II 

112TH CONGRESS 

1ST SESSION S. 825 

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

modify the research tax credit, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 14, 2011 

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 permanently 

extend and modify the research tax credit, 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 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Job Creation Through Innovation Act’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 


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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 SEC. 2. USE OF ONLY SIMPLIFIED RESEARCH CREDIT 

4 AFTER 2011; EXPANSION AND PERMANENT 

5 EXTENSION. 

6 (a) SIMPLIFIED CREDIT FOR QUALIFIED RESEARCH

7 EXPENSES.—Subsection (a) of section 41 is amended to 

8 read as follows: 

9 ‘‘(a) GENERAL RULE.— 

10 ‘‘(1) CREDIT DETERMINED.—For purposes of 

11 section 38, the research credit determined under this 

12 section for the taxable year shall be an amount equal 

13 to 20 percent of so much of the qualified research 

14 expenses for the taxable year as exceeds 50 percent 

15 of the average qualified research expenses for the 3 

16 taxable years preceding the taxable year for which 

17 the credit is being determined. 

18 ‘‘(2) SPECIAL RULE IN CASE OF NO QUALIFIED

19 RESEARCH EXPENSES IN ANY OF 3 PRECEDING TAX20 ABLE YEARS.— 

21 ‘‘(A) TAXPAYERS TO WHICH PARAGRAPH

22 APPLIES.—The credit under this section shall 

23 be determined under this paragraph if the tax24 payer has no qualified research expenses in any 


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1 one of the 3 taxable years preceding the taxable 

2 year for which the credit is being determined. 

3 ‘‘(B) CREDIT RATE.—The credit deter4 mined under this paragraph shall be equal to 

5 10 percent of the qualified research expenses 

6 for the taxable year.’’. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) TERMINATION OF BASE AMOUNT CALCULA9 TION.—Section 41 is amended by striking subsection 

10 (c) and redesignating subsection (d) as subsection 

11 (c). 

12 (2) TERMINATION OF BASIC RESEARCH PAY13 MENT CALCULATION.—Section 41 is amended by 

14 striking subsection (e) and redesignating subsections 

15 (f) and (g) as subsections (d) and (e), respectively. 

16 (3) SPECIAL RULES.— 

17 (A) Paragraph (1)(A)(ii) of subsection (d) 

18 of section 41, as so redesignated, is amended by 

19 striking ‘‘shares of the qualified research ex20 penses, basic research payments, and amounts 

21 paid or incurred to energy research consor22 tiums,’’ and inserting ‘‘share of the qualified re23 search expenses’’. 

24 (B) Paragraph (1)(B)(ii) of section 41(d), 

25 as so redesignated, is amended by striking 


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1 ‘‘shares of the qualified research expenses, basic 

2 research payments, and amounts paid or in3 curred to energy research consortiums,’’ and in4 serting ‘‘share of the qualified research ex5 penses’’. 

6 (C) Paragraph (3) of section 41(d), as so 

7 redesignated, is amended— 

8 (i) by striking ‘‘, and the gross re9 ceipts of the taxpayer’’ and all that follows 

10 in subparagraph (A) and inserting a pe11 riod, 

12 (ii) by striking ‘‘, and the gross re13 ceipts of the taxpayer’’ and all that follows 

14 in subparagraph (B) and inserting a pe15 riod, and 

16 (iii) by striking subparagraph (C). 

17 (D) Paragraph (4) of section 41(d), as so 

18 redesignated, is amended by striking ‘‘and gross 

19 receipts’’. 

20 (E) Subsection (d) of section 41, as so re21 designated, is amended by striking paragraph 

22 (6). 

23 (4) PERMANENT EXTENSION.— 

24 (A) Section 41 is amended by striking sub25 section (h). 


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1 (B) Section 45C(b)(1) is amended by strik2 ing subparagraph (D). 

3 (5) CROSS-REFERENCES.— 

4 (A) Paragraphs (2)(A) and (4) of section 

5 41(b) are each amended by striking ‘‘subsection 

6 (f)(1)’’ and inserting ‘‘subsection (d)(1)’’. 

7 (B) Paragraph (2) of section 45C(c) is 

8 amended by striking ‘‘base period research ex9 penses’’ and inserting ‘‘average qualified re10 search expenses’’. 

11 (C) Paragraph (3) of section 45C(d) is 

12 amended by striking ‘‘section 41(f)’’ and insert13 ing ‘‘section 41(d)’’. 

