IGNITE American Innovation Act

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. Short title This Act may be cited as the Innovation and Growth Now by Investing in Tomorrow’s Enterprises Act IGNITE American Innovation Act 2. Advance refunds of net operating losses for C corporation taxpayers (a) In general (1) Net operating loss carryovers Section 172 (g) Advance refund for C corporations relating to certain carryovers arising during 2015 through 2021 (1) In general A taxpayer to which this subsection applies for any taxable year beginning in 2020 or 2021 shall be allowed an advance refund in the amount determined under paragraph (2) for such taxable year. (2) Amount of the advance refund (A) In general The advance refund determined under this paragraph for any taxable year is an amount equal the lesser of— (i) the amount specified by the taxpayer in the election to have this subsection apply, or (ii) an amount equal to 21 percent of the sum of— (I) any net operating loss arising in such taxable year (reduced by any portion of such net operating loss carried back to a preceding taxable year under subsection (b)(1)(D)), plus (II) any carryforward to such taxable year of a net operating loss arising in a taxable year beginning after December 31, 2014, and before such taxable year. (B) Aggregate dollar limitation The aggregate amount of advance refunds of a taxpayer under this subsection for all taxable years shall not exceed $100,000,000. (3) Net operating loss offset by advance refunds The net operating loss of the taxpayer for any taxable year to which this subsection applies shall be reduced by the amount of any net operating loss arising in such taxable year, or net operating loss carryforward to such taxable year, for which an advance refund is elected pursuant to this subsection. (4) Taxpayer to which subsection applies For purposes of paragraph (1), this subsection applies to a taxpayer for a taxable year if— (A) the taxpayer is a C corporation— (i) with respect to which the average number of full-time employees (as determined for purposes of determining whether an employer is an applicable large employer for purposes of section 4980H(c)(2) (ii) which has complied to date with filing of all forms or return requirements under section 3102, 3111, 3301, and 3402 with respect to calendar years 2019 and 2020, and (B) the taxpayer elects the application of this subsection for such taxable year. (5) Special rules For purposes of this subsection— (A) Certain contributions of capital not taken into account in determining ownership change under section 382 For purposes of determining whether an ownership change has occurred with respect to the loss corporation under section 382(g) in computing the amount of any advance refund under this section, a transfer of stock in exchange for a capital contribution to such loss corporation shall not be taken into account if— (i) the value of the stock transferred is commensurate with the amount of capital being contributed, and (ii) such exchange is not part of a plan to redeem other shareholders. (B) Aggregation rule All corporations treated as a single employer under subsection (a) of section 52 or subsection (m) or (o) under section 414 shall be treated as a single taxpayer for purposes of this section. (6) Regulations and guidance The Secretary shall issue such regulations and other guidance as may be necessary to carry out the purposes of this section, including regulations and other guidance to carry out the purposes of this subsection— (A) to allow for the making of an election for the application of this subsection in such manner as the Secretary may by regulations prescribe, (B) to allow the payment of the advance refund in accordance with section 6429 based on such information as the Secretary shall require, (C) to allow advance refunds permitted under this subsection to be claimed on such forms as the Secretary shall prescribe, and (D) to provide for the application of this subsection to taxpayers that file consolidated returns. (7) Advance refund For rules for claiming the advance refund, see section 6429. . (2) Conforming amendment Section 172(c) of such Code is amended by inserting before the period at the end the following: and with the reduction required by subsection (g) (b) Advance refund of research credits and orphan drug credits for C corporation taxpayers Section 39 of such Code is amended by adding at the end the following: (e) Advance refund of research and orphan drug credits (1) In general A taxpayer that is a C corporation may elect an advance refund of the portion of any unused business credit carryforward under section 39 which— (A) is attributable to the credit determined under section 41 or the credit determined under section 45C, and (B) is an unused business credit carryforward carried to a taxable year beginning