[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 825 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 825

 To amend the Internal Revenue Code of 1986 to permanently extend and 
        modify the research tax credit, and for other purposes.


_______________________________________________________________________


                   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.

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

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Job Creation 
Through Innovation Act''.
    (b) 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.

SEC. 2. USE OF ONLY SIMPLIFIED RESEARCH CREDIT AFTER 2011; EXPANSION 
              AND PERMANENT EXTENSION.

    (a) Simplified Credit for Qualified Research Expenses.--Subsection 
(a) of section 41 is amended to read as follows:
    ``(a) General Rule.--
            ``(1) 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.
            ``(2) Special rule in case of no qualified research 
        expenses in any of 3 preceding taxable years.--
                    ``(A) 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.
                    ``(B) Credit rate.--The credit determined under 
                this paragraph shall be equal to 10 percent of the 
                qualified research expenses for the taxable year.''.
    (b) Conforming Amendments.--
            (1) Termination of base amount calculation.--Section 41 is 
        amended by striking subsection (c) and redesignating subsection 
        (d) as subsection (c).
            (2) 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.
            (3) Special rules.--
                    (A) 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''.
                    (B) 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''.
                    (C) Paragraph (3) of section 41(d), as so 
                redesignated, is amended--
                            (i) by striking ``, and the gross receipts 
                        of the taxpayer'' and all that follows in 
                        subparagraph (A) and inserting a period,
                            (ii) by striking ``, and the gross receipts 
                        of the taxpayer'' and all that follows in 
                        subparagraph (B) and inserting a period, and
                            (iii) by striking subparagraph (C).
                    (D) Paragraph (4) of section 41(d), as so 
                redesignated, is amended by striking ``and gross 
                receipts''.
                    (E) Subsection (d) of section 41, as so 
                redesignated, is amended by striking paragraph (6).
            (4) Permanent extension.--
                    (A) Section 41 is amended by striking subsection 
                (h).
                    (B) Section 45C(b)(1) is amended by striking 
                subparagraph (D).
            (5) Cross-references.--
                    (A) Paragraphs (2)(A) and (4) of section 41(b) are 
                each amended by striking ``subsection (f)(1)'' and 
                inserting ``subsection (d)(1)''.
                    (B) Paragraph (2) of section 45C(c) is amended by 
                striking ``base period research expenses'' and 
                inserting ``average qualified research expenses''.
                    (C) Paragraph (3) of section 45C(d) is amended by 
                striking ``section 41(f)'' and inserting ``section 
                41(d)''.
                    (D) Paragraph (2) of section 45G(e) is amended by 
                striking ``section 41(f)'' and inserting ``section 
                41(d)''.
                    (E) Subsection (g) of section 45O is amended by 
                striking ``section 41(f)'' and inserting ``section 
                41(d)''.
                    (F) Subparagraph (A) of section 54(l)(3) is amended 
                by striking ``section 41(g)'' and inserting ``section 
                41(e)''.
                    (G) Clause (i) of section 170(e)(4)(B) is amended 
                to read as follows:
                            ``(i) the contribution is to a qualified 
                        organization,''.
                    (H) Paragraph (4) of section 170(e) is amended by 
                adding at the end the following new subparagraph:
                    ``(E) Qualified organization.--For purposes of this 
                paragraph, the term `qualified organization' means--
                            ``(i) any educational organization which--
                                    ``(I) is an institution of higher 
                                education (within the meaning of 
                                section 3304(f)), and
                                    ``(II) is described in subsection 
                                (b)(1)(A)(ii), or
                            ``(ii) any organization not described in 
                        clause (i) which--
                                    ``(I) is described in section 
                                501(c)(3) and is exempt from tax under 
                                section 501(a),
                                    ``(II) is organized and operated 
                                primarily to conduct scientific 
                                research, and
                                    ``(III) is not a private 
                                foundation.''.
                    (I) 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)''.
                    (J) Section 280C is amended--
                            (i) by striking ``41(f)'' each place it 
                        appears in subsection (b)(3) and inserting 
                        ``41(d)'',
                            (ii) by striking ``or basic research 
                        expenses (as defined in section 41(e)(2))'' in 
                        subsection (c)(1),
                            (iii) by striking ``section 41(a)(1)'' in 
                        subsection (c)(2)(A) and inserting ``section 
                        41(a)'', and
                            (iv) by striking ``or basic research 
                        expenses'' in subsection (c)(2)(B).
                    (K) Subclause (IV)(c) of section 936(h)(5)(C)(i) is 
                amended by striking ``section 41(f)'' and inserting 
                ``section 41(d)''.
                    (L) Subparagraph (D) of section 936(j)(5) is 
                amended by striking ``section 41(f)(3)'' and inserting 
                ``section 41(d)(3)''.
                    (M) Clause (i) of section 965(c)(2)(C) is amended 
                by striking ``section 41(f)(3)'' and inserting 
                ``section 41(d)(3)''.
                    (N) Clause (i) of section 1400N(l)(7)(B) is amended 
                by striking ``section 41(g)'' and inserting ``section 
                41(e)''.
    (c) Technical Corrections.--Section 409 is amended--
            (1) 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),
            (2) 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),
            (3) 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),
            (4) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' in 
        subsection (m),
            (5) by inserting ``(as so in effect)'' after ``section 
        48(n)(1)'' in subsection (m),
            (6) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 48(n)'' in 
        subsection (q)(1), and
            (7) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 41'' in 
        subsection (q)(3).
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2011.
            (2) Technical corrections.--The amendments made by 
        subsection (c) shall take effect on the date of the enactment 
        of this Act.

