SAFETY Act

I 116TH CONGRESS 1ST SESSION H. R. 942 To amend the Internal Revenue Code of 1986 to provide an enhanced research credit for the development of smart gun technologies. IN THE HOUSE OF REPRESENTATIVES JANUARY 31, 2019 Mr. HIMES (for himself, Ms. KUSTER of New Hampshire, Ms. HILL of Cali- fornia, Ms. CLARKE of New York, Mr. DEUTCH, Mr. PERLMUTTER, Mr. SOTO, and Mrs. MURPHY) introduced the following bill; which was re- ferred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide an enhanced research credit for the development of smart gun technologies. 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 ‘‘Start Advancing Fire- 4 arms Enhancements and Technology Act of 2018’’ or the 5 ‘‘SAFETY Act’’. 6 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 2 •HR 942 IH SEC. 2. ENHANCED RESEARCH CREDIT FOR DEVELOPMENT 1 OF SMART GUN TECHNOLOGIES. 2 (a) IN GENERAL.—Subpart D of part IV of sub- 3 chapter A of chapter 1 of the Internal Revenue Code of 4 1986 is amended by inserting after section 45S the fol- 5 lowing new section: 6 ‘‘SEC. 45T. RESEARCH EXPENSES FOR SMART GUN TECH- 7 NOLOGIES. 8 ‘‘(a) GENERAL RULE.—For purposes of section 38, 9 in the case of a taxpayer who is a Federal firearms li- 10 censee, the smart gun technology credit determined under 11 this section for the taxable year is an amount equal to 12 30 percent of the excess of— 13 ‘‘(1) the smart gun technology expenses for the 14 taxable year, over 15 ‘‘(2) the base amount. 16 ‘‘(b) SMART GUN TECHNOLOGY EXPENSES; BASE 17 AMOUNT.—For purposes of this section— 18 ‘‘(1) SMART GUN TECHNOLOGY EXPENSES.— 19 ‘‘(A) IN GENERAL.—Except as otherwise 20 provided in this paragraph, the term ‘smart gun 21 technology expenses’ means the amounts which 22 are paid or incurred by the taxpayer during the 23 taxable year which would be described in sec- 24 tion 41(b) if such section were applied with the 25 modifications set forth in subparagraph (B). 26 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 3 •HR 942 IH ‘‘(B) MODIFICATIONS.—For purposes of 1 subparagraph (A), section 41(b) shall be ap- 2 plied— 3 ‘‘(i) by substituting ‘smart gun tech- 4 nology research’ for ‘qualified research’ 5 each place it appears in paragraphs (2) 6 and (3) of such subsection, and 7 ‘‘(ii) by substituting ‘100 percent’ for 8 ‘65 percent’ in paragraph (3)(A) of such 9 subsection. 10 ‘‘(C) EXCLUSION FOR AMOUNTS FUNDED 11 BY GRANTS, ETC.—The term ‘smart gun tech- 12 nology expenses’ shall not include any amount 13 to the extent such amount is funded by any 14 grant, contract, or otherwise by another person 15 (or any governmental entity). 16 ‘‘(2) BASE AMOUNT.— 17 ‘‘(A) IN GENERAL.—Except as provided in 18 subparagraph (B), the term ‘base amount’ 19 means the amount which would be the base 20 amount in section 41(c) if such section were ap- 21 plied by substituting ‘smart gun technology re- 22 search’ for ‘qualified research’ each place it ap- 23 pears. 24 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 4 •HR 942 IH ‘‘(B) BASE AMOUNT IS ZERO FOR 3 1 YEARS.—The base amount shall be zero for 2 purposes of determining the amount of credit 3 for taxable years beginning in 2019, 2020, or 4 2021. 5 ‘‘(c) SMART GUN TECHNOLOGY RESEARCH.—For 6 purposes of this section— 7 ‘‘(1) IN GENERAL.—The term ‘smart gun tech- 8 nology research’ means qualified research (as de- 9 fined in section 41(d)) for the purpose of developing 10 smart gun technologies for firearms. 11 ‘‘(2) SMART GUN TECHNOLOGY.—The term 12 ‘smart gun technology’ means any technology (other 13 than a simple mechanical lock) which is designed— 14 ‘‘(A) to prevent a firearm from being fired 15 by any individual other than an authorized user 16 of the firearm, and 17 ‘‘(B) to convert the firearm from the inop- 18 erable condition to the operable condition in 19 less than 2 seconds after the authorized user 20 makes contact with the firearm, the firearm’s 21 arming device, or an external safe or locking 22 device. 23 ‘‘(3) AUTHORIZED USER.—For purposes of this 24 subsection, the term ‘authorized user’ means, with 25 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 5 •HR 942 IH respect to a firearm, the owner of the firearm and 1 any individual lawfully authorized by such owner to 2 operate the firearm. 3 ‘‘(4) SIMPLE MECHANICAL LOCK.—For pur- 4 poses of this subsection, the term ‘simple mechanical 5 lock’ means a lock that uses a key or a conventional 6 combination lock. Such term does not include an ad- 7 vanced lock that incorporates electronics or biomet- 8 ric sensors, or a lock with other features to enable 9 faster opening from any orientation with low visi- 10 bility. 11 ‘‘(d) FEDERAL FIREARMS LICENSEE.—For purposes 12 of this section, the term ‘Federal firearms licensee’ means 13 any person holding a license under chapter 44 of title 18, 14 United States Code, other than a licensed collector. 15 ‘‘(e) COORDINATION WITH CREDIT FOR INCREASING 16 RESEARCH EXPENDITURES.— 17 ‘‘(1) IN GENERAL.—Except as provided in para- 18 graph (2), any smart gun technology expenses for a 19 taxable year to which an election under this section 20 applies shall not be taken into account for purposes 21 of determining the credit allowable under section 41 22 for such taxable year. 23 ‘‘(2) EXPENSES INCLUDED IN DETERMINING 24 BASE PERIOD RESEARCH EXPENSES.