14 (D) Paragraph (2) of section 45G(e) is 

15 amended by striking ‘‘section 41(f)’’ and insert16 ing ‘‘section 41(d)’’. 

17 (E) Subsection (g) of section 45O is 

18 amended by striking ‘‘section 41(f)’’ and insert19 ing ‘‘section 41(d)’’. 

20 (F) Subparagraph (A) of section 54(l)(3) 

21 is amended by striking ‘‘section 41(g)’’ and in22 serting ‘‘section 41(e)’’. 

23 (G) Clause (i) of section 170(e)(4)(B) is 

24 amended to read as follows: 


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1 ‘‘(i) the contribution is to a qualified 

2 organization,’’. 

3 (H) Paragraph (4) of section 170(e) is 

4 amended by adding at the end the following 

5 new subparagraph: 

6 ‘‘(E) QUALIFIED ORGANIZATION.—For 

7 purposes of this paragraph, the term ‘qualified 

8 organization’ means— 

9 ‘‘(i) any educational organization 

10 which— 

11 ‘‘(I) is an institution of higher 

12 education (within the meaning of sec13 tion 3304(f)), and 

14 ‘‘(II) is described in subsection 

15 (b)(1)(A)(ii), or 

16 ‘‘(ii) any organization not described in 

17 clause (i) which— 

18 ‘‘(I) is described in section 

19 501(c)(3) and is exempt from tax 

20 under section 501(a), 

21 ‘‘(II) is organized and operated 

22 primarily to conduct scientific re23 search, and 

24 ‘‘(III) is not a private founda25 tion.’’. 


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1 (I) Subsection (f) of section 197 is amend2 ed by striking ‘‘section 41(f)(1)’’ each place it 

3 appears in paragraphs (1)(C) and (9)(C)(i) and 

4 inserting ‘‘section 41(d)(1)’’. 

5 (J) Section 280C is amended— 

6 (i) by striking ‘‘41(f)’’ each place it 

7 appears in subsection (b)(3) and inserting 

8 ‘‘41(d)’’, 

9 (ii) by striking ‘‘or basic research ex10 penses (as defined in section 41(e)(2))’’ in 

11 subsection (c)(1), 

12 (iii) by striking ‘‘section 41(a)(1)’’ in 

13 subsection (c)(2)(A) and inserting ‘‘section 

14 41(a)’’, and 

15 (iv) by striking ‘‘or basic research ex16 penses’’ in subsection (c)(2)(B). 

17 (K) Subclause (IV)(c) of section 

18 936(h)(5)(C)(i) is amended by striking ‘‘section 

19 41(f)’’ and inserting ‘‘section 41(d)’’. 

20 (L) Subparagraph (D) of section 936(j)(5) 

21 is amended by striking ‘‘section 41(f)(3)’’ and 

22 inserting ‘‘section 41(d)(3)’’. 

23 (M) Clause (i) of section 965(c)(2)(C) is 

24 amended by striking ‘‘section 41(f)(3)’’ and in25 serting ‘‘section 41(d)(3)’’. 


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1 (N) Clause (i) of section 1400N(l)(7)(B) is 

2 amended by striking ‘‘section 41(g)’’ and insert3 ing ‘‘section 41(e)’’. 

4 (c) TECHNICAL CORRECTIONS.—Section 409 is 

5 amended— 

6 (1) by inserting ‘‘, as in effect before the enact7 ment of the Tax Reform Act of 1984)’’ after ‘‘sec8 tion 41(c)(1)(B)’’ in subsection (b)(1)(A), 

9 (2) by inserting ‘‘, as in effect before the enact10 ment of the Tax Reform Act of 1984’’ after ‘‘relat11 ing to the employee stock ownership credit’’ in sub12 section (b)(4), 

13 (3) by inserting ‘‘(as in effect before the enact14 ment of the Tax Reform Act of 1984)’’ after ‘‘sec15 tion 41(c)(1)(B)’’ in subsection (i)(1)(A), 

16 (4) by inserting ‘‘(as in effect before the enact17 ment of the Tax Reform Act of 1984)’’ after ‘‘sec18 tion 41(c)(1)(B)’’ in subsection (m), 

19 (5) by inserting ‘‘(as so in effect)’’ after ‘‘sec20 tion 48(n)(1)’’ in subsection (m), 

21 (6) by inserting ‘‘(as in effect before the enact22 ment of the Tax Reform Act of 1984)’’ after ‘‘sec23 tion 48(n)’’ in subsection (q)(1), and 


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1 (7) by inserting ‘‘(as in effect before the enact2 ment of the Tax Reform Act of 1984)’’ after ‘‘sec3 tion 41’’ in subsection (q)(3). 

