[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3937 Reported in House (RH)]
<DOC>
Union Calendar No. 100
118th CONGRESS
1st Session
H. R. 3937
[Report No. 118-128]
To amend the Internal Revenue Code of 1986 to promote the establishment
and growth of small businesses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 9, 2023
Mr. Smith of Missouri introduced the following bill; which was referred
to the Committee on Ways and Means
June 30, 2023
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on June 9,
2023]
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to promote the establishment
and growth of small businesses.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS, ETC.
(a) Short Title.--This Act may be cited as the ``Small Business
Jobs Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents, etc.
Sec. 2. Increase in threshold for requiring information reporting with
respect to certain payees.
Sec. 3. Restoration of reporting rule for third party network
transactions.
Sec. 4. Modifications to exclusion for gain from qualified small
business stock.
Sec. 5. Increase in limitations on expensing of depreciable business
assets.
Sec. 6. Establishment of special rules for capital gains invested in
rural opportunity zones.
Sec. 7. Reporting on qualified opportunity funds and qualified rural
opportunity funds.
SEC. 2. INCREASE IN THRESHOLD FOR REQUIRING INFORMATION REPORTING WITH
RESPECT TO CERTAIN PAYEES.
(a) In General.--Sections 6041(a) is amended by striking ``$600''
and inserting ``$5,000''.
(b) Inflation Adjustment.--Section 6041 is amended by adding at the
end the following new subsection:
``(h) Inflation Adjustment.--In the case of any calendar year after
2024, the dollar amount in subsection (a) shall be increased by an
amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any increase under the preceding sentence is not a multiple of $100,
such increase shall be rounded to the nearest multiple of $100.''.
(c) Application to Reporting on Remuneration for Services and
Direct Sales.--Section 6041A is amended--
(1) in subsection (a)(2), by striking ``is $600 or more''
and inserting ``equals or exceeds the dollar amount in effect
for such calendar year under section 6041(a)'', and
(2) in subsection (b)(1)(B), by striking ``is $5,000 or
more'' and inserting ``equals or exceeds the dollar amount in
effect for such calendar year under section 6041(a)''.
(d) Application to Backup Withholding.--Section 3406(b)(6) is
amended--
(1) by striking ``$600'' in subparagraph (A) and inserting
``the dollar amount in effect for such calendar year under
section 6041(a)'', and
(2) by striking ``only where aggregate for calendar year is
$600 or more'' in the heading and inserting ``only if in excess
of threshold''.
(e) Conforming Amendments.--
(1) The heading of section 6041(a) is amended by striking
``of $600 or More'' and inserting ``Exceeding Threshold''.
(2) Section 6041(a) is amended by striking ``taxable year''
and inserting ``calendar year''.
(f) Effective Date.--The amendments made by this section shall
apply with respect to payments made after December 31, 2023.
SEC. 3. RESTORATION OF REPORTING RULE FOR THIRD PARTY NETWORK
TRANSACTIONS.
(a) De Minimis Exception for Third Party Settlement
Organizations.--Section 6050W(e) is amended to read as follows:
``(e) Exception for De Minimis Payments by Third Party Settlement
Organizations.--A third party settlement organization shall be required
to report any information under subsection (a) with respect to third
party network transactions of any participating payee only if--
``(1) the amount which would otherwise be reported under
subsection (a)(2) with respect to such transactions exceeds
$20,000, and
``(2) the aggregate number of such transactions exceeds
200.''.
(b) Effective Date.--The amendment made by this section shall apply
to returns for calendar years beginning after December 31, 2021.
SEC. 4. MODIFICATIONS TO EXCLUSION FOR GAIN FROM QUALIFIED SMALL
BUSINESS STOCK.
(a) Phased Increase in Exclusion for Gain From Qualified Small
Business Stock.--
(1) In general.--Section 1202(a)(1) is amended--
(A) by striking ``50 percent'' and inserting ``the
applicable percentage'', and
(B) by striking ``held for more than 5 years'' and
inserting ``held for at least 3 years''.
(2) Applicable percentage.--Section 1202(a) is amended by
adding at the end the following new paragraph:
``(5) Applicable percentage.--Except as provided in
paragraphs (3) and (4), the applicable percentage under
paragraph (1) shall be determined under the following table:
Applicable
``Years stock held: percentage:
3 years................................................ 50%
4 years................................................ 75%
5 years or more........................................ 100%''.
