I 

117TH CONGRESS 

1ST SESSION H. R. 3623 

To amend the Internal Revenue Code of 1986 to provide for advance refunds 

of certain net operating losses and research expenditures, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 28, 2021 

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, 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’’. 

7 SEC. 2. ADVANCE REFUNDS OF NET OPERATING LOSSES 

8 FOR C CORPORATION TAXPAYERS. 

9 (a) IN GENERAL.— 


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1 (1) NET OPERATING LOSS CARRYOVERS.—Sec2 tion 172 of the Internal Revenue Code of 1986 is 

3 amended by redesignating subsection (g) as sub4 section (h) and by inserting after subsection (f) the 

5 following: 

6 ‘‘(g) ADVANCE REFUND FOR C CORPORATIONS RE7 LATING TO CERTAIN CARRYOVERS ARISING DURING 2015 

8 THROUGH 2021.— 

9 ‘‘(1) IN GENERAL.—A taxpayer to whom this 

10 subsection applies may, in lieu of an election with re11 spect to a net operating loss carryback under sub12 section (b)(1)(D), elect an advance refund of net op13 erating loss carryovers in the amount equal to— 

14 ‘‘(A) the rate set forth in section 11 (as in 

15 effect on the date of the enactment of this para16 graph), multiplied by 

17 ‘‘(B) any net operating loss carryovers that 

18 arose— 

19 ‘‘(i) in a taxable year beginning on or 

20 after January 1, 2015, and before January 

21 1, 2020, or 

22 ‘‘(ii) in a taxable year beginning on or 

23 after January 1, 2019, and before January 

24 1, 2022. 


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1 ‘‘(2) TAXPAYER DESCRIBED.—For purposes of 

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

3 if— 

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

5 ‘‘(B) the average number of full-time em6 ployees (as determined for purposes of deter7 mining whether an employer is an applicable 

8 large employer for purposes of section 

9 4980H(c)(2)) employed by the taxpayer during 

10 calendar year 2019 or 2020, whichever is great11 er, is greater than five and did not exceed 

12 1,500, and 

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

14 with filing of all forms or return requirements 

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

16 respect to calendar years 2019 and 2020. 

17 ‘‘(3) SPECIAL RULES.—For purposes of this 

18 subsection— 

19 ‘‘(A) CERTAIN CONTRIBUTIONS OF CAP20 ITAL NOT TAKEN INTO ACCOUNT IN DETER21 MINING OWNERSHIP CHANGE UNDER SECTION

22 382.—For purposes of determining whether an 

23 ownership change has occurred with respect to 

24 the loss corporation under section 382(g) in 

25 computing the amount of any advance refund 


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1 under this section, a transfer of stock in ex2 change for a capital contribution to such loss 

3 corporation shall not be taken into account if— 

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

5 is commensurate with the amount of cap6 ital being contributed, and 

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

8 plan to redeem other shareholders. 

9 ‘‘(B) AGGREGATE LIMITATION.—The ag10 gregate amount of net operating loss or net op11 erating loss carryover for which an advance re12 fund is elected pursuant to this subsection shall 

13 not exceed $100,000,000. 

14 ‘‘(C) REDUCTION OF NET OPERATING

15 LOSS.—The net operating losses of the taxpayer 

16 determined under subsection (c) shall be re17 duced by the amount of any net operating loss 

18 or net operating loss carryover for which an ad19 vance refund is elected pursuant to this sub20 section. 

21 ‘‘(D) AGGREGATION RULE.—All corpora22 tions treated as a single employer under sub23 section (a) of section 52 or subsection (m) or 

24 (o) under section 414 shall be treated as a sin25 gle taxpayer for purposes of this section. 


