Furthering Our Recovery With American Research & Development Act or the FORWARD Act
This bill makes several changes to the income tax credit for business expenses for increasing research activities.
Specifically, the bill
The bill appropriates to the Social Security trust funds amounts equal to the reduction in revenues from payroll taxes by reason of this bill.
The Internal Revenue Service (IRS) shall develop partnership agreements to provide for development of basic training relating to federal tax credits benefitting small business concerns and startups, especially credits for research and experimentation, and informational materials relating to such credits, including IRS guidance documents.
Small business development centers shall provide informational materials, education, and basic training to small business concerns relating to federal tax credits, including those available to (1) businesses generally; and (2) small business concerns and startups specifically, especially credits for research and experimentation.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6713 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 6713
To amend the Internal Revenue Code of 1986 to expand and modify the
credit for increasing research activities, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 5, 2020
Ms. DelBene (for herself and Mrs. Walorski) introduced the following
bill; which was referred to the Committee on Ways and Means, and in
addition to the Committee on Small Business, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand and modify the
credit for increasing research activities, and for other purposes.
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 ``Furthering Our Recovery With
American Research & Development Act'' or the ``FORWARD Act''.
SEC. 2. TREATMENT OF CREDIT FOR QUALIFIED SMALL BUSINESSES.
(a) Gross Receipts Test.--
(1) In general.--Clause (i) of section 41(h)(3)(A) of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``$5,000,000'' in subclause (I) and
inserting ``$20,000,000''; and
(B) by striking ``gross receipts'' in subclause
(II) and inserting ``gross receipts in excess of
$25,000''.
(2) Definition of gross receipts.--
(A) In general.--Clause (i) of section
41(h)(3)(A)(i) of such Code, as amended by paragraph
(1), is further amended--
(i) by striking ``(as determined under the
rules of section 448(c)(3), without regard to
subparagraph (A) thereof)'' in subclause (I);
and
(ii) by striking ``(as so determined)'' in
subclause (II).
(B) Definition.--Subparagraph (A) of section
41(h)(3) of such Code, as so amended, is further
amended by adding at the end the following flush
sentence:
``For purposes of the preceding sentence, gross
receipts shall be determined under the rules of section
448(c)(3) without regard to subparagraph (A) thereof,
except that such term shall not include any
contributions to the capital of a corporation (other
than contributions by a shareholder) or any amount
described in section 118(b) (other than receipts from
customers in exchange for goods or services).''.
(b) Startup Date.--Subclause (II) of section 41(h)(3)(A)(i) of the
Internal Revenue Code of 1986 is amended by striking ``5-taxable-year
period'' and inserting ``8-taxable-year period''.
(c) Limitation on Election Amount.--Clause (i) of section
41(h)(4)(B) of the Internal Revenue Code of 1986 is amended by striking
``$250,000'' and inserting ``$1,000,000''.
(d) Limitation on Election.--Clause (ii) of section 41(h)(4)(B) of
the Internal Revenue Code of 1986 is amended by striking ``5 or more''
and inserting ``8 or more''.
(e) Payroll Tax Credit Portion.--Paragraph (2) of section 41(h) of
the Internal Revenue Code of 1986 is amended--
(1) by striking subparagraph (C);
(2) by adding ``or'' at the end of subparagraph (A); and
(3) by striking ``, or'' at the end of subparagraph (B) and
inserting a period.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 3. INCLUSION OF EMPLOYEE TRAINING EXPENSES.
(a) In General.--Paragraph (1) of section 41(b) of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by striking the period at the end of subparagraph (B)
and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(C) employee training expenses.''.
(b) Employee Training Expenses.--Subsection (b) of section 41 of
the Internal Revenue Code of 1986 is amended--
(1) by redesignating paragraph (4) as paragraph (5); and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) Employee training expenses.--
``(A) In general.--The term `employee training
expenses' means any wages paid or incurred to an
employee in connection with training for the employee
to perform qualified services described in clause (i)
or (ii) of paragraph (2)(B). Such term does not include
wages paid or incurred in connection with general
employer training which does not specifically pertain
to such qualified services.
``(B) Wages, etc.--For purposes of this paragraph--
``(i) In general.--The term `wages' shall
not include any amount taken into account under
paragraph (2)(A)(i).
``(ii) Rules.--The rules of paragraph
(2)(D) shall apply.''.
(c) Effective Date.--The amendments made by this section shall
apply to expenses paid or incurred in taxable years beginning after
December 31, 2019.
SEC. 4. INCREASED CREDIT RATE FOR CERTAIN RESEARCH ACTIVITIES.
(a) In General.--Section 41 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:
``(i) Special Rules for Certain High-Benefit Research Activities.--
``(1) Certain collaborative research.--
``(A) In general.--In the case of any qualified
research expenses described in subparagraph (B), as
applicable--
``(i) subsection (a)(1) shall be applied by
substituting `25 percent' for `20 percent',
``(ii) subsection (c)(4)(A) shall be
applied by substituting `17.5 percent' for `14
percent', and
``(iii) subsection (c)(4)(B)(ii) shall be
applied by substituting `7.5 percent' for `6
percent'.
``(B) Expenses described.--
``(i) In general.--Qualified research
expenses described in this subparagraph are
qualified research expenses incurred by the
taxpayer with respect to qualified research in
collaboration with one or more other entities,
which may include a qualified organization
described in subparagraph (A), (B), or (C) of
subsection (e)(6), an organization which is a
Federal laboratory (within the meaning of
subsection (b)(3)(D)(i)(III)), or a qualified
research consortium (as defined in subsection
(b)(3)(C)(ii)).
