II 

114TH CONGRESS 

1ST SESSION S. 1827 

To amend the Internal Revenue Code of 1986 to improve the tax treatment 

of small businesses. 

IN THE SENATE OF THE UNITED STATES 

JULY 22, 2015 

Mr. VITTER introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to improve 

the tax treatment of small businesses. 

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, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Business Tax Compliance Relief Act of 2015’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title, etc. 

TITLE I—SMALL BUSINESS TAX REFORM 

Sec. 101. Expansion of cash accounting threshold. 

Sec. 102. Modification of Safe Harbor for Expensing of Acquisition or Production Costs of Tangible Property. 


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Sec. 103. Removal of computer equipment from listed property. 

Sec. 104. Deduction for health insurance costs in computing self-employment 

taxes. 

Sec. 105. Flexible retirement account for small businesses. 

Sec. 106. Repeal of simple plans and simple IRAs. 

Sec. 107. Modification of rules relating to the termination of partnerships and 

S corporations. 

Sec. 108. Repeal of special rules for top-heavy plans. 

TITLE II—PROVISIONS RELATED TO THE INTERNAL REVENUE 

SERVICE 

Sec. 201. Requirement to convene small business review panels. 

Sec. 202. Penalty waivers in cases of good faith efforts. 

Sec. 203. Inflation adjustments for certain provisions. 

Sec. 204. Report on uniform definitions. 

Sec. 205. Report on improvements to customer service. 

Sec. 206. Reasonable cause exception for failure to report certain transactions. 

Sec. 207. Reasonable cause exception. 

Sec. 208. Return due date modifications. 

TITLE III—PROVISIONS RELATED TO START-UP BUSINESSES 

Sec. 301. Modification of application of rules for nonqualified deferred compensation plans. 

Sec. 302. Reduction in holding period for qualified small business stock. 

Sec. 303. Extension of rollover period for qualified small business stock. 

1 TITLE I—SMALL BUSINESS TAX 

2 REFORM 

3 SEC. 101. EXPANSION OF CASH ACCOUNTING THRESHOLD. 

4 (a) IN GENERAL.— 

5 (1) IN GENERAL.—Paragraph (3) of section 

6 448(b) of the Internal Revenue Code of 1986 is 

7 amended by striking ‘‘$5,000,000’’ in the text and 

8 in the heading and inserting ‘‘$10,000,000’’. 

9 (2) CONFORMING AMENDMENTS.—Section 

10 448(c) of such Code is amended— 

11 (A) by striking ‘‘$5,000,000’’ each place it 

12 appears in the text and in the heading of para13 graph (1) and inserting ‘‘$10,000,000’’, and 


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1 (B) by adding at the end the following new 

2 paragraph: 

3 ‘‘(4) INFLATION ADJUSTMENT.—In the case of 

4 any taxable year beginning in a calendar year after 

5 2015, the dollar amount contained in subsection 

6 (b)(3) and paragraph (1) of this subsection shall be 

7 increased by an amount equal to— 

8 ‘‘(A) such dollar amount, multiplied by 

9 ‘‘(B) the cost-of-living adjustment deter10 mined under section 1(f)(3) for the calendar 

11 year in which the taxable year begins, by sub12 stituting ‘calendar year 2014’ for ‘calendar year 

13 1992’ in subparagraph (B) thereof. 

14 If any amount as adjusted under this subparagraph 

15 is not a multiple of $100,000, such amount shall be 

16 rounded to the nearest multiple of $100,000.’’. 

17 (b) EXEMPTION FROM INVENTORY REQUIREMENT.— 

18 Section 471 of the Internal Revenue Code of 1986 is 

19 amended by redesignating subsection (c) as subsection (d) 

20 and by inserting after subsection (b) the following new 

21 subsection: 

22 ‘‘(c) SECTION NOT TO APPLY TO CERTAIN CASH

23 METHOD TAXPAYERS.—If a taxpayer— 

24 ‘‘(1) would otherwise be required to use inven25 tories under this section for any taxable year, but 


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1 ‘‘(2) the taxpayer meets the gross receipts test 

2 of section 448(b) for the taxable year and is eligible 

3 and elects to use the cash receipts and disburse4 ments method of accounting for the taxable year, 

5 then the requirement to use inventories shall not apply 

6 to the taxpayer for the taxable year.’’. 

7 (c) EFFECTIVE DATE AND SPECIAL RULE.— 

8 (1) IN GENERAL.—The amendments made by 

9 this section shall apply to taxable years beginning 

10 after December 31, 2014. 

11 (2) CHANGE IN METHOD OF ACCOUNTING.—In 

12 the case of any taxpayer changing the taxpayer’s 

13 method of accounting for any taxable year under the 

14 amendments made by this section— 

15 (A) such change shall be treated as initi16 ated by the taxpayer; and 

17 (B) such change shall be treated as made 

18 with the consent of the Secretary of the Treas19 ury. 

