IGNITE American Innovation Act

I 117TH CONGRESS 1ST SESSION H. R. 3623 To amend the Internal Revenue Code of 1986 to provide for advance refunds of certain net operating losses and research expenditures, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 28, 2021 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, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Innovation and Growth 4 Now by Investing in Tomorrow’s Enterprises Act’’ or the 5 ‘‘IGNITE American Innovation Act’’. 6 SEC. 2. ADVANCE REFUNDS OF NET OPERATING LOSSES 7 FOR C CORPORATION TAXPAYERS. 8 (a) IN GENERAL.— 9 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3623 IH (1) NET OPERATING LOSS CARRYOVERS.—Sec- 1 tion 172 of the Internal Revenue Code of 1986 is 2 amended by redesignating subsection (g) as sub- 3 section (h) and by inserting after subsection (f) the 4 following: 5 ‘‘(g) ADVANCE REFUND FOR C CORPORATIONS RE- 6 LATING TO CERTAIN CARRYOVERS ARISING DURING 2015 7 THROUGH 2021.— 8 ‘‘(1) IN GENERAL.—A taxpayer to whom this 9 subsection applies may, in lieu of an election with re- 10 spect to a net operating loss carryback under sub- 11 section (b)(1)(D), elect an advance refund of net op- 12 erating loss carryovers in the amount equal to— 13 ‘‘(A) the rate set forth in section 11 (as in 14 effect on the date of the enactment of this para- 15 graph), multiplied by 16 ‘‘(B) any net operating loss carryovers that 17 arose— 18 ‘‘(i) in a taxable year beginning on or 19 after January 1, 2015, and before January 20 1, 2020, or 21 ‘‘(ii) in a taxable year beginning on or 22 after January 1, 2019, and before January 23 1, 2022. 24 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3623 IH ‘‘(2) TAXPAYER DESCRIBED.—For purposes of 1 paragraph (1), this subsection applies to a taxpayer 2 if— 3 ‘‘(A) the taxpayer is a C corporation, 4 ‘‘(B) the average number of full-time em- 5 ployees (as determined for purposes of deter- 6 mining whether an employer is an applicable 7 large employer for purposes of section 8 4980H(c)(2)) employed by the taxpayer during 9 calendar year 2019 or 2020, whichever is great- 10 er, is greater than five and did not exceed 11 1,500, and 12 ‘‘(C) the taxpayer has complied to date 13 with filing of all forms or return requirements 14 under section 3102, 3111, 3301, and 3402 with 15 respect to calendar years 2019 and 2020. 16 ‘‘(3) SPECIAL RULES.—For purposes of this 17 subsection— 18 ‘‘(A) CERTAIN CONTRIBUTIONS OF CAP- 19 ITAL NOT TAKEN INTO ACCOUNT IN DETER- 20 MINING OWNERSHIP CHANGE UNDER SECTION 21 382.—For purposes of determining whether an 22 ownership change has occurred with respect to 23 the loss corporation under section 382(g) in 24 computing the amount of any advance refund 25 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3623 IH under this section, a transfer of stock in ex- 1 change for a capital contribution to such loss 2 corporation shall not be taken into account if— 3 ‘‘(i) the value of the stock transferred 4 is commensurate with the amount of cap- 5 ital being contributed, and 6 ‘‘(ii) such exchange is not part of a 7 plan to redeem other shareholders. 8 ‘‘(B) AGGREGATE LIMITATION.—The ag- 9 gregate amount of net operating loss or net op- 10 erating loss carryover for which an advance re- 11 fund is elected pursuant to this subsection shall 12 not exceed $100,000,000. 13 ‘‘(C) REDUCTION OF NET OPERATING 14 LOSS.—The net operating losses of the taxpayer 15 determined under subsection (c) shall be re- 16 duced by the amount of any net operating loss 17 or net operating loss carryover for which an ad- 18 vance refund is elected pursuant to this sub- 19 section. 20 ‘‘(D) AGGREGATION RULE.—All corpora- 21 tions treated as a single employer under sub- 22 section (a) of section 52 or subsection (m) or 23 (o) under section 414 shall be treated as a sin- 24 gle taxpayer for purposes of this section. 25 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3623 IH ‘‘(4) REGULATIONS AND GUIDANCE.—The Sec- 1 retary shall issue such regulations and other guid- 2 ance as may be necessary to carry out the purposes 3 of this section, including regulations and other guid- 4 ance— 5 ‘‘(A) to allow for the making of an election 6 for the application of this subsection in such 7 manner as the Secretary may prescribe, 8 ‘‘(B) to allow the payment of the advance 9 refund in accordance with section 6429 based 10 on such information as the Secretary shall re- 11 quire, 12 ‘‘(C) to allow advance refunds permitted 13 under this subsection to be claimed on such 14 forms as the Secretary shall prescribe, and 15 ‘‘(D) to provide for the application of this 16 subsection to taxpayers that file consolidated 17 returns. 