Main Street Jobs and Opportunity Act of 2016

To provide assistance to small businesses. 1. Short title; table of contents (a) Short title This Act may be cited as the Main Street Jobs and Opportunity Act of 2016 (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Title I—Death Tax Repeal Sec. 101. Repeal of estate and generation-skipping transfer taxes. Sec. 102. Modifications of gift tax. Title II—Small Business Paperwork Relief Sec. 201. Suspension of fines for first-time paperwork violations by small business concerns. Title III—Occupational licensing Sec. 301. Sense of Congress regarding occupational licensing. Sec. 302. Study on effects of certain occupational licensing requirements. Title IV—Restore Traditional Definition of Full-Time Employment Sec. 401. Repeal of 30-hour threshold for classification as full-time employee for purposes of the employer mandate in the Patient Protection and Affordable Care Act and replacement with 40 hours. Title V—Small business start-up savings accounts Sec. 501. Establishment of Small Business Start-Up Savings Accounts. Title VI—Limit frivolous lawsuits Sec. 601. Attorney accountability. Title VII—Increase IRS accountability Sec. 701. Modification of standards for awarding of costs and certain fees. Sec. 702. Civil damages allowed for reckless or intentional disregard of internal revenue laws. Sec. 703. Modifications relating to certain offenses by officers and employees in connection with revenue laws. Sec. 704. Modifications relating to civil damages for unauthorized inspection or disclosure of returns and return information. Sec. 705. Increase in monetary penalties for certain unauthorized disclosures of information. I Death Tax Repeal 101. Repeal of estate and generation-skipping transfer taxes (a) Estate tax repeal Subchapter C of chapter 11 of subtitle B of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 2210. Termination (a) In general Except as provided in subsection (b), this chapter shall not apply to the estates of decedents dying on or after the date of the enactment of the Main Street Jobs and Opportunity Act of 2016 (b) Certain Distributions From Qualified Domestic Trusts In applying section 2056A with respect to the surviving spouse of a decedent dying before the date of the enactment of the Main Street Jobs and Opportunity Act of 2016 (1) section 2056A(b)(1)(A) shall not apply to distributions made after the 10-year period beginning on such date, and (2) section 2056A(b)(1)(B) shall not apply on or after such date. . (b) Generation-Skipping transfer tax repeal Subchapter G of chapter 13 of subtitle B of such Code is amended by adding at the end the following new section: 2664. Termination This chapter shall not apply to generation-skipping transfers on or after the date of the enactment of the Main Street Jobs and Opportunity Act of 2016 . (c) Conforming amendments (1) The table of sections for subchapter C of chapter 11 Sec. 2210. Termination. . (2) The table of sections for subchapter G of chapter 13 of such Code is amended by adding at the end the following new item: Sec. 2664. Termination. . (d) Effective Date The amendments made by this section shall apply to the estates of decedents dying, and generation-skipping transfers, on or after the date of the enactment of this Act. 102. Modifications of gift tax (a) Computation of gift tax Subsection (a) of section 2502 (a) Computation of tax (1) In general The tax imposed by section 2501 for each calendar year shall be an amount equal to the excess of— (A) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for such calendar year and for each of the preceding calendar periods, over (B) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for each of the preceding calendar periods. (2) Rate schedule If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $10,000 18% of such amount. Over $10,000 but not over $20,000 $1,800, plus 20% of the excess over $10,000. Over $20,000 but not over $40,000 $3,800, plus 22% of the excess over $20,000. Over $40,000 but not over $60,000 $8,200, plus 24% of the excess over $40,000. Over $60,000 but not over $80,000 $13,000, plus 26% of the excess over $60,000. Over $80,000 but not over $100,000 $18,200, plus 28% of the excess over $80,000. Over $100,000 but not over $150,000 $23,800, plus 30% of the excess over $100,000. Over $150,000 but not over $250,000 $38,800, plus 32% of the excess of $150,000. Over $250,000 but not over $500,000 $70,800, plus 34% of the excess over $250,000. Over $500,000 $155,800, plus 35% of the excess of $500,000. . (b) Treatment of certain transfers in trust Section 2511 (c) Treatment of certain transfers in trust Notwithstanding any other provision of this section and except as provided in regulations, a transfer in trust shall be treated as a taxable gift under section 2503, unless the trust is treated as wholly owned by the donor or the donor’s spouse under subpart E of part I of subchapter J of chapter 1. . (c) Lifetime gift exemption (1) In general Paragraph (1) of section 2505(a) (1) the amount of the tentative tax which would be determined under the rate schedule set forth in section 2502(a)(2) if the amount with respect to which such tentative tax is to be computed were $5,000,000, reduced by . (2) Inflation adjustment Section 2505 of such Code is amended by adding at the end the following new subsection: (d) Inflation adjustment (1) In general In the case of any calendar year after 2011, the dollar amount in subsection (a)(1) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting calendar year 2010 calendar year 1992 (2) Rounding If any amount as adjusted under paragraph (1) is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000. . (d) Conforming amendments (1) The heading for section 2505 of such Code is amended by striking Unified (2) The item in the table of