20 SEC. 102. MODIFICATION OF SAFE HARBOR FOR EXPENS21 ING OF ACQUISITION OR PRODUCTION COSTS 

22 OF TANGIBLE PROPERTY. 

23 (a) REQUIREMENT TO MODIFY SAFE HARBOR.—The 

24 Secretary of the Treasury or his delegate shall, within 180 


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1 days after the date of enactment of this Act, modify 

2 Treasury Regulations section 1.263(a)–1(f) by— 

3 (1) increasing the amount of the de minimis 

4 safe harbor for taxpayers without applicable finan5 cial statements from $500 to $2,500, 

6 (2) requiring adequate records showing the dol7 lar amount being expensed in lieu of accounting pro8 cedures in place at the beginning of the taxable year, 

9 and 

10 (3) modifying the definition of applicable finan11 cial statement to include reviewed financial state12 ments. 

13 (b) EFFECTIVE DATE.—The modifications required 

14 by subsection (a) shall apply to taxable years beginning 

15 after December 31, 2014. 

16 SEC. 103. REMOVAL OF COMPUTER EQUIPMENT FROM 

17 LISTED PROPERTY. 

18 (a) IN GENERAL.—Section 280F(d)(4)(A) of the In19 ternal Revenue Code of 1986 is amended by inserting 

20 ‘‘and’’ at the end of clause (iii) and by striking clause (iv). 

21 (b) CONFORMING AMENDMENT.—Section 280F(d)(4) 

22 of the Internal Revenue Code of 1986 is amended by strik23 ing subparagraph (B) and by redesignating subparagraph 

24 (C) as subparagraph (B). 


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1 (c) 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 SEC. 104. DEDUCTION FOR HEALTH INSURANCE COSTS IN 

5 COMPUTING SELF-EMPLOYMENT TAXES. 

6 (a) IN GENERAL.—Paragraph (4) of section 162(l) 

7 of the Internal Revenue Code of 1986 is amended by strik8 ing ‘‘for taxable years beginning before January 1, 2010, 

9 or after December 31, 2010’’ and inserting ‘‘for taxable 

10 years beginning before January 1, 2015.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2014. 

14 SEC. 105. FLEXIBLE RETIREMENT ACCOUNT FOR SMALL 

15 BUSINESSES. 

16 (a) IN GENERAL.—Section 408 of the Internal Rev17 enue Code of 1986 is amended by redesignating subsection 

18 (r) as subsection (s) and by inserting after subsection (q) 

19 the following new subsection: 

20 ‘‘(r) FLEXIBLE RETIREMENT ACCOUNT DEFINED.— 

21 ‘‘(1) IN GENERAL.—For purposes of this title, 

22 the term ‘flexible retirement account’ means an indi23 vidual retirement account or individual retirement 

24 annuity with respect to which the requirements of 

25 paragraphs (2), (3), (4), and (7) are met. 


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1 ‘‘(2) MAINTAINED BY SMALL BUSINESS.— 

2 ‘‘(A) IN GENERAL.—This paragraph is sat3 isfied for a year with respect to a flexible retire4 ment account that is part of a plan of an em5 ployer if the employer has not more than 100 

6 full-time employees on the last day of the pre7 vious year. 

8 ‘‘(B) AGGREGATION RULES.—For purposes 

9 of subparagraph (A), all employees of any 

10 trades or business (whether or not incor11 porated) which are under common control shall 

12 be treated as employed by a single employer. 

13 ‘‘(3) PARTICIPATION REQUIREMENTS.—This 

14 paragraph is satisfied with respect to a flexible re15 tirement account for a year only if for such year the 

16 employer maintains a flexible retirement account on 

17 behalf of each employee who— 

18 ‘‘(A) has attained age 21, and 

19 ‘‘(B) received not less than $3,300 in com20 pensation (within the meaning of section 

21 415(c)(3)) from the employer in any calendar 

22 quarter during the previous year. 

23 ‘‘(4) AUTOMATIC ENROLLMENT; EMPLOYEE

24 MAY ELECT NOT TO PARTICIPATE.—This paragraph 

25 is satisfied with respect to a flexible retirement acVerDate Sep 11 2014 23:01 Jul 23, 2015 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1827.IS S1827

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1 count that is part of a plan of an employer if under 

2 the terms of the plan— 

3 ‘‘(A) each employee described in paragraph 

4 (3) (without regard to paragraph (5))— 

5 ‘‘(i) may elect— 

6 ‘‘(I) to have the employer make 

7 contributions on behalf of the em8 ployee to a flexible retirement ac9 count, or 

10 ‘‘(II) to have such payments paid 

11 to the employee directly in cash, and 

12 ‘‘(ii) is deemed to have made the elec13 tion under clause (i)(I), effective as of the 

14 first day of the first calendar quarter be15 ginning after the employee becomes an em16 ployee described in paragraph (3), in an 

17 amount equal to 3 percent of the employ18 ee’s compensation, until the employee spe19 cifically elects not to have such contribu20 tions made or to have contributions made 

21 in a different amount, and 

22 ‘‘(B) amounts contributed pursuant clause 

23 (i) or (ii) of subparagraph (A) are invested in 

24 a diversified common stock fund chosen by the 

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1 ment account until the employee specifically 

2 elects to direct such contributions to a different 

3 investment option. 

