SAFE Act

I 118TH CONGRESS 1ST SESSION H. R. 3566 To amend the Internal Revenue Code of 1986 to allow individuals to avoid a penalty for failure to pay income tax by timely paying 125 percent of the income tax liability for the prior year. IN THE HOUSE OF REPRESENTATIVES MAY 22, 2023 Ms. CHU (for herself and Mr. CAREY) 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 indi- viduals to avoid a penalty for failure to pay income tax by timely paying 125 percent of the income tax liability for the prior year. 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. 3 This Act may be cited as the ‘‘Simplify Automatic 4 Filing Extensions Act’’ or the ‘‘SAFE Act’’. 5 VerDate Sep 11 2014 05:22 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3566.IH H3566 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 3566 IH SEC. 2. NO PENALTY FOR FAILURE TO PAY INCOME TAX 1 FOR INDIVIDUALS WHO TIMELY PAY 125 PER- 2 CENT OF INCOME TAX LIABILITY FOR PRIOR 3 YEAR. 4 (a) IN GENERAL.—Section 6651(c) of the Internal 5 Revenue Code of 1986 is amended by adding at the end 6 the following new paragraph: 7 ‘‘(3) NO PENALTY FOR FAILURE TO PAY IN- 8 COME TAX FOR INDIVIDUALS WHO TIMELY PAY 125 9 PERCENT OF INCOME TAX LIABILITY FOR PRIOR 10 YEAR.— 11 ‘‘(A) IN GENERAL.—Subsection (a)(2) 12 shall not apply with respect to an income tax 13 return of an individual if such individual pays, 14 on or before the date prescribed for the pay- 15 ment of the tax with respect to which such re- 16 turn relates (determined with regard to any ex- 17 tension of time for payment), 125 percent of 18 the amount of tax required to be shown on the 19 income tax return of such individual for the im- 20 mediately preceding taxable year. 21 ‘‘(B) FAILURE TO FILE; SHORT TAXABLE 22 YEARS.—If the individual did not file an income 23 tax return for the immediately preceding tax- 24 able year referred to in subparagraph (A), or if 25 VerDate Sep 11 2014 05:22 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3566.IH H3566 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 3566 IH such taxable year was less than 12 months, 1 subparagraph (A) shall not apply. 2 ‘‘(C) JOINT RETURNS.—In the case of a 3 joint return, if the taxpayer did not file a joint 4 return for the immediately preceding taxable 5 year referred to in subparagraph (A), the 6 amounts required to be shown on the income 7 tax returns of both spouses for such imme- 8 diately preceding taxable year shall be taken 9 into account under subparagraph (A). Except 10 as otherwise provided by the Secretary, if the 11 individual does not file a joint return for the 12 taxable year to which subparagraph (A) applies 13 and filed a joint return for the immediately pre- 14 ceding taxable year, the entire amount of tax 15 required to be shown on such joint return shall 16 be taken into account under subparagraph (A). 17 ‘‘(D) EXCEPTION NOT APPLICABLE IN 18 CERTAIN CASES OF INCREASED PENALTY.— 19 Subparagraph (A) shall not apply with respect 20 to any period beginning after the day described 21 in subsection (d)(2).’’. 22 (b) CONFORMING AMENDMENT.—The heading of sec- 23 tion 6651(c) of such Code is amended by striking ‘‘RULE’’ 24 and inserting ‘‘RULES’’. 25 VerDate Sep 11 2014 05:22 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3566.IH H3566 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 3566 IH (c) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to taxable years beginning after 2 December 31, 2022. 3 Æ VerDate Sep 11 2014 05:22 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H3566.IH H3566 pbinns on DSKJLVW7X2PROD with $$_JOB