[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