II 

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. 

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.—A taxpayer to which this 

13 subsection applies for any taxable year beginning in 

14 2020 or 2021 shall be allowed an advance refund in 

15 the amount determined under paragraph (2) for 

16 such taxable year. 

17 ‘‘(2) AMOUNT OF THE ADVANCE REFUND.— 

18 ‘‘(A) IN GENERAL.—The advance refund 

19 determined under this paragraph for any tax20 able year is an amount equal the lesser of— 

21 ‘‘(i) the amount specified by the tax22 payer in the election to have this sub23 section apply, or 

24 ‘‘(ii) an amount equal to 21 percent of 

25 the sum of— 


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1 ‘‘(I) any net operating loss aris2 ing in such taxable year (reduced by 

3 any portion of such net operating loss 

4 carried back to a preceding taxable 

5 year under subsection (b)(1)(D)), plus 

6 ‘‘(II) any carryforward to such 

7 taxable year of a net operating loss 

8 arising in a taxable year beginning 

9 after December 31, 2014, and before 

10 such taxable year. 

11 ‘‘(B) AGGREGATE DOLLAR LIMITATION.— 

12 The aggregate amount of advance refunds of a 

13 taxpayer under this subsection for all taxable 

14 years shall not exceed $100,000,000. 

15 ‘‘(3) NET OPERATING LOSS OFFSET BY AD16 VANCE REFUNDS.—The net operating loss of the 

17 taxpayer for any taxable year to which this sub18 section applies shall be reduced by the amount of 

19 any net operating loss arising in such taxable year, 

20 or net operating loss carryforward to such taxable 

21 year, for which an advance refund is elected pursu22 ant to this subsection. 

23 ‘‘(4) TAXPAYER TO WHICH SUBSECTION AP24 PLIES.—For purposes of paragraph (1), this sub25 section applies to a taxpayer for a taxable year if— 


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1 ‘‘(A) the taxpayer is a C corporation— 

2 ‘‘(i) with respect to which the average 

3 number of full-time employees (as deter4 mined for purposes of determining whether 

5 an employer is an applicable large em6 ployer for purposes of section 4980H(c)(2) 

7 of the Internal Revenue Code of 1986) em8 ployed by the taxpayer during calendar 

9 year 2019 or 2020, whichever is greater, is 

10 greater than five and is not greater than 

11 1,500, and 

12 ‘‘(ii) which has complied to date with 

13 filing of all forms or return requirements 

14 under section 3102, 3111, 3301, and 3402 

15 with respect to calendar years 2019 and 

16 2020, and 

17 ‘‘(B) the taxpayer elects the application of 

18 this subsection for such taxable year. 

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

20 subsection— 

21 ‘‘(A) CERTAIN CONTRIBUTIONS OF CAP22 ITAL NOT TAKEN INTO ACCOUNT IN DETER23 MINING OWNERSHIP CHANGE UNDER SECTION

24 382.—For purposes of determining whether an 

25 ownership change has occurred with respect to 


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1 the loss corporation under section 382(g) in 

2 computing the amount of any advance refund 

3 under this section, a transfer of stock in ex4 change for a capital contribution to such loss 

5 corporation shall not be taken into account if— 

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

7 is commensurate with the amount of cap8 ital being contributed, and 

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

10 plan to redeem other shareholders. 

11 ‘‘(B) 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 ‘‘(6) 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 ‘‘(7) ADVANCE REFUND.—For rules for claim12 ing the advance refund, see section 6429.’’. 

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 which— 

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 December 31, 2014. 

11 ‘‘(2) ANNUAL LIMITATION.—The amount of the 

12 advance refund under paragraph (1) for a taxable 

13 year shall not exceed the excess (if any) of 

14 $25,000,000 reduced by the amount of the advance 

15 refund for such taxable year 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) ADVANCE REFUND.— 

20 ‘‘(1) IN GENERAL.—In the case of a C corpora21 tion, the advance refund sum for any taxable year 

22 may be claimed by the taxpayer as follows: 

23 ‘‘(A) PAYROLL TAXES.—First, by reducing 

24 deposits or payments of applicable employment 

25 taxes. 


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1 ‘‘(B) ADVANCE REFUNDABILITY.—Second, 

2 any remaining amount of the advance refund 

3 sum to be refunded to the taxpayer after the 

4 application of subparagraph (A) shall be treated 

5 as an overpayment and shall be refunded in a 

6 manner similar to that prescribed in subsection 

7 2301(b)(3) of the Coronavirus, Aid, Relief, and 

8 Economic Security Act. 

9 ‘‘(2) APPLICABLE EMPLOYMENT TAXES.—For 

10 purposes of paragraph (1)(A), the term ‘applicable 

11 employment taxes’ means the following: 

12 ‘‘(A) The taxes imposed under section 

13 3111(b). 

14 ‘‘(B) So much of the taxes imposed under 

15 section 3221(a) as are attributable to the rate 

16 in effect under section 3111(b). 

17 ‘‘(b) ADVANCE REFUND SUM.—For purposes of sub18 section (a), the term ‘advance refund sum’ means, with 

19 respect to any taxable year, the sum of— 

20 ‘‘(1) the amount of the taxpayer’s advance re21 fund under section 172(g) for the taxable year, and 

22 ‘‘(2) the amount of the advance refund for such 

23 taxable year under section 39(e) of any unused busi24 ness credit carryforward which is attributable to the 


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1 research credit determined under section 41 or the 

2 orphan drug credit determined under section 45C. 

3 ‘‘(c) RECAPTURE.— 

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

5 regulations, provide for recapturing the benefit of 

6 any advance refund allowable under this section if 

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

8 corporation during the recapture period. The recap9 ture amount shall not exceed the lesser of— 

10 ‘‘(A) the amount of any proceeds or dis11 tributions received by shareholders of the cor12 poration attributable to such sale or liquidation, 

13 or 

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

15 exceeds the aggregate amount spent by the cor16 poration on payroll, research expenses, and 

17 property, plant and equipment during the re18 capture period. 

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

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

21 the two-year period beginning on the date of the ad22 vance refund.’’. 

23 (2) CLERICAL AMENDMENT.—The table of sec24 tions for subchapter B of chapter 65 of such Code 


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1 is amended by inserting after the item relating to 

2 section 6428 the following new item: 

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

orphan drug credit.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2019. 

6 SEC. 3. ENHANCED RESEARCH CREDIT FOR COVID–19 EX7 PENDITURES. 

8 (a) IN GENERAL.—Section 41 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the 

10 following: 

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

12 EXPENDITURES.— 

13 ‘‘(1) IN GENERAL.—For purposes of deter14 mining the amount of qualified research expenses 

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

16 amount of any qualified COVID–19 research ex17 penditures paid or incurred by a taxpayer on or 

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

19 2022, shall be equal to 200 percent of the amount 

20 paid or incurred. 

21 ‘‘(2) QUALIFIED COVID–19 RESEARCH EXPENDI22 TURES.—For purposes of this subsection, the term 

23 ‘qualified COVID–19 research expenditures’ means 

24 expenditures paid or incurred in connection with the 


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1 research and development of products regulated by 

2 the Food and Drug Administration (including bio3 logics, drugs, and devices) that are intended to be 

4 used in the diagnosis, prevention and treatment of 

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

6 other similar expenditures as prescribed by the Sec7 retary in regulations.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2019. 

Æ 


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