4 ‘‘(5) INCLUSION OF SELF-EMPLOYED INDIVID5 UALS.—For purposes of this subsection, the term 

6 ‘employee’ includes an employee as defined in section 

7 401(c)(1). For purposes of applying the limitations 

8 of sections 402(h), 404(h), and 415(c)(1)(A) with 

9 respect to an employee described in the preceding 

10 sentence, the term ‘compensation’ has the meaning 

11 given in subsection (p)(6)(A)(ii). 

12 ‘‘(6) EMPLOYER CONTRIBUTIONS.—The em13 ployer maintaining a flexible retirement account may 

14 make qualified nonelective contributions (as defined 

15 in section 401(m)(4)(C)) to the flexible retirement 

16 accounts of employees described in paragraph (3), 

17 but only if such contributions made with respect to 

18 all such employees bear a uniform relationship to the 

19 compensation of the employees. 

20 ‘‘(7) FINANCIAL INSTITUTIONS.—This para21 graph is satisfied with respect to a flexible retire22 ment account if— 

23 ‘‘(A) such account is maintained at a fi24 nancial institution, including a bank, credit 

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1 istered with the Securities and Exchange Com2 mission, and such other entities as the Sec3 retary may by regulation designate, 

4 ‘‘(B) such financial institution— 

5 ‘‘(i) provides for not less than 3 in6 vestment options among which the em7 ployee may choose to direct the contribu8 tions to and balances held in the employ9 ee’s flexible retirement account, each of 

10 which is diversified and has materially dif11 ferent risk and return characteristics, and 

12 ‘‘(ii) provides a quarterly report to 

13 each employee with respect to whom it 

14 holds a flexible retirement account describ15 ing the contributions to the account, with16 drawals from the account, and investment 

17 performance of the account, and 

18 ‘‘(C) the contributions to and balances held 

19 in the flexible retirement account of an em20 ployee may not be invested in securities of the 

21 employer maintaining such account.’’. 

22 (b) LIMITATION ON DEDUCTIONS BY EMPLOYER.— 

23 Subsection (h) of section 404 of the Internal Revenue 

24 Code of 1986 is amended— 


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1 (1) by striking ‘‘PENSIONS’’ in the heading and 

2 inserting ‘‘PENSIONS AND FLEXIBLE RETIREMENT

3 ACCOUNTS’’, 

4 (2) by striking ‘‘a simplified employee pension’’ 

5 each place it appears in paragraph (1) and inserting 

6 ‘‘a simplified employee pension or a flexible retire7 ment account’’, and 

8 (3) by striking ‘‘For purposes of subsection 

9 (a)(7), a simplified employee pension shall be treated 

10 as if it were’’ in paragraph (3) and inserting ‘‘In the 

11 case of a simplified employee pension or a flexible 

12 retirement account, section (a)(7) shall be applied by 

13 treating such pension or account as if it were’’. 

14 (c) TAXABILITY OF BENEFICIARY.—Subsection (h) of 

15 section 402 of the Internal Revenue Code of 1986 is 

16 amended— 

17 (1) by striking ‘‘PENSIONS’’ in the heading and 

18 inserting ‘‘PENSIONS AND FLEXIBLE RETIREMENT

19 ACCOUNTS’’, 

20 (2) by striking ‘‘408(k))’’ in paragraph (1) and 

21 inserting ‘‘408(k)) or a flexible retirement account 

22 (as defined in section 408(r))’’, 

23 (3) by striking ‘‘section 408(k)(6)’’ in para24 graph (1)(B) and inserting ‘‘subsection (k)(6) or 

25 (r)(4) of section 408’’, 


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1 (4) by striking ‘‘the simplified employee pen2 sion’’ each place it appears in paragraphs (1)(B) 

3 and (2)(A) and inserting ‘‘the simplified employee 

4 pension or flexible retirement account’’, 

5 (5) by striking ‘‘a simplified employee pension’’ 

6 each place it appears in paragraphs (2) and (3) and 

7 inserting ‘‘a simplified employee pension or flexible 

8 retirement account’’, and 

9 (6) by striking ‘‘reduced in the case’’ in para10 graph (2)(B) and inserting ‘‘reduced, with respect to 

11 a simplified employee pension, in the case’’. 

12 (d) CONFORMING AMENDMENTS.— 

13 (1) Subparagraph (A) of section 219(g)(5) of 

14 the Internal Revenue Code of 1986 is amended by 

15 striking ‘‘or’’ at the end of clause (v) and by adding 

16 at the end the following new clause: 

17 ‘‘(vii) a flexible retirement account 

18 (within the meaning of section 408(r)), 

19 or’’. 

20 (2) Paragraph (6) of section 280G(b) of such 

21 Code is amended by striking ‘‘or’’ at the end of sub22 paragraph (C), by striking the period at the end of 

23 subparagraph (D) and inserting ‘‘, or’’, and by add24 ing at the end the following new subparagraph: 


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1 ‘‘(E) a flexible retirement account (as de2 fined in section 408(r)).’’. 