SEC. 3. ENHANCED RESEARCH CREDIT FOR DOMESTIC MANUFACTURERS.

    (a) 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:
    ``(f) Enhanced Credit for Domestic Manufacturers.--
            ``(1) 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.
            ``(2) Qualified domestic manufacturer.--For purposes of 
        this subsection--
                    ``(A) 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.
                    ``(B) Domestic production gross receipts.--The term 
                `domestic production gross receipts' has the meaning 
                given to such term under section 199(c)(4).
                    ``(C) 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--
                            ``(i) 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,
                            ``(ii) by substituting `any property 
                        described in section 168(f)(3)' for `any 
                        qualified film' in subparagraph (A)(i)(II) 
                        thereof, and
                            ``(iii) 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.
            ``(3) Bonus amount.--For purposes of paragraph (1), the 
        bonus amount shall be determined as follows:


``If the percentage of total production  The bonus amount is:
 gross receipts which are domestic
 production gross receipts is:
  More than 50 percent and not more      2 percentage points
   than 60 percent.
  More than 60 percent and not more      4 percentage points
   than 70 percent.
  More than 70 percent and not more      6 percentage points
   than 80 percent.
  More than 80 percent and not more      8 percentage points
   than 90 percent.
  More than 90 percent.................  10 percentage points.''.
 

    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred in taxable years beginning after 
December 31, 2011.

SEC. 4. RESEARCH CREDIT MADE REFUNDABLE FOR SMALL BUSINESSES.

    (a) 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:
            ``(3) Portion of credit refundable.--
                    ``(A) 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.
                    ``(B) 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.''.
    (b) Conforming Amendment.--Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ``41(a)(3),'' after ``36A,''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 5. EXTENSION OF GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF 
              TAX CREDITS.

    (a) In General.--Subsection (a) of section 1603 of division B of 
the American Recovery and Reinvestment Act of 2009 is amended--
            (1) in paragraph (1), by striking ``or 2011'' and inserting 
        ``2011, or 2012'', and
            (2) in paragraph (2)--
                    (A) by striking ``after 2011'' and inserting 
                ``after 2012'', and
                    (B) by striking ``or 2011'' and inserting ``2011, 
                or 2012''.
    (b) Conforming Amendment.--Subsection (j) of section 1603 of 
division B of such Act is amended by striking ``2012'' and inserting 
``2013''.

SEC. 6. EXTENSION OF THE ADVANCED ENERGY PROJECT CREDIT.

    (a) In General.--Subsection (d) of section 48C is amended by adding 
at the end the following new paragraph:
            ``(6) Additional 2011 allocations.--
                    ``(A) 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.
                    ``(B) 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).
                    ``(C) 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--
                            ``(i) Certification.--Applicants shall have 
                        2 years from the date that the Secretary 
                        establishes such program to submit 
                        applications.
                            ``(ii) 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.
                            ``(iii) 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.
                    ``(D) 2011 allocation amount.--For purposes of this 
                subsection, the term `2011 allocation amount' means 
                $5,000,000,000.
                    ``(E) 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.''.
    (b) 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''.
    (c) Conforming Amendment.--Paragraph (2) of section 1324(b) of 
title 31, United States Code, is amended by inserting ``48C(d)(6)(E),'' 
after ``36C,''.
                                 <all>