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1 ‘‘(4) REGULATIONS AND GUIDANCE.—The Sec2 retary shall issue such regulations and other guid3 ance as may be necessary to carry out the purposes 

4 of this section, including regulations and other guid5 ance— 

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

7 for the application of this subsection in such 

8 manner as the Secretary may prescribe, 

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

10 refund in accordance with section 6429 based 

11 on such information as the Secretary shall re12 quire, 

13 ‘‘(C) to allow advance refunds permitted 

14 under this subsection to be claimed on such 

15 forms as the Secretary shall prescribe, and 

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

17 subsection to taxpayers that file consolidated 

18 returns. 

19 ‘‘(5) ADVANCE REFUND.—See section 6429 for 

20 rules for claiming the advance refund.’’. 

21 (2) CONFORMING AMENDMENT.—Section 

22 172(c) of such Code is amended by inserting before 

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

24 reduction required by subsection (g)’’. 


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1 (b) ADVANCE REFUND OF RESEARCH CREDITS AND

2 ORPHAN DRUG CREDITS FOR C CORPORATION TAX3 PAYERS.—Section 39 of such Code is amended by adding 

4 at the end the following: 

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

6 DRUG CREDITS.— 

7 ‘‘(1) IN GENERAL.—An eligible taxpayer may 

8 elect an advance refund of the portion of any unused 

9 business credit carryforward under section 39 that— 

10 ‘‘(A) is attributable to the credit deter11 mined under section 41 or the credit deter12 mined under section 45C, and 

13 ‘‘(B) is an unused business credit 

14 carryforward carried to a taxable year begin15 ning on or after January 1, 2020, and before 

16 January 1, 2022, and that arose in taxable 

17 years beginning after January 1, 2015. 

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

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

20 excess of $25,000,000 reduced by the amount elect21 ed for the taxable year as an advance refund of net 

22 operating loss carryovers under section 172(g). 

23 ‘‘(3) ELIGIBLE TAXPAYER.—For purposes of 

24 this subsection, a taxpayer is an eligible taxpayer 

25 if— 


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1 ‘‘(A) the taxpayer is a C corporation, and 

2 ‘‘(B) the taxpayer does not have an out3 standing loan made or guaranteed pursuant to 

4 section 7(a)(37) of the Small Business Act (15 

5 U.S.C. 636(a)(37)). 

6 ‘‘(4) INAPPLICABILITY OF SECTIONS 38(C) AND

7 383.—For purposes of this subsection, the amount of 

8 any advance refund shall be computed without re9 spect to the limitations under sections 38(c) and 

10 383(a). 

11 ‘‘(5) REGULATIONS AND GUIDANCE.—The Sec12 retary shall issue such regulations and other guid13 ance as may be necessary— 

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

15 under paragraph (1) in such manner as the 

16 Secretary may by regulations prescribe, 

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

18 this subsection and section 6429 based on such 

19 information as the Secretary shall require, and 

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

21 section to be claimed on such forms as the Sec22 retary shall prescribe.’’. 

23 (c) ADVANCE REFUND OF CERTAIN NET OPERATING

24 LOSSES, RESEARCH CREDIT, AND ORPHAN DRUG CRED25 IT.— 


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

2 of such Code is amended by inserting after section 

3 6428 the following new section: 

4 ‘‘SEC. 6429. ADVANCE REFUND OF CERTAIN NET OPER5 ATING LOSSES, RESEARCH CREDIT, AND OR6 PHAN DRUG CREDIT. 

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

8 the advance refund sum may be claimed by the taxpayer 

9 as follows: 

10 ‘‘(1) PAYROLL TAXES.—First, by reducing de11 posits or payments of— 

12 ‘‘(A) the applicable employment taxes im13 posed under sections 3101(a), 3101(b), 

14 3111(a), and 3111(b) (reduced by any credits 

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

16 3111, sections 7001 and 7003 of the Families 

17 First Coronavirus Response Act and section 

18 2301 of the Coronavirus, Aid, Relief, and Eco19 nomic Security Act) on the wages paid with re20 spect to the employment of all the employees of 

21 the taxpayer for a calendar quarter, and 

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

23 paid by an employer pursuant to section 3403, 

24 with the balance of the advance refund payable 

25 to the taxpayer. 


