘‘(ii) who was an employee of the tax16 payer during the 1-year period ending on 

17 the day before the date that the employee 

18 begins qualified active duty. 

19 ‘‘(B) NATIONAL GUARD.—The term ‘Na20 tional Guard’ has the meaning given such term 

21 by section 101(c)(1) of title 10, United States 

22 Code. 

23 ‘‘(C) READY RESERVE.—The term ‘Ready 

24 Reserve’ has the meaning given such term by 

25 section 10142 of title 10, United States Code. 


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1 ‘‘(2) QUALIFIED ACTIVE DUTY.—The term 

2 ‘qualified active duty’ means— 

3 ‘‘(A) active duty under an order or call for 

4 a period in excess of 90 days or for an indefi5 nite period, other than the training duty speci6 fied in— 

7 ‘‘(i) section 10147 of title 10, United 

8 States Code (relating to training require9 ments for the Ready Reserve), or 

10 ‘‘(ii) section 502(a) of title 32, United 

11 States Code (relating to required drills and 

12 field exercises for the National Guard), 

13 in connection with which an employee is entitled 

14 to reemployment rights and other benefits or to 

15 a leave of absence from employment under 

16 chapter 43 of title 38, United States Code, and 

17 ‘‘(B) hospitalization incident to such active 

18 duty. 

19 ‘‘(3) ACTIVE DUTY WAGE DIFFERENTIAL.— 

20 ‘‘(A) IN GENERAL.—The active duty wage 

21 differential of a Ready Reserve/National Guard 

22 employee for any period of qualified active duty 

23 is the amount equal to the product of— 

24 ‘‘(i) the daily wage differential of such 

25 employee for such period, multiplied by 


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1 ‘‘(ii) the number of days that such 

2 employee is on qualified active duty during 

3 such period. 

4 ‘‘(B) DAILY WAGE DIFFERENTIAL.—For 

5 purposes of subparagraph (A), the daily wage 

6 differential of a Ready Reserve/National Guard 

7 employee for any period is an amount equal to 

8 the excess of— 

9 ‘‘(i) such employee’s average daily em10 ployer-provided compensation for such pe11 riod, over 

12 ‘‘(ii) such employee’s average daily 

13 military pay for such period. 

14 ‘‘(C) AVERAGE DAILY EMPLOYER-PRO15 VIDED COMPENSATION.— 

16 ‘‘(i) IN GENERAL.—For purposes of 

17 subparagraph (B), an employee’s average 

18 daily employer-provided compensation for 

19 any period is the average daily compensa20 tion paid by the employer to the employee 

21 for the 1-year period ending on the day be22 fore the date that the employee begins 

23 qualified active duty, adjusted for cost-of24 living and other increases generally appliVerDate Nov 24 2008 06:28 May 20, 2009 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2490.IH H2490

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1 cable to employees of the employer for 

2 such period. 

3 ‘‘(ii) EMPLOYER-PROVIDED COM4 PENSATION.—The term ‘compensation’ 

5 means any remuneration for employment, 

6 whether in cash or in kind, which is allow7 able as a deduction under section 

8 162(a)(1). 

9 ‘‘(D) AVERAGE DAILY MILITARY PAY.— 

10 ‘‘(i) IN GENERAL.—For purposes of 

11 subparagraph (B), a Ready Reserve/Na12 tional Guard employee’s average daily mili13 tary pay is the average daily military pay 

14 and allowances received by the employee on 

15 account of the employee’s performance of 

16 qualified active duty during the period. 

17 ‘‘(ii) MILITARY PAY AND ALLOW18 ANCES.—For purposes of clause (i)— 

19 ‘‘(I) MILITARY PAY.—The term 

20 ‘military pay’ means pay (as defined 

21 in section 101(21) of title 37, United 

22 States Code). 

23 ‘‘(II) ALLOWANCES.—The term 

24 ‘allowances’ means the allowances 

25 payable to a member of the Armed 


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1 Forces of the United States under 

2 chapter 7 of such title. 

3 ‘‘(h) REPORTS.—The Secretary may require such re4 porting as the Secretary determines to be appropriate to 

5 carry out this section. 

6 ‘‘(i) APPLICATION OF SECTION.—This section shall 

7 apply to taxes imposed for taxable years beginning after 

8 the date of the enactment of this section and before Janu9 ary 1, 2011.’’. 

10 (b) PRIORITY OF LENDER.—Subsection (b) of section 

11 6323 of such Code is amended by adding at the end the 

12 following new paragraph: 

13 ‘‘(11) LOANS SECURED BY GROW ACCOUNTS.— 

14 With respect to a GROW account (as defined in sec15 tion 6168(f)) with any bank (as defined in section 

16 408(n)), to the extent of any loan made by such 

17 bank without actual notice or knowledge of the exist18 ence of such lien, as against such bank, if such loan 

19 is secured by such account.’’. 

20 (c) CLERICAL AMENDMENT.—The table of sections 

21 for subchapter B of chapter 62 of such Code is amended 

22 by adding at the end the following new item: 

‘‘Sec. 6168. Extension of time for payment of tax for certain small businesses.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 (e) STUDY BY GENERAL ACCOUNTING OFFICE.— 

5 (1) STUDY.—In consultation with the Secretary 

6 of the Treasury, the Comptroller General of the 

7 United States shall undertake a study to evaluate 

8 the applicability (including administrative aspects) 

9 and impact of the GROW America’s Small Busi10 nesses Act of 2009, including how it affects the cap11 ital funding needs of businesses under the Act and 

12 number of businesses benefitting. 

13 (2) REPORT.—Not later than March 31, 2011, 

14 the Comptroller General shall transmit to the Com15 mittee on Ways and Means of the House of Rep16 resentatives and the Committee on Finance of the 

17 Senate a written report presenting the results of the 

18 study conducted pursuant to this subsection, to19 gether with such recommendations for legislative or 

20 administrative changes as the Comptroller General 

21 determines are appropriate. 

Æ 


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