Small Business Owners’ Tax Simplification Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 593 To amend the Internal Revenue Code of 1986 to simplify income tax compliance for small businesses, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 16, 2019 Mr. CHABOT (for himself, Ms. VELA´ZQUEZ, Mrs. RADEWAGEN, Mr. MAR- SHALL, Mr. LAWSON of Florida, and Mr. NORMAN) introduced the fol- lowing bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to simplify income tax compliance for small businesses, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Small Business Owners’ Tax Simplification Act of 5 2019’’. 6 (b) TABLE OF CONTENTS.—The table of contents for 7 this Act is as follows: 8 Sec. 1. Short title; table of contents. Sec. 2. Quarterly reporting of estimated tax payments. VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 2 •HR 593 IH Sec. 3. Aligning the filing thresholds for information reporting. Sec. 4. Uniform standards for the use of electronic signatures for third-party disclosure authorizations. Sec. 5. Pre-notification testing. Sec. 6. Treatment of cafeteria plans for employee-owners. Sec. 7. Excluding from self-employment income net earnings less than amount required for Social Security quarters of coverage. Sec. 8. Allowing a deduction for certain health insurance costs for self-employ- ment tax purposes. Sec. 9. No effect of voluntary withholding agreements on worker classification. Sec. 10. Effect of voluntary training and group discount programs on worker classification. SEC. 2. QUARTERLY REPORTING OF ESTIMATED TAX PAY- 1 MENTS. 2 (a) IN GENERAL.—The table contained in paragraph 3 (2) of section 6654(c) of the Internal Revenue Code of 4 1986 is amended— 5 (1) by striking ‘‘June 15’’ and inserting ‘‘July 6 15’’, and 7 (2) by striking ‘‘September 15’’ and inserting 8 ‘‘October 15’’. 9 (b) EFFECTIVE DATE.—The amendments made by 10 this section shall apply to installments due in taxable years 11 beginning after December 31, 2019. 12 SEC. 3. ALIGNING THE FILING THRESHOLDS FOR INFORMA- 13 TION REPORTING. 14 (a) INCREASING THE DOLLAR THRESHOLD RE- 15 QUIRED FOR FILING A 1099–MISC.— 16 (1) IN GENERAL.—Subsection (a) of section 17 6041 of the Internal Revenue Code of 1986 is 18 amended by striking ‘‘$600’’ and inserting 19 ‘‘$1,500’’. 20 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 3 •HR 593 IH (2) INFLATION ADJUSTMENT.—Section 6041 of 1 such Code is amended by adding at the end the fol- 2 lowing new subsection: 3 ‘‘(h) INFLATION ADJUSTMENT.—In the case of any 4 taxable year beginning in a calendar year after 2020, the 5 dollar amount in subsection (a) shall be increased by an 6 amount equal to— 7 ‘‘(1) such dollar amount, multiplied by 8 ‘‘(2) the cost-of-living adjustment determined 9 under section 1(f)(3) for the calendar year in which 10 the taxable year begins, determined by substituting 11 ‘calendar year 2019’ for ‘calendar year 2016’ in sub- 12 paragraph (A)(ii) thereof. 13 If any increase under the preceding sentence is not a mul- 14 tiple of $100, such increase shall be rounded to the nearest 15 multiple of $100.’’. 16 (3) CONFORMING AMENDMENT.—The heading 17 of subsection (a) of section 6041 of such Code is 18 amended by striking ‘‘OF $600 OR MORE’’ and in- 19 serting ‘‘EXCEEDING THRESHOLD’’. 20 (b) INCREASING THE DOLLAR LIMIT FOR REMU- 21 NERATION FOR SERVICES AND DIRECT SALES.— 22 (1) IN GENERAL.—Paragraph (2) of section 23 6041A(a) of the Internal Revenue Code of 1986 is 24 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 4 •HR 593 IH amended by striking ‘‘$600’’ and inserting 1 ‘‘$1,500’’. 2 (2) INFLATION ADJUSTMENT.—Section 6041A 3 of such Code is amended by adding at the end the 4 following new subsection: 5 ‘‘(g) INFLATION ADJUSTMENT.—In the case of any 6 taxable year beginning in a calendar year after 2020, the 7 dollar amount in subsection (a)(2) shall be increased by 8 an amount equal to— 9 ‘‘(1) such dollar amount, multiplied by 10 ‘‘(2) the cost-of-living adjustment determined 11 under section 1(f)(3) for the calendar year in which 12 the taxable year begins, determined by substituting 13 ‘calendar year 2019’ for ‘calendar year 2016’ in sub- 14 paragraph (A)(ii) thereof. 