(3) Continued treatment as not item of tax preference.--
(A) In general.--Section 57(a)(7) is amended by
striking ``An amount'' and inserting ``In the case of
stock acquired on or before the date of the enactment
of the Creating Small Business Jobs Act of 2010, an
amount''.
(B) Conforming amendment.--Section 1202(a)(4) is
amended--
(i) by striking ``, and'' at the end of
subparagraph (B) and inserting a period, and
(ii) by striking subparagraph (C).
(4) Other conforming amendments.--
(A) Section 1202(a)(4) is amended by inserting
``and before the date of the enactment of the Small
Business Jobs Act'' after ``Act of 2010''.
(B) Paragraphs (3) and (4) of section 1202(a) are
each amended by inserting ``held for more than 5 years
and'' after ``In the case of qualified small business
stock''.
(C) Section 1202(a)(3)(A) of such Code is amended
to read as follows:
``(A) the applicable percentage under paragraph (1)
shall be 75 percent, and'',
(D) Section 1202(a)(4)(A) is amended to read as
follows:
``(A) the applicable percentage under paragraph (1)
shall be 100 percent, and''.
(E) Section 1202(b)(2) is amended by striking
``more than 5 years'' and inserting ``at least 3
years''.
(F) Section 1202(g)(2)(A) is amended by striking
``more than 5 years'' and inserting ``at least 3
years''.
(G) Section 1202(j)(1)(A) is amended by striking
``more than 5 years'' and inserting ``at least 3
years''.
(b) Tacking Holding Period of Convertible Debt Instruments.--
(1) In general.--Section 1202(f) is amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B) and moving such subparagraphs
(as so redesignated) 2 ems to the right,
(B) by striking ``Conversion of Other Stock.--If
any stock'' and inserting the following:
``Conversion.--
``(1) Other stock.--If any stock'', and
(C) by adding at the end the following new
paragraph:
``(2) Convertible debt instruments.--
``(A) In general.--If any stock in a corporation is
acquired by the taxpayer, without recognition of gain,
solely through the conversion of a qualified
convertible debt instrument--
``(i) the stock so acquired shall be
treated as qualified small business stock in
the hands of the taxpayer, and
``(ii) the stock so acquired shall be
treated as having been held during the period
during which the qualified convertible debt
instrument was held.
``(B) Qualified convertible debt instrument.--For
purposes of this paragraph, the term `qualified
convertible debt instrument' means any bond or other
evidence of indebtedness--
``(i) which is originally issued by the
corporation to the taxpayer,
``(ii) the issuer of which--
``(I) from issuance until
conversion, is a qualified small
business, and
``(II) during substantially all of
the taxpayer's holding period of such
bond or evidence of indebtedness, the
corporation meets the active business
requirements of subsection (e), and
``(iii) which is convertible into stock in
the corporation.''.
(c) Gain Exclusion Allowed With Respect to Qualified Small Business
Stock in Corporation.--
(1) In general.--Section 1202(c) is amended--
(A) by striking ``C corporation'' in paragraph (1)
and inserting ``corporation'', and
(B) by striking ``and such corporation is a C
corporation'' in paragraph (2)(A).
(2) Qualified small business definition.--Section
1202(d)(1) is amended by striking ``which is a C corporation''.
(3) Clarification of aggregation rules applicable to S
corporations.--Section 1202(d)(3) is amended by adding at the
end the following new subparagraph:
``(C) Clarification with respect to S
corporations.--Any determination of the members of a
controlled group of corporations under this paragraph
shall include taking into account any stock ownership
in an S corporation.''.
(4) Treatment of passive losses.--Section 469(g)(1) is
amended by adding at the end the following new subparagraph:
``(D) Certain dispositions of small business
stock.--In the case a disposition any gain from which
is excluded from gross income under section 1202,
subparagraph (A) shall not apply.''.
(5) Special rules relating to S corporations.--Section
1202(e) is amended by adding at the end the following new
paragraph:
``(9) Applied at S corporation level.--In the case of an S
corporation, the requirements of this subsection shall be
applied at the corporate level.''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
stock acquired after the date of the enactment of this Act.
(2) Continued treatment as not item of tax preference.--The
amendments made by subsection (a)(3) shall take effect as if
included in the enactment of section 2011 the Creating Small
Business Jobs Act of 2010.
(3) Tacking holding period of convertible debt
instruments.--The amendments made by subsection (b) shall apply
to debt instruments originally issued after the date of the
enactment of this Act.
SEC. 5. INCREASE IN LIMITATIONS ON EXPENSING OF DEPRECIABLE BUSINESS
ASSETS.
