Startup Innovation Credit Act of 2014 - Amends the Internal Revenue Code to allow a qualified small business to elect to use a portion of its tax credit for increasing research expenditures as an offset against its payroll tax liability under the Federal Insurance Contributions Act (FICA).
Defines "qualified small business" as a corporation, a partnership, or a person other than a tax-exempt organization that had gross receipts of less than $5 million for the taxable year and that did not have gross receipts for any period preceding the five-taxable-year period ending with such taxable year.
Limits: (1) the number of years a taxpayer may elect to offset payroll taxes under this Act to five, and (2) the annual amount of such offset to $250,000.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4696 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4696
To amend the Internal Revenue Code of 1986 to provide for startup
businesses to use a portion of the research and development credit to
offset payroll taxes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 21, 2014
Mr. Gerlach (for himself, Mr. Kind, Mr. Kelly of Pennsylvania, and Mr.
Peters of Michigan) 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 provide for startup
businesses to use a portion of the research and development credit to
offset payroll taxes.
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 ``Startup Innovation Credit Act of
2014''.
SEC. 2. TREATMENT OF RESEARCH CREDIT FOR CERTAIN STARTUP COMPANIES.
(a) In General.--Section 41 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:
``(i) Treatment of Credit for Qualified Small Businesses.--
``(1) In general.--At the election of a qualified small
business for any taxable year, section 3111(f) shall apply to
the payroll tax credit portion of the credit otherwise
determined under subsection (a) for the taxable year and such
portion shall not be treated (other than for purposes of
section 280C) as a credit determined under subsection (a).
``(2) Payroll tax credit portion.--For purposes of this
subsection, the payroll tax credit portion of the credit
determined under subsection (a) with respect to any qualified
small business for any taxable year is the least of--
``(A) the amount specified in the election made
under this subsection,
``(B) the credit determined under subsection (a)
for the taxable year (determined before the application
of this subsection), or
``(C) in the case of a qualified small business
other than a partnership or S corporation, the amount
of the business credit carryforward under section 39
carried from the taxable year (determined before the
application of this subsection to the taxable year).
``(3) Qualified small business.--For purposes of this
subsection--
``(A) In general.--The term `qualified small
business' means, with respect to any taxable year--
``(i) a corporation or partnership, if--
``(I) the gross receipts (as
determined under the rules of section
448(c)(3), without regard to
subparagraph (A) thereof) of such
entity for the taxable year is less
than $5,000,000, and
``(II) such entity did not have
gross receipts (as so determined) for
any taxable year preceding the 5-
taxable-year period ending with such
taxable year, and
``(ii) any person (other than a corporation
or partnership) who meets the requirements of
subclauses (I) and (II) of clause (i),
determined--
``(I) by substituting `person' for
`entity' each place it appears, and
``(II) by only taking into account
the aggregate gross receipts received
by such person in carrying on all
trades or businesses of such person.
``(B) Limitation.--Such term shall not include an
organization which is exempt from taxation under
section 501.
``(4) Election.--
``(A) In general.--Any election under this
subsection for any taxable year--
``(i) shall specify the amount of the
credit to which such election applies,
``(ii) shall be made on or before the due
date (including extensions) of--
``(I) in the case of a qualified
small business which is a partnership,
the return required to be filed under
section 6031,
``(II) in the case of a qualified
small business which is an S
corporation, the return required to be
filed under section 6037, and
``(III) in the case of any other
qualified small business, the return of
tax for the taxable year, and
``(iii) may be revoked only with the
consent of the Secretary.
``(B) Limitations.--
``(i) Amount.--The amount specified in any
election made under this subsection shall not
exceed $250,000.
``(ii) Number of taxable years.--A person
may not make an election under this subsection
if such person (or any other person treated as
a single taxpayer with such person under
paragraph (5)(A)) has made an election under
this subsection for 5 or more preceding taxable
years.
``(C) Special rule for partnerships and s
corporations.--In the case of a qualified small
business which is a partnership or S corporation, the
election made under this subsection shall be made at
the entity level.
``(5) Aggregation rules.--
``(A) In general.--Except as provided in
subparagraph (B), all persons or entities treated as a
single taxpayer under subsection (f)(1) shall be
treated as a single taxpayer for purposes of this
subsection.
``(B) Special rules.--For purposes of this
subsection and section 3111(f)--
``(i) each of the persons treated as a
single taxpayer under subparagraph (A) may
separately make the election under paragraph
(1) for any taxable year, and
``(ii) the $250,000 amount under paragraph
(4)(B)(i) shall be allocated among all persons
treated as a single taxpayer under subparagraph
(A) in the same manner as under subparagraph
(A)(ii) or (B)(ii) of subsection (f)(1),
whichever is applicable.
``(6) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection, including--
``(A) regulations to prevent the avoidance of the
purposes of the limitations and aggregation rules under
this subsection through the use of successor companies
or other means,
``(B) regulations to minimize compliance and
recordkeeping burdens under this subsection, and
``(C) regulations for recapturing the benefit of
credits determined under section 3111(f) in cases where
there is a subsequent adjustment to the payroll tax
credit portion of the credit determined under
subsection (a), including requiring amended income tax
returns in the cases where there is such an
adjustment.''.
(b) Credit Allowed Against FICA Taxes.--Section 3111 of such Code
is amended by adding at the end the following new subsection:
``(f) Credit for Research Expenditures of Qualified Small
Businesses.--
``(1) In general.--In the case of a taxpayer who has made
an election under section 41(i) for a taxable year, there shall
be allowed as a credit against the tax imposed by subsection
(a) for the first calendar quarter which begins after the date
on which the taxpayer files the return specified in section
41(i)(4)(A)(ii) an amount equal to the payroll tax credit
portion determined under section 41(i)(2).
``(2) Limitation.--The credit allowed by paragraph (1)
shall not exceed the tax imposed by subsection (a) for any
calendar quarter on the wages paid with respect to the
employment of all individuals in the employ of the employer.
``(3) Carryover of unused credit.--If the amount of the
credit under paragraph (1) exceeds the limitation of paragraph
(2) for any calendar quarter, such excess shall be carried to
the succeeding calendar quarter and allowed as a credit under
paragraph (1) for such quarter.
``(4) Deduction allowed for credited amounts.--The credit
allowed under paragraph (1) shall not be taken into account for
purposes of determining the amount of any deduction allowed
under chapter 1 for taxes imposed under subsection (a).''.
(c) Effective Date.--The amendments made by this section shall
apply to credits determined for taxable years beginning after December
31, 2013.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line