15 If any increase under the preceding sentence is not a mul- 16 tiple of $100, such increase shall be rounded to the nearest 17 multiple of $100.’’. 18 (c) DECREASING THE DOLLAR THRESHOLD RE- 19 QUIRED FOR FILING A 1099–K; ELIMINATING THE 20 TRANSACTION THRESHOLD.—Subsection (e) of section 21 6050W of such Code is amended by striking ‘‘only if’’ and 22 all that follows through the period at the end and inserting 23 ‘‘only if the amount which would otherwise be reported 24 under subsection (a)(2) with respect to such transactions 25 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 5 •HR 593 IH exceeds the dollar amount in effect for the taxable year 1 under section 6041(a).’’. 2 (d) EFFECTIVE DATE.—The amendments made by 3 this section shall apply with respect to returns for years 4 beginning after December 31, 2019. 5 SEC. 4. UNIFORM STANDARDS FOR THE USE OF ELEC- 6 TRONIC SIGNATURES FOR THIRD-PARTY DIS- 7 CLOSURE AUTHORIZATIONS. 8 Not later than 6 months after the date of the enact- 9 ment of this section, the Secretary of the Treasury shall 10 publish guidance to establish uniform standards and pro- 11 cedures for the acceptance of signatures in digital or other 12 electronic form for purposes of— 13 (1) any request for disclosure of a taxpayer’s 14 return or return information under section 6103(c) 15 of the Internal Revenue Code of 1986, and 16 (2) any power of attorney executed by a tax- 17 payer. 18 SEC. 5. PRE-NOTIFICATION TESTING. 19 Not later than 180 days after the date of enactment 20 of this Act, the Secretary of the Treasury will ensure that, 21 for any refund or credit of overpayment of tax under the 22 Internal Revenue Code of 1986 transferred to an indi- 23 vidual through electronic fund transfer, there is, prior to 24 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 6 •HR 593 IH such transfer, a prenotification testing to verify recipient 1 information and assist in preventing refund fraud. 2 SEC. 6. TREATMENT OF CAFETERIA PLANS FOR EMPLOYEE- 3 OWNERS. 4 (a) IN GENERAL.—Subsection (g) of section 125 of 5 the Internal Revenue Code of 1986 is amended by adding 6 at the end the following new paragraph: 7 ‘‘(5) SELF-EMPLOYED INDIVIDUALS.— 8 ‘‘(A) IN GENERAL.—Notwithstanding sec- 9 tion 105(g), for purposes of providing qualified 10 benefits under a cafeteria plan of an eligible 11 employer (as defined in subsection (j)(5)) and 12 for purposes of any prohibition on discrimina- 13 tion (including subsection (b)) with respect to a 14 cafeteria plan— 15 ‘‘(i) the term ‘employee’ includes an 16 individual who is an employee within the 17 meaning of section 401(c)(1) and any indi- 18 vidual treated as a partner under section 19 1372(a), 20 ‘‘(ii) an individual who owns the en- 21 tire interest in an unincorporated trade or 22 business shall be treated as his own em- 23 ployer, and 24 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 7 •HR 593 IH ‘‘(iii) a partnership shall be treated as 1 the employer of each partner who is an 2 employee within the meaning of clause (i). 3 ‘‘(B) LIMITATION.— 4 ‘‘(i) AMOUNTS EXCLUDED NOT TO EX- 5 CEED EARNED INCOME.—In the case of an 6 individual treated as an employee by rea- 7 son of subparagraph (A)(i), subsection (a) 8 shall apply to amounts for an individual 9 only to the extent that such amounts ex- 10 ceeds the individual’s earned income (as 11 defined in section 401(c)(2)) derived from 12 the trade or business with respect to which 13 the cafeteria plan is maintained. 14 ‘‘(ii) PARTNERSHIPS.—This para- 15 graph shall apply in the case of any indi- 16 vidual treated as a partner under section 17 1372(a), except that, for purposes of this 18 subsection, such individual’s wages (as de- 19 fined in section 3121) from the S corpora- 20 tion shall be treated as such individual’s 21 earned income, and there shall be such ad- 22 justments in the application of this sub- 23 section as the Secretary may by regula- 24 tions prescribe. 25 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 8 •HR 593 IH ‘‘(C) DENIAL OF DOUBLE BENEFIT.—No 1 deduction or credit shall be allowed to an em- 2 ployee under any section of this chapter for any 3 amount excluded from gross income under sub- 4 section (a) by reason of this paragraph.’’