[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2490 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 2490

   To amend the Internal Revenue Code of 1986 to allow certain small 
                  businesses to defer payment of tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 19, 2009

   Mr. Kennedy (for himself, Mr. Kagen, and Mr. Patrick J. Murphy of 
Pennsylvania) 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 certain small 
                  businesses to defer payment of tax.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Generating Reinvestment 
Opportunities With America's Small Businesses Act of 2009'' or the 
``GROW America's Small Businesses Act of 2009''.

SEC. 2. DEFERRED PAYMENT OF TAX BY CERTAIN SMALL BUSINESSES.

    (a) In General.--Subchapter B of chapter 62 of the Internal Revenue 
Code of 1986 (relating to extensions of time for payment of tax) is 
amended by adding at the end the following new section:

``SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF TAX FOR CERTAIN SMALL 
              BUSINESSES.

    ``(a) In General.--An eligible small business may elect to pay the 
tax imposed by chapter 1 in 4 equal installments.
    ``(b) Limitation.--The maximum amount of tax which may be paid in 
installments under this section for any taxable year shall not exceed 
whichever of the following is the least:
            ``(1) The tax imposed by chapter 1 for the taxable year.
            ``(2) The amount contributed by the taxpayer into a GROW 
        Account during such year.
            ``(3) The excess of $275,000 over the aggregate amount of 
        tax for which an election under this section was made by the 
        taxpayer (or any predecessor) for all prior taxable years.
    ``(c) Eligible Small Business.--For purposes of this section--
            ``(1) In general.--The term `eligible small business' 
        means, with respect to any taxable year, any person if--
                    ``(A) such person meets the active business 
                requirements of section 1202(e) throughout such taxable 
                year,
                    ``(B) the taxpayer has gross receipts of 
                $12,000,000 or less for the taxable year,
                    ``(C) the gross receipts of the taxpayer for such 
                taxable year are at least 10 percent greater than the 
                average annual gross receipts of the taxpayer (or any 
                predecessor) for the 2 prior taxable years, and
                    ``(D) the taxpayer uses an accrual method of 
                accounting.
            ``(2) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (2) and (3) of section 448(c) shall apply for 
        purposes of this subsection.
    ``(d) Date for Payment of Installments; Interest.--
            ``(1) Date for payment of installments.--
                    ``(A) In general.--If an election is made under 
                this section for any taxable year, the first 
                installment shall be paid on or before the due date for 
                such installment and each succeeding installment shall 
                be paid on or before the date which is 1 year after the 
                date prescribed by this paragraph for payment of the 
                preceding installment.
                    ``(B) Due date for first installment.--The due date 
                for the first installment for a taxable year shall be 
                whichever of the following is the earliest:
                            ``(i) The date selected by the taxpayer.
                            ``(ii) The date which is 2 years after the 
                        date prescribed by section 6151(a) for payment 
                        of the tax for such taxable year.
                    ``(C) Additional deferral where employment 
                increases.--
                            ``(i) In general.--Subparagraph (B)(ii) 
                        shall be applied by substituting `3 years' for 
                        `2 years' in the case of an eligible small 
                        business which meets the employment increase 
                        requirement of clause (ii) for the second 
                        taxable year following the taxable year for 
                        which the election is made.
                            ``(ii) Employment increase requirement.--
                        The employment increase requirement of this 
                        clause is met for such second taxable year if 
                        the average daily number of full-time employees 
                        of such business for the last calendar quarter 
                        ending in such taxable year is at least 10 
                        percent greater than such average number for 
                        the last calendar quarter ending before the 
                        date that the GROW Account of such business is 
                        established. For purposes of this clause, an 
                        employee shall be considered full-time if such 
                        employee is employed at least 35 hours per 
                        week.
                            ``(iii) Salary maintenance of called-up 
                        reservist treated as employment increase.--For 
                        purposes of clause (ii), an eligible small 
                        business shall be treated as having an 
                        additional full-time employee for any period 
                        for each employee who is a Ready Reserve/
                        National Guard employee of such business 
                        serving on qualified active duty for such 
                        period if the compensation paid or incurred by 
                        such business to such employee for such period 
                        is not less than the active duty wage 
                        differential of such employee for such period. 
                        For the definition of terms used in this 
                        clause, see subsection (g).
