II 

111TH CONGRESS 

1ST SESSION S. 2917 

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. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 18, 2009 

Mr. BAUCUS (for himself, Mr. GRASSLEY, Mr. NELSON of Nebraska, Ms. 

LANDRIEU, Mr. BOND, Mr. LUGAR, Mr. BROWNBACK, Mr. ROBERTS, Mr. 

HATCH, and Mr. CRAPO) 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 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. 

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 ‘‘Small Business Pen5 alty Fairness Act of 2009’’. 


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1 SEC. 2. LIMITATION ON PENALTY FOR FAILURE TO DIS2 CLOSE REPORTABLE TRANSACTIONS BASED 

3 ON RESULTING TAX BENEFITS. 

4 (a) IN GENERAL.—Subsection (b) of section 6707A 

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

6 as follows: 

7 ‘‘(b) AMOUNT OF PENALTY.— 

8 ‘‘(1) IN GENERAL.—Except as otherwise pro9 vided in this subsection, the amount of the penalty 

10 under subsection (a) with respect to any reportable 

11 transaction shall be 75 percent of the decrease in 

12 tax shown on the return as a result of such trans13 action (or which would have resulted from such 

14 transaction if such transaction were respected for 

15 Federal tax purposes). 

16 ‘‘(2) MAXIMUM PENALTY.—The amount of the 

17 penalty under subsection (a) with respect to any re18 portable transaction shall not exceed— 

19 ‘‘(A) in the case of a listed transaction, 

20 $200,000 ($100,000 in the case of a natural 

21 person), or 

22 ‘‘(B) in the case of any other reportable 

23 transaction, $50,000 ($10,000 in the case of a 

24 natural person). 

25 ‘‘(3) MINIMUM PENALTY.—The amount of the 

26 penalty under subsection (a) with respect to any 


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1 transaction shall not be less than $10,000 ($5,000 

2 in the case of a natural person).’’. 

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

4 this section shall apply to penalties assessed after Decem5 ber 31, 2006. 

6 SEC. 3. REPORT ON TAX SHELTER PENALTIES AND CER7 TAIN OTHER ENFORCEMENT ACTIONS. 

8 (a) IN GENERAL.—The Commissioner of Internal 

9 Revenue, in consultation with the Secretary of the Treas10 ury, shall submit to the Committee on Ways and Means 

11 of the House of Representatives and the Committee on 

12 Finance of the Senate an annual report on the penalties 

13 assessed by the Internal Revenue Service during the pre14 ceding year under each of the following provisions of the 

15 Internal Revenue Code of 1986: 

16 (1) Section 6662A (relating to accuracy-related 

17 penalty on understatements with respect to report18 able transactions). 

19 (2) Section 6700(a) (relating to promoting abu20 sive tax shelters). 

21 (3) Section 6707 (relating to failure to furnish 

22 information regarding reportable transactions). 

23 (4) Section 6707A (relating to failure to include 

24 reportable transaction information with return). 


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1 (5) Section 6708 (relating to failure to main2 tain lists of advisees with respect to reportable 

3 transactions). 

4 (b) ADDITIONAL INFORMATION.—The report re5 quired under subsection (a) shall also include information 

6 on the following with respect to each year: 

7 (1) Any action taken under section 330(b) of 

8 title 31, United States Code, with respect to any re9 portable transaction (as defined in section 6707A(c) 

10 of the Internal Revenue Code of 1986). 

11 (2) Any extension of the time for assessment of 

12 tax enforced, or assessment of any amount under 

13 such an extension, under paragraph (10) of section 

14 6501(c) of the Internal Revenue Code of 1986. 

15 (c) DATE OF REPORT.—The first report required 

16 under subsection (a) shall be submitted not later than 

17 June 1, 2010. 

18 SEC. 4. APPLICATION OF BAD CHECKS PENALTY TO ELEC19 TRONIC PAYMENTS. 

20 (a) IN GENERAL.—Section 6657 of the Internal Rev21 enue Code of 1986 is amended— 

22 (1) by striking ‘‘If any check or money order in 

23 payment of any amount’’ and inserting ‘‘If any in24 strument in payment, by any commercially accept25 able means, of any amount’’, and 


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1 (2) by striking ‘‘such check’’ each place it ap2 pears and inserting ‘‘such instrument’’. 

3 (b) EFFECTIVE DATES.—The amendments made by 

4 this section shall apply to instruments tendered after the 

5 date of the enactment of this Act. 

6 SEC. 5. APPLICATION OF LEVY TO PAYMENTS TO FEDERAL 

7 VENDORS RELATING TO PROPERTY. 

8 (a) IN GENERAL.—Section 6331(h)(3) of the Inter9 nal Revenue Code of 1986 is amended by striking ‘‘goods 

10 or services’’ and inserting ‘‘property, goods, or services’’. 

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

12 this section shall apply to levies approved after the date 

13 of the enactment of this Act. 

Æ 


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