(a) In General.--Section 179(b) is amended--
(1) by striking ``$1,000,000'' in paragraph (1) and
inserting ``$2,500,000'', and
(2) by striking ``$2,500,000'' in paragraph (2) and
inserting ``$4,000,000''.
(b) Inflation Adjustment.--Section 179(b)(6) is amended--
(1) by striking ``2018'' and inserting ``2024 (2018 in the
case of the dollar amount in paragraph (5)(A))'', and
(2) by striking ```calendar year 2017'' and inserting
```calendar year 2024' (`calendar year 2017' in the case of the
dollar amount in paragraph (5)(A))''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
December 31, 2023.
SEC. 6. ESTABLISHMENT OF SPECIAL RULES FOR CAPITAL GAINS INVESTED IN
RURAL OPPORTUNITY ZONES.
(a) In General.--Subchapter Z of chapter 1 is amended by adding at
the end the following new section:
``SEC. 1400Z-3. SPECIAL RULES FOR CAPITAL GAINS INVESTED IN RURAL
OPPORTUNITY ZONES.
``(a) In General.--
``(1) Treatment of gains.--In the case of capital gain from
the sale to, or exchange with, an unrelated person of any
property held by the taxpayer, at the election of the
taxpayer--
``(A) gross income for the taxable year shall not
include so much of such gain as does not exceed the
aggregate amount invested by the taxpayer in a
qualified rural opportunity fund during the 180-day
period beginning on the date of such sale or exchange,
``(B) the amount of gain excluded by subparagraph
(A) shall be included in gross income as provided by
subsection (b), and
``(C) subsection (c) shall apply.
``(2) Election.--No election may be made under paragraph
(1)--
``(A) with respect to a sale or exchange if an
election previously made with respect to such sale or
exchange is in effect, or
``(B) with respect to any sale or exchange after
December 31, 2032.
``(b) Deferral of Gain Invested in Qualified Rural Opportunity Zone
Property.--
``(1) Year of inclusion.--Gain to which subsection
(a)(1)(B) applies shall be included in income in the taxable
year which includes the earlier of--
``(A) the date on which such investment is sold or
exchanged, or
``(B) December 31, 2032.
``(2) Amount includible.--
``(A) In general.--The amount of gain included in
gross income under subsection (a)(1)(A) shall be the
excess of--
``(i) the lesser of the amount of gain
excluded under paragraph (1) or the fair market
value of the investment as determined as of the
date described in paragraph (1), over
``(ii) the taxpayer's basis in the
investment.
``(B) Determination of basis qualified rural
opportunity zone property.--
``(i) In general.--Except as otherwise
provided in this clause or subsection (c), the
taxpayer's basis in the investment shall be
zero.
``(ii) Increase for gain recognized under
subsection (a)(1)(b).--The basis in the
investment shall be increased by the amount of
gain recognized by reason of subsection
(a)(1)(B) with respect to such property.
``(iii) Investments held for 5 years.--In
the case of any investment held for at least 5
years, the basis of such investment shall be
increased by an amount equal to 10 percent of
the amount of gain deferred by reason of
subsection (a)(1)(A).
``(iv) Investments held for 7 years.--In
the case of any investment held by the taxpayer
for at least 7 years, in addition to any
adjustment made under clause (iii), the basis
of such property shall be increased by an
amount equal to 5 percent of the amount of gain
deferred by reason of subsection (a)(1)(A).
``(c) Special Rule for Investments Held for at Least 10 Years.--In
the case of any investment held by the taxpayer for at least 10 years
and with respect to which the taxpayer makes an election under this
subsection, the basis of such property shall be equal to the fair
market value of such investment on the date that the investment is sold
or exchanged.
``(d) Qualified Rural Opportunity Fund.--For purposes of this
section--
``(1) In general.--The term `qualified rural opportunity
fund' means any investment vehicle which is organized as a
corporation or a partnership for the purpose of investing in
qualified rural opportunity zone property (other than another
qualified rural opportunity fund) that holds at least 90
percent of its assets in qualified rural opportunity zone
property, determined by the average of the percentage of
qualified rural opportunity zone property held in the fund as
measured--
``(A) on the last day of the first 6-month period
of the taxable year of the fund, and
``(B) on the last day of the taxable year of the
fund.
``(2) Qualified rural opportunity zone property.--
``(A) In general.--The term `qualified rural
opportunity zone property' means property which is--
``(i) qualified rural opportunity zone
stock,
``(ii) qualified rural opportunity zone
partnership interest, or
``(iii) qualified rural opportunity zone
business property.
