I 

113TH CONGRESS 

2D SESSION H. R. 5636 

To amend the Internal Revenue Code of 1986 to cut and reduce excess 

and duplicative tax assessments and paperwork for entrepreneurs. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 18, 2014 

Mr. PETERS of California (for himself, Mrs. NAPOLITANO, Mr. VARGAS, Mr. 

MURPHY of Florida, and Mr. DELANEY) 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 cut and 

reduce excess and duplicative tax assessments and paperwork for entrepreneurs. 

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 ‘‘Cut REDTAPE Act’’. 

5 SEC. 2. EXEMPTION OF NEW SMALL BUSINESSES FROM ES6 TIMATED INCOME TAX PAYMENTS. 

7 (a) INDIVIDUALS.—Section 6654 of the Internal Rev8 enue Code of 1986 is amended by redesignating subsection 


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1 (n) as subsection (o) and by inserting after subsection (m) 

2 the following new subsection: 

3 ‘‘(n) SPECIAL RULE FOR NEW SMALL BUSI4 NESSES.— 

5 ‘‘(1) IN GENERAL.—No addition to tax shall be 

6 imposed under subsection (a) with respect to income 

7 from a new small business. 

8 ‘‘(2) INCOME FROM A NEW SMALL BUSINESS.— 

9 For purposes of paragraph (1), income from a new 

10 small business means, with respect to any individual, 

11 income from a trade or business if the gross receipts 

12 of such trade or business for the calendar year end13 ing with or within the taxable year of the individual 

14 do not exceed $1,000,000. 

15 ‘‘(3) LIMITED APPLICATION.—Paragraph (1) 

16 shall not apply to income from a new small business 

17 for any taxable year beginning after 2 years after 

18 the date on which the new small business is formed. 

19 ‘‘(4) CONTROLLED GROUPS.— 

20 ‘‘(A) IN GENERAL.—For purposes of this 

21 subsection, all persons treated as a single em22 ployer under subsection (a) or (b) of section 52 

23 or subsection (m) or (o) of section 414 shall be 

24 treated as a single trade or business. 


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1 ‘‘(B) INCLUSION OF FOREIGN CORPORA2 TIONS.—For purposes of subparagraph (A), in 

3 applying subsections (a) and (b) of section 52 

4 to this section, section 1563 shall be applied 

5 without regard to subsection (b)(2)(C) there6 of.’’. 

7 (b) CORPORATIONS.—Section 6655 of the Internal 

8 Revenue Code of 1986 is amended by redesignating sub9 section (j) as subsection (k) and by inserting after sub10 section (i) the following new subsection: 

11 ‘‘(j) SPECIAL RULE FOR NEW SMALL BUSINESSES.— 

12 ‘‘(1) IN GENERAL.—No addition to tax shall be 

13 imposed under subsection (a) with respect to income 

14 from a new small business. 

15 ‘‘(2) INCOME FROM A NEW SMALL BUSINESS.— 

16 For purposes of paragraph (1), income from a new 

17 small business means income from a trade or busi18 ness if the gross receipts of such trade or business 

19 for the taxable year do not exceed $1,000,000. 

20 ‘‘(3) LIMITED APPLICATION.—Paragraph (1) 

21 shall not apply to income from a new small business 

22 for any taxable year beginning after 2 years after 

23 the date on which the new small business is incor24 porated. 

25 ‘‘(4) CONTROLLED GROUPS.— 


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1 ‘‘(A) IN GENERAL.—For purposes of this 

2 subsection, all persons treated as a single em3 ployer under subsection (a) or (b) of section 52 

4 or subsection (m) or (o) of section 414 shall be 

5 treated as a single trade or business. 

6 ‘‘(B) INCLUSION OF FOREIGN CORPORA7 TIONS.—For purposes of subparagraph (A), in 

8 applying subsections (a) and (b) of section 52 

9 to this section, section 1563 shall be applied 

10 without regard to subsection (b)(2)(C) there11 of.’’. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2014. 

Æ 


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