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1 ‘‘(2) ADVANCE REFUNDABILITY OF EXCESS

2 LOSSES.—Second, any remaining amount to be re3 funded to the taxpayer after the application of para4 graph (1) shall be treated as an overpayment and 

5 shall be refunded in a manner similar to that pre6 scribed in subsection 2301(b)(3) of the Coronavirus, 

7 Aid, Relief, and Economic Security Act. 

8 ‘‘(b) ADVANCE REFUND SUM.—For purposes of sub9 section (a), the term ‘advance refund sum’ means the sum 

10 of— 

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

12 advance refund of net operating loss carryovers 

13 under section 172(g), and 

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

15 carryforward elected under section 39(e) that is at16 tributable to the research credit determined under 

17 section 41 or the orphan drug credit determined 

18 under section 45C. 

19 ‘‘(c) RECAPTURE.— 

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

21 regulations, provide for recapturing the benefit of 

22 any advance refund allowable under this section in 

23 the amount that the advance refund exceeds the sum 

24 of— 


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1 ‘‘(A) the aggregate amount spent by the 

2 corporation on payroll, research expenses, and 

3 property, plant and equipment during the re4 capture period, plus 

5 ‘‘(B) in the case of a sale or full or partial 

6 liquidation of the corporation during the recap7 ture period, the amount of any proceeds or dis8 tributions received by shareholders of the cor9 poration attributable to such sale or liquidation. 

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

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

12 the three-year period beginning on the date of the 

13 advance refund.’’. 

14 (2) TRANSFERS TO FEDERAL OLD-AGE AND

15 SURVIVORS INSURANCE TRUST FUND.—There are 

16 hereby appropriated to the Federal Old-Age and 

17 Survivors Insurance Trust Fund and the Federal 

18 Disability Insurance Trust Fund established under 

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

20 401), the Federal Hospital Insurance Trust Fund 

21 established under section 1817(a) of the Social Se22 curity Act (42 U.S.C. 1395i(a)), and the Social Se23 curity Equivalent Benefit Account established under 

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

25 1974 (45 U.S.C. 14 231n–1(a)) amounts equal to 


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1 the reduction in revenues to the Treasury by reason 

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

3 Amounts appropriated by the preceding sentence 

4 shall be transferred from the general fund at such 

5 times and in such manner as to replicate to the ex6 tent possible the transfers which would have oc7 curred to such Trust Fund or Account had this sec8 tion not been enacted. 

9 (3) CLERICAL AMENDMENT.—The table of sec10 tions for subchapter B of chapter 65 of such Code 

11 is amended by inserting after the item relating to 

12 section 6428 the following new item: 

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

orphan drug credit.’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2020. 

16 SEC. 3. ENHANCED RESEARCH CREDIT FOR CERTAIN PAN17 DEMIC RESEARCH EXPENDITURES. 

18 (a) IN GENERAL.—Section 41 of the Internal Rev19 enue Code of 1986 is amended by adding at the end the 

20 following: 

21 ‘‘(i) ENHANCED CREDIT FOR CERTAIN PANDEMIC

22 RESEARCH EXPENDITURES.— 

23 ‘‘(1) IN GENERAL.—For purposes of deter24 mining the amount of qualified research expenses 


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

2 amount of any qualified pandemic research expendi3 tures paid or incurred by a taxpayer on or after 

4 February 15, 2020, and before January 1, 2022, 

5 shall be equal to 200 percent of the amount paid or 

6 incurred. 

7 ‘‘(2) QUALIFIED PANDEMIC RESEARCH EX8 PENDITURES.—The term ‘qualified pandemic re9 search expenditures’ means expenditures paid or in10 curred in connection with the research and develop11 ment of products regulated by the Food and Drug 

12 Administration (including biological products, drugs, 

13 and devices) that are intended to be used in the di14 agnosis, prevention and treatment of diseases arising 

15 from a virus (or other pathogen) with pandemic po16 tential, and such other similar expenditures as pre17 scribed by the Secretary in regulations.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2020. 

Æ 


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