4 (d) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as provided in para6 graph (2), the amendments made by this section 

7 shall apply to taxable years beginning after Decem8 ber 31, 2011. 

9 (2) TECHNICAL CORRECTIONS.—The amend10 ments made by subsection (c) shall take effect on 

11 the date of the enactment of this Act. 

12 SEC. 3. ENHANCED RESEARCH CREDIT FOR DOMESTIC 

13 MANUFACTURERS. 

14 (a) IN GENERAL.—Section 41, as amended by section 

15 3, is amended by redesignating subsection (f) as sub16 section (g) and by inserting after subsection (e) the fol17 lowing new subsection: 

18 ‘‘(f) ENHANCED CREDIT FOR DOMESTIC MANUFAC19 TURERS.— 

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

21 domestic manufacturer, this section shall be applied 

22 by increasing the 20 percent amount in subsection 

23 (a)(1) by the bonus amount. 

24 ‘‘(2) QUALIFIED DOMESTIC MANUFACTURER.— 

25 For purposes of this subsection— 


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

2 domestic manufacturer’ means a taxpayer who 

3 has domestic production gross receipts which 

4 are more than 50 percent of total production 

5 gross receipts. 

6 ‘‘(B) DOMESTIC PRODUCTION GROSS RE7 CEIPTS.—The term ‘domestic production gross 

8 receipts’ has the meaning given to such term 

9 under section 199(c)(4). 

10 ‘‘(C) TOTAL PRODUCTION GROSS RE11 CEIPTS.—The term ‘total production gross re12 ceipts’ means the gross receipts of the taxpayer 

13 which are described in section 199(c)(4), deter14 mined— 

15 ‘‘(i) without regard to whether prop16 erty described in subparagraph (A)(i)(I) or 

17 (A)(i)(III) thereof was manufactured, pro18 duced, grown, or extracted in the United 

19 States, 

20 ‘‘(ii) by substituting ‘any property de21 scribed in section 168(f)(3)’ for ‘any quali22 fied film’ in subparagraph (A)(i)(II) there23 of, and 

24 ‘‘(iii) without regard to whether any 

25 construction described in subparagraph 


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1 (A)(ii) thereof or services described in sub2 paragraph (A)(iii) thereof were performed 

3 in the United States. 

4 ‘‘(3) BONUS AMOUNT.—For purposes of para5 graph (1), the bonus amount shall be determined as 

6 follows: 

‘‘If the percentage of total production gross 

receipts which are domestic production 

gross receipts is: 

The bonus 

amount is: 

More than 50 percent and not more than 60 percent.2 percentage points 

More than 60 percent and not more than 70 percent.4 percentage points 

More than 70 percent and not more than 80 percent.6 percentage points 

More than 80 percent and not more than 90 percent.8 percentage points 

More than 90 percent ............................................ 10 percentage 

points.’’. 

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

8 this section shall apply to expenditures paid or incurred 

9 in taxable years beginning after December 31, 2011. 

10 SEC. 4. RESEARCH CREDIT MADE REFUNDABLE FOR SMALL 

11 BUSINESSES. 

12 (a) IN GENERAL.—Subsection (a) of section 41 of the 

13 Internal Revenue Code of 1986, as amended by section 

14 3, is amended by adding at the end the following new 

15 paragraph: 

16 ‘‘(3) PORTION OF CREDIT REFUNDABLE.— 

17 ‘‘(A) IN GENERAL.—For purposes of sub18 sections (b) and (c) of section 6401, the 

19 amount of the credit determined under this secVerDate Mar 15 2010 23:49 Apr 15, 2011 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S825.IS S825

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1 tion which is attributable to a qualified small 

2 business shall be treated as a credit allowed 

3 under subpart C of part IV of subchapter A for 

4 the taxable year (and not under any other sub5 part). For purposes of section 6425, any 

6 amount treated as so allowed shall be treated as 

7 a payment of estimated income tax for the tax8 able year. 

9 ‘‘(B) QUALIFIED SMALL BUSINESS.—For 

10 purposes of this paragraph, the term ‘qualified 

11 small business’ means, with respect to any tax12 able year, any person if the annual average 

13 number of employees employed by such person 

14 during such taxable year is 500 or fewer.’’. 

15 (b) CONFORMING AMENDMENT.—Section 1324(b)(2) 

16 of title 31, United States Code, is amended by inserting 

17 ‘‘41(a)(3),’’ after ‘‘36A,’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2011. 

