II 

113TH CONGRESS 

2D SESSION S. 1920 

To amend the Internal Revenue Code of 1986 to extend and modify the 

research and development credit to encourage innovation. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 14, 2014 

Mr. ROBERTS (for himself and Mr. COONS) 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 extend 

and modify the research and development credit to encourage innovation. 

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 ‘‘Innovators Job Cre5 ation Act’’. 

6 SEC. 2. PERMANENT EXTENSION. 

7 (a) IN GENERAL.—Section 41 of the Internal Rev8 enue Code of 1986 is amended by striking subsection (h) 

9 and inserting the following: 


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1 ‘‘(h) TERMINATION OF ALTERNATIVE INCREMENTAL

2 CREDIT.—No election under subsection (c)(4) shall apply 

3 to taxable years beginning after December 31, 2008.’’. 

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

5 this section shall apply to amounts paid or incurred after 

6 December 31, 2013. 

7 SEC. 3. CREDIT ALLOWED AGAINST ALTERNATIVE MIN8 IMUM TAX. 

9 Subparagraph (B) of section 38(c)(4) of the Internal 

10 Revenue Code of 1986 is amended— 

11 (1) by redesignating clauses (ii), (iii), (iv), (v), 

12 (vi), (vii), (viii), and (ix) as clauses (iii), (iv), (v), 

13 (vi), (vii), (viii), (ix), and (x), respectively, and 

14 (2) by inserting after clause (i) the following 

15 new clause: 

16 ‘‘(ii) the credit determined under sec17 tion 41 to the extent attributable to 

18 amounts paid or incurred after December 

19 31, 2013,’’. 

20 SEC. 4. PERMANENT 5-YEAR CARRYBACK FOR RESEARCH 

21 CREDITS OF SMALL BUSINESSES. 

22 (a) IN GENERAL.—Paragraph (4) of section 39(a) of 

23 the Internal Revenue Code of 1986 is amended to read 

24 as follows: 


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1 ‘‘(4) 5-YEAR CARRYBACK FOR RESEARCH CRED2 ITS OF SMALL BUSINESSES.—Notwithstanding sub3 section (d), in the case of credits determined under 

4 section 41 with respect to an eligible small business 

5 (as defined in section 38(c)(5)(C)) in taxable years 

6 beginning after December 31, 2013— 

7 ‘‘(A) paragraph (1) shall be applied by 

8 substituting ‘each of the 5 taxable years’ for 

9 ‘the taxable year’ in subparagraph (A) thereof, 

10 and 

11 ‘‘(B) paragraph (2) shall be applied— 

12 ‘‘(i) by substituting ‘25 taxable years’ 

13 for ‘21 taxable years’ in subparagraph (A) 

14 thereof, and 

15 ‘‘(ii) by substituting ‘24 taxable years’ 

16 for ‘20 taxable years’ in subparagraph (B) 

17 thereof.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2013. 

21 SEC. 5. ELECTION PERMITTED ON AMENDED RETURN. 

22 (a) IN GENERAL.—Paragraph (5) of section 41(c) of 

23 the Internal Revenue Code of 1986 is amended by adding 

24 at the end the following new subparagraph: 


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1 ‘‘(D) SPECIAL RULE REGARDING TIMING

2 OF ELECTION.—An election under this para3 graph may be made by means of an amendment 

4 to the return of tax for the taxable year for 

5 which made.’’. 

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2013. 

9 SEC. 6. TREATMENT OF RESEARCH CREDIT FOR CERTAIN 

10 STARTUP COMPANIES. 

11 (a) IN GENERAL.— 

12 (1) IN GENERAL.—Section 41 of the Internal 

13 Revenue Code of 1986 is amended by adding at the 

14 end the following new subsection: 

15 ‘‘(i) TREATMENT OF CREDIT TO QUALIFIED SMALL

16 BUSINESSES.— 

17 ‘‘(1) IN GENERAL.—At the election of a quali18 fied small business, the payroll tax credit portion of 

19 the credit determined under subsection (a) shall be 

20 treated as a credit allowed under section 3111(f) 

21 (and not under this section). 

22 ‘‘(2) PAYROLL TAX CREDIT PORTION.—For 

23 purposes of this subsection, the payroll tax credit 

24 portion of the credit determined under subsection 


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1 (a) for any taxable year is so much of such credit 

2 as does not exceed $250,000. 

3 ‘‘(3) QUALIFIED SMALL BUSINESS.—For pur4 poses of this subsection— 

5 ‘‘(A) IN GENERAL.—The term ‘qualified 

6 small business’ means, with respect to any tax7 able year— 

8 ‘‘(i) a corporation, partnership, or S 

9 corporation if— 

10 ‘‘(I) the gross receipts (as deter11 mined under subsection (c)(7)) of 

12 such entity for the taxable year is less 

13 than $5,000,000, and 

14 ‘‘(II) such entity did not have 

15 gross receipts (as so determined) for 

16 any period preceding the 5-taxable17 year period ending with such taxable 

18 year, and 

19 ‘‘(ii) any person not described in sub20 paragraph (A) if clauses (i) and (ii) of sub21 paragraph (A) applied to such person, de22 termined— 

23 ‘‘(I) by substituting ‘person’ for 

24 ‘entity’ each place it appears), and 


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1 ‘‘(II) in the case of an individual, 

2 by only taking into account the aggre3 gate gross receipts received by such 

4 individual in carrying on trades or 

5 businesses of such individual. 

6 ‘‘(B) LIMITATION.—Such term shall not 

7 include an organization which is exempt from 

8 taxation under section 501. 

9 ‘‘(4) ELECTION.— 

10 ‘‘(A) IN GENERAL.—In the case of a part11 nership or S corporation, an election under this 

12 subsection shall be made at the entity level. 

