II 111th CONGRESS 2d Session S. 3018 IN THE SENATE OF THE UNITED STATES February 23, 2010 Mr. Wyden (for himself and Mr. Gregg) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to make the Federal income tax system simpler, fairer, and more fiscally responsible, and for other purposes.

1.

Short title; amendment of 1986 Code; table of contents

(a)

Short Title

This Act may be cited as the Bipartisan Tax Fairness and Simplification Act of 2010. (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; amendment of 1986 Code; table of contents. Sec. 2. Purpose. TITLE I—Individual income tax reforms Sec. 101. 3 progressive individual income tax rates. Sec. 102. Increase in basic standard deduction. Sec. 103. Permanent extension of expansion of earned income credit. Sec. 104. Permanent extension of expansion of dependent care credit. Sec. 105. Permanent extension of child tax credit. Sec. 106. Permanent repeal of limitations on personal exemptions and itemized deductions. Sec. 107. Elimination of individual miscellaneous itemized deductions. Sec. 108. Treatment of capital gains. Sec. 109. Partial exclusion of dividends received by individuals. Sec. 110. Nonrefundable personal credit for interest on State and local bonds. Sec. 111. Retirement savings accounts. Sec. 112. Lifetime Savings Accounts. Sec. 113. Consolidation of tax credits and deductions for education expenses. Sec. 114. Termination of various exclusions, exemptions, deductions, and credits. Sec. 115. Simplified tax return preparation. TITLE II—Corporate and business income tax reforms Sec. 201. Corporate flat tax. Sec. 202. Treatment of travel on corporate aircraft. Sec. 203. Unlimited expensing of depreciable assets and inventories for certain small businesses. Sec. 204. Termination of various preferential treatments. Sec. 205. Pass-through business entity transparency. Sec. 206. Modification of effective date of leasing provisions of the American Jobs Creation Act of 2004. Sec. 207. Revaluation of LIFO inventories of large integrated oil companies. Sec. 208. Modifications of foreign tax credit rules applicable to large integrated oil companies which are dual capacity taxpayers. Sec. 209. Repeal of lower of cost or market value of inventory rule. Sec. 210. Reinstitution of per country foreign tax credit. Sec. 211. Application of rules treating inverted corporations as domestic corporations to certain transactions occurring after March 20, 2002. Sec. 212. Indexing corporate interest deduction for inflation. Sec. 213. Prohibition of advance refunding of bonds. Sec. 214. CBO study on government spending on businesses. TITLE III—Repeal of alternative minimum tax Sec. 301. Repeal of alternative minimum tax. TITLE IV—Other provisions Subtitle A—Improvements in tax compliance Sec. 401. Information reporting on payments to corporations. Sec. 402. Additional reporting requirements by regulation. Sec. 403. Increase in information return penalties. Sec. 404. E-filing requirement for certain large organizations. Sec. 405. Implementation of standards clarifying when employee leasing companies can be held liable for their clients' Federal employment taxes. Sec. 406. Expansion of IRS access to information in National Directory of New Hires for tax administration purposes. Sec. 407. Modification of criminal penalties for willful failures involving tax payments and filing requirements. Sec. 408. Penalties for failure to file certain returns electronically. Sec. 409. Reporting on identification of beneficial owners of certain foreign financial accounts. Subtitle B—Requiring economic substance Sec. 411. Clarification of economic substance doctrine. Sec. 412. Penalty for understatements attributable to transactions lacking economic substance, etc. Sec. 413. Denial of deduction for interest on underpayments attributable to noneconomic substance transactions. Subtitle C—Internet gambling taxation and regulation Sec. 421. Tax on Internet gambling; licensee information reporting. Sec. 422. Withholding from certain gambling winnings. Sec. 423. Withholding of tax on nonresident aliens. Sec. 424. Territorial extent. Sec. 425. Federal licensing requirement for Internet gambling operators. Sec. 426. Report required. Sec. 427. Effective date. Subtitle D—Miscellaneous Sec. 431. Denial of deduction for punitive damages. Sec. 432. Application of medicare payroll tax to all State and local government employees. Sec. 433. Corrections for CPI overstatement in cost-of-living indexation. TITLE V—Technical and conforming amendments Sec. 501. Technical and conforming amendments.

2.

Purpose

The purpose of this Act is to amend the Internal Revenue Code of 1986— (1)to make the Federal individual income tax system simpler, fairer, and more transparent by, among other reforms— (A)repealing the individual alternative minimum tax, (B)increasing the basic standard deduction and maintaining itemized deductions for mortgage interest and charitable contributions, and (C)reducing the number of exclusions, exemptions, deductions, and credits, (2)to make the Federal corporate income tax rate a flat 24 percent, repeal the corporate alternative minimum tax, and eliminate special tax preferences that favor particular types of businesses or activities, and (3)to partially offset the Federal budget deficit through the increased fiscal responsibility resulting from these reforms.