[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 193 Introduced in Senate (IS)]
113th CONGRESS
1st Session
S. 193
To amend the Internal Revenue Code of 1986 to provide for startup
businesses to use a portion of the research and development credit to
offset payroll taxes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 31, 2013
Mr. Coons (for himself, Mr. Enzi, Mr. Schumer, Mr. Rubio, Mr. Blunt,
Ms. Stabenow, and Mr. Moran) 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 provide for startup
businesses to use a portion of the research and development credit to
offset payroll taxes.
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 ``Startup Innovation Credit Act of
2013''.
SEC. 2. TREATMENT OF RESEARCH CREDIT FOR CERTAIN STARTUP COMPANIES.
(a) In General.--
(1) In general.--Section 41 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(i) Treatment of Credit to Qualified Small Businesses.--
``(1) In general.--At the election of a qualified small
business, the payroll tax credit portion of the credit
determined under subsection (a) shall be treated as a credit
allowed under section 3111(f) (and not under this section).
``(2) Payroll tax credit portion.--For purposes of this
subsection, the payroll tax credit portion of the credit
determined under subsection (a) for any taxable year is so much
of such credit as does not exceed $250,000.
``(3) Qualified small business.--For purposes of this
subsection--
``(A) In general.--The term `qualified small
business' means, with respect to any taxable year--
``(i) a corporation, partnership, or S
corporation if--
``(I) the gross receipts (as
determined under subsection (c)(7)) of
such entity for the taxable year is
less than $5,000,000, and
``(II) such entity did not have
gross receipts (as so determined) for
any period preceding the 5-taxable-year
period ending with such taxable year,
and
``(ii) any person not described in
subparagraph (A) if clauses (i) and (ii) of
subparagraph (A) applied to such person,
determined--
``(I) by substituting `person' for
`entity' each place it appears, and
``(II) in the case of an
individual, by only taking into account
the aggregate gross receipts received
by such individual in carrying on
trades or businesses of such
individual.
``(B) Limitation.--Such term shall not include an
organization which is exempt from taxation under
section 501.
``(4) Election.--
``(A) In general.--In the case of a partnership or
S corporation, an election under this subsection shall
be made at the entity level.
``(B) Revocation.--An election under this
subsection may not be revoked without the consent of
the Secretary.
``(C) Limitation.--A taxpayer may not make an
election under this subsection if such taxpayer has
made an election under this subsection for 5 or more
preceding taxable years.
``(5) Aggregation rules.--For purposes of determining the
$250,000 limitation under paragraph (2) and determining gross
receipts under paragraph (3), all members of the same
controlled group of corporations (within the meaning of section
267(f)) and all persons under common control (within the
meaning of section 52(b) but determined by treating an interest
of more than 50 percent as a controlling interest) shall be
treated as 1 person.
``(6) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection, including--
``(A) regulations to prevent the avoidance of the
purposes of paragraph (3) through the use of successor
companies or other means,
``(B) regulations to minimize compliance and
recordkeeping burdens under this subsection for start-
up companies, and
``(C) regulations for recapturing the benefit of
credits determined under section 3111(f) in cases where
there is a subsequent adjustment to the payroll tax
credit portion of the credit determined under
subsection (a), including requiring amended returns in
the cases where there is such an adjustment.''.
(2) Conforming amendment.--Section 280C(c) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(5) Treatment of qualified small business credit.--For
purposes of determining the amount of any credit under section
41(a) under this subsection, any election under section 41(i)
shall be disregarded.''.
(b) Credit Allowed Against FICA Taxes.--
(1) In general.--Section 3111 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(f) Credit for Research Expenditures of Qualified Small
Businesses.--
``(1) In general.--In the case of a qualified small
business which has made an election under section 41(i), there
shall be allowed as a credit against the tax imposed by
subsection (a) on wages paid with respect to the employment of
all employees of the qualified small business for days in an
applicable calendar quarter an amount equal to the payroll tax
credit portion of the research credit determined under section
41(a).
``(2) Carryover of unused credit.--In any case in which the
payroll tax credit portion of the research credit determined
under section 41(a) exceeds the tax imposed under subsection
(a) for an applicable calendar quarter--
``(A) the succeeding calendar quarter shall be
treated as an applicable calendar quarter, and
``(B) the amount of credit allowed under paragraph
(1) shall be reduced by the amount of credit allowed
under such paragraph for all preceding applicable
calendar quarters.
``(3) Allocation of credit for controlled groups, etc.--In
determining the amount of the credit under this subsection--
``(A) all persons treated as a single taxpayer
under section 41 shall be treated as a single taxpayer
under this section, and
``(B) the credit (if any) allowable by this section
to each such member shall be its proportionate share of
the qualified research expenses, basic research
payments, and amounts paid or incurred to energy
research consortiums, giving rise to the credit
allowable under section 41.
``(4) Definitions.--For purposes of this subsection--
``(A) Applicable calendar quarter.--The term
`applicable calendar quarter' means--
``(i) the first calendar quarter following
the date on which the qualified small business
files a return under section 6012 for the
taxable year for which the payroll tax credit
portion of the research credit under section
41(a) is determined, and
``(ii) any succeeding calendar quarter
treated as an applicable calendar quarter under
paragraph (2)(A).
``For purposes of determining the date on which a
return is filed, rules similar to the rules of section
6513 shall apply.
``(B) Other terms.--Any term used in this
subsection which is also used in section 41 shall have
the meaning given such term under section 41.''.
(2) Transfers to federal old-age and survivors insurance
trust fund.--There are hereby appropriated to the Federal Old-
Age and Survivors Trust Fund and the Federal Disability
Insurance Trust Fund established under section 201 of the
Social Security Act (42 U.S.C. 401) amounts equal to the
reduction in revenues to the Treasury by reason of the
amendments made by paragraph (1). 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 had such amendments not been enacted.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2012.
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