II
112th CONGRESS
1st Session
S. 825
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.
Short title
Short title
This Act may be cited
as the Job Creation Through Innovation
Act
.
Amendment of 1986 Code
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
Use of only simplified research credit after 2011; expansion and permanent extension
Simplified credit for qualified research expenses
Subsection (a) of section 41 is amended to read as follows:
General rule
Credit determined
For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined.
Special rule in case of no qualified research expenses in any of 3 preceding taxable years
Taxpayers to which paragraph applies
The credit under this section shall be determined under this paragraph if the taxpayer has no qualified research expenses in any one of the 3 taxable years preceding the taxable year for which the credit is being determined.
Credit rate
The credit determined under this paragraph shall be equal to 10 percent of the qualified research expenses for the taxable year.
.
Conforming amendments
Termination of base amount calculation
Section 41 is amended by striking subsection (c) and redesignating subsection (d) as subsection (c).
Termination of basic research payment calculation
Section 41 is amended by striking subsection (e) and redesignating subsections (f) and (g) as subsections (d) and (e), respectively.
Special rules
Paragraph
(1)(A)(ii) of subsection (d) of section 41, as so redesignated, is amended by
striking shares of the qualified research expenses, basic research
payments, and amounts paid or incurred to energy research consortiums,
and inserting share of the qualified research expenses
.
Paragraph
(1)(B)(ii) of section 41(d), as so redesignated, is amended by striking
shares of the qualified research expenses, basic research payments, and
amounts paid or incurred to energy research consortiums,
and inserting
share of the qualified research expenses
.
Paragraph (3) of section 41(d), as so redesignated, is amended—
by
striking , and the gross receipts of the taxpayer
and all that
follows in subparagraph (A) and inserting a period,
by
striking , and the gross receipts of the taxpayer
and all that
follows in subparagraph (B) and inserting a period, and
by striking subparagraph (C).
Paragraph (4) of
section 41(d), as so redesignated, is amended by striking and gross
receipts
.
Subsection (d) of section 41, as so redesignated, is amended by striking paragraph (6).
Permanent extension
Section 41 is amended by striking subsection (h).
Section 45C(b)(1) is amended by striking subparagraph (D).
Cross-references
Paragraphs (2)(A)
and (4) of section 41(b) are each amended by striking subsection
(f)(1)
and inserting subsection (d)(1)
.
Paragraph (2) of
section 45C(c) is amended by striking base period research
expenses
and inserting average qualified research
expenses
.
Paragraph (3) of
section 45C(d) is amended by striking section 41(f)
and
inserting section 41(d)
.
Paragraph (2) of
section 45G(e) is amended by striking section 41(f)
and
inserting section 41(d)
.
Subsection (g) of
section 45O is amended by striking section 41(f)
and inserting
section 41(d)
.
Subparagraph (A)
of section 54(l)(3) is amended by striking section 41(g)
and
inserting section 41(e)
.
Clause (i) of section 170(e)(4)(B) is amended to read as follows:
the contribution is to a qualified organization,
.
Paragraph (4) of section 170(e) is amended by adding at the end the following new subparagraph:
Qualified organization
For purposes of this paragraph, the term qualified organization means—
any educational organization which—
is an institution of higher education (within the meaning of section 3304(f)), and
is described in subsection (b)(1)(A)(ii), or
any organization not described in clause (i) which—
is described in section 501(c)(3) and is exempt from tax under section 501(a),
is organized and operated primarily to conduct scientific research, and
is not a private foundation.
.
Subsection (f) of
section 197 is amended by striking section 41(f)(1)
each place
it appears in paragraphs (1)(C) and (9)(C)(i) and inserting section
41(d)(1)
.
Section 280C is amended—
by
striking 41(f)
each place it appears in subsection (b)(3) and
inserting 41(d)
,
by
striking or basic research expenses (as defined in section
41(e)(2))
in subsection (c)(1),
by striking
section 41(a)(1)
in subsection (c)(2)(A) and inserting
section 41(a)
, and
by
striking or basic research expenses
in subsection
(c)(2)(B).
Subclause (IV)(c)
of section 936(h)(5)(C)(i) is amended by striking section 41(f)
and inserting section 41(d)
.
Subparagraph (D)
of section 936(j)(5) is amended by striking section 41(f)(3)
and
inserting section 41(d)(3)
.
Clause (i) of
section 965(c)(2)(C) is amended by striking section 41(f)(3)
and
inserting section 41(d)(3)
.
Clause (i) of
section 1400N(l)(7)(B) is amended by striking section 41(g)
and
inserting section 41(e)
.
Technical corrections
Section 409 is amended—
by inserting
, as in effect before the enactment of the Tax Reform Act of
1984)
after section 41(c)(1)(B)
in subsection
(b)(1)(A),
by inserting
, as in effect before the enactment of the Tax Reform Act of
1984
after relating to the employee stock ownership
credit
in subsection (b)(4),
by inserting
(as in effect before the enactment of the Tax Reform Act of
1984)
after section 41(c)(1)(B)
in subsection
(i)(1)(A),
by inserting
(as in effect before the enactment of the Tax Reform Act of
1984)
after section 41(c)(1)(B)
in subsection
(m),
by inserting
(as so in effect)
after section 48(n)(1)
in
subsection (m),
by inserting
(as in effect before the enactment of the Tax Reform Act of
1984)
after section 48(n)
in subsection (q)(1),
and
by inserting
(as in effect before the enactment of the Tax Reform Act of
1984)
after section 41
in subsection (q)(3).