18 ‘‘(5) ADVANCE REFUND.—See section 6429 for 19 rules for claiming the advance refund.’’. 20 (2) CONFORMING AMENDMENT.—Section 21 172(c) of such Code is amended by inserting before 22 the period at the end the following: ‘‘and with the 23 reduction required by subsection (g)’’. 24 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3623 IH (b) ADVANCE REFUND OF RESEARCH CREDITS AND 1 ORPHAN DRUG CREDITS FOR C CORPORATION TAX- 2 PAYERS.—Section 39 of such Code is amended by adding 3 at the end the following: 4 ‘‘(e) ADVANCE REFUND OF RESEARCH AND ORPHAN 5 DRUG CREDITS.— 6 ‘‘(1) IN GENERAL.—An eligible taxpayer may 7 elect an advance refund of the portion of any unused 8 business credit carryforward under section 39 that— 9 ‘‘(A) is attributable to the credit deter- 10 mined under section 41 or the credit deter- 11 mined under section 45C, and 12 ‘‘(B) is an unused business credit 13 carryforward carried to a taxable year begin- 14 ning on or after January 1, 2020, and before 15 January 1, 2022, and that arose in taxable 16 years beginning after January 1, 2015. 17 ‘‘(2) LIMITATION.—The amount elected under 18 paragraph (1) for a taxable year may not exceed the 19 excess of $25,000,000 reduced by the amount elect- 20 ed for the taxable year as an advance refund of net 21 operating loss carryovers under section 172(g). 22 ‘‘(3) ELIGIBLE TAXPAYER.—For purposes of 23 this subsection, a taxpayer is an eligible taxpayer 24 if— 25 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3623 IH ‘‘(A) the taxpayer is a C corporation, and 1 ‘‘(B) the taxpayer does not have an out- 2 standing loan made or guaranteed pursuant to 3 section 7(a)(37) of the Small Business Act (15 4 U.S.C. 636(a)(37)). 5 ‘‘(4) INAPPLICABILITY OF SECTIONS 38(C) AND 6 383.—For purposes of this subsection, the amount of 7 any advance refund shall be computed without re- 8 spect to the limitations under sections 38(c) and 9 383(a). 10 ‘‘(5) REGULATIONS AND GUIDANCE.—The Sec- 11 retary shall issue such regulations and other guid- 12 ance as may be necessary— 13 ‘‘(A) to allow for the making of an election 14 under paragraph (1) in such manner as the 15 Secretary may by regulations prescribe, 16 ‘‘(B) to allow the advance refund under 17 this subsection and section 6429 based on such 18 information as the Secretary shall require, and 19 ‘‘(C) to allow advance refunds under this 20 section to be claimed on such forms as the Sec- 21 retary shall prescribe.’’. 22 (c) ADVANCE REFUND OF CERTAIN NET OPERATING 23 LOSSES, RESEARCH CREDIT, AND ORPHAN DRUG CRED- 24 IT.— 25 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3623 IH (1) IN GENERAL.—Subchapter B of chapter 65 1 of such Code is amended by inserting after section 2 6428 the following new section: 3 ‘‘SEC. 6429. ADVANCE REFUND OF CERTAIN NET OPER- 4 ATING LOSSES, RESEARCH CREDIT, AND OR- 5 PHAN DRUG CREDIT. 6 ‘‘(a) IN GENERAL.—In the case of a C corporation, 7 the advance refund sum may be claimed by the taxpayer 8 as follows: 9 ‘‘(1) PAYROLL TAXES.—First, by reducing de- 10 posits or payments of— 11 ‘‘(A) the applicable employment taxes im- 12 posed under sections 3101(a), 3101(b), 13 3111(a), and 3111(b) (reduced by any credits 14 allowed under subsections (e) and (f) of section 15 3111, sections 7001 and 7003 of the Families 16 First Coronavirus Response Act and section 17 2301 of the Coronavirus, Aid, Relief, and Eco- 18 nomic Security Act) on the wages paid with re- 19 spect to the employment of all the employees of 20 the taxpayer for a calendar quarter, and 21 ‘‘(B) the withholding taxes required to be 22 paid by an employer pursuant to section 3403, 23 with the balance of the advance refund payable 24 to the taxpayer. 25 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3623 IH ‘‘(2) ADVANCE REFUNDABILITY OF EXCESS 1 LOSSES.—Second, any remaining amount to be re- 2 funded to the taxpayer after the application of para- 3 graph (1) shall be treated as an overpayment and 4 shall be refunded in a manner similar to that pre- 5 scribed in subsection 2301(b)(3) of the Coronavirus, 6 Aid, Relief, and Economic Security Act. 7 ‘‘(b) ADVANCE REFUND SUM.