Innovation and Growth Now by Investing in Tomorrow's Enterprises Act or the IGNITE American Innovation Act
This bill allows certain C corporation taxpayers to elect an increased advance refund of net operating loss carryovers attributable to COVID-19 (i.e., coronavirus disease 2019) research expenditures in 2020 and 2021. The bill also allows such taxpayers an advance refund of certain other net operating loss carryovers arising during 2015 through 2021.
The bill allows an increased research tax credit for COVID-19 research expenditures paid or incurred on or after February 15, 2020, and before January 1, 2022.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7917 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 7917
To amend the Internal Revenue Code of 1986 to provide for advance
refunds of certain net operating losses and research expenditures
relating to COVID-19, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 31, 2020
Mr. Phillips (for himself and Mrs. Walorski) 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 advance
refunds of certain net operating losses and research expenditures
relating to COVID-19, 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 ``Innovation and Growth Now by
Investing in Tomorrow's Enterprises Act'' or the ``IGNITE American
Innovation Act''.
SEC. 2. ADVANCE REFUNDS OF NET OPERATING LOSSES FOR C CORPORATION
TAXPAYERS.
(a) In General.--
(1) Net operating loss carryovers.--Section 172 of the
Internal Revenue Code of 1986 is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following:
``(g) Advance Refund for C Corporations Relating to Certain
Carryovers Arising During 2015 Through 2021.--
``(1) In general.--
``(A) Election.--A taxpayer to whom this paragraph
applies may elect an advance refund of net operating
loss carryovers in the amounts and manner determined
under subparagraphs (B) and (C).
``(B) Net operating loss carryovers arising during
2015 through 2021.--The advance refund determined under
this subparagraph is an amount elected by the taxpayer
in lieu of an election with respect to a net operating
loss carryback under subsection (b)(1)(D), in the
amount equal to--
``(i) the rate set forth in section 11 (as
in effect on the date of the enactment of this
paragraph), multiplied by
``(ii) any net operating loss carryovers
that arose--
``(I) in a taxable year beginning
on or after January 1, 2015, and before
January 1, 2020, or
``(II) in a taxable year beginning
on or after January 1, 2019, and before
January 1, 2022.
``(C) COVID-19 research expenditures for 2020 and
2021.--The advance refund under this subparagraph is
the amount of the advance refund with respect to the
portion of any net operating loss attributable to and
arising from qualified COVID-19 research expenditures
that are paid or incurred on or after February 15, 2020
and before January 1, 2022, that is equal to 200
percent of the amount otherwise taken into account
under paragraph (1)(B)(ii). A net operating loss shall
be treated as arising from qualified COVID-19 research
expenditures to the extent that such expenses are paid
or incurred by the taxpayer.
``(2) Qualified covid-19 research expenditures.--For
purposes of this subsection, the term `qualified COVID-19
research expenditures' means expenditures paid or incurred in
connection with the research and development of products
regulated by the Food and Drug Administration (including
biologics, drugs, and devices) that are intended to be used in
the diagnosis, prevention and treatment of coronavirus disease
2019 (COVID-19), and such other similar expenditures as
prescribed by the Secretary in regulations.
``(3) Taxpayer described.--For purposes of paragraph (1),
this subsection applies to a taxpayer if--
``(A) the taxpayer is a C corporation,
``(B) the average number of full-time employees (as
determined for purposes of determining whether an
employer is an applicable large employer for purposes
of section 4980H(c)(2) of the Internal Revenue Code of
1986) employed by the taxpayer during calendar year
2019 or 2020, whichever is greater, is greater than
five and did not exceed 1,500, and
``(C) the taxpayer has complied to date with filing
of all forms or return requirements under section 3102,
3111, 3301, and 3402 with respect to calendar years
2019 and 2020.
``(4) Special rules.--For purposes of this subsection--
``(A) Certain contributions of capital not taken
into account in determining ownership change under
section 382.--For purposes of determining whether an
ownership change has occurred with respect to the loss
corporation under section 382(g) in computing the
amount of any advance refund under this section, a
transfer of stock in exchange for a capital
contribution to such loss corporation shall not be
taken into account if--
``(i) the value of the stock transferred is
commensurate with the amount of capital being
contributed, and
``(ii) such exchange is not part of a plan
to redeem other shareholders.
``(B) Aggregate limitation.--The aggregate amount
of net operating loss or net operating loss carryover
for which an advance refund is elected pursuant to this
subsection shall not exceed $100,000,000.
``(C) Reduction of net operating loss.--The net
operating losses of the taxpayer determined under
subsection (c) shall be reduced by the amount of any
net operating loss or net operating loss carryover for
which an advance refund is elected pursuant to this
subsection, including the amount of any net operating
loss to which paragraph (1)(C) applies.
``(D) Aggregation rule.--All corporations treated
as a single employer under subsection (a) of section 52
or subsection (m) or (o) under section 414 shall be
treated as a single taxpayer for purposes of this
section.
``(5) Regulations and guidance.--The Secretary shall issue
such regulations and other guidance as may be necessary to
carry out the purposes of this section, including regulations
and other guidance to carry out the purposes of this
subsection--
``(A) to allow for the making of an election for
the application of this subsection in such manner as
the Secretary may by regulations prescribe,
``(B) to allow the payment of the advance refund in
accordance with section 6429 based on such information
as the Secretary shall require,
``(C) to allow advance refunds permitted under this
subsection to be claimed on such forms as the Secretary
shall prescribe, and
``(D) to provide for the application of this
subsection to taxpayers that file consolidated returns.
``(6) Advance refund.--See section 6429 for rules for
claiming the advance refund.''.