on or after January 1, 2020, and before January 1, 2022, and that arose in taxable years beginning after December 31, 2014. (2) Annual limitation The amount of the advance refund under paragraph (1) for a taxable year shall not exceed the excess (if any) of $25,000,000 reduced by the amount of the advance refund for such taxable year under section 172(g). (3) Inapplicability of sections 38(c) 383(a) For purposes of this subsection, the amount of any advance refund shall be computed without respect to the limitations under sections 38(c) and 383(a). (4) Regulations and guidance The Secretary shall issue such regulations and other guidance as may be necessary— (A) to allow for the making of an election under paragraph (1) in such manner as the Secretary may by regulations prescribe, (B) to allow the advance refund under this subsection and section 6429 based on such information as the Secretary shall require, and (C) to allow advance refunds under this section to be claimed on such forms as the Secretary shall prescribe. . (c) Advance refund of certain net operating losses, research credit, and orphan drug credit (1) In general Subchapter B of chapter 65 of such Code is amended by inserting after section 6428 the following new section: 6429. Advance refund of certain net operating losses, research credit, and orphan drug credit (a) Advance refund (1) In general In the case of a C corporation, the advance refund sum for any taxable year may be claimed by the taxpayer as follows: (A) Payroll taxes First, by reducing deposits or payments of applicable employment taxes. (B) Advance refundability Second, any remaining amount of the advance refund sum to be refunded to the taxpayer after the application of subparagraph (A) shall be treated as an overpayment and shall be refunded in a manner similar to that prescribed in subsection 2301(b)(3) of the Coronavirus, Aid, Relief, and Economic Security Act. (2) Applicable employment taxes For purposes of paragraph (1)(A), the term applicable employment taxes (A) The taxes imposed under section 3111(b). (B) So much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b). (b) Advance refund sum For purposes of subsection (a), the term advance refund sum (1) the amount of the taxpayer's advance refund under section 172(g) for the taxable year, and (2) the amount of the advance refund for such taxable year under section 39(e) of any unused business credit carryforward which is attributable to the research credit determined under section 41 or the orphan drug credit determined under section 45C. (c) Recapture (1) In general The Secretary shall, by regulations, provide for recapturing the benefit of any advance refund allowable under this section if there is a sale or full or partial liquidation of the corporation during the recapture period. The recapture amount shall not exceed the lesser of— (A) the amount of any proceeds or distributions received by shareholders of the corporation attributable to such sale or liquidation, or (B) the amount that the advance refund exceeds the aggregate amount spent by the corporation on payroll, research expenses, and property, plant and equipment during the recapture period. (2) Recapture period For purposes of paragraph (1), the term recapture period . (2) Clerical amendment The table of sections for subchapter B of chapter 65 of such Code is amended by inserting after the item relating to section 6428 the following new item: Sec. 6429. Advance refund of certain net operating losses, research credit, and orphan drug credit. . (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2019. 3. Enhanced research credit for COVID–19 expenditures (a) In general Section 41 (i) Enhanced credit for COVID–19 research expenditures (1) In general For purposes of determining the amount of qualified research expenses under subsection (b) for the taxable year, the amount of any qualified COVID–19 research expenditures paid or incurred by a taxpayer on or after February 15, 2020, and before January 1, 2022, shall be equal to 200 percent of the amount paid or incurred. (2) Qualified COVID–19 research expenditures For purposes of this subsection, the term qualified COVID–19 research expenditures . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2019.

Summary: Innovation and Growth Now by Investing in Tomorrow's Enterprises Act or the IGNITE American Innovation Act This bill allows certain C corporation taxpayers to elect an increased advance refund of net operating loss carryovers attributable to COVID-19 research expenditures in 2020 and 2021. The bill also allows such taxpayers an advance refund of certain other net operating loss carryovers arising during 2015 through 2021. The bill allows an increased research tax credit for COVID-19 research expenditures paid or incurred on or after February 15, 2020, and before January 1, 2022.