sections for subchapter A of chapter 12 of such Code relating to section 2505 is amended to read as follows: Sec. 2505. Credit against gift tax. . (3) Section 2801(a)(1) of such Code is amended by striking section 2001(c) as in effect on the date of such receipt section 2502(a)(2) (e) Effective date The amendments made by this section shall apply to gifts made on or after the date of the enactment of this Act. (f) Transition rule (1) In general For purposes of applying sections 1015(d), 2502, and 2505 of the Internal Revenue Code of 1986, the calendar year in which this Act is enacted shall be treated as 2 separate calendar years one of which ends on the day before the date of the enactment of this Act and the other of which begins on such date of enactment. (2) Application of section 2504(b) For purposes of applying section 2504(b) II Small Business Paperwork Relief 201. Suspension of fines for first-time paperwork violations by small business concerns Section 3506 of title 44, United States Code (commonly referred to as the Paperwork Reduction Act (j) Small businesses (1) Small business concern In this subsection, the term small business concern Small Business Act 15 U.S.C. 632 (2) In general In the case of a first-time violation by a small business concern of a requirement regarding the collection of information by an agency, the head of the agency shall not impose a civil fine on the small business concern unless the head of the agency determines that— (A) the violation has the potential to cause serious harm to the public interest; (B) failure to impose a civil fine would impede or interfere with the detection of criminal activity; (C) the violation is a violation of an internal revenue law or a law concerning the assessment or collection of any tax, debt, revenue, or receipt; (D) the violation was not corrected on or before the date that is 6 months after the date on which the small business concern receives notification of the violation in writing from the agency; or (E) except as provided in paragraph (3), the violation presents a danger to the public health or safety. (3) Danger to public health or safety (A) In general In any case in which the head of an agency determines under paragraph (2)(E) that a violation presents a danger to the public health or safety, the head of the agency may, notwithstanding paragraph (2)(E), determine not to impose a civil fine on the small business concern if the violation is corrected not later than 24 hours after receipt by the owner of the small business concern of notification of the violation in writing. (B) Considerations In determining whether to allow a small business concern 24 hours to correct a violation under subparagraph (A), the head of an agency shall take into account all of the facts and circumstances regarding the violation, including— (i) the nature and seriousness of the violation, including whether the violation is technical or inadvertent or involves willful or criminal conduct; (ii) whether the small business concern has made a good faith effort to comply with applicable laws and to remedy the violation within the shortest practicable period of time; and (iii) whether the small business concern has obtained a significant economic benefit from the violation. (C) Notice to Congress In any case in which the head of an agency imposes a civil fine on a small business concern for a violation that presents a danger to the public health or safety and does not allow the small business concern 24 hours to correct the violation under subparagraph (A), the head of the agency shall notify Congress regarding the determination not later than 60 days after the date on which the civil fine is imposed by the agency. (4) Limited to first-Time violations (A) In general This subsection shall not apply to any violation by a small business concern of a requirement regarding collection of information by an agency if the small business concern previously violated any requirement regarding collection of information by the agency. (B) Other agencies For purposes of making a determination under subparagraph (A), the head of an agency shall not take into account any violation of a requirement regarding collection of information by another agency. . III Occupational licensing 301. Sense of Congress regarding occupational licensing It is the sense of Congress that— (1) the Department of Labor should act within its existing authority to reduce employment barriers created by certain occupational licensing requirements, including providing technical assistance and disseminating guidance and information on best practices to States interested in increasing economic opportunity through licensing reciprocity agreements or other approaches; and (2) that States should form interstate compacts to make it easier for licensed workers to practice and relocate across State lines, while also enabling State regulators to share practitioners’ performance histories. 302. Study on effects of certain occupational licensing requirements (a) Study The Secretary of Labor shall conduct a study on the effects of occupational licensing requirements to determine how such requirements may— (1) affect the service quality of certain occupations; (2) affect public safety; and (3) impose barriers to entry for establishing small businesses, inhibit competition, increase costs to consumers, limit hiring, or negatively impact certain populations. (b) Report Not later than 180 days after the date of enactment of this Act, the Secretary shall transmit a report to Congress detailing the results of the study required by subsection (a), including any recommendation for legislation. IV Restore Traditional Definition of Full-Time Employment 401. Repeal of 30-hour threshold for classification as full-time employee for purposes of the employer mandate in