WASHINGTON – Today, U.S. Senators Chris Coons (D-Del.), Pat Roberts (R-Kan.), Catherine Cortez Masto (D-Nev.), Todd Young (R-Ind.), Maggie Hassan (D-N.H.), and Steve Daines (R-Mont.), along with U.S. Representatives Suzan DelBene (D-Wash.) and Jackie Walorski (R-Ind.), introduced legislation to provide expanded tax support for American companies that invest in the research and development of new products and technologies.

“As the United States confronts this public health and economic crisis, it is critical that we do everything we can to support the American companies that will develop the vaccines, products, and technologies necessary to move our country forward,” said Sen. Coons.“By providing vital tax support to innovative startups and businesses, the bipartisan, bicameral FORWARD Act will help to combat the COVID-19 pandemic and rebuild a stronger U.S. economy.”

“American startups and businesses driving research and development will help lead our nation’s growth out of the COVID-19 crisis,” said Sen. Roberts. “This bipartisan, bicameral legislation will provide targeted tax support to help our nation’s most innovative companies – from vaccine developers to equipment manufacturers – work through this challenging period and power our economy forward.”

“In the midst of the coronavirus pandemic, we need to harness our best ideas to develop vaccines, testing, treatments, and protection for frontline workers and vulnerable populations alike,” said Sen. Cortez Masto. “Nevada has been a leader in innovation, but our startups and small technology firms can struggle to access the funds they need for research and development that will save lives and help our economies rebound. This bipartisan legislation will make it easier for cutting-edge solutions to become reality.”

“The private sector will help America emerge from the coronavirus pandemic and prepare for future emergencies,” said Sen. Young. “Government should work to encourage our small businesses to conduct the research and development needed to produce vaccines and other critical technologies right here in the U.S.”

“As the COVID-19 pandemic continues to drastically impact all aspects of American life, we must support innovative businesses that are working to develop solutions that will help our country recover from this crisis,” said Sen. Hassan. “This bipartisan legislation—along with my efforts to expand the R&D tax credit to support startups and businesses in New Hampshire and across the country—can play a vital role in ensuring that companies on the forefront of innovation have the resources that they need during this pandemic.”

“We must support American research and development to accelerate the development and manufacturing of critical drugs to treat and prevent the coronavirus,” said Sen. Daines.

"COVID-19 is having a devastating impact on our economy and draining resources for future innovations. To help spark the next generation of products and discoveries, and get our economy on track, we need to invest in research and development," said Rep. DelBene. "We need to unlock the full potential of the R&D Tax Credit by making it more accessible to smaller businesses."

“Our country is facing an unprecedented challenge, but I know we will emerge even stronger because of American innovation and entrepreneurial spirit,” said Rep. Walorski.“Boosting investment in research and development – including for new treatments and vaccines – will not only help in the fight against coronavirus, it will put America’s small businesses and manufacturers on the best path to rebuilding our economy.”

The United States spends far less supporting R&D than international competitors. This places American businesses at a disadvantage, undermining the U.S. economy and leaving the country ill-prepared for crises like COVID-19. In 2015, Congress passed legislation authored by Senators Coons and Roberts to make the R&D tax credit permanent and to expand access to the credit for more startups and small businesses. These changes addressed urgent problems, but – as the current crisis makes clear – further steps are needed. 

The Furthering Our Recovery With American Research and Development, or FORWARD, Act:

  • Expands access to the research and development tax credit for new small- and medium-sized businesses. Firms with up to $20 million in gross receipts will be eligible to use the credit to reduce their payroll tax obligation during a span of 8 years—up from current thresholds of $5 million and 5 years. A new de minimis threshold delays the start of the 8-year window until gross receipts exceed $25,000.
  • Strengthens the economy by incentivizing American manufacturing. The R&D credit is increased for companies that generate the majority of their gross receipts from manufacturing their products in the United States. 
  • Targets specific activities that enhance economic productivity by spreading knowledge and work opportunities to the U.S. workforce. The full R&D credit is expanded to cover R&D-related worker training costs. For R&D performed in collaboration with industry consortia, academic institutions, federal laboratories, and other entities, the credit rate is increased by one quarter (to 25% and 17.5% for the Regular Research and Alternative Simplified Credits, respectively). 
  • Activates the R&D credit by providing outreach, education, and training for businesses with limited accounting expertise, to be provided by the Small Business Administration and the Internal Revenue Service.