(2) Conforming amendment.--Section 172(c) of such Code is
amended by inserting before the period at the end the
following: ``and with the reduction required by subsection
(g)''.
(b) Advance Refund of Research Credits and Orphan Drug Credits for
C Corporation Taxpayers.--Section 39 of such Code is amended by adding
at the end the following:
``(e) Advance Refund of Research and Orphan Drug Credits.--
``(1) In general.--A taxpayer that is a C corporation may
elect an advance refund of the portion of any unused business
credit carryforward under section 39 that--
``(A) is attributable to the credit determined
under section 41 or the credit determined under section
45C, and
``(B) is an unused business credit carryforward
carried to a taxable year beginning on or after January
1, 2020, and before January 1, 2022, and that arose in
taxable years beginning after January 1, 2015.
``(2) Limitation.--The amount elected under paragraph (1)
for a taxable year may not exceed the excess of $25,000,000
reduced by the amount elected for the taxable year as an
advance refund of net operating loss carryovers under section
172(g).
``(3) Inapplicability of sections 38(c) and 383(a).--For
purposes of this subsection, the amount of any advance refund
shall be computed without respect to the limitations under
sections 38(c) and 383(a).
``(4) Regulations and guidance.--The Secretary shall issue
such regulations and other guidance as may be necessary--
``(A) to allow for the making of an election under
paragraph (1) in such manner as the Secretary may by
regulations prescribe,
``(B) to allow the advance refund under this
subsection and section 6429 based on such information
as the Secretary shall require, and
``(C) to allow advance refunds under this section
to be claimed on such forms as the Secretary shall
prescribe.''.
(c) Advance Refund of Certain Net Operating Losses, Research
Credit, and Orphan Drug Credit.--
(1) In general.--Subchapter B of chapter 65 of such Code is
amended by inserting after section 6428 the following new
section:
``SEC. 6429. ADVANCE REFUND OF CERTAIN NET OPERATING LOSSES, RESEARCH
CREDIT, AND ORPHAN DRUG CREDIT.
``(a) In General.--In the case of a C corporation, the advance
refund sum may be claimed by the taxpayer as follows:
``(1) Payroll taxes.--First, by reducing deposits or
payments of--
``(A) the applicable employment taxes imposed under
sections 3101(a), 3101(b), 3111(a), and 3111(b)
(reduced by any credits allowed under subsections (e)
and (f) of section 3111, sections 7001 and 7003 of the
Families First Coronavirus Response Act and section
2301 of the Coronavirus, Aid, Relief, and Economic
Security Act) on the wages paid with respect to the
employment of all the employees of the taxpayer for a
calendar quarter, and
``(B) the withholding taxes required to be paid by
an employer pursuant to section 3403, with the balance
of the advance refund payable to the taxpayer.
``(2) Advance refundability of excess losses.--Second, any
remaining amount to be refunded to the taxpayer after the
application of paragraph (1) shall be treated as an overpayment
and shall be refunded in a manner similar to that prescribed in
subsection 2301(b)(3) of the Coronavirus, Aid, Relief, and
Economic Security Act.
``(b) Advance Refund Sum.--For purposes of subsection (a), the term
`advance refund sum' means the sum of--
``(1) the amount elected by the taxpayer as an advance
refund of net operating loss carryovers under section 172(g),
and
``(2) the amount of any unused business credit carryforward
elected under section 39(e) that is attributable to the
research credit determined under section 41 or the orphan drug
credit determined under section 45C.
``(c) Recapture.--
``(1) In general.--The Secretary shall, by regulations,
provide for recapturing the benefit of any advance refund
allowable under this section if there is a sale or full or
partial liquidation of the corporation during the recapture
period. The recapture amount shall not exceed the lesser of--
``(A) the amount of any proceeds or distributions
received by shareholders of the corporation
attributable to such sale or liquidation, or
``(B) the amount that the advance refund exceeds
the aggregate amount spent by the corporation on
payroll, research expenses, and property, plant and
equipment during the recapture period.
``(2) Recapture period.--For purposes of paragraph (1), the
term `recapture period' means the two-year period beginning on
the date of the advance refund.''.
(2) Transfers to federal old-age and survivors insurance
trust fund.--There are hereby appropriated to the Federal Old-
Age and Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund established under section 201
of the Social Security Act (42 U.S.C. 401), the Federal
Hospital Insurance Trust Fund established under section 1817(a)
of the Social Security Act (42 U.S.C. 1395i(a)), and the Social
Security Equivalent Benefit Account established under section
15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 14
231n-1(a)) amounts equal to the reduction in revenues to the
Treasury by reason of this section (without regard to this
subsection). 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 or
Account had this section not been enacted.
(3) Clerical amendment.--The table of sections for
subchapter B of chapter 65 of such Code is amended by inserting
after the item relating to section 6428 the following new item:
``Sec. 6429. Advance refund of certain net operating losses, research
credit, and orphan drug credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 3. ENHANCED RESEARCH CREDIT FOR COVID-19 EXPENDITURES.
(a) In General.--Section 41 of the Internal Revenue Code of 1986 is
amended by adding at the end the following:
``(i) Enhanced Credit for COVID-19 Research Expenditures.--
``(1) In general.--For purposes of determining the amount
of qualified research expenses under subsection (b) for the
taxable year, the amount of any qualified COVID-19 research
expenditures paid or incurred by a taxpayer on or after
February 15, 2020, and before January 1, 2022, shall be equal
to 200 percent of the amount paid or incurred.
``(2) Qualified covid-19 research expenditures.--The term
`qualified COVID-19 research expenditures' has the meaning
given such term by section 172(g)(2).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2019.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Referred to the Subcommittee on Select Revenue Measures.
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