13 ‘‘(B) REVOCATION.—An election under 

14 this subsection may not be revoked without the 

15 consent of the Secretary. 

16 ‘‘(C) LIMITATION.—A taxpayer may not 

17 make an election under this subsection if such 

18 taxpayer has made an election under this sub19 section for 5 or more preceding taxable years. 

20 ‘‘(5) AGGREGATION RULES.—For purposes of 

21 determining the $250,000 limitation under para22 graph (2) and determining gross receipts under 

23 paragraph (3), all members of the same controlled 

24 group of corporations (within the meaning of section 

25 267(f)) and all persons under common control (withVerDate Mar 15 2010 07:17 Jan 16, 2014 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1920.IS S1920

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1 in the meaning of section 52(b) but determined by 

2 treating an interest of more than 50 percent as a 

3 controlling interest) shall be treated as 1 person. 

4 ‘‘(6) REGULATIONS.—The Secretary shall pre5 scribe such regulations as may be necessary to carry 

6 out the purposes of this subsection, including— 

7 ‘‘(A) regulations to prevent the avoidance 

8 of the purposes of paragraph (3) through the 

9 use of successor companies or other means, 

10 ‘‘(B) regulations to minimize compliance 

11 and record-keeping burdens under this sub12 section for start-up companies, and 

13 ‘‘(C) regulations for recapturing the ben14 efit of credits determined under section 3111(f) 

15 in cases where there is a subsequent adjustment 

16 to the payroll tax credit portion of the credit 

17 determined under subsection (a), including re18 quiring amended returns in the cases where 

19 there is such an adjustment.’’. 

20 (2) CONFORMING AMENDMENT.—Section 

21 280C(c) of the Internal Revenue Code of 1986 is 

22 amended by adding at the end the following new 

23 paragraph: 

24 ‘‘(5) TREATMENT OF QUALIFIED SMALL BUSI25 NESS CREDIT.—For purposes of determining the 


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1 amount of any credit under section 41(a) under this 

2 subsection, any election under section 41(i) shall be 

3 disregarded.’’. 

4 (b) CREDIT ALLOWED AGAINST FICA TAXES.— 

5 (1) IN GENERAL.—Section 3111 of the Internal 

6 Revenue Code of 1986 is amended by adding at the 

7 end the following new subsection: 

8 ‘‘(f) CREDIT FOR RESEARCH EXPENDITURES OF

9 QUALIFIED SMALL BUSINESSES.— 

10 ‘‘(1) IN GENERAL.—In the case of a qualified 

11 small business which has made an election under 

12 section 41(i), there shall be allowed as a credit 

13 against the tax imposed by subsection (a) on wages 

14 paid with respect to the employment of all employees 

15 of the qualified small business for days in an appli16 cable calendar quarter an amount equal to the pay17 roll tax credit portion of the research credit deter18 mined under section 41(a). 

19 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—In any 

20 case in which the payroll tax credit portion of the re21 search credit determined under section 41(a) exceeds 

22 the tax imposed under subsection (a) for an applica23 ble calendar quarter— 


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1 ‘‘(A) the succeeding calendar quarter shall 

2 be treated as an applicable calendar quarter, 

3 and 

4 ‘‘(B) the amount of credit allowed under 

5 paragraph (1) shall be reduced by the amount 

6 of credit allowed under such paragraph for all 

7 preceding applicable calendar quarters. 

8 ‘‘(3) ALLOCATION OF CREDIT FOR CON9 TROLLED GROUPS, ETC.—In determining the 

10 amount of the credit under this subsection— 

11 ‘‘(A) all persons treated as a single tax12 payer under section 41 shall be treated as a 

13 single taxpayer under this section, and 

14 ‘‘(B) the credit (if any) allowable by this 

15 section to each such member shall be its pro16 portionate share of the qualified research ex17 penses, basic research payments, and amounts 

18 paid or incurred to energy research consor19 tiums, giving rise to the credit allowable under 

20 section 41. 

21 ‘‘(4) DEFINITIONS.—For purposes of this sub22 section— 

23 ‘‘(A) APPLICABLE CALENDAR QUARTER.— 

24 The term ‘applicable calendar quarter’ means— 


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1 ‘‘(i) the first calendar quarter fol2 lowing the date on which the qualified 

3 small business files a return under section 

4 6012 for the taxable year for which the 

5 payroll tax credit portion of the research 

6 credit under section 41(a) is determined, 

7 and 

8 ‘‘(ii) any succeeding calendar quarter 

9 treated as an applicable calendar quarter 

10 under paragraph (2)(A). 

11 ‘‘For purposes of determining the date on 

12 which a return is filed, rules similar to the rules 

13 of section 6513 shall apply. 

14 ‘‘(B) OTHER TERMS.—Any term used in 

15 this subsection which is also used in section 41 

16 shall have the meaning given such term under 

17 section 41.’’. 

18 (2) TRANSFERS TO FEDERAL OLD-AGE AND

19 SURVIVORS INSURANCE TRUST FUND.—There are 

20 hereby appropriated to the Federal Old-Age and 

21 Survivors Trust Fund and the Federal Disability In22 surance Trust Fund established under section 201 

23 of the Social Security Act (42 U.S.C. 401) amounts 

24 equal to the reduction in revenues to the Treasury 

25 by reason of the amendments made by paragraph 


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1 (1). Amounts appropriated by the preceding sen2 tence shall be transferred from the general fund at 

3 such times and in such manner as to replicate to the 

4 extent possible the transfers which would have oc5 curred to such Trust Fund had such amendments 

6 not been enacted. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2013. 

Æ 


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