I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Innovation and Growth 

5 Now by Investing in Tomorrow’s Enterprises Act’’ or the 

6 ‘‘IGNITE American Innovation Act’’. 


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1 SEC. 2. ADVANCE REFUNDS OF NET OPERATING LOSSES 

2 FOR C CORPORATION TAXPAYERS. 

3 (a) IN GENERAL.— 

4 (1) NET OPERATING LOSS CARRYOVERS.—Sec5 tion 172 of the Internal Revenue Code of 1986 is 

6 amended by redesignating subsection (g) as sub7 section (h) and by inserting after subsection (f) the 

8 following: 

9 ‘‘(g) ADVANCE REFUND FOR C CORPORATIONS RE10 LATING TO CERTAIN CARRYOVERS ARISING DURING 2015 

11 THROUGH 2021.— 

12 ‘‘(1) IN GENERAL.— 

13 ‘‘(A) ELECTION.—A taxpayer to whom this 

14 paragraph applies may elect an advance refund 

15 of net operating loss carryovers in the amounts 

16 and manner determined under subparagraphs 

17 (B) and (C). 

18 ‘‘(B) NET OPERATING LOSS CARRYOVERS

19 ARISING DURING 2015 THROUGH 2021.—The ad20 vance refund determined under this subpara21 graph is an amount elected by the taxpayer in 

22 lieu of an election with respect to a net oper23 ating loss carryback under subsection 

24 (b)(1)(D), in the amount equal to— 


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1 ‘‘(i) the rate set forth in section 11 

2 (as in effect on the date of the enactment 

3 of this paragraph), multiplied by 

4 ‘‘(ii) any net operating loss carryovers 

5 that arose— 

6 ‘‘(I) in a taxable year beginning 

7 on or after January 1, 2015, and be8 fore January 1, 2020, or 

9 ‘‘(II) in a taxable year beginning 

10 on or after January 1, 2019, and be11 fore January 1, 2022. 

12 ‘‘(C) COVID–19 RESEARCH EXPENDI13 TURES FOR 2020 AND 2021.—The advance re14 fund under this subparagraph is the amount of 

15 the advance refund with respect to the portion 

16 of any net operating loss attributable to and 

17 arising from qualified COVID–19 research ex18 penditures that are paid or incurred on or after 

19 February 15, 2020 and before January 1, 

20 2022, that is equal to 200 percent of the 

21 amount otherwise taken into account under 

22 paragraph (1)(B)(ii). A net operating loss shall 

23 be treated as arising from qualified COVID–19 

24 research expenditures to the extent that such 

25 expenses are paid or incurred by the taxpayer. 


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1 ‘‘(2) QUALIFIED COVID–19 RESEARCH EXPENDI2 TURES.—For purposes of this subsection, the term 

3 ‘qualified COVID–19 research expenditures’ means 

4 expenditures paid or incurred in connection with the 

5 research and development of products regulated by 

6 the Food and Drug Administration (including bio7 logics, drugs, and devices) that are intended to be 

8 used in the diagnosis, prevention and treatment of 

9 coronavirus disease 2019 (COVID–19), and such 

10 other similar expenditures as prescribed by the Sec11 retary in regulations. 

12 ‘‘(3) TAXPAYER DESCRIBED.—For purposes of 

13 paragraph (1), this subsection applies to a taxpayer 

14 if— 

15 ‘‘(A) the taxpayer is a C corporation, 

16 ‘‘(B) the average number of full-time em17 ployees (as determined for purposes of deter18 mining whether an employer is an applicable 

19 large employer for purposes of section 

20 4980H(c)(2) of the Internal Revenue Code of 

21 1986) employed by the taxpayer during cal22 endar year 2019 or 2020, whichever is greater, 

23 is greater than five and did not exceed 1,500, 

24 and 


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1 ‘‘(C) the taxpayer has complied to date 

2 with filing of all forms or return requirements 

3 under section 3102, 3111, 3301, and 3402 with 

4 respect to calendar years 2019 and 2020. 

5 ‘‘(4) SPECIAL RULES.—For purposes of this 

6 subsection— 

7 ‘‘(A) CERTAIN CONTRIBUTIONS OF CAP8 ITAL NOT TAKEN INTO ACCOUNT IN DETER9 MINING OWNERSHIP CHANGE UNDER SECTION

10 382.—For purposes of determining whether an 

11 ownership change has occurred with respect to 

12 the loss corporation under section 382(g) in 

13 computing the amount of any advance refund 

14 under this section, a transfer of stock in ex15 change for a capital contribution to such loss 

16 corporation shall not be taken into account if— 

17 ‘‘(i) the value of the stock transferred 

18 is commensurate with the amount of cap19 ital being contributed, and 

20 ‘‘(ii) such exchange is not part of a 

21 plan to redeem other shareholders. 