Effective date
In general
Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2011.
Technical corrections
The amendments made by subsection (c) shall take effect on the date of the enactment of this Act.
Enhanced research credit for domestic manufacturers
In general
Section 41, as amended by section 3, is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:
Enhanced credit for domestic manufacturers
In general
In the case of a qualified domestic manufacturer, this section shall be applied by increasing the 20 percent amount in subsection (a)(1) by the bonus amount.
Qualified domestic manufacturer
For purposes of this subsection—
In general
The term qualified domestic manufacturer means a taxpayer who has domestic production gross receipts which are more than 50 percent of total production gross receipts.
Domestic production gross receipts
The term domestic production gross receipts has the meaning given to such term under section 199(c)(4).
Total production gross receipts
The term total production gross receipts means the gross receipts of the taxpayer which are described in section 199(c)(4), determined—
without regard to whether property described in subparagraph (A)(i)(I) or (A)(i)(III) thereof was manufactured, produced, grown, or extracted in the United States,
by substituting
any property described in section 168(f)(3)
for any
qualified film
in subparagraph (A)(i)(II) thereof, and
without regard to whether any construction described in subparagraph (A)(ii) thereof or services described in subparagraph (A)(iii) thereof were performed in the United States.
Bonus amount
For purposes of paragraph (1), the bonus amount shall be determined as 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. |
.
Effective date
The amendment made by this section shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2011.
Research credit made refundable for small businesses
In general
Subsection (a) of section 41 of the Internal Revenue Code of 1986, as amended by section 3, is amended by adding at the end the following new paragraph:
Portion of credit refundable
In general
For purposes of subsections (b) and (c) of section 6401, the amount of the credit determined under this section which is attributable to a qualified small business shall be treated as a credit allowed under subpart C of part IV of subchapter A for the taxable year (and not under any other subpart). For purposes of section 6425, any amount treated as so allowed shall be treated as a payment of estimated income tax for the taxable year.
Qualified small business
For purposes of this paragraph, the term qualified small business means, with respect to any taxable year, any person if the annual average number of employees employed by such person during such taxable year is 500 or fewer.
.
Conforming amendment
Section 1324(b)(2) of title 31, United States Code, is
amended by inserting 41(a)(3),
after 36A,
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2011.
Extension of grants for specified energy property in lieu of tax credits
In general
Subsection (a) of section 1603 of division B of the American Recovery and Reinvestment Act of 2009 is amended—
in paragraph (1),
by striking or 2011
and inserting 2011, or 2012
,
and
in paragraph (2)—
by striking
after 2011
and inserting after 2012
, and
by striking
or 2011
and inserting 2011, or 2012
.
Conforming amendment
Subsection (j) of section 1603 of division B of such
Act is amended by striking 2012
and inserting
2013
.
Extension of the advanced energy project credit
In general
Subsection (d) of section 48C is amended by adding at the end the following new paragraph:
Additional 2011 allocations
In general
Not later than 180 days after the date of the enactment of this paragraph, the Secretary, in consultation with the Secretary of Energy, shall establish a program to consider and award certifications for qualified investments eligible for credits under this section to qualifying advanced energy project sponsors with respect to applications received on or after the date of the enactment of this paragraph.
Limitation
The total amount of credits that may be allocated under the program described in subparagraph (A) shall not exceed the 2011 allocation amount reduced by so much of the 2011 allocation amount as is taken into account as an increase in the limitation described in paragraph (1)(B).
Application of certain rules
Rules similar to the rules of paragraphs (2), (3), (4), and (5) shall apply for purposes of the program described in subparagraph (A), except that—
Certification
Applicants shall have 2 years from the date that the Secretary establishes such program to submit applications.
Selection criteria
For purposes of paragraph (3)(B)(i), the term domestic job creation (both direct and indirect) means the creation of direct jobs in the United States producing the property manufactured at the manufacturing facility described under subsection (c)(1)(A)(i), and the creation of indirect jobs in the manufacturing supply chain for such property in the United States.
Review and redistribution
The Secretary shall conduct a separate review and redistribution under paragraph (5) with respect to such program not later than 4 years after the date of the enactment of this paragraph.
2011 allocation amount
For purposes of this subsection, the term 2011
allocation amount
means $5,000,000,000.
Direct payments
In lieu of any qualifying advanced energy project credit which would otherwise be determined under this section with respect to an allocation to a taxpayer under this paragraph, the Secretary shall, upon the election of the taxpayer, make a grant to the taxpayer in the amount of such credit as so determined. Rules similar to the rules of section 50 shall apply with respect to any grant made under this subparagraph.
.
Portion of 2011 allocation allocated toward pending applications under original program
Subparagraph (B) of section 48C(d)(1) is amended by
inserting (increased by so much of the 2011 allocation amount (not in
excess of $1,500,000,000) as the Secretary determines necessary to make
allocations to qualified investments with respect to which qualifying
applications were submitted before the date of the enactment of paragraph
(6))
after $2,300,000,000
.
Conforming amendment
Paragraph (2) of
section 1324(b) of title 31, United States Code, is amended by inserting
48C(d)(6)(E),
after 36C,
.