3 (3) Subsection (j) of section 408 of such Code 

4 is amended— 

5 (A) by striking ‘‘PENSIONS’’ in the heading 

6 and inserting ‘‘PENSIONS AND FLEXIBLE RE7 TIREMENT ACCOUNTS’’, and 

8 (B) by striking ‘‘pension,’’ and inserting 

9 ‘‘pension or flexible retirement account,’’. 

10 (4) Subsections (b), (c), (m)(4)(B), (n)(3)(B), 

11 and (u)(1)(C) of section 414 of such Code are each 

12 amended by inserting ‘‘, 408(r)’’ after ‘‘408(p)’’. 

13 (5) Paragraph (6) of section 414(u) of such 

14 Code is amended by inserting ‘‘, any flexible retire15 ment account under section 408(r)’’ after ‘‘408(p)’’. 

16 (6) Subparagraph (B) of section 414(v)(3) of 

17 such Code is amended by inserting ‘‘, 408(r)’’ after 

18 ‘‘408(k)’’. 

19 (7) Clause (iv) of section 414(v)(6)(A) of such 

20 Code is amended by striking ‘‘(k) or (p)’’ and insert21 ing ‘‘(k), (p), or (r)’’. 

22 (8) Paragraph (5) of section 414(w) of such 

23 Code is amended by striking ‘‘and’’ at the end of 

24 subparagraph (D), by striking the period at the end 


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1 of subparagraph (E) and inserting ‘‘, and’’, and by 

2 adding at the end the following new subparagraph: 

3 ‘‘(F) a flexible retirement account (as de4 fined in section 408(r)).’’. 

5 (9) Paragraph (2) of section 415(a) of such 

6 Code is amended— 

7 (A) by striking ‘‘or’’ at the end of subpara8 graph (B), 

9 (B) by striking the comma at the end of 

10 subparagraph (C) and inserting ‘‘, or’’, 

11 (C) by inserting after subparagraph (C) 

12 the following new subparagraph: 

13 ‘‘(D) a flexible retirement account de14 scribed in section 408(r),’’, 

15 (D) by striking ‘‘or pension’’ and inserting 

16 ‘‘pension, or account’’, and 

17 (E) by striking ‘‘or 408(k)’’ and inserting 

18 ‘‘408(k), or 408(r)’’. 

19 (10) Subparagraph (C) of section 3121(a)(5) of 

20 such Code is amended by inserting ‘‘, or a flexible 

21 retirement account (as defined in section 408(r)’’ 

22 after ‘‘408(k)(6)’’. 

23 (11) Subparagraph (C) of section 3306(a)(5) of 

24 such Code is amended by inserting ‘‘, or a flexible 


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1 retirement account (as defined in section 408(r)’’ 

2 after ‘‘408(k)(6)’’. 

3 (12) Subparagraph (A) of section 4972(d)(1) of 

4 such Code is amended by striking ‘‘and’’ at the end 

5 of clause (iii), by striking the period at the end of 

6 clause (iv) and inserting ‘‘, and’’, and by adding at 

7 the end the following new clause: 

8 ‘‘(v) any flexible retirement account 

9 (within the meaning of section 408(r)).’’. 

10 (e) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to contributions made after De12 cember 31, 2015. 

13 SEC. 106. REPEAL OF SIMPLE PLANS AND SIMPLE IRAS. 

14 (a) SIMPLE 401(k) PLANS.—Paragraph (11) of sec15 tion 401(k) of the Internal Revenue Code of 1986 is 

16 amended by adding at the end the following new subpara17 graph: 

18 ‘‘(E) TERMINATION.—This paragraph 

19 shall not apply to any cash or deferred arrange20 ment adopted after December 31, 2016.’’. 

21 (b) SIMPLE IRAS.—Subsection (p) of section 408 of 

22 the Internal Revenue Code of 1986 is amended by adding 

23 at the end the following new paragraph: 


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1 ‘‘(11) TERMINATION.—This subsection shall not 

2 apply to any plan established after December 31, 

3 2016.’’. 

4 SEC. 107. MODIFICATION OF RULES RELATING TO THE TER5 MINATION OF PARTNERSHIPS AND S COR6 PORATIONS. 

7 (a) NO TERMINATION OF PARTNERSHIP ON SALE OR

8 EXCHANGE OF ASSETS.— 

9 (1) IN GENERAL.—Section 708(b)(1) of the In10 ternal Revenue Code of 1986 is amended by striking 

11 ‘‘only if’’ and all that follows and inserting ‘‘only if 

12 no part of any business, financial operation, or ven13 ture of the partnership continues to be carried on by 

14 any of its partners in a partnership.’’. 

15 (2) CONFORMING AMENDMENTS.— 

16 (A) Section 168(i)(7)(B) of such Code is 

17 amended by striking the last sentence. 

18 (B) Section 743(e) of such Code is amend19 ed by striking paragraph (4). 

20 (C) Section 774 of such Code is amended 

21 by striking subsection (c). 