``(B) Qualified rural opportunity zone stock.--
``(i) In general.--Except as provided in
clause (ii), the term `qualified rural
opportunity zone stock' means any stock in a
domestic corporation if--
``(I) such stock is acquired by the
qualified rural opportunity fund after
December 31, 2023, at its original
issue (directly or through an
underwriter) from the corporation
solely in exchange for cash,
``(II) as of the time such stock
was issued, such corporation was a
qualified rural opportunity zone
business (or, in the case of a new
corporation, such corporation was being
organized for purposes of being a
qualified rural opportunity zone
business), and
``(III) during substantially all of
the qualified rural opportunity fund's
holding period for such stock, such
corporation qualified as a qualified
rural opportunity zone business.
``(ii) Redemptions.--A rule similar to the
rule of section 1202(c)(3) shall apply for
purposes of this paragraph.
``(C) Qualified rural opportunity zone partnership
interest.--The term `qualified rural opportunity zone
partnership interest' means any capital or profits
interest in a domestic partnership if--
``(i) such interest is acquired by the
qualified rural opportunity fund after December
31, 2023, from the partnership solely in
exchange for cash,
``(ii) as of the time such interest was
acquired, such partnership was a qualified
rural opportunity zone business (or, in the
case of a new partnership, such partnership was
being organized for purposes of being a
qualified rural opportunity zone business), and
``(iii) during substantially all of the
qualified rural opportunity fund's holding
period for such interest, such partnership
qualified as a qualified rural opportunity zone
business.
``(D) Qualified rural opportunity zone business
property.--
``(i) In general.--The term `qualified
rural opportunity zone business property' means
tangible property used in a trade or business
of the qualified rural opportunity fund if--
``(I) such property was acquired by
the qualified rural opportunity fund by
purchase (as defined in section
179(d)(2)) after December 31, 2023,
``(II) the original use of such
property in the qualified rural
opportunity zone commences with the
qualified rural opportunity fund or the
qualified rural opportunity fund
substantially improves the property,
and
``(III) during substantially all of
the qualified rural opportunity fund's
holding period for such property,
substantially all of the use of such
property was in a qualified rural
opportunity zone.
``(ii) Substantial improvement.--For
purposes of subparagraph (A)(ii), property
shall be treated as substantially improved by
the qualified rural opportunity fund only if,
during any 30-month period beginning after the
date of acquisition of such property, additions
to basis with respect to such property in the
hands of the qualified rural opportunity fund
exceed an amount equal to the adjusted basis of
such property at the beginning of such 30-month
period in the hands of the qualified rural
opportunity fund.
``(iii) Related party.--For purposes of
subparagraph (A)(i), the related person rule of
section 179(d)(2) shall be applied pursuant to
subsection (e)(2) in lieu of the application of
such rule in section 179(d)(2)(A).
``(3) Qualified rural opportunity zone business.--
``(A) In general.--The term `qualified rural
opportunity zone business' means a trade or business--
``(i) in which substantially all of the
tangible property owned or leased by the
taxpayer is qualified rural opportunity zone
business property (determined by substituting
`qualified rural opportunity zone business' for
`qualified rural opportunity fund' each place
it appears in paragraph (2)(D)),
``(ii) which satisfies the requirements of
paragraphs (2), (4), and (8) of section
1397C(b), and
``(iii) which is not described in section
144(c)(6)(B).
``(B) Special rule.--For purposes of subparagraph
(A), tangible property that ceases to be a qualified
rural opportunity zone business property shall continue
to be treated as a qualified rural opportunity zone
business property for the lesser of--
``(i) 5 years after the date on which such
tangible property ceases to be so qualified, or
``(ii) the date on which such tangible
property is no longer held by the qualified
rural opportunity zone business.
``(4) Qualified rural opportunity zone.--
``(A) In general.--The term `qualified rural
opportunity zone' means any population census tract
which--
``(i) is located in a rural county, and
``(ii) is in persistent poverty (as
determined by the Bureau of the Census using
the same methodology and data as used for
purposes of the May 2023 report of such Bureau
entitled `Persistent Poverty in Counties and
Census Tracts').
``(B) Rural county.--The term `rural county' means
any county if more than 50 percent of the census blocks
which comprise such county are rural blocks (as
determined by the Bureau of the Census as of the date
of the enactment of this Act). A rule similar to
section 143(k)(2)(D) shall apply for purposes of the
preceding sentence.
