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. 
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†S 2917 ES

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’’. 

6 SEC. 2. LIMITATION ON PENALTY FOR FAILURE TO DIS7 CLOSE REPORTABLE TRANSACTIONS BASED 

8 ON RESULTING TAX BENEFITS. 

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

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

11 as follows: 

12 ‘‘(b) AMOUNT OF PENALTY.— 

13 ‘‘(1) IN GENERAL.—Except as otherwise pro14 vided in this subsection, the amount of the penalty 

15 under subsection (a) with respect to any reportable 

16 transaction shall be 75 percent of the decrease in 

17 tax shown on the return as a result of such trans18 action (or which would have resulted from such 

19 transaction if such transaction were respected for 

20 Federal tax purposes). 

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

22 penalty under subsection (a) with respect to any re23 portable transaction shall not exceed— 
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1 ‘‘(A) in the case of a listed transaction, 

2 $200,000 ($100,000 in the case of a natural 

3 person), or 

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

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

6 natural person). 

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

8 penalty under subsection (a) with respect to any 

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

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

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

12 this section shall apply to penalties assessed after Decem13 ber 31, 2006. 

14 SEC. 3. REPORT ON TAX SHELTER PENALTIES AND CER15 TAIN OTHER ENFORCEMENT ACTIONS. 

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

17 Revenue, in consultation with the Secretary of the Treas18 ury, shall submit to the Committee on Ways and Means 

19 of the House of Representatives and the Committee on 

20 Finance of the Senate an annual report on the penalties 

21 assessed by the Internal Revenue Service during the pre22 ceding year under each of the following provisions of the 

23 Internal Revenue Code of 1986: 
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1 (1) Section 6662A (relating to accuracy-related 

2 penalty on understatements with respect to report3 able transactions). 

4 (2) Section 6700(a) (relating to promoting abu5 sive tax shelters). 

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

7 information regarding reportable transactions). 

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

9 reportable transaction information with return). 

10 (5) Section 6708 (relating to failure to main11 tain lists of advisees with respect to reportable 

12 transactions). 

13 (b) ADDITIONAL INFORMATION.—The report re14 quired under subsection (a) shall also include information 

15 on the following with respect to each year: 

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

17 title 31, United States Code, with respect to any re18 portable transaction (as defined in section 6707A(c) 

19 of the Internal Revenue Code of 1986). 

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

21 tax enforced, or assessment of any amount under 

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

23 6501(c) of the Internal Revenue Code of 1986. 
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1 (c) DATE OF REPORT.—The first report required 

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

3 June 1, 2010. 

4 SEC. 4. APPLICATION OF BAD CHECKS PENALTY TO ELEC5 TRONIC PAYMENTS. 

6 (a) IN GENERAL.—Section 6657 of the Internal Rev7 enue Code of 1986 is amended— 

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

9 payment of any amount’’ and inserting ‘‘If any in10 strument in payment, by any commercially accept11 able means, of any amount’’, and 

12 (2) by striking ‘‘such check’’ each place it ap13 pears and inserting ‘‘such instrument’’. 

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

15 this section shall apply to instruments tendered after the 

16 date of the enactment of this Act. 

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

18 VENDORS RELATING TO PROPERTY. 

19 (a) IN GENERAL.—Section 6331(h)(3) of the Inter20 nal Revenue Code of 1986 is amended by striking ‘‘goods 

21 or services’’ and inserting ‘‘property, goods, or services’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to levies approved after the date 

3 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 

eral vendors, and for other purposes. Service, to modify certain rules relating to Fedmitting a bad check to the Internal Revenue reportable transactions and the penalty for submodify the penalty for failure to disclose certain