22 (b) NO TERMINATION OF S CORPORATION STATUS

23 DUE TO EXCESSIVE PASSIVE INVESTMENT INCOME.— 

24 Paragraph (3) of section 1362(d) of the Internal Revenue 


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1 Code of 1986 is amended by adding at the end the fol2 lowing new subparagraph: 

3 ‘‘(D) TERMINATION.—This paragraph 

4 shall not apply to taxable years ending after the 

5 date of the enactment of the Small Business 

6 Tax Compliance Relief Act of 2015.’’. 

7 SEC. 108. REPEAL OF SPECIAL RULES FOR TOP-HEAVY 

8 PLANS. 

9 Section 416 of the Internal Revenue Code of 1986 

10 is amended by adding at the end the following new sub11 section: 

12 ‘‘(j) TERMINATION.—This section shall not apply to 

13 plan years beginning after the date of the enactment of 

14 the Small Business Tax Compliance Relief Act of 2015.’’. 

15 TITLE II—PROVISIONS RELATED 

16 TO THE INTERNAL REVENUE 

17 SERVICE 

18 SEC. 201. REQUIREMENT TO CONVENE SMALL BUSINESS 

19 REVIEW PANELS. 

20 Section 609(d) of title 5, United States Code, is 

21 amended— 

22 (1) in paragraph (2), by striking ‘‘and’’ at the 

23 end; 

24 (2) in paragraph (3), by striking the period and 

25 inserting ‘‘; and’’; and 


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1 (3) by adding at the end the following: 

2 ‘‘(4) the Internal Revenue Service.’’. 

3 SEC. 202. PENALTY WAIVERS IN CASES OF GOOD FAITH EF4 FORTS. 

5 The Commissioner of Internal Revenue may waive 

6 the application of any provision of the Internal Revenue 

7 Code of 1986 (other than a criminal penalty) if it is shown 

8 that the taxpayer acted in good faith or failure to comply 

9 with the provision was due to reasonable cause. 

10 SEC. 203. INFLATION ADJUSTMENTS FOR CERTAIN PROVI11 SIONS. 

12 (a) IN GENERAL.—Chapter 77 of the Internal Rev13 enue Code of 1986 is amended by adding at the end the 

14 following new section: 

15 ‘‘SEC. 7529. INFLATION ADJUSTMENTS. 

16 ‘‘(a) IN GENERAL.—In the case of any taxable year 

17 beginning in a calendar year after 2015, each of the speci18 fied dollar amounts shall be increased by an amount equal 

19 to— 

20 ‘‘(1) such dollar amount, multiplied by 

21 ‘‘(2) the cost-of-living adjustment determined 

22 under section 1(f)(3) for the calendar year in which 

23 the taxable year begins, determined by substituting 

24 ‘calendar year 2014’ for ‘calendar year 1992’ in sub25 paragraph (B) thereof. 


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1 ‘‘(b) SPECIFIED DOLLAR AMOUNTS.—For purposes 

2 of subsection (a), the specified dollar amounts are— 

3 ‘‘(1) the $50,000 amount in section 79(a)(1), 

4 ‘‘(2) each of the $5,250 amounts in section 

5 127(a)(2), 

6 ‘‘(3) each of the $500 amounts in paragraphs 

7 (11)(A), (11)(B), and (12) of section 170(f), 

8 ‘‘(4) the $5,000 amount in section 

9 170(f)(11)(C), 

10 ‘‘(5) the $10,000,000 amount in section 

11 263A(b)(2), 

12 ‘‘(6) each of the dollar amounts in section 

13 274(b)(1), 

14 ‘‘(7) each of the $400 amounts in section 

15 274(j), 

16 ‘‘(8) the $1,600 amount in section 

17 274(j)(2)(B), 

18 ‘‘(9) the $10,000,000 amount in section 

19 1202(b)(1), 

20 ‘‘(10) each of the $50,000,000 amounts in sec21 tion 1202(d)(1), 

22 ‘‘(11) the $50,000 amount in section 

23 1244(b)(1), and 

24 ‘‘(12) the $1,000,000 in section 1244(c)(3)(A). 

25 ‘‘(c) ROUNDING.— 


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1 ‘‘(1) Any increase determined under paragraph 

2 (5), (9), or (10) of subsection (b) shall be rounded 

3 to the nearest multiple of $100,000. 

4 ‘‘(2) Any increase determined under paragraph 

5 (1), (4), (11), or (12) of subsection (b) shall be 

6 rounded to the nearest multiple of $1,000. 

7 ‘‘(3) Any increase determined under paragraph 

8 (2) of subsection (b) shall be rounded to the nearest 

9 multiple of $500. 

10 ‘‘(4) Any increase determined under paragraph 

11 (3), (7), or (8) of subsection (b) shall be rounded to 

12 the nearest multiple of $100. 

13 ‘‘(5) Any increase determined under paragraph 

14 (6) of subsection (b) shall be rounded to the nearest 

15 multiple of $5.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) Section 1202(b)(3) of such Code is amend18 ed by striking ‘‘paragraph (1)(A) shall be applied by 

19 substituting ‘$5,000,000’ for ‘$10,000,000’ ’’ and in20 serting ‘‘the amount under paragraph (1)(A) shall 

21 be 50 percent of such dollar amount (determined 

22 without regard to this paragraph)’’. 