``(e) Applicable Rules.--
``(1) Treatment of investments with mixed funds.--In the
case of any investment in a qualified rural opportunity fund
only a portion of which consists of investments of gain to
which an election under subsection (a) is in effect--
``(A) such investment shall be treated as 2
separate investments, consisting of--
``(i) one investment that only includes
amounts to which the election under subsection
(a) applies, and
``(ii) a separate investment consisting of
other amounts, and
``(B) subsections (a), (b), and (c) shall only
apply to the investment described in subparagraph
(A)(i).
``(2) Related persons.--For purposes of this section,
persons are related to each other if such persons are described
in section 267(b) or 707(b)(1), determined by substituting `20
percent' for `50 percent' each place it occurs in such
sections.
``(3) Decedents.--In the case of a decedent, amounts
recognized under this section shall, if not properly includible
in the gross income of the decedent, be includible in gross
income as provided by section 691.
``(4) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section, including--
``(A) rules for the certification of qualified
rural opportunity funds for the purposes of this
section,
``(B) rules to ensure a qualified rural opportunity
fund has a reasonable period of time to reinvest the
return of capital from investments in qualified rural
opportunity zone stock and qualified rural opportunity
zone partnership interests, and to reinvest proceeds
received from the sale or disposition of qualified
rural opportunity zone property, and
``(C) rules to prevent abuse.
``(f) Failure of Qualified Rural Opportunity Fund to Maintain
Investment Standard.--
``(1) In general.--If a qualified rural opportunity fund
fails to meet the 90-percent requirement of subsection (d)(1),
the qualified rural opportunity fund shall pay a penalty for
each month it fails to meet the requirement in an amount equal
to the product of--
``(A) the excess of--
``(i) the amount equal to 90 percent of its
aggregate assets, over
``(ii) the aggregate amount of qualified
rural opportunity zone property held by the
fund, multiplied by
``(B) the underpayment rate established under
section 6621(a)(2) for such month.
``(2) Special rule for partnerships.--In the case that the
qualified rural opportunity fund is a partnership, the penalty
imposed by paragraph (1) shall be taken into account
proportionately as part of the distributive share of each
partner of the partnership.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(b) Clerical Amendment.--The table of sections for subchapter Z of
chapter 1 is amended by adding at the end the following new item:
``Sec. 1400Z-3. Special rules for capital gains invested in rural
opportunity zones.''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts invested after the date of the enactment of this
section.
SEC. 7. REPORTING ON QUALIFIED OPPORTUNITY FUNDS AND QUALIFIED RURAL
OPPORTUNITY FUNDS.
(a) In General.--
(1) Filing requirements for funds and investors.--Subpart A
of part III of subchapter A of chapter 61 is amended by
inserting after section 6039J the following new sections:
``SEC. 6039K. RETURNS WITH RESPECT TO QUALIFIED OPPORTUNITY FUNDS AND
QUALIFIED RURAL OPPORTUNITY FUNDS.
``(a) In General.--Every qualified opportunity fund shall file an
annual return (at such time and in such manner as the Secretary may
prescribe) containing the information described in subsection (b).
``(b) Information From Qualified Opportunity Funds.--The
information described in this subsection is--
``(1) the name, address, and taxpayer identification number
of the qualified opportunity fund,
``(2) whether the qualified opportunity fund is organized
as a corporation or a partnership,
``(3) the value of the total assets held by the qualified
opportunity fund as of each date described in section 1400Z-
2(d)(1),
``(4) the value of all qualified opportunity zone property
held by the qualified opportunity fund on each such date,
``(5) with respect to each investment held by the qualified
opportunity fund in qualified opportunity zone stock or a
qualified opportunity zone partnership interest--
``(A) the name, address, and taxpayer
identification number of the corporation in which such
stock is held or the partnership in which such interest
is held, as the case may be,
``(B) each North American Industry Classification
System (NAICS) code that applies to the trades or
businesses conducted by such corporation or
partnership,
``(C) the population census tracts in which the
qualified opportunity zone business property of such
corporation or partnership is located,
``(D) the amount of the investment in such stock or
partnership interest as of each date described in
section 1400Z-2(d)(1),
``(E) the value of tangible property held by such
corporation or partnership on each such date which is
owned by such corporation or partnership,
``(F) the value of tangible property held by such
corporation or partnership on each such date which is
leased by such corporation or partnership,
``(G) the approximate number of residential units
(if any) for any real property held by such corporation
or partnership, and
``(H) the approximate average monthly number of
full-time equivalent employees of such corporation or
partnership for the year (within numerical ranges
identified by the Secretary) or such other indication
of the employment impact of such corporation or
partnership as determined appropriate by the Secretary,
``(6) with respect to the items of qualified opportunity
zone business property held by the qualified opportunity fund--
``(A) the North American Industry Classification
System (NAICS) code that applies to the trades or
businesses in which such property is held,
``(B) the population census tract in which the
property is located,
``(C) whether the property is owned or leased,
``(D) the aggregate value of the items of qualified
opportunity zone property held by the qualified
opportunity fund as of each date described in section
1400Z-2(d)(1), and
``(E) in the case of real property, number of
residential units (if any),
``(7) the approximate average monthly number of full-time
equivalent employees for the year of the trades or businesses
of the qualified opportunity fund in which qualified
opportunity zone business property is held (within numerical
ranges identified by the Secretary) or such other indication of
the employment impact of such trades or businesses as
determined appropriate by the Secretary,
``(8) with respect to each person who disposed of an
investment in the qualified opportunity fund during the year--
``(A) the name and taxpayer identification number
of such person,
``(B) the date or dates on which the investment
disposed was acquired, and
``(C) the date or dates on which any such
investment was disposed and the amount of the
investment disposed, and
``(9) such other information as the Secretary may require.
