[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2529 Introduced in Senate (IS)]
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117th CONGRESS
1st Session
S. 2529
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 SENATE OF THE UNITED STATES
July 29, 2021
Mr. Menendez introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
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 taxpayer to which this subsection
applies for any taxable year beginning in 2020 or 2021 shall be
allowed an advance refund in the amount determined under
paragraph (2) for such taxable year.
``(2) Amount of the advance refund.--
``(A) In general.--The advance refund determined
under this paragraph for any taxable year is an amount
equal the lesser of--
``(i) the amount specified by the taxpayer
in the election to have this subsection apply,
or
``(ii) an amount equal to 21 percent of the
sum of--
``(I) any net operating loss
arising in such taxable year (reduced
by any portion of such net operating
loss carried back to a preceding
taxable year under subsection
(b)(1)(D)), plus
``(II) any carryforward to such
taxable year of a net operating loss
arising in a taxable year beginning
after December 31, 2014, and before
such taxable year.
``(B) Aggregate dollar limitation.--The aggregate
amount of advance refunds of a taxpayer under this
subsection for all taxable years shall not exceed
$100,000,000.
``(3) Net operating loss offset by advance refunds.--The
net operating loss of the taxpayer for any taxable year to
which this subsection applies shall be reduced by the amount of
any net operating loss arising in such taxable year, or net
operating loss carryforward to such taxable year, for which an
advance refund is elected pursuant to this subsection.
``(4) Taxpayer to which subsection applies.--For purposes
of paragraph (1), this subsection applies to a taxpayer for a
taxable year if--
``(A) the taxpayer is a C corporation--
``(i) with respect to which 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 is not
greater than 1,500, and
``(ii) which 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, and
``(B) the taxpayer elects the application of this
subsection for such taxable year.
``(5) 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) 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.
``(6) 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.
``(7) Advance refund.--For rules for claiming the advance
refund, see section 6429.''.
(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 which--
``(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 December 31, 2014.
``(2) Annual limitation.--The amount of the advance refund
under paragraph (1) for a taxable year shall not exceed the
excess (if any) of $25,000,000 reduced by the amount of the
advance refund for such taxable year 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) Advance Refund.--
``(1) In general.--In the case of a C corporation, the
advance refund sum for any taxable year may be claimed by the
taxpayer as follows:
``(A) Payroll taxes.--First, by reducing deposits
or payments of applicable employment taxes.
``(B) Advance refundability.--Second, any remaining
amount of the advance refund sum to be refunded to the
taxpayer after the application of subparagraph (A)
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.
``(2) Applicable employment taxes.--For purposes of
paragraph (1)(A), the term `applicable employment taxes' means
the following:
``(A) The taxes imposed under section 3111(b).
``(B) So much of the taxes imposed under section
3221(a) as are attributable to the rate in effect under
section 3111(b).
``(b) Advance Refund Sum.--For purposes of subsection (a), the term
`advance refund sum' means, with respect to any taxable year, the sum
of--
``(1) the amount of the taxpayer's advance refund under
section 172(g) for the taxable year, and
``(2) the amount of the advance refund for such taxable
year under section 39(e) of any unused business credit
carryforward which 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) 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.--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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2019.
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