22 ‘‘(B) AGGREGATE LIMITATION.—The ag23 gregate amount of net operating loss or net op24 erating loss carryover for which an advance reVerDate Sep 11 2014 02:34 Aug 21, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7917.IH H7917

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1 fund is elected pursuant to this subsection shall 

2 not exceed $100,000,000. 

3 ‘‘(C) REDUCTION OF NET OPERATING

4 LOSS.—The net operating losses of the taxpayer 

5 determined under subsection (c) shall be re6 duced by the amount of any net operating loss 

7 or net operating loss carryover for which an ad8 vance refund is elected pursuant to this sub9 section, including the amount of any net oper10 ating loss to which paragraph (1)(C) applies. 

11 ‘‘(D) AGGREGATION RULE.—All corpora12 tions treated as a single employer under sub13 section (a) of section 52 or subsection (m) or 

14 (o) under section 414 shall be treated as a sin15 gle taxpayer for purposes of this section. 

16 ‘‘(5) REGULATIONS AND GUIDANCE.—The Sec17 retary shall issue such regulations and other guid18 ance as may be necessary to carry out the purposes 

19 of this section, including regulations and other guid20 ance to carry out the purposes of this subsection— 

21 ‘‘(A) to allow for the making of an election 

22 for the application of this subsection in such 

23 manner as the Secretary may by regulations 

24 prescribe, 


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1 ‘‘(B) to allow the payment of the advance 

2 refund in accordance with section 6429 based 

3 on such information as the Secretary shall re4 quire, 

5 ‘‘(C) to allow advance refunds permitted 

6 under this subsection to be claimed on such 

7 forms as the Secretary shall prescribe, and 

8 ‘‘(D) to provide for the application of this 

9 subsection to taxpayers that file consolidated 

10 returns. 

11 ‘‘(6) ADVANCE REFUND.—See section 6429 for 

12 rules for claiming the advance refund.’’. 

13 (2) CONFORMING AMENDMENT.—Section 

14 172(c) of such Code is amended by inserting before 

15 the period at the end the following: ‘‘and with the 

16 reduction required by subsection (g)’’. 

17 (b) ADVANCE REFUND OF RESEARCH CREDITS AND

18 ORPHAN DRUG CREDITS FOR C CORPORATION TAX19 PAYERS.—Section 39 of such Code is amended by adding 

20 at the end the following: 

21 ‘‘(e) ADVANCE REFUND OF RESEARCH AND ORPHAN

22 DRUG CREDITS.— 

23 ‘‘(1) IN GENERAL.—A taxpayer that is a C cor24 poration may elect an advance refund of the portion 


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1 of any unused business credit carryforward under 

2 section 39 that— 

3 ‘‘(A) is attributable to the credit deter4 mined under section 41 or the credit deter5 mined under section 45C, and 

6 ‘‘(B) is an unused business credit 

7 carryforward carried to a taxable year begin8 ning on or after January 1, 2020, and before 

9 January 1, 2022, and that arose in taxable 

10 years beginning after January 1, 2015. 

11 ‘‘(2) LIMITATION.—The amount elected under 

12 paragraph (1) for a taxable year may not exceed the 

13 excess of $25,000,000 reduced by the amount elect14 ed for the taxable year as an advance refund of net 

15 operating loss carryovers under section 172(g). 

16 ‘‘(3) INAPPLICABILITY OF SECTIONS 38(c) AND

17 383(a).—For purposes of this subsection, the 

18 amount of any advance refund shall be computed 

19 without respect to the limitations under sections 

20 38(c) and 383(a). 

21 ‘‘(4) REGULATIONS AND GUIDANCE.—The Sec22 retary shall issue such regulations and other guid23 ance as may be necessary— 


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1 ‘‘(A) to allow for the making of an election 

2 under paragraph (1) in such manner as the 

3 Secretary may by regulations prescribe, 

4 ‘‘(B) to allow the advance refund under 

5 this subsection and section 6429 based on such 

6 information as the Secretary shall require, and 

7 ‘‘(C) to allow advance refunds under this 

8 section to be claimed on such forms as the Sec9 retary shall prescribe.’’. 

10 (c) ADVANCE REFUND OF CERTAIN NET OPERATING

11 LOSSES, RESEARCH CREDIT, AND ORPHAN DRUG CRED12 IT.— 

13 (1) IN GENERAL.—Subchapter B of chapter 65 

14 of such Code is amended by inserting after section 

15 6428 the following new section: 

16 ‘‘SEC. 6429. ADVANCE REFUND OF CERTAIN NET OPER17 ATING LOSSES, RESEARCH CREDIT, AND OR18 PHAN DRUG CREDIT. 