``(c) Statement Required to Be Furnished to Investors.--Every
person required to make a return under subsection (a) shall furnish to
each person whose name is required to be set forth in such return by
reason of subsection (b)(8) a written statement showing--
``(1) the name, address and phone number of the information
contact of the person required to make such return, and
``(2) the information required to be shown on such return
by reason of subsection (b)(8) with respect to the person whose
name is required to be so set forth.
``(d) Definitions.--For purposes of this section--
``(1) In general.--Any term used in this section which is
also used in subchapter Z of chapter 1 shall have the meaning
given such term under such subchapter.
``(2) Full-time equivalent employees.--The term `full-time
equivalent employees' means, with respect to any month, the sum
of--
``(A) the number of full-time employees (as defined
in section 4980H(c)(4)) for the month, plus
``(B) the number of employees determined (under
rules similar to the rules of section 4980H(c)(2)(E))
by dividing the aggregate number of hours of service of
employees who are not full-time employees for the month
by 120.
``(e) Application to Qualified Rural Opportunity Funds.--Every
qualified rural opportunity fund shall file the annual return required
under subsection (a), and the statements required under subsection (c),
applied--
``(1) by substituting `qualified rural opportunity' for
`qualified opportunity' each place it appears, and
``(2) by substituting `section 1400Z-3(d)(1)' for `section
1400Z-2(d)(1)' each place it appears.
``SEC. 6039L. INFORMATION REQUIRED FROM QUALIFIED OPPORTUNITY ZONE
BUSINESSES AND QUALIFIED RURAL OPPORTUNITY ZONE
BUSINESSES.
``(a) In General.--Every applicable qualified opportunity zone
business shall furnish to the qualified opportunity fund described in
subsection (b) a written statement in such manner and setting forth
such information as the Secretary may by regulations prescribe for
purposes of enabling such qualified opportunity fund to meet the
requirements of section 6039K(b)(5).
``(b) Applicable Qualified Opportunity Zone Business.--For purposes
of subsection (a), the term `applicable qualified opportunity zone
business' means any qualified opportunity zone business--
``(1) which is a trade or business of a qualified
opportunity fund,
``(2) in which a qualified opportunity fund holds qualified
opportunity zone stock, or
``(3) in which a qualified opportunity fund holds a
qualified opportunity zone partnership interest.
``(c) Other Terms.--Any term used in this section which is also
used in subchapter Z of chapter 1 shall have the meaning given such
term under such subchapter.
``(d) Application to Qualified Rural Opportunity Funds.--Every
qualified rural opportunity zone business (as defined in subsection (b)
determined after application of the substitutions described in this
sentence) shall furnish the written statement required under subsection
(a), applied by substituting `qualified rural opportunity' for
`qualified opportunity' each place it appears.''.
(2) Penalties.--
(A) In general.--Part II of subchapter B of chapter
68 is amended by inserting after section 6725 the
following new section:
``SEC. 6726. FAILURE TO COMPLY WITH INFORMATION REPORTING REQUIREMENTS
RELATING TO QUALIFIED OPPORTUNITY FUNDS AND QUALIFIED
RURAL OPPORTUNITY FUNDS.
