[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1884 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 1884

   To amend the Internal Revenue Code of 1986 to provide an enhanced 
     research credit for the development of smart gun technologies.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 18, 2019

 Mr. Murphy (for himself and Mr. Blumenthal) 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 an enhanced 
     research credit for the development of smart gun technologies.

    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 ``Start Advancing Firearms 
Enhancements and Technology Act of 2019'' or the ``SAFETY Act''.

SEC. 2. ENHANCED RESEARCH CREDIT FOR DEVELOPMENT OF SMART GUN 
              TECHNOLOGIES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 45S the following new section:

``SEC. 45T. RESEARCH EXPENSES FOR SMART GUN TECHNOLOGIES.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
taxpayer who is a Federal firearms licensee, the smart gun technology 
credit determined under this section for the taxable year is an amount 
equal to 30 percent of the excess of--
            ``(1) the smart gun technology expenses for the taxable 
        year, over
            ``(2) the base amount.
    ``(b) Smart Gun Technology Expenses; Base Amount.--For purposes of 
this section--
            ``(1) Smart gun technology expenses.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the term `smart gun technology 
                expenses' means the amounts which are paid or incurred 
                by the taxpayer during the taxable year which would be 
                described in section 41(b) if such section were applied 
                with the modifications set forth in subparagraph (B).
                    ``(B) Modifications.--For purposes of subparagraph 
                (A), section 41(b) shall be applied--
                            ``(i) by substituting `smart gun technology 
                        research' for `qualified research' each place 
                        it appears in paragraphs (2) and (3) of such 
                        subsection, and
                            ``(ii) by substituting `100 percent' for 
                        `65 percent' in paragraph (3)(A) of such 
                        subsection.
                    ``(C) Exclusion for amounts funded by grants, 
                etc.--The term `smart gun technology expenses' shall 
                not include any amount to the extent such amount is 
                funded by any grant, contract, or otherwise by another 
                person (or any governmental entity).
            ``(2) Base amount.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `base amount' means the 
                amount which would be the base amount in section 41(c) 
                if such section were applied by substituting `smart gun 
                technology research' for `qualified research' each 
                place it appears.
                    ``(B) Base amount is zero for 3 years.--The base 
                amount shall be zero for purposes of determining the 
                amount of credit for taxable years beginning in 2020, 
                2021, or 2022.
    ``(c) Smart Gun Technology Research.--For purposes of this 
section--
            ``(1) In general.--The term `smart gun technology research' 
        means qualified research (as defined in section 41(d)) for the 
        purpose of developing smart gun technologies for firearms.
            ``(2) Smart gun technology.--The term `smart gun 
        technology' means any technology (other than a simple 
        mechanical lock) which is designed--
                    ``(A) to prevent a firearm from being fired by any 
                individual other than an authorized user of the 
                firearm, and
                    ``(B) to convert the firearm from the inoperable 
                condition to the operable condition in less than 2 
                seconds after the authorized user makes contact with 
                the firearm, the firearm's arming device, or an 
                external safe or locking device.
            ``(3) Authorized user.--For purposes of this subsection, 
        the term `authorized user' means, with respect to a firearm, 
        the owner of the firearm and any individual lawfully authorized 
        by such owner to operate the firearm.
            ``(4) Simple mechanical lock.--For purposes of this 
        subsection, the term `simple mechanical lock' means a lock that 
        uses a key or a conventional combination lock. Such term does 
        not include an advanced lock that incorporates electronics or 
        biometric sensors, or a lock with other features to enable 
        faster opening from any orientation with low visibility.
    ``(d) Federal Firearms Licensee.--For purposes of this section, the 
term `Federal firearms licensee' means any person holding a license 
under chapter 44 of title 18, United States Code, other than a licensed 
collector.
    ``(e) Coordination With Credit for Increasing Research 
Expenditures.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        smart gun technology expenses for a taxable year to which an 
        election under this section applies shall not be taken into 
        account for purposes of determining the credit allowable under 
        section 41 for such taxable year.
            ``(2) Expenses included in determining base period research 
        expenses.--Smart gun technology expenses for any taxable year 
        shall be taken into account in determining base period research 
        expenses for purposes of applying section 41 to subsequent 
        taxable years.
    ``(f) Special Rules.--
            ``(1) Certain rules made applicable.--Rules similar to the 
        rules of paragraphs (1) and (2) of section 41(f) shall apply 
        for purposes of this section.
            ``(2) Election.--This section shall apply to any taxpayer 
        for any taxable year only if such taxpayer elects (at such time 
        and in such manner as the Secretary may by regulations 
        prescribe) to have this section apply for such taxable year.
    ``(g) Treatment of Credit for Qualified Small Businesses.--
            ``(1) In general.--Under rules similar to the rules of 
        section 41(h), section 3111(f) shall apply to the payroll tax 
        credit portion of the credit otherwise determined under 
        subsection (a) for the taxable year and such portion shall not 
        be treated (other than for purposes of section 280C) as a 
        credit determined under subsection (a).
            ``(2) Federal firearms licensee exception.--For purposes of 
        this subsection, the payroll tax credit portion of the credit 
        otherwise determined under subsection (a) shall be determined 
        without regard to whether the taxpayer is a Federal firearms 
        licensee.''.
    (b) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end the following new subsection:
    ``(i) Credit for Smart Gun Technology Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the smart gun technology expenses (as defined in 
        section 45T(b)) otherwise allowable as a deduction for the 
        taxable year which is equal to the amount of the credit 
        allowable for the taxable year under section 45T (determined 
        without regard to section 38(c)).
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit allowable for the 
                taxable year under section 45T (determined without 
                regard to section 38(c)), exceeds
                    ``(B) the amount allowable as a deduction for the 
                taxable year for smart gun technology expenses 
                (determined without regard to paragraph (1)),
        the amount chargeable to capital account for the taxable year 
        for such expenses shall be reduced by the amount of such 
        excess.
            ``(3) Controlled groups.--In the case of a corporation 
        which is a member of a controlled group of corporations (within 
        the meaning of section 41(f)(5)) or a trade or business which 
        is treated as being under common control with other trades or 
        business (within the meaning of section 41(f)(1)(B)), this 
        subsection shall be applied under rules prescribed by the 
        Secretary similar to the rules applicable under subparagraphs 
        (A) and (B) of section 41(f)(1).''.
    (c) Credit Made Part of General Business Credit.--
            (1) In general.--Section 38(b) of such Code is amended by 
        striking ``plus'' at the end of paragraph (31), by striking the 
        period at the end of paragraph (32) and inserting ``, plus'', 
        and by adding at the end thereof the following new paragraph:
            ``(33) in the case of a taxpayer who is a Federal firearms 
        licensee (as defined in section 45T(d)), the smart gun 
        technology credit determined under section 45T(a).''.
            (2) Deduction for certain unused business credits.--
        Subsection (c) of section 196 of such Code is amended by 
        striking ``and'' at the end of paragraph (13), by striking the 
        period at the end of paragraph (14) and inserting ``, and'', 
        and by adding after paragraph (8) the following new paragraph:
            ``(15) the smart gun technology credit determined under 
        section 45T.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 45S the following new 
item:

``Sec. 45T. Research expenses for smart gun technologies.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2019, in taxable 
years beginning after such date.

SEC. 3. FIREARMS TAX NOT TO APPLY TO COST OF SMART GUN TECHNOLOGY.

    (a) In General.--Section 4181 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sentence:
    ``The price taken into account under the preceding sentence shall 
not include so much of the price of the firearm as is attributable to 
any smart gun technology (as defined in section 45T(c)(2)) of such 
firearm.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2020.
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