21 SEC. 5. EXTENSION OF GRANTS FOR SPECIFIED ENERGY 

22 PROPERTY IN LIEU OF TAX CREDITS. 

23 (a) IN GENERAL.—Subsection (a) of section 1603 of 

24 division B of the American Recovery and Reinvestment 

25 Act of 2009 is amended— 


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1 (1) in paragraph (1), by striking ‘‘or 2011’’ and 

2 inserting ‘‘2011, or 2012’’, and 

3 (2) in paragraph (2)— 

4 (A) by striking ‘‘after 2011’’ and inserting 

5 ‘‘after 2012’’, and 

6 (B) by striking ‘‘or 2011’’ and inserting 

7 ‘‘2011, or 2012’’. 

8 (b) CONFORMING AMENDMENT.—Subsection (j) of 

9 section 1603 of division B of such Act is amended by strik10 ing ‘‘2012’’ and inserting ‘‘2013’’. 

11 SEC. 6. EXTENSION OF THE ADVANCED ENERGY PROJECT 

12 CREDIT. 

13 (a) IN GENERAL.—Subsection (d) of section 48C is 

14 amended by adding at the end the following new para15 graph: 

16 ‘‘(6) ADDITIONAL 2011 ALLOCATIONS.— 

17 ‘‘(A) IN GENERAL.—Not later than 180 

18 days after the date of the enactment of this 

19 paragraph, the Secretary, in consultation with 

20 the Secretary of Energy, shall establish a pro21 gram to consider and award certifications for 

22 qualified investments eligible for credits under 

23 this section to qualifying advanced energy 

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1 ceived on or after the date of the enactment of 

2 this paragraph. 

3 ‘‘(B) LIMITATION.—The total amount of 

4 credits that may be allocated under the pro5 gram described in subparagraph (A) shall not 

6 exceed the 2011 allocation amount reduced by 

7 so much of the 2011 allocation amount as is 

8 taken into account as an increase in the limita9 tion described in paragraph (1)(B). 

10 ‘‘(C) APPLICATION OF CERTAIN RULES.— 

11 Rules similar to the rules of paragraphs (2), 

12 (3), (4), and (5) shall apply for purposes of the 

13 program described in subparagraph (A), except 

14 that— 

15 ‘‘(i) CERTIFICATION.—Applicants 

16 shall have 2 years from the date that the 

17 Secretary establishes such program to sub18 mit applications. 

19 ‘‘(ii) SELECTION CRITERIA.—For pur20 poses of paragraph (3)(B)(i), the term ‘do21 mestic job creation (both direct and indi22 rect)’ means the creation of direct jobs in 

23 the United States producing the property 

24 manufactured at the manufacturing facility 

25 described under subsection (c)(1)(A)(i), 


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1 and the creation of indirect jobs in the 

2 manufacturing supply chain for such prop3 erty in the United States. 

4 ‘‘(iii) REVIEW AND REDISTRIBU5 TION.—The Secretary shall conduct a sep6 arate review and redistribution under para7 graph (5) with respect to such program 

8 not later than 4 years after the date of the 

9 enactment of this paragraph. 

10 ‘‘(D) 2011 ALLOCATION AMOUNT.—For 

11 purposes of this subsection, the term ‘2011 allo12 cation amount’ means $5,000,000,000. 

13 ‘‘(E) DIRECT PAYMENTS.—In lieu of any 

14 qualifying advanced energy project credit which 

15 would otherwise be determined under this sec16 tion with respect to an allocation to a taxpayer 

17 under this paragraph, the Secretary shall, upon 

18 the election of the taxpayer, make a grant to 

19 the taxpayer in the amount of such credit as so 

20 determined. Rules similar to the rules of section 

21 50 shall apply with respect to any grant made 

22 under this subparagraph.’’. 

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1 ed by inserting ‘‘(increased by so much of the 2011 alloca2 tion amount (not in excess of $1,500,000,000) as the Sec3 retary determines necessary to make allocations to quali4 fied investments with respect to which qualifying applica5 tions were submitted before the date of the enactment of 

6 paragraph (6))’’ after ‘‘$2,300,000,000’’. 

7 (c) CONFORMING AMENDMENT.—Paragraph (2) of 

8 section 1324(b) of title 31, United States Code, is amend9 ed by inserting ‘‘48C(d)(6)(E),’’ after ‘‘36C,’’. 

Æ 


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