``(a) In General.--In the case of any person required to file a
return under section 6039K fails to file a complete and correct return
under such section in the time and in the manner prescribed therefor,
such person shall pay a penalty of $500 for each day during which such
failure continues.
``(b) Limitation.--
``(1) In general.--The maximum penalty under this section
on failures with respect to any 1 return shall not exceed
$10,000.
``(2) Large qualified opportunity funds.--In the case of
any failure described in subsection (a) with respect to a fund
the gross assets of which (determined on the last day of the
taxable year) are in excess of $10,000,000, paragraph (1) shall
be applied by substituting `$50,000' for `$10,000'.
``(c) Penalty in Cases of Intentional Disregard.--If a failure
described in subsection (a) is due to intentional disregard, then--
``(1) subsection (a) shall be applied by substituting
`$2,500' for `$500',
``(2) subsection (b)(1) shall be applied by substituting
`$50,000' for `$10,000', and
``(3) subsection (b)(2) shall be applied by substituting
`$250,000' for `$50,000'.
``(d) Inflation Adjustment.--
``(1) In general.--In the case of any failure relating to a
return required to be filed in a calendar year beginning after
2023, each of the dollar amounts in subsections (a), (b), and
(c) shall be increased by an amount equal to such dollar amount
multiplied by the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year determined by
substituting `calendar year 2022' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--
``(A) In general.--If the $500 dollar amount in
subsection (a) and (c)(1) or the $2,500 amount in
subsection (c)(1), after being increased under
paragraph (1), is not a multiple of $10, such dollar
amount shall be rounded to the next lowest multiple of
$10.
``(B) Asset threshold.--If the $10,000,000 dollar
amount in subsection (b)(2), after being increased
under paragraph (1), is not a multiple of $10,000, such
dollar amount shall be rounded to the next lowest
multiple of $10,000.
``(C) Other dollar amounts.--If any dollar amount
in subsection (b) or (c) (other than any amount to
which subparagraph (A) or (B) applies), after being
increased under paragraph (1), is not a multiple of
$1,000, such dollar amount shall be rounded to the next
lowest multiple of $1,000.''.
(B) Information required to be sent to other
taxpayers.--Section 6724(d)(2) is amended--
(i) by striking ``or'' at the end of
subparagraph (II),
(ii) by striking the period at the end of
the first subparagraph (JJ) (relating to
section 6226) and inserting a comma,
(iii) by redesignating the second
subparagraph (JJ) (relating to section 6050Y)
as subparagraph (KK),
(iv) by striking the period at the end of
subparagraph (KK) (as redesignated by clause
(iii)) and inserting a comma, and
(v) by inserting after subparagraph (KK)
(as so redesignated) the following new
subparagraphs:
``(LL) section 6039K(c) (relating to disposition of
qualified opportunity fund investments), or
``(MM) section 6039L (relating to information
required from certain qualified opportunity zone
businesses and qualified rural opportunity zone
businesses).''.
(3) Electronic filing.--Section 6011(e) is amended by
adding at the end the following new paragraph:
``(8) Qualified opportunity funds and qualified rural
opportunity funds.--Notwithstanding paragraphs (1) and (2), any
return filed by a qualified opportunity fund or qualified rural
opportunity fund shall be filed on magnetic media or other
machine-readable form.''.
(4) Clerical amendments.--
(A) The table of sections for subpart A of part III
of subchapter A of chapter 61 is amended by inserting
after the item relating to section 6039J the following
new items:
``Sec. 6039K. Returns with respect to qualified opportunity funds and
qualified rural opportunity funds.
``Sec. 6039L. Information required from certain qualified opportunity
zone businesses and qualified rural
opportunity zone businesses.''.
(B) The table of sections for part II of subchapter
B of chapter 68 is amended by inserting after the item
relating to section 6725 the following new item:
``Sec. 6726. Failure to comply with information reporting requirements
relating to qualified opportunity funds and
qualified rural opportunity funds.''.
(5) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(b) Reporting of Data on Opportunity Zone and Rural Opportunity
Zone Tax Incentives.--
(1) In general.--As soon as practical after the date of the
enactment of this Act, and annually thereafter, the Secretary
of the Treasury, or the Secretary's delegate (referred to in
this section as the ``Secretary''), in consultation with the
Director of the Bureau of the Census and such other agencies as
the Secretary determines appropriate, shall make publicly
available a report on qualified opportunity funds.
(2) Information included.--The report required under
paragraph (1) shall include, to the extent available, the
following information:
(A) The number of qualified opportunity funds.
