I 
109TH CONGRESS 
1ST SESSION H. R. 3629 
To amend the Internal Revenue Code of 1986 to allow the subchapter S 
election to be made on a return filed before the due date with extensions, 
to reduce the payroll deposit penalties for failures to make deposits 
in the prescribed manner, and to allow a married couple who operates 
a unincorporated business as co-owners to file separate self-employment 
tax returns. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 29, 2005 
Mr. DOGGETT (for himself, Ms. VELA´ZQUEZ, Mr. LEWIS of Georgia, Mr. 
BECERRA, Mr. EMANUEL, Mr. BACA, Mr. BROWN of Ohio, Mr. CARDOZA, 
Mr. CASE, Mr. CHANDLER, Mr. FILNER, Mr. GENE GREEN of Texas, Mr. 
GRIJALVA, Ms. HERSETH, Mr. MCGOVERN, Ms. MILLENDER-MCDONALD, 
Mrs. NAPOLITANO, Mr. SHERMAN, Mr. MOORE of Kansas, Mr. HOLT, 
Mr. THOMPSON of California, and Mr. DAVIS of Illinois) 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 allow the 
subchapter S election to be made on a return filed before 
the due date with extensions, to reduce the payroll de-
posit penalties for failures to make deposits in the pre-
scribed manner, and to allow a married couple who oper-
ates a unincorporated business as co-owners to file sepa-
rate self-employment tax returns. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Taking Care of Small 
Business Tax Simplification Act of 2005’’. 
SEC. 2. SUBCHAPTER S ELECTION PERMITTED ON RETURN 
FILED BEFORE DUE DATE WITH EXTENSIONS. 
(a) IN GENERAL.—Subsection (b) of section 1362 of 
the Internal Revenue Code of 1986 (relating to when sub-
chapter S election made) is amended to read as follows: 
‘‘(b) WHEN MADE.— 
‘‘(1) IN
GENERAL.—An election under sub-
section (a) may be made by a small business cor-
poration for any taxable year at any time during the 
period— 
‘‘(A) beginning on the first day of the pre-
ceding taxable year, and 
‘‘(B) ending on the due date (with exten-
sions) for filing the return for the taxable year. 
‘‘(2) CERTAIN ELECTIONS TREATED AS MADE 
FOR NEXT TAXABLE YEAR.—If— 
‘‘(A) an election under subsection (a) is 
made for any taxable year within the period de-
scribed in paragraph (1), but 
‘‘(B) either— 
‘‘(i) on 1 or more days in such taxable 
year before the day on which the election 
was made the corporation did not meet the
requirements of subsection (b) of section 
1361, or 
‘‘(ii) 1 or more of the persons who 
held stock in the corporation during such 
taxable year and before the election was 
made did not consent to the election, 
then such election shall be treated as made for 
the following taxable year. 
‘‘(3) ELECTION
MADE
AFTER
DUE
DATE 
TREATED
AS
MADE
FOR
FOLLOWING
TAXABLE 
YEAR.—If— 
‘‘(A) a small business corporation makes 
an election under subsection (a) for any taxable 
year, and 
‘‘(B) such election is made after the due 
date (with extensions) for filling the return for 
such year, 
hen such election shall be treated as made for the 
following taxable year. 
‘‘(4) AUTHORITY TO TREAT LATE ELECTIONS, 
ETC., AS TIMELY.—If— 
‘‘(A) an election under subsection (a) is 
made for any taxable year (determined without 
regard to paragraph (3)) after the date pre-
scribed by this subsection for making such elec-
tion for such taxable year or no such election is 
made for any taxable year, and 
‘‘(B) the Secretary determines that there 
was reasonable cause for the failure to timely 
make such election, 
the Secretary may treat such an election as timely 
made for such taxable year (and paragraph (3) shall 
not apply)’’. 
(b) REVOCATIONS.—Subparagraph (C) of section 
1362(d)(1) of such Code is amended to read as follows: 
‘‘(C) WHEN EFFECTIVE.—Except as pro-
vided in subparagraph (D)— 
‘‘(i) a revocation made on or before 
the due date (with extensions) for filing 
the return for a taxable year shall be effec-
tive on the 1st day of such taxable year 
unless the revocation specifies that it is to 
take effect on the 1st day of the taxable 
year in which made, and 
‘‘(ii) a revocation made during a tax-
able year but after the due date (with ex-
tensions) for filing the return for the pre-
ceding taxable year shall be effective on 
the 1st day of the taxable year.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to elections for taxable years begin-
ning after the date of the enactment of this Act. 
SEC. 3. RELIEF FROM PENALTIES FOR DEPOSITS OF TAXES 
MADE ON A TIMELY BASIS BUT NOT IN THE 
PRESCRIBED MANNER. 
(a) IN GENERAL.—Section 6656 of the Internal Rev-
enue Code of 1986 (relating to failure to make deposits 
of taxes) is amended by redesignating subsection (e) as 
subsection (f) and by inserting after subsection (d) the fol-
lowing new subsection: 
‘‘(e) RELIEF FROM PENALTIES FOR DEPOSITS OF 
TAXES MADE ON A TIMELY BASIS BUT NOT IN THE PRE-
SCRIBED MANNER.—The Secretary may abate all or any 
portion of the penalty imposed by subsection (a) on the 
failure to make a deposit in the manner prescribed by the 
Secretary if— 
‘‘(1) the deposit was made not later than the 
date prescribed therefor, and 
‘‘(2) such failure was due to reasonable cause 
and not willful neglect. 
The applicable percentage under subsection (b) shall not 
exceed 2 percent in the case of any failure with respect 
to which the requirements of paragraphs (1) and (2) are 
met.’’.