23 (2) Section 1244(b)(2) of such Code is amend24 ed by striking ‘‘$100,000’’ and inserting ‘‘200 per25 cent of the amount under paragraph (1)’’. 


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

2 for chapter 77 of such Code is amended by adding at the 

3 end the following new item: 

‘‘Sec. 7529. Inflation adjustments.’’. 

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

5 this section shall apply to taxable years beginning after 

6 the date of the enactment of this Act. 

7 SEC. 204. REPORT ON UNIFORM DEFINITIONS. 

8 Not later than June 30, 2016, the Commissioner of 

9 Internal Revenue shall submit to the Committee on Small 

10 Business and Entrepreneurship of the Senate, the Com11 mittee on Finance of the Senate, and the Committee on 

12 Ways and Means of the House of Representatives a report 

13 detailing changes in law to make statutory definitions in 

14 the Internal Revenue Code of 1986 relating to small busi15 nesses consistent across different provisions of such Code. 

16 Such report shall include recommendations on wording 

17 such definitions in a manner that is easy to understand 

18 for a layman not familiar with the Internal Revenue Code 

19 of 1986. 

20 SEC. 205. REPORT ON IMPROVEMENTS TO CUSTOMER 

21 SERVICE. 

22 Not later than June 30, 2016, the Commissioner of 

23 Internal Revenue shall submit to the Committee on Small 

24 Business and Entrepreneurship of the Senate, the Com25 mittee on Finance of the Senate, and the Committee on 


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1 Ways and Means of the House of Representatives a report 

2 detailing specific ways to improve customer service to 

3 small businesses, including objectively measurable goals 

4 for how to reduce response times. 

5 SEC. 206. REASONABLE CAUSE EXCEPTION FOR FAILURE 

6 TO REPORT CERTAIN TRANSACTIONS. 

7 (a) IN GENERAL.—Subsection (d) of section 6707A 

8 of the Internal Revenue Code of 1986 is amended to read 

9 as follows: 

10 ‘‘(d) REASONABLE CAUSE WAIVER.—No penalty 

11 shall be imposed under this section with respect to any 

12 failure if it is shown that such failure is due to reasonable 

13 cause and not to willful neglect.’’. 

14 (b) CONFORMING AMENDMENTS.— 

15 (1) Section 6664(d)(3) of the Internal Revenue 

16 Code of 1986 is amended by striking ‘‘if the penalty 

17 for such failure was rescinded under section 

18 6707A(d)’’ and inserting ‘‘if it is shown that such 

19 failure is due to reasonable cause and not to willful 

20 neglect’’. 

21 (2) Section 6707(c) of such Code is amended to 

22 read as follows: 

23 ‘‘(c) REASONABLE CAUSE WAIVER.—No penalty 

24 shall be imposed under this section with respect to any 


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1 failure if it is shown that such failure is due to reasonable 

2 cause and not to willful neglect.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall take effect on the date of the enactment 

5 of this Act. 

6 SEC. 207. REASONABLE CAUSE EXCEPTION. 

7 (a) IN GENERAL.—No assessable penalty or addition 

8 to tax shall be imposed under the Internal Revenue Code 

9 of 1986 if it is shown that an action, or failure to act, 

10 by the taxpayer with regard to any material element was 

11 due to reasonable cause and the taxpayer acted in good 

12 faith. 

13 (b) COORDINATION.—Subsection (a) shall not apply 

14 to any assessable penalty or addition to tax for which there 

15 is a provision of the Internal Revenue Code which provides 

16 for the nonapplication of such penalty or addition if the 

17 taxpayer’s action (or failure to act) was due to reasonable 

18 cause. 

19 SEC. 208. RETURN DUE DATE MODIFICATIONS. 

20 (a) NEW DUE DATE FOR PARTNERSHIP FORM 1065, 

21 S CORPORATION FORM 1120S, AND C CORPORATION

22 FORM 1120.— 

23 (1) PARTNERSHIPS.— 


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1 (A) IN GENERAL.—Section 6072 of the In2 ternal Revenue Code of 1986 is amended by 

3 adding at the end the following new subsection: 

4 ‘‘(f) RETURNS OF PARTNERSHIPS.—Returns of part5 nerships under section 6031 made on the basis of the cal6 endar year shall be filed on or before the 15th day of 

7 March following the close of the calendar year, and such 

8 returns made on the basis of a fiscal year shall be filed 

9 on or before the 15th day of the third month following 

10 the close of the fiscal year.’’. 

11 (B) CONFORMING AMENDMENT.—Section 

12 6072(a) of such Code is amended by striking 

13 ‘‘6017, or 6031’’ and inserting ‘‘or 6017’’. 

14 (2) S CORPORATIONS.— 

15 (A) IN GENERAL.—So much of subsection 

16 (b) of 6072 of such Code as precedes the sec17 ond sentence thereof is amended to read as fol18 lows: 

19 ‘‘(b) RETURNS OF CERTAIN CORPORATIONS.—Re20 turns of S corporations under sections 6012 and 6037 

21 made on the basis of the calendar year shall be filed on 

22 or before the 31st day of March following the close of the 

23 calendar year, and such returns made on the basis of a 

24 fiscal year shall be filed on or before the last day of the 

25 third month following the close of the fiscal year.’’. 