(B) The aggregate dollar amount of assets held in
qualified opportunity funds.
(C) The aggregate dollar amount of investments made
by qualified opportunity funds in qualified opportunity
fund property, stated separately for each North
American Industry Classification System (NAICS) code.
(D) The percentage of population census tracts
designated as qualified opportunity zones that have
received qualified opportunity fund investments.
(E) For each population census tract designated as
a qualified opportunity zone, the approximate average
monthly number of full-time equivalent employees of the
qualified opportunity zone businesses in such qualified
opportunity zone for the preceding 12-month period
(within numerical ranges identified by the Secretary)
or such other indication of the employment impact of
such qualified opportunity fund businesses as
determined appropriate by the Secretary.
(F) The percentage of the total amount of
investments made by qualified opportunity funds in--
(i) qualified opportunity zone property
which is real property; and
(ii) other qualified opportunity zone
property.
(G) For each population census tract, the aggregate
approximate number of residential units resulting from
investments made by qualified opportunity funds in real
property.
(H) The aggregate dollar amount of investments made
by qualified opportunity funds in each population
census tract.
(3) Additional information.--
(A) In general.--Beginning with the report
submitted under paragraph (1) for the 6th year after
the date of the enactment of this Act, the Secretary
shall include in such report the impacts and outcomes
of a designation of a population census tract as a
qualified opportunity zone as measured by economic
indicators, such as job creation, poverty reduction,
new business starts, and other metrics as determined by
the Secretary.
(B) Semi-decennial information.--
(i) In general.--In the case of any report
submitted under paragraph (1) in the 6th year
or the 11th year after the date of the
enactment of this Act, the Secretary shall
include the following information:
(I) For population census tracts
designated as a qualified opportunity
zone, a comparison (based on aggregate
information) of the factors listed in
clause (iii) between the 5-year period
ending on the date of the enactment of
Public Law 115-97 and the most recent
5-year period for which data is
available.
(II) For population census tracts
designated as a qualified opportunity
zone, a comparison (based on aggregate
information) of the factors listed in
clause (iii) for the most recent 5-year
period for which data is available
between such population census tracts
and a similar population census tracts
that were not designated as a qualified
opportunity zone.
(ii) Control groups.--For purposes of
clause (i), the Secretary may combine
population census tracts into such groups as
the Secretary determines appropriate for
purposes of making comparisons.
(iii) Factors listed.--The factors listed
in this paragraph are the following:
(I) The unemployment rate.
(II) The number of persons working
in the population census tract,
including the percentage of such
persons who were not residents in the
population census tract in the
preceding year.
(III) Individual, family, and
household poverty rates.
(IV) Median family income of
residents of the population census
tract.
(V) Demographic information on
residents of the population census
tract, including age, income,
education, race, and employment.
(VI) The average percentage of
income of residents of the population
census tract spent on rent annually.
(VII) The number of residences in
the population census tract.
(VIII) The rate of home ownership
in the population census tract.
(IX) The average value of
residential property in the population
census tract.
(X) The number of affordable
housing units in the population census
tract.
(XI) The number and percentage of
residents in the population census
tract that were not employed for the
preceding year.
(XII) The number of new business
starts in the population census tract.
(XIII) The distribution of
employees in the population census
tract by North American Industry
Classification System (NAICS) code.
(4) Protection of identifiable return information.--In
making reports required under this subsection, the Secretary--
(A) shall establish appropriate procedures to
ensure that any amounts reported do not disclose
taxpayer return information that can be associated with
any particular taxpayer or competitive or proprietary
information, and
(B) if necessary to protect taxpayer return
information, may combine information required with
respect to individual population census tracts into
larger geographic areas.
(5) Definitions.--Any term used in this subsection which is
also used in subchapter Z of chapter 1 of the Internal Revenue
Code of 1986 shall have the meaning given such term under such
subchapter.
(6) Reports on qualified rural opportunity funds.--The
Secretary shall make publicly available, with respect to
qualified rural opportunity funds, separate reports as required
under this subsection, applied--
(A) by substituting ``qualified rural opportunity''
for ``qualified opportunity'' each place it appears,
and
(B) by substituting ``the Small Business Jobs Act''
for ``Public Law 115-97''.
Union Calendar No. 100
118th CONGRESS
1st Session
H. R. 3937
[Report No. 118-128]
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to promote the establishment
and growth of small businesses.
_______________________________________________________________________
June 30, 2023
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed