Bill Text: IA SF2044 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A bill for an act relating to taxation by providing for the protection from disallowance of tax benefits to private nonprofit educational institutions because of certain religious beliefs and moral convictions, and including effective date provisions.
Spectrum: Partisan Bill (Independent 1-0)
Status: (Introduced - Dead) 2016-01-26 - Subcommittee, Quirmbach, Anderson, and Bolkcom. S.J. 106. [SF2044 Detail]
Download: Iowa-2015-SF2044-Introduced.html
Senate File 2044 - Introduced SENATE FILE BY JOHNSON A BILL FOR 1 An Act relating to taxation by providing for the protection 2 from disallowance of tax benefits to private nonprofit 3 educational institutions because of certain religious 4 beliefs and moral convictions, and including effective date 5 provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5029XS (2) 86 mm/sc PAG LIN 1 1 Section 1. FINDINGS. The general assembly finds all of the 1 2 following: 1 3 1. Private nonprofit educational institutions play a vital 1 4 role in providing formal education in society, and the United 1 5 States and Iowa support and recognize these institutions in 1 6 part by providing important and necessary tax benefits. 1 7 2. The United States and Iowa have a long, honorable history 1 8 of accommodating religious exercise and establishing conscience 1 9 protections based on religious and moral convictions. 1 10 3. Protecting the tax benefits available to private 1 11 nonprofit educational institutions from being denied based 1 12 on religious or moral convictions is a state interest of the 1 13 highest order. The state is obligated to take measures that 1 14 advance this interest by remedying, deterring, and preventing 1 15 government interference with religious exercise in a way that 1 16 complements the protections mandated by the Constitution of the 1 17 State of Iowa and the Constitution of the United States. 1 18 4. In 2015, during the course of oral argument at the United 1 19 States Supreme Court, in Obergefell v. Hodges, 135 S. Ct. 1 20 2584 (2015), when Justice Alito asked whether an institution 1 21 could lose its tax=exempt status for maintaining the view that 1 22 marriage is the union of one man and one woman, the solicitor 1 23 general of the United States admitted it was "going to be an 1 24 issue". 1 25 5. In the Obergefell v. Hodges opinion, the United States 1 26 Supreme Court held same=sex couples have a right to marry, but 1 27 also noted, "Many who deem same=sex marriage to be wrong reach 1 28 that conclusion based on decent and honorable religious or 1 29 philosophical premises, and neither they nor their beliefs are 1 30 disparaged here". 1 31 6. In the wake of the Obergefell v. Hodges decision, leading 1 32 legal scholars concur that conflict between same=sex marriage 1 33 and religious liberty are inevitable and, therefore, should be 1 34 addressed through legislation. 1 35 7. The state of Iowa has an obligation to refrain from 2 1 discriminating against those who maintain a belief that 2 2 marriage is the union of one man and one woman based on 2 3 religious and moral convictions. 2 4 8. Laws that protect important and necessary tax benefits 2 5 from being denied because of the free exercise of religious 2 6 beliefs and moral convictions about marriage will encourage 2 7 private citizens and institutions to demonstrate tolerance for 2 8 those beliefs and convictions and therefore contribute to a 2 9 more respectful, diverse, and peaceful society. 2 10 Sec. 2. NEW SECTION. 421.62 Private educational institution 2 11 tax benefits == protection of the free exercise of religious 2 12 beliefs and moral convictions. 2 13 1. For purposes of this section, unless otherwise required 2 14 by the context: 2 15 a. "Private educational institution" includes a private 2 16 elementary or secondary school in the state, or a private 2 17 postsecondary educational institution in the state. 2 18 b. "Tax benefit" means an exclusion from the operation 2 19 or collection of a tax imposed in this state, including tax 2 20 credits, exemptions, deductions, rebates, and refunds. 2 21 2. Notwithstanding any other provision of state law to 2 22 the contrary, if a provision of the Code grants a tax benefit 2 23 that applies to, or is dependent upon, a private educational 2 24 institution that is recognized as nonprofit, or exempt from 2 25 federal taxation under section 501(a) of the Internal Revenue 2 26 Code, such tax benefit shall not be disallowed on or after the 2 27 effective date of this Act because the private educational 2 28 institution believes, acts, or teaches in accordance with a 2 29 religious belief or moral conviction that marriage is or should 2 30 be recognized as the union of one man and one woman, or that 2 31 sexual relations are properly reserved to such marriage, or 2 32 because the private educational institution was disallowed a 2 33 tax exemption under section 501(a) of the Internal Revenue Code 2 34 on the basis of those beliefs, acts, or teachings. 