—For purposes of sub- 8 section (a), the term ‘advance refund sum’ means the sum 9 of— 10 ‘‘(1) the amount elected by the taxpayer as an 11 advance refund of net operating loss carryovers 12 under section 172(g), and 13 ‘‘(2) the amount of any unused business credit 14 carryforward elected under section 39(e) that is at- 15 tributable to the research credit determined under 16 section 41 or the orphan drug credit determined 17 under section 45C. 18 ‘‘(c) RECAPTURE.— 19 ‘‘(1) IN GENERAL.—The Secretary shall, by 20 regulations, provide for recapturing the benefit of 21 any advance refund allowable under this section in 22 the amount that the advance refund exceeds the sum 23 of— 24 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3623 IH ‘‘(A) the aggregate amount spent by the 1 corporation on payroll, research expenses, and 2 property, plant and equipment during the re- 3 capture period, plus 4 ‘‘(B) in the case of a sale or full or partial 5 liquidation of the corporation during the recap- 6 ture period, the amount of any proceeds or dis- 7 tributions received by shareholders of the cor- 8 poration attributable to such sale or liquidation. 9 ‘‘(2) RECAPTURE PERIOD.—For purposes of 10 paragraph (1), the term ‘recapture period’ means 11 the three-year period beginning on the date of the 12 advance refund.’’. 13 (2) TRANSFERS TO FEDERAL OLD-AGE AND 14 SURVIVORS INSURANCE TRUST FUND.—There are 15 hereby appropriated to the Federal Old-Age and 16 Survivors Insurance Trust Fund and the Federal 17 Disability Insurance Trust Fund established under 18 section 201 of the Social Security Act (42 U.S.C. 19 401), the Federal Hospital Insurance Trust Fund 20 established under section 1817(a) of the Social Se- 21 curity Act (42 U.S.C. 1395i(a)), and the Social Se- 22 curity Equivalent Benefit Account established under 23 section 15A(a) of the Railroad Retirement Act of 24 1974 (45 U.S.C. 14 231n–1(a)) amounts equal to 25 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3623 IH the reduction in revenues to the Treasury by reason 1 of this section (without regard to this subsection). 2 Amounts appropriated by the preceding sentence 3 shall be transferred from the general fund at such 4 times and in such manner as to replicate to the ex- 5 tent possible the transfers which would have oc- 6 curred to such Trust Fund or Account had this sec- 7 tion not been enacted. 8 (3) CLERICAL AMENDMENT.—The table of sec- 9 tions for subchapter B of chapter 65 of such Code 10 is amended by inserting after the item relating to 11 section 6428 the following new item: 12 ‘‘Sec. 6429. Advance refund of certain net operating losses, research credit, and orphan drug credit.’’. (d) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2020. 15 SEC. 3. ENHANCED RESEARCH CREDIT FOR CERTAIN PAN- 16 DEMIC RESEARCH EXPENDITURES. 17 (a) IN GENERAL.—Section 41 of the Internal Rev- 18 enue Code of 1986 is amended by adding at the end the 19 following: 20 ‘‘(i) ENHANCED CREDIT FOR CERTAIN PANDEMIC 21 RESEARCH EXPENDITURES.— 22 ‘‘(1) IN GENERAL.—For purposes of deter- 23 mining the amount of qualified research expenses 24 VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 3623 IH under subsection (b) for the taxable year, the 1 amount of any qualified pandemic research expendi- 2 tures paid or incurred by a taxpayer on or after 3 February 15, 2020, and before January 1, 2022, 4 shall be equal to 200 percent of the amount paid or 5 incurred. 6 ‘‘(2) QUALIFIED PANDEMIC RESEARCH EX- 7 PENDITURES.—The term ‘qualified pandemic re- 8 search expenditures’ means expenditures paid or in- 9 curred in connection with the research and develop- 10 ment of products regulated by the Food and Drug 11 Administration (including biological products, drugs, 12 and devices) that are intended to be used in the di- 13 agnosis, prevention and treatment of diseases arising 14 from a virus (or other pathogen) with pandemic po- 15 tential, and such other similar expenditures as pre- 16 scribed by the Secretary in regulations.’’. 17 (b) EFFECTIVE DATE.—The amendment made by 18 this section shall apply to taxable years beginning after 19 December 31, 2020. 20 Æ VerDate Sep 11 2014 05:41 Jun 24, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H3623.IH H3623 kjohnson on DSK79L0C42PROD with BILLS