the Patient Protection and Affordable Care Act and replacement with 40 hours (a) Full-Time equivalents Paragraph (2) of section 4980H(c) (1) by repealing subparagraph (E), and (2) by inserting after subparagraph (D) the following new subparagraph: (E) Full-time equivalents treated as full-time employees Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 174. . (b) Full-Time employees Paragraph (4) of section 4980H(c) (1) by repealing subparagraph (A), and (2) by inserting before subparagraph (B) the following new subparagraph: (A) In general The term full-time employee . (c) Effective date The amendments made by this section shall apply to months beginning after December 31, 2013. V Small business start-up savings accounts 501. Establishment of Small Business Start-Up Savings Accounts (a) In general Chapter 77 7529. Small Business Start-Up Savings Accounts (a) In general An individual or an eligible small business may enter into an agreement with the Secretary to establish a small business start-up savings account. (b) Small business start-Up savings account For purposes of this section, the term small business start-up savings account (1) Except as provided in subsection (d)(3) in the case of a rollover contribution, no contribution will be accepted unless it is in cash, and contributions will not be accepted for the taxable year on behalf of any account beneficiary in excess of the amount in effect for such taxable year under subsection (d)(2). (2) The trustee is a bank (as defined in section 408(n)) or such other person who demonstrates to the satisfaction of the Secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section. (3) No part of the trust funds will be invested in life insurance contracts. (4) The interest of an individual in the balance of his account is nonforfeitable. (5) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund. (c) Eligible small business For purposes of this section, the term eligible small business (d) Treatment of contributions (1) In general There shall be allowed as a deduction for the taxable year an amount equal to so much of the account beneficiary’s contributions for the taxable year to all small business start-up savings accounts maintained for the benefit of such beneficiary as do not exceed the contribution limitations in effect for the taxable year under paragraph (2). (2) Contribution limitation (A) In general The amount allowable as a deduction under paragraph (1) with respect to all small business start-up savings accounts maintained for the benefit of any person shall not exceed the lesser of— (i) $10,000, or (ii) $150,000, reduced by the aggregate contributions by such person for all taxable years with respect to all small business start-up savings accounts of the taxpayer. (B) Cost of living adjustment (i) In general In the case of a taxable year beginning after 2016, the $10,000 amount in subparagraph (A) shall be increased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2015 calendar year 1992 (ii) Rounding If any amount as adjusted under clause (i) is not a multiple of $500, such amount shall be rounded to the next lowest multiple of $500. (3) Rollovers from retirement plans not allowed Under regulations prescribed by the Secretary, a person may make a rollover contribution to a small business start-up savings account only in the case of a rollover from another small business start-up savings account. (4) Treated as deduction for individuals and corporations For purposes of chapter 1, the deduction allowed under paragraph (1) shall be treated as a deduction specified in part VI of subchapter B of chapter 1 (relating to itemized deductions for individuals and corporations). (e) Treatment of distributions (1) Tax treatment (A) Exclusion of qualified distributions Any qualified distribution from a small business start-up savings account shall not be includible in gross income. (B) Inclusion of other distributions Any distribution from a small business start-up savings account which is not a qualified distribution shall be included in gross income. (2) Qualified distribution For purposes of this subsection, the term qualified distribution (A) to the extent the amount of such payment or distribution does not exceed the sum of— (i) the aggregate amounts paid or incurred by the taxpayer for such taxable year with respect to the taxpayer’s trade or business for the purchase of equipment or facilities, marketing, training, incorporation, and accounting fees, and (ii) the aggregate capital contributions of the taxpayer with respect to an eligible small business for the taxable year (but only to the extent such amounts are used by such small business for purposes described in clause (i)), and (B) which, in the case of a payment or distribution subsequent to the first payment or distribution from such account (or any predecessor to such account)— (i) is made not later than the close of the 5th taxable year beginning after the date of such first payment or distribution, and (ii) is made with respect to the same eligible small business with respect to which such first payment or distribution was made. (3) Treatment after death of account beneficiary (A) In general If, by reason of the death of the account beneficiary, any person acquires the account beneficiary’s interest in a small business start-up savings account— (i) such account shall cease to be a small business start-up savings account as of the date of death, and (ii) an amount equal to the fair market value of the assets in such account on such date shall be includible— (I) in the case of a person who is not the estate of such beneficiary, in such person’s gross income for the taxable year which includes such date, or (II) in the case of a person who is the estate of such beneficiary, in such beneficiary’s gross income for the last