19 ‘‘(a) IN GENERAL.—In the case of a C corporation, 

20 the advance refund sum may be claimed by the taxpayer 

21 as follows: 

22 ‘‘(1) PAYROLL TAXES.—First, by reducing de23 posits or payments of— 

24 ‘‘(A) the applicable employment taxes im25 posed under sections 3101(a), 3101(b), 


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1 3111(a), and 3111(b) (reduced by any credits 

2 allowed under subsections (e) and (f) of section 

3 3111, sections 7001 and 7003 of the Families 

4 First Coronavirus Response Act and section 

5 2301 of the Coronavirus, Aid, Relief, and Eco6 nomic Security Act) on the wages paid with re7 spect to the employment of all the employees of 

8 the taxpayer for a calendar quarter, and 

9 ‘‘(B) the withholding taxes required to be 

10 paid by an employer pursuant to section 3403, 

11 with the balance of the advance refund payable 

12 to the taxpayer. 

13 ‘‘(2) ADVANCE REFUNDABILITY OF EXCESS

14 LOSSES.—Second, any remaining amount to be re15 funded to the taxpayer after the application of para16 graph (1) shall be treated as an overpayment and 

17 shall be refunded in a manner similar to that pre18 scribed in subsection 2301(b)(3) of the Coronavirus, 

19 Aid, Relief, and Economic Security Act. 

20 ‘‘(b) ADVANCE REFUND SUM.—For purposes of sub21 section (a), the term ‘advance refund sum’ means the sum 

22 of— 

23 ‘‘(1) the amount elected by the taxpayer as an 

24 advance refund of net operating loss carryovers 

25 under section 172(g), and 


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1 ‘‘(2) the amount of any unused business credit 

2 carryforward elected under section 39(e) that is at3 tributable to the research credit determined under 

4 section 41 or the orphan drug credit determined 

5 under section 45C. 

6 ‘‘(c) RECAPTURE.— 

7 ‘‘(1) IN GENERAL.—The Secretary shall, by 

8 regulations, provide for recapturing the benefit of 

9 any advance refund allowable under this section if 

10 there is a sale or full or partial liquidation of the 

11 corporation during the recapture period. The recap12 ture amount shall not exceed the lesser of— 

13 ‘‘(A) the amount of any proceeds or dis14 tributions received by shareholders of the cor15 poration attributable to such sale or liquidation, 

16 or 

17 ‘‘(B) the amount that the advance refund 

18 exceeds the aggregate amount spent by the cor19 poration on payroll, research expenses, and 

20 property, plant and equipment during the re21 capture period. 

22 ‘‘(2) RECAPTURE PERIOD.—For purposes of 

23 paragraph (1), the term ‘recapture period’ means 

24 the two-year period beginning on the date of the ad25 vance refund.’’. 


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1 (2) TRANSFERS TO FEDERAL OLD-AGE AND

2 SURVIVORS INSURANCE TRUST FUND.—There are 

3 hereby appropriated to the Federal Old-Age and 

4 Survivors Insurance Trust Fund and the Federal 

5 Disability Insurance Trust Fund established under 

6 section 201 of the Social Security Act (42 U.S.C. 

7 401), the Federal Hospital Insurance Trust Fund 

8 established under section 1817(a) of the Social Se9 curity Act (42 U.S.C. 1395i(a)), and the Social Se10 curity Equivalent Benefit Account established under 

11 section 15A(a) of the Railroad Retirement Act of 

12 1974 (45 U.S.C. 14 231n–1(a)) amounts equal to 

13 the reduction in revenues to the Treasury by reason 

14 of this section (without regard to this subsection). 

15 Amounts appropriated by the preceding sentence 

16 shall be transferred from the general fund at such 

17 times and in such manner as to replicate to the ex18 tent possible the transfers which would have oc19 curred to such Trust Fund or Account had this sec20 tion not been enacted. 

21 (3) CLERICAL AMENDMENT.—The table of sec22 tions for subchapter B of chapter 65 of such Code 

23 is amended by inserting after the item relating to 

24 section 6428 the following new item: 

‘‘Sec. 6429. Advance refund of certain net operating losses, research credit, and 

orphan drug credit.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2019. 

4 SEC. 3. ENHANCED RESEARCH CREDIT FOR COVID–19 EX5 PENDITURES. 

6 (a) IN GENERAL.—Section 41 of the Internal Rev7 enue Code of 1986 is amended by adding at the end the 

8 following: 

9 ‘‘(i) ENHANCED CREDIT FOR COVID–19 RESEARCH

10 EXPENDITURES.— 

11 ‘‘(1) IN GENERAL.—For purposes of deter12 mining the amount of qualified research expenses 

13 under subsection (b) for the taxable year, the 

14 amount of any qualified COVID–19 research ex15 penditures paid or incurred by a taxpayer on or 

16 after February 15, 2020, and before January 1, 

17 2022, shall be equal to 200 percent of the amount 

18 paid or incurred. 

19 ‘‘(2) QUALIFIED COVID–19 RESEARCH EXPENDI20 TURES.—The term ‘qualified COVID–19 research 

21 expenditures’ has the meaning given such term by 

22 section 172(g)(2).’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2019. 

Æ 


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