2 35 3. The protection of tax benefits provided in this section 3 1 applies to but is not limited to the following provisions: 3 2 a. The redevelopment tax credits under sections 15.291 3 3 through 15.295. 3 4 b. The workforce housing tax incentives under sections 3 5 15.351 through 15.356. 3 6 c. The exemption from the fee for new registration under 3 7 section 321.105A, subsection 2, paragraph "c", subparagraphs 3 8 (1) and (21), and subsection 3, paragraph "f". 3 9 d. The historic preservation and cultural and entertainment 3 10 district tax credit under chapter 404A. 3 11 e. The charitable contribution deduction in section 422.9, 3 12 subsection 2. The amount of contributions that would have been 3 13 deductible as a charitable contribution under section 170 of 3 14 the Internal Revenue Code but for the fact that the private 3 15 educational institution that was the recipient or beneficiary 3 16 of the contribution was disallowed a tax exemption under 3 17 section 501(a) of the Internal Revenue Code for the reason 3 18 described in subsection 2 of this section, shall be allowed 3 19 as a deductible charitable contribution under section 422.9, 3 20 subsection 2. 3 21 f. The school tuition organization tax credit under section 3 22 422.11S. 3 23 g. The charitable conservation contribution tax credit under 3 24 sections 422.11W and 422.33, subsection 25. 3 25 h. The tuition tax credit under section 422.12, subsection 3 26 2, paragraph "b". 3 27 i. The exemption from corporate income tax under section 3 28 422.34, subsection 2. 3 29 j. The charitable contribution deduction in determining 3 30 federal taxable income of a corporation or financial 3 31 institution for purposes of the net income computation under 3 32 section 422.35 or 422.61, as applicable. A corporation or 3 33 financial institution is allowed an additional subtraction 3 34 in computing net income equal to the amount of contributions 3 35 that would have been deductible as a charitable contribution 4 1 under section 170 of the Internal Revenue Code for purposes 4 2 of computing federal taxable income but for the fact that the 4 3 private educational institution that was the recipient or 4 4 beneficiary of the contribution was disallowed a tax exemption 4 5 under section 501(a) of the Internal Revenue Code for the 4 6 reason described in subsection 2 of this section. 4 7 k. The sales tax exemptions in section 423.3, subsections 4 8 17, 78, 80, and 89. 4 9 l. The sales tax refunds in section 423.4, subsections 1 4 10 and 6. 4 11 m. The property tax exemptions in section 427.1, subsections 4 12 7 and 8. 4 13 n. The inheritance tax exemption in section 450.4, 4 14 subsection 2. Property that passes for a purpose that would 4 15 have qualified as a charitable, educational, or religious 4 16 purpose as defined in sections 170(c) and 2055 of the Internal 4 17 Revenue Code but for the fact that the private educational 4 18 institution that was the recipient or beneficiary of the 4 19 property was disallowed a tax exemption under section 501(a) 4 20 of the Internal Revenue Code for the reason described in 4 21 subsection 2 of this section shall be considered exempt from 4 22 inheritance tax under section 450.4, subsection 2. 4 23 4. This section shall be construed in favor of a broad 4 24 protection of free exercise of religious beliefs and moral 4 25 convictions, to the maximum extent permitted by the terms of 4 26 this section and the Constitution of the State of Iowa and the 4 27 Constitution of the United States. 4 28 5. The protection of free exercise of religious beliefs 4 29 and moral convictions afforded by this section are in addition 4 30 to the protections provided under federal law, state law, and 4 31 the Constitution of the State of Iowa and the Constitution of 4 32 the United States. This section shall not be construed to 4 33 preempt or repeal any state or local law that is equally or 4 34 more protective of free exercise of religious beliefs or moral 4 35 convictions, and this section shall not be construed to narrow 5 1 the meaning or application of any state or local law protecting 5 2 free exercise of religious beliefs or moral convictions. 