The bill text is available here.

A one-pager on the bill is available here.

The FORWARD Act is supported by the American Small Manufacturers Coalition, the Information Technology and Innovation Foundation, the Center for American Entrepreneurship, Third Way, the American Society of Mechanical Engineers, Intelligent Manufacturing Systems International, the Delaware Small Business Development Center, the Association for Manufacturing Technology, the Manufacturing Alliance of Communities, Cover & Rossiter, the Delaware Prosperity Partnership, the National Center for Defense Manufacturing and Machining, the State Science and Technology Institute, the University City Science Center, AlliantGroup, and the Small Business Investor Alliance.

“In the midst of a global pandemic and economic collapse, we need to be doing everything possible to support our manufacturers,” said Gabe Horwitz, Senior Vice President for the Economic Program at Third Way. “We applaud Senator Chris Coons for working to modernize R&D incentives, expanding the support to more businesses and driving more manufacturing here in the United States. Coons’ leadership on this issue will not only keep more people employed here, it will also bolster our response to global shocks like the coronavirus.”

“Science and engineering-based innovation are critical for addressing a wide array of American challenges, including the COVID-19 crisis,” said Dr. Robert D. Atkinson, President of the Information Technology and Innovation Foundation. “But the main federal incentive for private sector research – the R&D tax credit – needs both modernization and expansion. The FORWARD Act does just that, and if passed would spur more American innovation, job creation and competitiveness.”

“We […] applaud and support Senator Coons and others’ continued effort to enhance the U.S. R&D tax credit,” said CPA Myunghee Geerts of Cover & Rossiter. “The newly proposed regulations will tremendously benefit small business taxpayers. Especially considering an economic downturn resulting from the COVID-19 pandemic, the timing couldn’t be better.”

"We thank Senator Coons for his ongoing leadership at the intersection of innovation and entrepreneurship,” said Dr. John Younger, Vice President of Science and Technology at Philadelphia’s University City Science Center. “These enhancements demonstrate the Senator’s deep understanding of the needs of start-ups, particularly the need to quickly access and thoughtfully deploy capital. These proposals make it easier for life-changing and life-saving technologies to make it to market. In addition to spurring job creation and economic growth, they will save and improve lives.”

Bill Hanka, Director of the Manufacturing Alliance of Communities, applauded the introduction, calling it “exactly what the manufacturing sector needs. […] MAC commends Senator Coons for this intelligent and effective piece of legislation and calls on its members to promote the bill with their home state senators.”

“The vulnerability of our supply chain made evident during this crisis is a real wake-up call across the manufacturing sector,” said Amber Thomas, Vice President for Advocacy at the Association for Manufacturing Technology. “It’s going to take a coordinated national effort to make sure we’re prepared as much as we can be for future challenges.”

Dr. Dean L. Bartles, President and Chief Executive Officer of the National Center for Defense Manufacturing and Machining (NCDMM), said: “On behalf of NCDMM, I am pleased to support this bill. By providing R&D incentives to small- and medium-sized manufacturers, legislative efforts such as this are directly aligned to the mission of NCDMM by enabling critical innovation efforts and worker training to keep U.S. advanced manufacturing globally competitive.”

“The FORWARD Act helps expand access to the R&D Tax credit to manufacturers at all levels,” said Dave Boulay, President of the Illinois Manufacturing Excellence Center and Board Chair of the American Small Manufacturers Coalition. “[This] will help spur industry innovation in technology, process and product. Continued investment in R&D is what the manufacturing industry needs to survive and grow in the future.”

Dan Nagy, Managing Director of Intelligent Manufacturing Systems International (IMSI), said: “The IMSI is pleased to support this bill as an incentive for small-to-medium sized manufacturers to grow their companies through payroll tax credits with additional incentives to adopt advanced manufacturing technologies. Providing the IRS and SBA funding to help manufacturers understand how to access these incentives gives this legislation the legs it needs to be effective.”