. 5 (b) SIMPLE CAFETERIA PLANS.—Paragraph (3) of 6 section 125(j) of the Internal Revenue Code of 1986 is 7 amended by adding at the end the following new subpara- 8 graph: 9 ‘‘(E) ALTERNATIVE FOR CERTAIN 10 PLANS.— 11 ‘‘(i) IN GENERAL.—In the case of a 12 plan that covers one or more individuals 13 described in clause (i) of subsection 14 (g)(5)(A), the requirements of this para- 15 graph shall be treated as met if the aver- 16 age employer contribution allocable to 17 qualified benefits under the plan on behalf 18 of individuals who are not qualified em- 19 ployees does not exceed 150 percent of the 20 average employer contribution allocable to 21 such benefits on behalf of individuals who 22 are qualified employees. 23 ‘‘(ii) ADDITIONAL CONTRIBUTIONS.— 24 In the case of a plan treated under clause 25 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 9 •HR 593 IH (i) as meeting the requirements of this 1 paragraph, subparagraph (C) shall not 2 apply.’’. 3 (c) EFFECTIVE DATE.—The amendment made by 4 this section shall apply with respect to taxable years begin- 5 ning after December 31, 2019. 6 SEC. 7. EXCLUDING FROM SELF-EMPLOYMENT INCOME 7 NET EARNINGS LESS THAN AMOUNT RE- 8 QUIRED FOR SOCIAL SECURITY QUARTERS 9 OF COVERAGE. 10 (a) IN GENERAL.—Paragraph (2) of section 1402(b) 11 of the Internal Revenue Code of 1986 is amended by strik- 12 ing ‘‘$400’’ and inserting ‘‘the amount required under sec- 13 tion 213(d) of the Social Security Act for a quarter of 14 coverage for the calendar year in which such taxable year 15 began’’. 16 (b) SELF-EMPLOYMENT TAX RETURNS.—Section 17 6017 of the Internal Revenue Code of 1986 is amended 18 by striking ‘‘$400’’ and inserting ‘‘the amount required 19 under section 1402(b)(2)’’. 20 (c) EFFECTIVE DATE.—The amendments made by 21 this section shall apply with respect to taxable years begin- 22 ning after the date of the enactment of this Act. 23 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 10 •HR 593 IH SEC. 8. ALLOWING A DEDUCTION FOR CERTAIN HEALTH IN- 1 SURANCE COSTS FOR SELF-EMPLOYMENT 2 TAX PURPOSES. 3 (a) IN GENERAL.—Subsection (l) of section 162 of 4 the Internal Revenue Code of 1986 is amended by striking 5 paragraph (4). 6 (b) EFFECTIVE DATE.—The amendment made by 7 this section shall apply with respect to taxable years begin- 8 ning after December 31, 2019. 9 SEC. 9. NO EFFECT OF VOLUNTARY WITHHOLDING AGREE- 10 MENTS ON WORKER CLASSIFICATION. 11 Section 3402(p) of the Internal Revenue Code of 12 1986 is amended by adding at the end the following new 13 paragraph: 14 ‘‘(4) WORKER CLASSIFICATION.—Agreements 15 under paragraph (3) may not be taken into account 16 in determining whether any party to such agreement 17 is an employee or an employer for purposes of any 18 provision of this title.’’. 19 SEC. 10. EFFECT OF VOLUNTARY TRAINING AND GROUP 20 DISCOUNT PROGRAMS ON WORKER CLASSI- 21 FICATION. 22 (a) IN GENERAL.—Chapter 79 of the Internal Rev- 23 enue Code of 1986 is amended by adding at the end the 24 following new section: 25 VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS 11 •HR 593 IH ‘‘SEC. 7706. EFFECT OF VOLUNTARY TRAINING AND GROUP 1 DISCOUNT PROGRAMS ON WORKER CLASSI- 2 FICATION. 3 ‘‘(a) IN GENERAL.—For purposes of this title, the 4 determination of whether an individual is an employee 5 shall be made without regard to the following: 6 ‘‘(1) Whether such individual is offered, and 7 whether such individual accepts, voluntary training. 8 ‘‘(2) Whether such individual is offered, or 9 takes advantage of, a discount on goods and services 10 available by reason of such individual performing 11 services. 12 ‘‘(b) REGULATIONS.—The Secretary shall issue such 13 regulations as the Secretary determines are necessary to 14 carry out the purposes of this section.’’. 15 (b) CLERICAL AMENDMENT.—The table of sections 16 for chapter 79 of such Code is amended by inserting after 17 the item relating to section 7705 the following: 18 ‘‘Sec. 7706. Effect of voluntary training and group discount programs on work- er classification.’’. Æ VerDate Sep 11 2014 03:28 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H593.IH H593 kjohnson on DSK79L0C42 with BILLS