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1 (B) CONFORMING AMENDMENTS.— 

2 (i) Section 1362(b) of such Code is 

3 amended— 

4 (I) by striking ‘‘15th’’ each place 

5 it appears and inserting ‘‘last’’, 

(II) by striking ‘‘21 6 ⁄2’’ each place 

7 it appears and inserting ‘‘3’’, and 

8 (III) by striking ‘‘2 months and 

9 15 days’’ in paragraph (4) and insert10 ing ‘‘3 months’’. 

11 (ii) Section 1362(d)(1)(C)(i) of such 

12 Code is amended by striking ‘‘15th’’ and 

13 inserting ‘‘last’’. 

14 (iii) Section 1362(d)(1)(C)(ii) of such 

15 Code is amended by striking ‘‘such 15th 

16 day’’ and inserting ‘‘the last day of the 3d 

17 month thereof’’. 

18 (3) CONFORMING AMENDMENTS RELATING TO C

19 CORPORATIONS.— 

20 (A) Section 170(a)(2)(B) of such Code is 

21 amended by striking ‘‘third month’’ and insert22 ing ‘‘4th month’’. 

23 (B) Section 563 of such Code is amended 

24 by striking ‘‘third month’’ each place it appears 

25 and inserting ‘‘4th month’’. 


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1 (C) Section 1354(d)(1)(B)(i) of such Code 

2 is amended by striking ‘‘3d month’’ and insert3 ing ‘‘4th month’’. 

4 (D) Subsections (a) and (c) of section 

5 6167 of such Code are each amended by strik6 ing ‘‘third month’’ and inserting ‘‘4th month’’. 

7 (E) Section 6425(a)(1) of such Code is 

8 amended by striking ‘‘third month’’ and insert9 ing ‘‘4th month’’. 

10 (F) Subsections (b)(2)(A), (g)(3), and 

11 (h)(1) of section 6655 of such Code are each 

12 amended by striking ‘‘3rd month’’ and inserting 

13 ‘‘4th month’’. 

14 (4) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall apply to returns for taxable 

16 years beginning after December 31, 2015. 

17 (b) MODIFICATION OF DUE DATES BY REGULA18 TION.—In the case of returns for taxable years beginning 

19 after December 31, 2013, the Secretary of the Treasury 

20 or the Secretary’s delegate shall modify appropriate regu21 lations to provide as follows: 

22 (1) The maximum extension for the returns of 

23 partnerships filing Form 1065 shall be a 6-month 

24 period beginning on the due date for filing the re25 turn (without regard to any extensions). 


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1 (2) The maximum extension for the returns of 

trusts and estates filing Form 1041 shall be a 51 2 ⁄2- 

3 month period beginning on the due date for filing 

4 the return (without regard to any extensions). 

5 (3) The maximum extension for the returns of 

6 employee benefit plans filing Form 5500 shall be an 

automatic 31 7 ⁄2-month period beginning on the due 

8 date for filing the return (without regard to any ex9 tensions). 

10 (4) The maximum extension for the Forms 990 

11 (series) returns of organizations exempt from income 

12 tax shall be an automatic 6-month period beginning 

13 on the due date for filing the return (without regard 

14 to any extensions). 

15 (5) The maximum extension for the returns of 

16 organizations exempt from income tax that are re17 quired to file Form 4720 returns of excise taxes 

18 shall be an automatic 6-month period beginning on 

19 the due date for filing the return (without regard to 

20 any extensions). 

21 (6) The maximum extension for the returns of 

22 trusts required to file Form 5227 shall be an auto23 matic 6-month period beginning on the due date for 

24 filing the return (without regard to any extensions). 


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1 (7) The maximum extension for the returns of 

2 Black Lung Benefit Trusts required to file Form 

3 6069 returns of excise taxes shall be an automatic 

4 6-month period beginning on the due date for filing 

5 the return (without regard to any extensions). 

6 (8) The maximum extension for a taxpayer re7 quired to file Form 8870 shall be an automatic 6- 

8 month period beginning on the due date for filing 

9 the return (without regard to any extensions). 

10 (9) The due date of Form 3520–A, Annual In11 formation Return of a Foreign Trust with a United 

12 States Owner, shall be the 15th day of the 4th 

13 month after the close of the trust’s taxable year, and 

14 the maximum extension shall be a 6-month period 

15 beginning on such day. 

16 (10) The due date of FinCEN Form 114 (relat17 ing to Report of Foreign Bank and Financial Ac18 counts) shall be April 15 with a maximum extension 

19 for a 6-month period ending on October 15, and 

20 with provision for an extension under rules similar 

21 to the rules of 26 C.F.R. 1.6081–5. For any tax22 payer required to file such form for the first time, 

23 the Secretary of the Treasury may waive any penalty 

24 for failure to timely request or file an extension. 


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1 (11) Taxpayers filing Form 3520, Annual Re2 turn to Report Transactions with Foreign Trusts 

3 and Receipt of Certain Foreign Gifts, shall be al4 lowed to extend the time for filing such form sepa5 rately from the income tax return of the taxpayer, 

6 for an automatic 6-month period beginning on the 

7 due date for filing the return (without regard to any 

8 extensions). 

