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S. 2207: Research and Development Tax Credit Expansion Act of 2019


The text of the bill below is as of Jul 23, 2019 (Introduced).


II

116th CONGRESS

1st Session

S. 2207

IN THE SENATE OF THE UNITED STATES

July 23, 2019

(for herself and Mr. Tillis) 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 expand refundability and increase simplification of the research credit for certain small businesses.

1.

Short title

This Act may be cited as the Research and Development Tax Credit Expansion Act of 2019.

2.

Expansion of refundable research credit for new and small businesses

(a)

Doubling cap on refundable credit

(1)

In general

Clause (i) of section 41(h)(4)(B) of the Internal Revenue Code of 1986 is amended by striking $250,000 and inserting $500,000.

(2)

Adjustment for inflation

Paragraph (4) of section 41(h) of such Code is amended—

(A)

by redesignating subparagraph (C) as subparagraph (D),

(B)

by redesignating clause (ii) of subparagraph (B) as subparagraph (C), and by moving such subparagraph 2 ems to the left,

(C)

by striking Limitations in the heading of subparagraph (B) and inserting Limitation on amount of election,

(D)

by striking Amount in the heading of clause (i) of subparagraph (B) and inserting In general, and

(E)

by adding at the end of subparagraph (B), as amended by the preceding subparagraphs of this paragraph, the following new clause:

(ii)

Adjustment for inflation

In the case of a taxable year beginning after 2020, the $500,000 amount in clause (i) shall be increased by an amount equal to—

(I)

such dollar amount, multiplied by

(II)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2019 for 2016 in subparagraph (A)(ii) thereof.

If any increase under the preceding sentence is not a multiple of $100, such increase shall be rounded to the nearest multiple of $100.

.

(3)

Conforming amendment

Clause (ii) of section 41(h)(5)(B) of such Code is amended by striking the $250,000 amount and inserting the amount in effect.

(b)

Credit refundable against Medicare and unemployment taxes

(1)

In general

Paragraph (1) of section 3111(f) of the Internal Revenue Code of 1986 is amended by striking subsection (a) and inserting subsections (a) and (b) and section 3301.

(2)

Conforming amendments

(A)

Paragraph (2) of section 3111(f) of such Code is amended by striking the tax imposed by subsection (a) and inserting the sum of the taxes imposed by subsection (a), subsection (b), and section 3301.

(B)

Section 3302 of such Code is amended by adding at the end the following new subsection:

(i)

Credit for research expenditures of qualified small businesses

Any portion of the credit under section 3111(f) which is credited under such section to the tax under section 3301 shall be treated as a credit under this section. Subsection (c) shall not apply to any such credit.

.

(c)

Doubling eligibility threshold

Subclause (I) of section 41(h)(3)(A)(i) of the Internal Revenue Code of 1986 is amended by striking $5,000,000 and inserting $10,000,000.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2019.

3.

Modifications to alternative simplified credit for new and small businesses

(a)

In general

Paragraph (4) of section 41(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(D)

Special rules for qualified small businesses

In the case of a qualified small business (as defined in subsection (h)(3))—

(i)

Credit rate

Subparagraph (A) shall be applied by substituting 20 percent for 14 percent.

(ii)

Special rule for 1st year of qualified research expenses

If the taxpayer has no qualified research expenses in any taxable year preceding the taxable year for which the credit is being determined, subparagraph (B)(ii) shall be applied by substituting 20 percent for 6 percent.

(iii)

Special rule for other years

If the taxpayer is not described in clause (ii) for the taxable year, and subparagraph (B) applies to such taxpayer for such year, at the election of the taxpayer—

(I)

subparagraph (B)(ii) shall be applied by substituting 10 percent for 6 percent, or

(II)

subparagraph (B) shall not apply, and the average under subparagraph (A) shall be determined by disregarding any taxable year in the 3-year period described in such subparagraph in which there were no qualified research expenses.

.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2019.