            ``(2) Interest.--For purposes of determining interest under 
        section 6601, if the time for payment of an amount of tax has 
        been extended under this section, the due date prescribed for 
        payment of such tax which is to be paid in an installment under 
        this section shall be the due date for such installment.
    ``(e) Special Rules.--
            ``(1) Application of limitation to partners and s 
        corporation shareholders.--
                    ``(A) In general.--In applying this section to a 
                partnership which is an eligible small business--
                            ``(i) the election under subsection (a) 
                        shall be made by the partnership,
                            ``(ii) the amount referred to in subsection 
                        (b)(1) shall be the sum of each partner's tax 
                        which is attributable to items of the 
                        partnership and assuming the highest marginal 
                        rate under section 1, and
                            ``(iii) the partnership shall be treated as 
                        the taxpayer referred to in paragraphs (2) and 
                        (3) of subsection (b).
                    ``(B) Overall limitation also applied at partner 
                level.--In the case of a partner in a partnership, the 
                limitation under subsection (b)(3) shall be applied at 
                the partnership and partner levels.
                    ``(C) Similar rules for s corporations.--Rules 
                similar to the rules of subparagraphs (A) and (B) shall 
                apply to shareholders in an S corporation.
            ``(2) Acceleration of payment in certain cases.--
                    ``(A) In general.--If--
                            ``(i) the taxpayer ceases to meet the 
                        requirement of subsection (c)(1)(A), or
                            ``(ii) there is an ownership change with 
                        respect to the taxpayer,
                then the extension of time for payment of tax provided 
                in subsection (a) shall cease to apply, and the unpaid 
                portion of the tax payable in installments shall be 
                paid on or before the due date for filing the return of 
                tax imposed by chapter 1 for the first taxable year 
                following such cessation.
                    ``(B) Ownership change.--For purposes of 
                subparagraph, in the case of a corporation, the term 
                `ownership change' has the meaning given to such term 
                by section 382. Rules similar to the rules applicable 
                under the preceding sentence shall apply to a 
                partnership.
            ``(3) Proration of deficiency to installments.--Rules 
        similar to the rules of section 6166(e) shall apply for 
        purposes of this section.
    ``(f) GROW Account.--For purposes of this section--
            ``(1) In general.--The term `GROW Account' means a trust 
        created or organized in the United States for the exclusive 
        benefit of an eligible small business, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    ``(A) No contribution will be accepted for any 
                taxable year in excess of the amount allowed as a 
                deferral under subsection (b) for such year.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) The assets of the trust consist entirely of 
                cash or of obligations which have adequate stated 
                interest (as defined in section 1274(c)(2)) and which 
                pay such interest not less often than annually.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) Amounts in the trust may be used only--
                            ``(i) as security for a loan to the 
                        business or for repayment of such loan, or
                            ``(ii) to pay the installments under this 
                        section.
            ``(2) Account taxed as grantor trust.--The grantor of a 
        GROW Account shall be treated for purposes of this title as the 
        owner of such Account and shall be subject to tax thereon in 
        accordance with subpart E of part I of subchapter J of this 
        chapter (relating to grantors and others treated as substantial 
        owners).
            ``(3) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to a 
        GROW Account on the last day of a taxable year if such payment 
        is made on account of such taxable year and is made within 3\1/
        2\ months after the close of such taxable year.
    ``(g) Definitions Relating to Salary Maintenance of Called-Up 
Reservists.--For purposes of subsection (d)(1)(C)(iii)--
            ``(1) Ready reserve/national guard employee.--
                    ``(A) In general.--The term `Ready Reserve/National 
                Guard employee' means any employee--
                            ``(i) who is a member of the Ready Reserve 
                        or of the National Guard, and
                            ``(ii) who was an employee of the taxpayer 
                        during the 1-year period ending on the day 
                        before the date that the employee begins 
                        qualified active duty.
                    ``(B) National guard.--The term `National Guard' 
                has the meaning given such term by section 101(c)(1) of 
                title 10, United States Code.
                    ``(C) Ready reserve.--The term `Ready Reserve' has 
                the meaning given such term by section 10142 of title 
                10, United States Code.
            ``(2) Qualified active duty.--The term `qualified active 
        duty' means--
                    ``(A) active duty under an order or call for a 
                period in excess of 90 days or for an indefinite 
                period, other than the training duty specified in--
                            ``(i) section 10147 of title 10, United 
                        States Code (relating to training requirements 