9 (c) CORPORATIONS PERMITTED STATUTORY AUTO10 MATIC 6-MONTH EXTENSION OF INCOME TAX RE11 TURNS.— 

12 (1) IN GENERAL.—Section 6081(b) of the In13 ternal Revenue Code of 1986 is amended by striking 

14 ‘‘3 months’’ and inserting ‘‘6 months’’. 

15 (2) EFFECTIVE DATE.—The amendment made 

16 by this section shall apply to returns for taxable 

17 years beginning after December 31, 2015. 

18 TITLE III—PROVISIONS RE19 LATED TO START-UP BUSI20 NESSES 

21 SEC. 301. MODIFICATION OF APPLICATION OF RULES FOR 

22 NONQUALIFIED DEFERRED COMPENSATION 

23 PLANS. 

24 (a) RULES ONLY APPLY TO PLANS OF PUBLICLY

25 TRADED COMPANIES.— 


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1 (1) IN GENERAL.—Section 409A of the Internal 

2 Revenue Code of 1986 is amended by striking ‘‘non3 qualified deferred compensation plan’’ each place it 

4 appears and inserting ‘‘specified nonqualified de5 ferred compensation plan’’. 

6 (2) SPECIFIED NONQUALIFIED DEFERRED COM7 PENSATION PLAN.—Section 409A(d)(1) of such 

8 Code is amended to read as follows: 

9 ‘‘(1) SPECIFIED NONQUALIFIED DEFERRED

10 COMPENSATION PLAN.— 

11 ‘‘(A) IN GENERAL.—The term ‘specified 

12 nonqualified deferred compensation plan’ means 

13 any plan maintained by a specified employer for 

14 the deferral of compensation, other than— 

15 ‘‘(i) a qualified employer plan, and 

16 ‘‘(ii) any bona fide vacation leave, sick 

17 leave, compensatory time, disability pay, or 

18 death benefit plan. 

19 ‘‘(B) SPECIFIED EMPLOYER.—For pur20 poses of subparagraph (A), the term ‘specified 

21 employer’ means any corporation— 

22 ‘‘(i) the stock of which is publicly 

23 traded on an established securities market 

24 or otherwise, or 


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1 ‘‘(ii) which is a member of a con2 trolled group of corporations (within the 

3 meaning of section 1563(a), determined 

4 without regard to section 1563(a)(4)) one 

5 of which is publicly traded on an estab6 lished securities market.’’. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) The last sentence of section 

9 409A(a)(2)(B)(i) of the Internal Revenue Code of 

10 1986 is amended to read as follows: ‘‘For purposes 

11 of the preceding sentence, a specified employee is a 

12 key employee (as defined in section 416(i) without 

13 regard to paragraph (5) thereof) of the employer.’’. 

14 (2) The heading of section 409A of such Code 

15 is amended by inserting ‘‘SPECIFIED’’ before 

16 ‘‘NONQUALIFIED’’. 

17 (3) The item relating to section 409A in the 

18 table of sections for subpart A of part I of sub19 chapter D of chapter 1 of such Code is by inserting 

20 ‘‘specified’’ before ‘‘nonqualified’’. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to amounts deferred after the date 

23 of the enactment of this Act. 


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1 SEC. 302. REDUCTION IN HOLDING PERIOD FOR QUALIFIED 

2 SMALL BUSINESS STOCK. 

3 (a) IN GENERAL.—Paragraph (1) of section 1202(a) 

4 of the Internal Revenue Code of 1986 is amended by strik5 ing ‘‘5 years’’ and inserting ‘‘3 years’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Paragraph (2) of section 1202(b) of such 

8 Code is amended by striking ‘‘5 years’’ and inserting 

9 ‘‘3 years’’, 

10 (2) Subparagraph (A) of section 1202(g)(2) of 

11 such Code is amended by striking ‘‘5 years’’ and in12 serting ‘‘3 years’’, 

13 (3) Subparagraph (C) of section 1202(h)(2) of 

14 such Code is amended by striking ‘‘5-year’’ and in15 serting ‘‘3-year’’, and 

16 (4) Subparagraph (A) of section 1202(j)(1) of 

17 such Code is amended by striking ‘‘5 years’’ and in18 serting ‘‘3 years’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to stock issued after the date of 

21 the enactment of this Act. 

22 SEC. 303. EXTENSION OF ROLLOVER PERIOD FOR QUALI23 FIED SMALL BUSINESS STOCK. 

24 (a) IN GENERAL.—Paragraph (1) of section 1045(a) 

25 of the Internal Revenue Code of 1986 is amended by strik26 ing ‘‘60-day period’’ and inserting ‘‘1-year period’’. 


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1 (b) CONFORMING AMENDMENT.—Paragraph (3) of 

2 section 1045(b) of such Code is amended by striking ‘‘60- 

3 day period’’ and inserting ‘‘1-year period’’. 

4 (c) EFFECTIVE DATE.—The amendment made by 

5 this section shall apply to sales after the date of the enact6 ment of this Act. 

Æ 


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