1.This Act may be cited as the
Startup Innovation Credit Act of
2012
.
2.Treatment of research
credit for certain startup companies
(a)
(1)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)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 portionFor 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)For purposes of this subsection—
(A)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)Such
term shall not include an organization which is exempt from taxation under
section 501.
(4)
(A)In the case of a partnership or S corporation, an
election under this subsection shall be made at the entity level.
(B)An
election under this subsection may not be revoked without the consent of the
Secretary.
(C)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)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)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)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 creditFor 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)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 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 creditIn 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, etcIn 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)For
purposes of this subsection—
(A)Applicable
calendar quarterThe 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)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 fundThere 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)The amendments made by this section shall apply to taxable
years beginning after December 31, 2011.