—Smart gun 25 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 6 •HR 942 IH technology expenses for any taxable year shall be 1 taken into account in determining base period re- 2 search expenses for purposes of applying section 41 3 to subsequent taxable years. 4 ‘‘(f) SPECIAL RULES.— 5 ‘‘(1) CERTAIN RULES MADE APPLICABLE.— 6 Rules similar to the rules of paragraphs (1) and (2) 7 of section 41(f) shall apply for purposes of this sec- 8 tion. 9 ‘‘(2) ELECTION.—This section shall apply to 10 any taxpayer for any taxable year only if such tax- 11 payer elects (at such time and in such manner as 12 the Secretary may by regulations prescribe) to have 13 this section apply for such taxable year. 14 ‘‘(g) TREATMENT OF CREDIT FOR QUALIFIED SMALL 15 BUSINESSES.— 16 ‘‘(1) IN GENERAL.—Under rules similar to the 17 rules of section 41(h), section 3111(f) shall apply to 18 the payroll tax credit portion of the credit otherwise 19 determined under subsection (a) for the taxable year 20 and such portion shall not be treated (other than for 21 purposes of section 280C) as a credit determined 22 under subsection (a). 23 ‘‘(2) FEDERAL FIREARMS LICENSEE EXCEP- 24 TION.—For purposes of this subsection, the payroll 25 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 7 •HR 942 IH tax credit portion of the credit otherwise determined 1 under subsection (a) shall be determined without re- 2 gard to whether the taxpayer is a Federal firearms 3 licensee.’’. 4 (b) DENIAL OF DOUBLE BENEFIT.—Section 280C of 5 such Code is amended by adding at the end the following 6 new subsection: 7 ‘‘(i) CREDIT FOR SMART GUN TECHNOLOGY EX- 8 PENSES.— 9 ‘‘(1) IN GENERAL.—No deduction shall be al- 10 lowed for that portion of the smart gun technology 11 expenses (as defined in section 45T(b)) otherwise al- 12 lowable as a deduction for the taxable year which is 13 equal to the amount of the credit allowable for the 14 taxable year under section 45T (determined without 15 regard to section 38(c) thereof). 16 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP- 17 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If— 18 ‘‘(A) the amount of the credit allowable for 19 the taxable year under section 45T (determined 20 without regard to section 38(c)), exceeds 21 ‘‘(B) the amount allowable as a deduction 22 for the taxable year for smart gun technology 23 expenses (determined without regard to para- 24 graph (1)), 25 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 8 •HR 942 IH the amount chargeable to capital account for the 1 taxable year for such expenses shall be reduced by 2 the amount of such excess. 3 ‘‘(3) CONTROLLED GROUPS.—In the case of a 4 corporation which is a member of a controlled group 5 of corporations (within the meaning of section 6 41(f)(5)) or a trade or business which is treated as 7 being under common control with other trades or 8 business (within the meaning of section 9 41(f)(1)(B)), this subsection shall be applied under 10 rules prescribed by the Secretary similar to the rules 11 applicable under subparagraphs (A) and (B) of sec- 12 tion 41(f)(1).’’. 13 (c) CREDIT MADE PART OF GENERAL BUSINESS 14 CREDIT.— 15 (1) IN GENERAL.—Section 38(b) of such Code 16 is amended by striking ‘‘plus’’ at the end of para- 17 graph (31), by striking the period at the end of 18 paragraph (32) and inserting ‘‘, plus’’, and by add- 19 ing at the end thereof the following new paragraph: 20 ‘‘(33) in the case of a taxpayer who is a Fed- 21 eral firearms licensee (as defined in section 45T(d)), 22 the smart gun technology credit determined under 23 section 45T(a).’’. 24 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 9 •HR 942 IH (2) DEDUCTION FOR CERTAIN UNUSED BUSI- 1 NESS CREDITS.—Subsection (c) of section 196 of 2 such Code is amended by striking ‘‘and’’ at the end 3 of paragraph (13), by striking the period at the end 4 of paragraph (14) and inserting ‘‘, and’’, and by 5 adding after paragraph (8) the following new para- 6 graph: 7 ‘‘(15) the smart gun technology credit deter- 8 mined under section 45T.’’. 9 (d) CLERICAL AMENDMENT.—The table of sections 10 for subpart D of part IV of subchapter A of chapter 1 11 of such Code is amended by inserting after the item relat- 12 ing to section 45S the following new item: 13 ‘‘Sec. 45T. Research expenses for smart gun technologies.’’. (e) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to amounts paid or incurred after 15 December 31, 2019, in taxable years beginning after such 16 date. 17 SEC. 3. FIREARMS TAX NOT TO APPLY TO COST OF SMART 18 GUN TECHNOLOGY. 19 (a) IN GENERAL.—Section 4181 of the Internal Rev- 20 enue Code of 1986 is amended by adding at the end the 21 following new sentence: 22 ‘‘The price taken into account under the preceding 23 sentence shall not include so much of the price of the fire- 24 VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS 10 •HR 942 IH arm as is attributable to any smart gun technology (as 1 defined in section 45T(c)(2)) of such firearm.’’. 2 (b) EFFECTIVE DATE.—The amendment made by 3 this section shall take effect on January 1, 2020. 4 Æ VerDate Sep 11 2014 22:45 Feb 11, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H942.IH H942 kjohnson on DSK79L0C42 with BILLS