IGNITE American Innovation Act
Bill: H.R.3623 | Sponsor: Rep. Phillips, Dean (D-MN)
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, 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 whom this subsection 
        applies may, in lieu of an election with respect to a net 
        operating loss carryback under subsection (b)(1)(D), elect an 
        advance refund of net operating loss carryovers in the amount 
        equal to--
                    ``(A) the rate set forth in section 11 (as in 
                effect on the date of the enactment of this paragraph), 
                multiplied by
                    ``(B) any net operating loss carryovers that 
                arose--
                            ``(i) in a taxable year beginning on or 
                        after January 1, 2015, and before January 1, 
                        2020, or
                            ``(ii) in a taxable year beginning on or 
                        after January 1, 2019, and before January 1, 
                        2022.
            ``(2) Taxpayer described.--For purposes of paragraph (1), 
        this subsection applies to a taxpayer if--
                    ``(A) the taxpayer is a C corporation,
                    ``(B) 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)) employed by the taxpayer during 
                calendar year 2019 or 2020, whichever is greater, is 
                greater than five and did not exceed 1,500, and
                    ``(C) the taxpayer 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.
            ``(3) 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) Aggregate limitation.--The aggregate amount 
                of net operating loss or net operating loss carryover 
                for which an advance refund is elected pursuant to this 
                subsection shall not exceed $100,000,000.
                    ``(C) Reduction of net operating loss.--The net 
                operating losses of the taxpayer determined under 
                subsection (c) shall be reduced by the amount of any 
                net operating loss or net operating loss carryover for 
                which an advance refund is elected pursuant to this 
                subsection.
                    ``(D) 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.
            ``(4) 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--
                    ``(A) to allow for the making of an election for 
                the application of this subsection in such manner as 
                the Secretary may 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.
            ``(5) Advance refund.--See section 6429 for rules for 
        claiming the advance refund.''.
            (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.--An eligible taxpayer may elect an 
        advance refund of the portion of any unused business credit 
        carryforward under section 39 that--
                    ``(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 January 1, 2015.
            ``(2) Limitation.--The amount elected under paragraph (1) 
        for a taxable year may not exceed the excess of $25,000,000 
        reduced by the amount elected for the taxable year as an 
        advance refund of net operating loss carryovers under section 
        172(g).
            ``(3) Eligible taxpayer.--For purposes of this subsection, 
        a taxpayer is an eligible taxpayer if--
                    ``(A) the taxpayer is a C corporation, and
                    ``(B) the taxpayer does not have an outstanding 
                loan made or guaranteed pursuant to section 7(a)(37) of 
                the Small Business Act (15 U.S.C. 636(a)(37)).
            ``(4) Inapplicability of sections 38(c) and 383.--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).
            ``(5) 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) In General.--In the case of a C corporation, the advance 
refund sum may be claimed by the taxpayer as follows:
            ``(1) Payroll taxes.--First, by reducing deposits or 
        payments of--
                    ``(A) the applicable employment taxes imposed under 
                sections 3101(a), 3101(b), 3111(a), and 3111(b) 
                (reduced by any credits allowed under subsections (e) 
                and (f) of section 3111, sections 7001 and 7003 of the 
                Families First Coronavirus Response Act and section 
                2301 of the Coronavirus, Aid, Relief, and Economic 
                Security Act) on the wages paid with respect to the 
                employment of all the employees of the taxpayer for a 
                calendar quarter, and
                    ``(B) the withholding taxes required to be paid by 
                an employer pursuant to section 3403, with the balance 
                of the advance refund payable to the taxpayer.
            ``(2) Advance refundability of excess losses.--Second, any 
        remaining amount to be refunded to the taxpayer after the 
        application of paragraph (1) 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.
    ``(b) Advance Refund Sum.--For purposes of subsection (a), the term 
`advance refund sum' means the sum of--
            ``(1) the amount elected by the taxpayer as an advance 
        refund of net operating loss carryovers under section 172(g), 
        and
            ``(2) the amount of any unused business credit carryforward 
        elected under section 39(e) that 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 in the amount that the advance 
        refund exceeds the sum of--
                    ``(A) the aggregate amount spent by the corporation 
                on payroll, research expenses, and property, plant and 
                equipment during the recapture period, plus
                    ``(B) in the case of a sale or full or partial 
                liquidation of the corporation during the recapture 
                period, the amount of any proceeds or distributions 
                received by shareholders of the corporation 
                attributable to such sale or liquidation.
            ``(2) Recapture period.--For purposes of paragraph (1), the 
        term `recapture period' means the three-year period beginning 
        on the date of the advance refund.''.
            (2) Transfers to federal old-age and survivors insurance 
        trust fund.--There are hereby appropriated to the Federal Old-
        Age and Survivors Insurance Trust Fund and the Federal 
        Disability Insurance Trust Fund established under section 201 
        of the Social Security Act (42 U.S.C. 401), the Federal 
        Hospital Insurance Trust Fund established under section 1817(a) 
        of the Social Security Act (42 U.S.C. 1395i(a)), and the Social 
        Security Equivalent Benefit Account established under section 
        15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 14 
        231n-1(a)) amounts equal to the reduction in revenues to the 
        Treasury by reason of this section (without regard to this 
        subsection). Amounts appropriated by the preceding sentence 
        shall be transferred from the general fund at such times and in 
        such manner as to replicate to the extent possible the 
        transfers which would have occurred to such Trust Fund or 
        Account had this section not been enacted.
            (3) 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, 2020.

SEC. 3. ENHANCED RESEARCH CREDIT FOR CERTAIN PANDEMIC RESEARCH 
              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 Certain Pandemic 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 pandemic 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 pandemic research expenditures.--The term 
        `qualified pandemic research expenditures' means expenditures 
        paid or incurred in connection with the research and 
        development of products regulated by the Food and Drug 
        Administration (including biological products, drugs, and 
        devices) that are intended to be used in the diagnosis, 
        prevention and treatment of diseases arising from a virus (or 
        other pathogen) with pandemic potential, 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, 2020.
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