                        for the Ready Reserve), or
                            ``(ii) section 502(a) of title 32, United 
                        States Code (relating to required drills and 
                        field exercises for the National Guard),
                in connection with which an employee is entitled to 
                reemployment rights and other benefits or to a leave of 
                absence from employment under chapter 43 of title 38, 
                United States Code, and
                    ``(B) hospitalization incident to such active duty.
            ``(3) Active duty wage differential.--
                    ``(A) In general.--The active duty wage 
                differential of a Ready Reserve/National Guard employee 
                for any period of qualified active duty is the amount 
                equal to the product of--
                            ``(i) the daily wage differential of such 
                        employee for such period, multiplied by
                            ``(ii) the number of days that such 
                        employee is on qualified active duty during 
                        such period.
                    ``(B) Daily wage differential.--For purposes of 
                subparagraph (A), the daily wage differential of a 
                Ready Reserve/National Guard employee for any period is 
                an amount equal to the excess of--
                            ``(i) such employee's average daily 
                        employer-provided compensation for such period, 
                        over
                            ``(ii) such employee's average daily 
                        military pay for such period.
                    ``(C) Average daily employer-provided 
                compensation.--
                            ``(i) In general.--For purposes of 
                        subparagraph (B), an employee's average daily 
                        employer-provided compensation for any period 
                        is the average daily compensation paid by the 
                        employer to the employee for the 1-year period 
                        ending on the day before the date that the 
                        employee begins qualified active duty, adjusted 
                        for cost-of-living and other increases 
                        generally applicable to employees of the 
                        employer for such period.
                            ``(ii) Employer-provided compensation.--The 
                        term `compensation' means any remuneration for 
                        employment, whether in cash or in kind, which 
                        is allowable as a deduction under section 
                        162(a)(1).
                    ``(D) Average daily military pay.--
                            ``(i) In general.--For purposes of 
                        subparagraph (B), a Ready Reserve/National 
                        Guard employee's average daily military pay is 
                        the average daily military pay and allowances 
                        received by the employee on account of the 
                        employee's performance of qualified active duty 
                        during the period.
                            ``(ii) Military pay and allowances.--For 
                        purposes of clause (i)--
                                    ``(I) Military pay.--The term 
                                `military pay' means pay (as defined in 
                                section 101(21) of title 37, United 
                                States Code).
                                    ``(II) Allowances.--The term 
                                `allowances' means the allowances 
                                payable to a member of the Armed Forces 
                                of the United States under chapter 7 of 
                                such title.
    ``(h) Reports.--The Secretary may require such reporting as the 
Secretary determines to be appropriate to carry out this section.
    ``(i) Application of Section.--This section shall apply to taxes 
imposed for taxable years beginning after the date of the enactment of 
this section and before January 1, 2011.''.
    (b) Priority of Lender.--Subsection (b) of section 6323 of such 
Code is amended by adding at the end the following new paragraph:
            ``(11) Loans secured by grow accounts.--With respect to a 
        GROW account (as defined in section 6168(f)) with any bank (as 
        defined in section 408(n)), to the extent of any loan made by 
        such bank without actual notice or knowledge of the existence 
        of such lien, as against such bank, if such loan is secured by 
        such account.''.
    (c) Clerical Amendment.--The table of sections for subchapter B of 
chapter 62 of such Code is amended by adding at the end the following 
new item:

``Sec. 6168. Extension of time for payment of tax for certain small 
                            businesses.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
    (e) Study by General Accounting Office.--
            (1) Study.--In consultation with the Secretary of the 
        Treasury, the Comptroller General of the United States shall 
        undertake a study to evaluate the applicability (including 
        administrative aspects) and impact of the GROW America's Small 
        Businesses Act of 2009, including how it affects the capital 
        funding needs of businesses under the Act and number of 
        businesses benefitting.
            (2) Report.--Not later than March 31, 2011, the Comptroller 
        General shall transmit to the Committee on Ways and Means of 
        the House of Representatives and the Committee on Finance of 
        the Senate a written report presenting the results of the study 
        conducted pursuant to this subsection, together with such 
        recommendations for legislative or administrative changes as 
        the Comptroller General determines are appropriate.
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