Order Code RS21891
July 21, 2004
CRS Report for Congress
Received through the CRS Web
H.R. 4840, Tax Simplification for America’s
Job Creators Act of 2004, and H.R. 4841, Tax
Simplification for Americans Act of 2004
Erika Lunder
Legislative Attorney
American Law Division
Summary
The House of Representatives is expected to consider two tax simplification bills
that were introduced on July 15, 2004: H.R. 4840 (Crane) and H.R. 4841 (Burns). H.R.
4840, the Tax Simplification for America’s Job Creators Act of 2004, contains
provisions that are intended to assist business taxpayers. H.R. 4841, the Tax
Simplification for Americans Act of 2004, includes provisions aimed at simplifying tax
laws that apply to individuals. This report summarizes the provisions in each bill.
During the week of July 19, 2004, the House of Representatives is expected to
consider two bills that are intended to simplify the Internal Revenue Code (IRC). H.R.
4840, the Tax Simplification for America’s Job Creators Act of 2004, was introduced by
Representative Crane on July 15, 2004. The bill’s provisions address tax simplification
for business taxpayers. H.R. 4841, the Tax Simplification for Americans Act of 2004,
was introduced by Representative Burns on July 15, 2004. Its provisions are intended to
simplify various tax laws that affect individuals. This report summarizes the provisions
in each bill.1
H.R. 4840. The provisions in H.R. 4840 are intended to assist business taxpayers.
First, the bill would amend the expensing provisions in IRC § 179. Under current law,
certain business assets that would otherwise be depreciable are allowed to be deducted in
the year the property is placed in service (i.e., expensed). Special provisions apply for
taxable years 2002 to 2006 that allow taxpayers to claim larger deductions and increase
the number of taxpayers who qualify for the deduction. The bill would extend the
expiration date of these special provisions from 2006 to 2008.
Second, the bill would change the accounting rules in IRC § 448. Under current law,
taxpayers may use the cash method of accounting if they meet certain criteria. Eligible
1 The summaries are of the bill versions that were provided by the House of Representatives Bill
Clerk. The versions published by the Government Printing Office were not yet available.
Congressional Research Service ˜
The Library of Congress
CRS-2
taxpayers include businesses with average gross receipts over a three-year period of less
than $5,000,000. The bill would adjust the $5,000,000 limit for inflation.
Finally, the bill would remove various corporate tax provisions that are no longer
operative. This would include deleting references to repealed programs or acts,
eliminating transitional rules that are no longer applicable, and removing references to
dates that are sufficiently in the past that their inclusion in the statues would no longer
appear to be relevant. The bill would include a savings provision so that any amendment
removing a provision would generally be disregarded if it would affect the business’s
future tax liability as it relates to events that occurred before the bill’s enactment (e.g.,
liability relating to property acquired or transactions that occurred before the bill’s
enactment).
H.R. 4841. The provisions in H.R. 4841 are intended to simplify various tax laws
that apply to individual taxpayers. First, the bill would codify a rule for determining when
an individual attains his or her next age. Numerous provisions in the IRC use an
individual’s age as a criterion for eligibility or to determine whether the provision applies
to the taxpayer. In some situations, the Internal Revenue Service (IRS) determines that
an individual has attained an age according to his or her birthday;2 however, in other
situations, the IRS uses the common law rule that an individual attains an age on the day
before his or her birthday. The bill would generally require that the individual’s actual
birthday be used.
The bill would also rename the filing status of “head of household” to “single head
of household.” Another provision would allow more taxpayers to file tax returns using
the shorter versions of Form 1040 — Forms 1040EZ and 1040A. Currently, one reason
that a taxpayer will not qualify to file either short form is if he or she has more than
$50,000 in taxable income. The bill would increase the threshold to $100,000, and adjust
this amount for inflation.
Like H.R. 4840, H.R. 4841 includes numerous amendments that would delete
obsolete language in the IRC. H.R. 4841 would amend various IRC sections that affect
individual taxpayers by deleting references to repealed acts, eliminating inoperative
transitional rules, and removing references to dates that are no longer necessary. H.R.
4841 also includes a savings provision that is identical to that in H.R. 4840.
2
See Revenue Ruling 2003-72.