``(ii) Contribution requirement.--A
collaboration shall be taken into account under
clause (i) only if each entity involved in the
collaboration provides or performs more than
\1/2\ of its pro rata share of the work hours
for the research.
``(2) Research by united states manufacturers.--
``(A) In general.--In the case of a qualified
domestic manufacturer, this section shall be applied--
``(i) by increasing the 20 percent amount
in subsection (a)(1) by the bonus amount,
``(ii) by increasing the 14 percent amount
under subsection (c)(4)(A) by the alternative
simplified bonus amount, and
``(iii) by increasing the 6 percent amount
under subsection (c)(4)(B)(ii) by the
subsection (c)(4)(B) bonus amount.
``(B) Qualified domestic manufacturer.--For
purposes of this subsection--
``(i) In general.--The term `qualified
domestic manufacturer' means a taxpayer who has
domestic production gross receipts which are
more than 50 percent of total gross receipts.
``(ii) Domestic production gross
receipts.--The term `domestic production gross
receipts' has the meaning given to such term
under section 199(c)(4) (as in effect on
December 31, 2017).
``(C) Bonus amount; alternative simplified bonus
amount; subsection (c)(4)(B) amount.--For purposes of
subparagraph (A):
The subsection
The alternative (c)(4)(B) bonus
``If the percentage of total gross The bonus amount is the simplified bonus amount amount is the
receipts which are domestic following number of is the following following number
production gross receipts is: percentage points: number of percentage of percentage
points: points:
More than 50% but not more than 60%... 1 0.7 0.3
More than 60% but not more than 70%... 2 1.4 0.6
More than 70% but not more than 80%... 3 2.1 0.9
More than 80% but not more than 90%... 4 2.8 1.2
More than 90%......................... 5 3.5 1.5.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2020.
SEC. 5. TRANSFERS TO FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST
FUND.
There are hereby appropriated to the Federal Old-Age and Survivors
Trust Fund and the Federal Disability Insurance Trust Fund established
under section 201 of the Social Security Act (42 U.S.C. 401) amounts
equal to the reduction in revenues to the Treasury from the taxes under
section 3111(a) of the Internal Revenue Code of 1986 by reason of the
amendments made by sections 2, 3, and 4. Amounts appropriated by the
preceding sentence shall be transferred from the general fund at such
times and in such manner as to replicate to the extent possible the
transfers which would have occurred to such Trust Fund had such
amendments not been enacted.
SEC. 6. SUPPORT FOR SMALL BUSINESS RESEARCH AND DEVELOPMENT.
(a) Definitions.--In this section--
(1) the term ``Administrator'' means the Administrator of
the Small Business Administration;
(2) the term ``Commissioner'' means the Commissioner of
Internal Revenue;
(3) the term ``small business concern'' has the meaning
given the term in section 3(a) of the Small Business Act (15
U.S.C. 632(a)); and
(4) the term ``small business development center'' means a
small business development center described in section 21 of
the Small Business Act (15 U.S.C. 648).
(b) IRS and SBA Partnerships.--Beginning not later than 180 days
after the date of enactment of this Act, the Commissioner, in
consultation with the Administrator, shall develop partnership
agreements that--
(1) provide for the development of--
(A) basic training, including in-person or modular
training sessions, relating to Federal income tax
credits that benefit small business concerns and
startups, especially credits for research and
experimentation; and
(B) informational materials relating to such
credits, including Internal Revenue Service guidance
documents;
(2) provide the basic training and informational materials
developed under paragraph (1)--
(A) through electronic resources, including
internet-based webinars; and
(B) at physical locations, including small business
development centers; and
(3) make such materials available to--
(A) business development programs administered by
the Small Business Administration, including women's
business centers, Veteran Business Outreach Centers,
and U.S. Export Assistance Centers, and nonprofit
research partners such as the Service Corps of Retired
Executives authorized under section 8(b)(1)(B) of the
Small Business Act (15 U.S.C. 637(b)(1)(B)); and
(B) business development entities that partner with
Small Business Administration programs, including
universities, nonprofits, business incubators, and
business accelerators.
(c) Reporting Requirement.--Not later than 180 days after the date
of enactment of this Act, the Commissioner, in consultation with the
Administrator, shall submit to Congress a report describing how the
Internal Revenue Service in partnership with the Small Business
Administration will provide outreach and educational materials to small
business concerns, businesses of medium size, and startups regarding
section 41(h) of the Internal Revenue Code of 1986.
(d) Small Business Development Centers.--Section 21(c)(3) of the
Small Business Act (15 U.S.C. 648(c)(3)) is amended--
(1) in subparagraph (T), by striking ``and'' at the end;
(2) in the first subparagraph (U) (relating to encouraging
and assisting the provision of succession planning), by
striking the period at the end of clause (v) and inserting a
semicolon;
(3) in the second subparagraph (U) (relating to providing
training in conjunction with the United States Patent and
Trademark Office)--
(A) by redesignating that subparagraph as
subparagraph (V); and
(B) in clause (ii)(II), by striking the period at
the end and inserting ``; and''; and
(4) by adding at the end the following:
``(W) in conjunction with the Internal Revenue
Service, providing informational materials, education,
and basic training--
``(i) to small business concerns relating
to Federal income tax credits available under
the Internal Revenue Code of 1986, including--
``(I) credits available to
businesses generally; and
``(II) credits available to small
business concerns and startups
specifically, especially credits for
research and experimentation; and
``(ii) that may be delivered--
``(I) in person; or
``(II) through a website.''.
(e) Authorization of Appropriations.--There are authorized to be
appropriated $2,000,000 per year to carry out the requirements of this
section.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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