5 3 6. If any provision of this section or the application 5 4 thereof to any person or circumstances is held invalid, the 5 5 invalidity shall not affect other provisions or applications 5 6 of this section which can be given effect without the invalid 5 7 provisions or application and, to this end, the provisions of 5 8 this section are severable. 5 9 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 5 10 immediate importance, takes effect upon enactment. 5 11 EXPLANATION 5 12 The inclusion of this explanation does not constitute agreement with 5 13 the explanation's substance by the members of the general assembly. 5 14 This bill protects tax benefits of private nonprofit 5 15 educational institutions from being disallowed because of 5 16 certain religious beliefs and moral convictions. The bill also 5 17 makes several findings, including but not limited to findings 5 18 related to the state interest in protecting tax benefits of 5 19 private nonprofit educational institutions, and in protecting 5 20 and promoting the free exercise of religious beliefs and moral 5 21 convictions about marriage. 5 22 The bill provides that notwithstanding any other provision 5 23 of state law to the contrary, if a tax benefit is available 5 24 under Iowa law that applies to, or is dependent upon, a private 5 25 educational institution that is recognized as nonprofit, or 5 26 exempt from federal taxation under Internal Revenue Code (IRC) 5 27 {501(a), such tax benefit shall not be disallowed on or after 5 28 the effective date of the bill because the private educational 5 29 institution believes, acts, or teaches in accordance with a 5 30 religious belief or moral conviction that marriage is or should 5 31 be recognized as the union of one man and one woman, or that 5 32 sexual relations are properly reserved to such marriage, or 5 33 because the private educational institution was disallowed a 5 34 tax exemption under IRC {501(a) on the basis of those beliefs, 5 35 acts, or teachings. "Private educational institution" and "tax 6 1 benefit" are both defined in the bill. 6 2 The bill provides a nonexhaustive list of tax benefits to 6 3 which the protection from disallowance applies and in certain 6 4 cases provides for how those tax benefits shall be administered 6 5 when the protection from disallowance becomes applicable. 6 6 The nonexhaustive list includes the redevelopment tax 6 7 credits, the workforce housing tax incentives, several 6 8 exemptions from the fee for new registration, the historic 6 9 preservation and cultural and entertainment district tax 6 10 credit, the school tuition organization tax credit, the 6 11 charitable conservation contribution tax credit, the tuition 6 12 tax credit, the exemption from the corporate income tax, 6 13 several sales tax exemptions and refunds, several property tax 6 14 exemptions, the charitable contribution deductions under the 6 15 individual and corporate income tax and franchise tax, and the 6 16 charitable contribution exemption under the inheritance tax. 6 17 With regard to charitable contributions, the bill provides 6 18 that contributions or bequests that would have qualified as 6 19 tax=deductible charitable contributions under the IRC but for 6 20 the fact that the private educational institution that was the 6 21 recipient or beneficiary of the property was disallowed a tax 6 22 exemption under IRC {501(a) for believing, acting, or teaching 6 23 in a way described in the bill, shall be considered deductible 6 24 contributions under the individual and corporate income tax 6 25 and franchise tax, and shall be considered exempt under the 6 26 inheritance tax. 6 27 The bill is to be construed in favor of a broad protection 6 28 of free exercise of religious beliefs and moral convictions, 6 29 to the maximum extent permitted by the terms of the bill and 6 30 the Constitutions of the State of Iowa and of the United 6 31 States. The protection of free exercise of religious beliefs 6 32 and moral convictions afforded by the bill are in addition to 6 33 the protections provided under federal law, state law, and the 6 34 Constitutions of the State of Iowa and of the United States, 6 35 and the bill is not to be construed to preempt or repeal any 7 1 state or local law that is equally or more protective of free 7 2 exercise of religious beliefs or moral convictions or to narrow 7 3 the meaning or application of any state or local law protecting 7 4 free exercise of religious beliefs or moral convictions. 7 5 The provisions of the bill are severable. The bill takes 7 6 effect upon enactment. LSB 5029XS (2) 86 mm/sc
