IGNITE American Innovation Act
Bill: S.2529 | Sponsor: Sen. Menendez, Robert (D-NJ)
Policy area: Taxation

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.

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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Innovation and Growth Now by 
Investing in Tomorrow's Enterprises Act'' or the ``IGNITE American 
Innovation Act''.

SEC. 2. ADVANCE REFUNDS OF NET OPERATING LOSSES FOR C CORPORATION 
              TAXPAYERS.

    (a) In General.--
            (1) Net operating loss carryovers.--Section 172 of the 
        Internal Revenue Code of 1986 is amended by redesignating 
        subsection (g) as subsection (h) and by inserting after 
        subsection (f) the following:
    ``(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) of the Internal Revenue 
                        Code of 1986) employed by the taxpayer during 
                        calendar year 2019 or 2020, whichever is 
                        greater, is greater than five and is not 
                        greater than 1,500, and
                            ``(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) and 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:

``SEC. 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' means 
        the following:
                    ``(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' means, with respect to any taxable year, the sum 
of--
            ``(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' means the two-year period beginning on 
        the date of the advance refund.''.
            (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.

SEC. 3. ENHANCED RESEARCH CREDIT FOR COVID-19 EXPENDITURES.

    (a) In General.--Section 41 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:
    ``(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' means expenditures paid or incurred in 
        connection with the research and development of products 
        regulated by the Food and Drug Administration (including 
        biologics, drugs, and devices) that are intended to be used in 
        the diagnosis, prevention and treatment of coronavirus disease 
        2019 (COVID-19), and such other similar expenditures as 
        prescribed by the Secretary in regulations.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2019.
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