taxable year of such beneficiary. (B) Special rules (i) Reduction of inclusion for predeath expenses The amount includible in gross income under subparagraph (A) shall be reduced by the amounts described in paragraph (2) which were incurred by the decedent before the date of the decedent’s death and paid by such person within 1 year after such date. (ii) Deduction for estate taxes An appropriate deduction shall be allowed under section 691(c) to any person (other than the decedent) with respect to amounts included in gross income under subparagraph (A)(ii)(I) by such person. (4) Treatment for failure to be treated as eligible small business If for any taxable year a taxpayer which holds a small business start-up savings account as an eligible small business ceases to be an eligible small business— (A) such account shall cease to be a small business start-up savings account, and (B) the balance of such account shall be treated as paid out for such taxable year in a distribution which is not a qualified distribution. (f) Special rules (1) Denial of double benefit Any deduction or credit otherwise allowed for the taxable year with respect to amounts described in subsection (e)(2)(A) shall be reduced by an amount equal to the qualified distributions attributable to such amounts. The adjusted basis of any property placed in service for the taxable year shall be reduced by the amount of any qualified distributions attributable to such property. For purposes of this paragraph, qualified distributions shall first be treated as attributable to amounts described in subsection (e)(2)(A), then to property placed in service for the taxable year. (2) Aggregation rule For purposes of this section, all persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as one person. . (b) Excise tax on excess contributions and nonqualified distributions Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: 50A Small business start-up savings accounts Sec. 5000D. Tax on excess contributions to small business start-up savings accounts. Sec. 5000E. Tax on nonqualified distributions from small business start-up savings accounts. Sec. 5000F. Cross reference. 5000D. Tax on excess contributions to small business start-up savings accounts (a) In general In the case of a small business start-up savings account (within the meaning of section 7529) there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such taxpayer’s account (determined as of the close of the taxable year). (b) Limitation The amount of tax imposed by subsection (a) shall not exceed 6 percent of the value of the account (determined as of the close of the taxable year). (c) Excess contributions For purposes of this section, in the case of contributions to all small business start-up savings accounts maintained for the benefit of a person, the term excess contributions (1) the excess (if any) of— (A) the amount contributed to such accounts for the taxable year, over (B) the amount allowable as a contribution under section 7529(d)(2)(A) for such taxable year, and (2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of— (A) the distributions out of the accounts for the taxable year, and (B) the excess (if any) of— (i) the maximum amount allowable as a contribution under section 7529(d)(2)(A) for such taxable year, over (ii) the amount contributed to such accounts for such taxable year. 5000E. Tax on nonqualified distributions from small business start-up savings accounts (a) In general If for any taxable year an amount is paid or distributed out of a taxpayer’s small business start-up savings account, there is imposed for such taxable year a tax in an amount equal to 10 percent of the portion of such amount which is includible in the gross income of the taxpayer. (b) Exception for disability or death Subsection (a) shall not apply if the payment or distribution is made after the account beneficiary becomes disabled within the meaning of section 72(m)(7) (but only if such beneficiary’s account was created before becoming so disabled) or dies. 5000F. Cross reference For prohibited transactions, see section 4975. . (c) Prohibited transactions (1) In general Paragraph (1) of section 4975(e) of such Code is amended by striking or , or (H) a small business start-up savings account (within the meaning of section 7529). . (2) Special rule for ceasing to be a small business start-up savings account Section 4975(c) of such Code (relating to tax on prohibited transactions) is amended by adding at the end the following new paragraph: (7) Special rule for small business start-up savings account An individual for whose benefit a small business start-up savings account (within the meaning of section 7529) is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if, with respect to such transaction, the account ceases to be a small business start-up savings account by reason of the application of paragraph (3) or (4) of section 7529(e) to such account. . (d) Deduction allowed whether or not individual itemizes Subsection (a) of section 62 of such Code is amended by inserting after paragraph (21) the following new paragraph: (22) Contributions to small business start-up savings accounts The deduction allowed by section 7529(d)(1)(A). . (e) Conforming amendments (1) The table of chapters for subtitle D of such Code is amended by adding at the end the following new item: Chapter 50A. Small Business Start-Up Savings Accounts . (2) The table of sections for chapter 77 of such Code is amended by inserting after the item relating to section 7528 the following new item: Sec. 7529. Small Business Start-Up Savings Accounts. . (f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2015. VI Limit frivolous lawsuits 601. Attorney accountability (a) Sanctions under rule 11 Rule 11(c) of the Federal Rules of Civil Procedure is amended— (1) in paragraph (1), by striking may shall (2) in paragraph (2), by striking Rule 5 motion. Rule 5. (3) in paragraph (4), by striking situated situated, and to compensate the parties that were injured by such conduct. Subject to the limitations in paragraph (5), the sanction shall consist of an order to pay to the party or parties the amount of the reasonable expenses incurred as a direct result of the violation, including reasonable attorneys’ fees and costs. The court may also impose additional appropriate sanctions, such as striking the pleadings, dismissing the suit, or other directives of a non-monetary nature, or, if warranted for effective deterrence, an order directing payment of a penalty into the court. (b) Rule of construction Nothing in this Act or an amendment made by this Act shall be construed to bar or impede the assertion or development of new claims, defenses, or remedies under Federal, State, or local laws, including civil rights laws, or under the Constitution of the United States. VII Increase IRS accountability 701. Modification of standards for awarding of costs and certain fees (a) Small businesses eligible without regard to net worth Subparagraph (D) of section 7430(c)(4) and , and (iii) in the case of an eligible small business, the net worth limitation in clause (ii) of such section shall not apply. . (b) Eligible small business Paragraph (4) of section 7430(c) (F) Eligible small business For purposes of subparagraph (D)(iii), the term eligible small business (i) a corporation the stock of which is not publicly traded, (ii) a partnership, or (iii) a sole proprietorship, if the average annual gross receipts of such corporation, partnership, or sole proprietorship for the 3-taxable-year period preceding such taxable year does not exceed $50,000,000. For purposes of applying the test under the preceding sentence, rules similar to the rules of paragraphs (2) and (3) of section 448(c) shall apply. . (c) Effective date The amendments made by this section shall apply to proceedings commenced after the date of the enactment of this Act. 702. Civil damages allowed for reckless or intentional disregard of internal revenue laws (a) Increase in amount of damages Section 7433(b) $1,000,000 ($100,000, in the case of negligence) $3,000,000 ($300,000, in the case of negligence) (b) Extension of time To bring action Section 7433(d)(3) 2 years 5 years (c) Effective date The amendments made by this section shall apply to actions of employees of the Internal Revenue Service after the date of the enactment of this Act. 703. Modifications relating to certain offenses by officers and employees in connection with revenue laws (a) Increase in penalty Section 7214 (1) by striking $10,000 $25,000 (2) by striking $5,000 $10,000 (b) Effective date The amendments made by this section shall take effect on the date of the enactment of this Act. 704. Modifications relating to civil damages for unauthorized inspection or disclosure of returns and return information (a) Increase in amount of damages Subparagraph (A) of section 7431(c)(1) $1,000 $10,000 (b) Effective date The amendment made by this section shall apply to inspections and disclosure occurring on and after the date of the enactment of this Act. 705. Increase in monetary penalties for certain unauthorized disclosures of information (a) In general Paragraphs (1), (2), (3), and (4) of section 7213(a) $5,000 $10,000 (b) Effective date The amendments made by this section shall apply to disclosures made after the date of the enactment of this Act.

Summary: Main Street Jobs and Opportunity Act of 2016 This bill amends the Internal Revenue Code to: (1) repeal the estate and generation-skipping transfer taxes, and (2) make permanent the maximum 35% gift tax rate and the lifetime gift tax exemption, with adjustments for inflation. The Paperwork Reduction Act is amended to direct federal agency heads not to impose civil fines for first-time paperwork violations by small businesses unless specified criteria are met. The Department of Labor shall study the effects of occupational licensing requirements to determine how they may affect public safety and the service quality of certain occupations, and impose barriers to entry for establishing small businesses, among other negative effects. The Internal Revenue Code is further amended to revise the formula for counting the hours of service of non-full-time employees in determining whether an employer is a large employer for health coverage purposes. An individual or an eligible small business may enter into an agreement with the Department of the Treasury to establish in a bank or other eligible trust a small business start-up savings account for tax-deductible annual contributions by the account beneficiary. The sanctions requirements of Rule 11 of the Federal Rules of Civil Procedure are revised to require the court to impose an appropriate sanction on any attorney, law firm, or party that has violated, or is responsible for the violation of, the rule with regard to representations to the court. Requires any sanction to compensate parties injured by the conduct in question. The Internal Revenue Code is further amended to: allow businesses with average annual gross receipts of not more than $50 million that prevail to recover their costs in any administrative or court proceeding involving the determination, collection, or refund of tax, interest, or penalty; increase the amount of civil damages against Internal Revenue Service officers or employees for reckless, intentional, or negligent disregard of internal revenue laws, and extend the statute of limitations for bringing a claim; and increase the penalties against federal officers or employees for unlawful acts in connection with internal revenue laws and for unauthorized disclosures or inspections of tax returns.