Senate File 269 - Introduced SENATE FILE BY ZAUN (COMPANION TO HF 240 BY MAXWELL) A BILL FOR 1 An Act creating a tax credit against the individual and 2 corporate income taxes, the franchise tax, insurance 3 premiums tax, and the moneys and credits tax for a 4 charitable contribution to certain institutions engaged in 5 regenerative medicine research and including retroactive and 6 other applicability provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1545XS (1) 87 mm/sc PAG LIN 1 1 Section 1. NEW SECTION. 422.10C Regenerative medicine 1 2 research tax credit. 1 3 1. a. The taxes imposed under this division, less the 1 4 credits allowed under section 422.12, shall be reduced by a 1 5 regenerative medicine research tax credit. 1 6 b. The credit shall be in an amount equal to sixty percent 1 7 of a taxpayer's charitable contribution to an eligible research 1 8 institution located in the state. A charitable contribution 1 9 shall not be eligible for the tax credit to the extent the 1 10 contribution was taken as a deduction pursuant to section 170 1 11 of the Internal Revenue Code for state tax purposes. For 1 12 purposes of this section, "eligible research institution" 1 13 means an organization qualifying under section 501(c)(3) of 1 14 the Internal Revenue Code as an organization exempt from 1 15 federal income tax under section 501(a) of the Internal 1 16 Revenue Code that is engaged in research designed to improve 1 17 patient care through the development and dissemination of novel 1 18 clinical therapies for the functional repair and replacement 1 19 of diseased tissues and organs, including research for the 1 20 treatment of cancer. "Eligible research institution" excludes 1 21 a postsecondary institution or an entity or organization 1 22 receiving twenty=five percent or more of its annual budget from 1 23 a postsecondary institution. 1 24 c. An individual may claim the tax credit allowed a 1 25 partnership, limited liability company, S corporation, estate, 1 26 or trust electing to have the income taxed directly to the 1 27 individual. The amount claimed by the individual shall be 1 28 based upon the pro rata share of the individual's earnings of 1 29 the partnership, limited liability company, S corporation, 1 30 estate, or trust. 1 31 d. Any tax credit in excess of the taxpayer's tax liability 1 32 is not refundable but the excess for the tax year may be 1 33 credited to the tax liability for the following four tax years 1 34 or until depleted, whichever is earlier. 1 35 2. a. A taxpayer must submit an application to the 2 1 department on or after the date the charitable contribution is 2 2 made. The application must be approved by the department in 2 3 order to claim the tax credit. 2 4 b. The department shall accept and approve applications 2 5 on a first=come, first=served basis according to the date 2 6 the application was received until the maximum amount of tax 2 7 credits that may be approved under subsection 3 is reached. 2 8 If for a fiscal year the aggregate amount of tax credits 2 9 applied for exceeds the amount specified in subsection 3, 2 10 the department shall establish a wait list for tax credits. 2 11 Valid applications filed by the taxpayer but not approved by 2 12 the department shall be placed on a wait list in the order 2 13 the applications were received and those applicants shall 2 14 be given priority for having their applications approved 2 15 in succeeding years. Placement on a wait list pursuant to 2 16 this paragraph shall not constitute a promise binding the 2 17 state. The availability of a tax credit and approval of a tax 2 18 credit application pursuant to this section in a future year 2 19 is contingent upon the availability of tax credits in that 2 20 particular year. 2 21 c. For tax credit applications received and approved by 2 22 the department in the fiscal year during which the charitable 2 23 contribution is made, the tax credit shall be claimed for the 2 24 tax year during which the charitable contribution is made. For 2 25 tax credit applications approved in any fiscal year following 2 26 the fiscal year during which the charitable contribution is 2 27 made, the tax credit shall be claimed for the tax year during 2 28 which the application is approved by the department. A tax 2 29 credit shall not be carried back to a tax year prior to the tax 2 30 year in which the taxpayer claims the tax credit. 2 31 3. The maximum aggregate amount of tax credits approved 2 32 in a fiscal year pursuant to this section, section 422.33, 2 33 subsection 27, section 422.60, subsection 14, section 432.12N, 2 34 and section 533.329, subsection 2, paragraph "m", shall not 2 35 exceed ten million dollars. 3 1 Sec. 2. Section 422.33, Code 2017, is amended by adding the 3 2 following new subsection: 3 3 NEW SUBSECTION. 27. The taxes imposed under this division 3 4 shall be reduced by a regenerative medicine research tax credit 3 5 in the same manner, for the same amount, and under the same 3 6 conditions as provided in section 422.10C. 3 7 Sec. 3. Section 422.60, Code 2017, is amended by adding the 3 8 following new subsection: 3 9 NEW SUBSECTION. 14. The taxes imposed under this division 3 10 shall be reduced by a regenerative medicine research tax credit 3 11 in the same manner, for the same amount, and under the same 3 12 conditions as provided in section 422.10C. 3 13 Sec. 4. NEW SECTION. 432.12N Regenerative medicine research 3 14 tax credit. 3 15 The taxes imposed under this chapter shall be reduced by a 3 16 regenerative medicine research tax credit in the same manner, 3 17 for the same amount, and under the same conditions as provided 3 18 in section 422.10C. 3 19 Sec. 5. Section 533.329, subsection 2, Code 2017, is amended 3 20 by adding the following new paragraph: 3 21 NEW PARAGRAPH. m. The moneys and credits tax imposed 3 22 under this section shall be reduced by a regenerative medicine 3 23 research tax credit in the same manner, for the same amount, 3 24 and under the same conditions as provided in section 422.10C. 3 25 Sec. 6. APPLICABILITY. This Act applies to charitable 3 26 contributions to an eligible research institution located in 3 27 this state made on or after January 1, 2017. 3 28 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies 3 29 retroactively to January 1, 2017, for tax years beginning on 3 30 or after that date. 3 31 EXPLANATION 3 32 The inclusion of this explanation does not constitute agreement with 3 33 the explanation's substance by the members of the general assembly. 3 34 This bill provides a credit against the individual or 3 35 corporate income tax, the franchise tax, the insurance premiums 4 1 tax, and the moneys and credits tax for 60 percent of a 4 2 taxpayer's contribution to a regenerative medicine research 4 3 institution located in the state. Contributions claimed as 4 4 a charitable deduction for Iowa tax purposes shall not be 4 5 eligible for the tax credit. In order to qualify for the 4 6 credit, the regenerative medicine research institute must be 4 7 qualified under 501(c)(3) of the Internal Revenue Code and must 4 8 engage in research that is designed to improve patient care 4 9 through the development and dissemination of novel clinical 4 10 therapies for the functional repair and replacement of diseased 4 11 tissues and organs, including cancer research. Postsecondary 4 12 institutions and entities that receive 25 percent or more of 4 13 their annual budget from a postsecondary institution do not 4 14 qualify. 4 15 In order to claim a tax credit, the taxpayer must submit 4 16 an application to the department of revenue (department) on 4 17 or after the date of the charitable contribution, and have 4 18 that application approved by the department. No more than 4 19 $10 million in tax credits may be approved per fiscal year. 4 20 If applications for the tax credit exceed that amount, the 4 21 department is required to establish a wait list in the order 4 22 the applications were received and those applicants will 4 23 receive priority for receiving tax credits in succeeding years. 4 24 The tax credit is nonrefundable, but any amount in excess of 4 25 the taxpayer's tax liability may be carried forward for up to 4 26 four years. The tax credit cannot be carried back to a prior 4 27 tax year. For tax credit applications received and approved by 4 28 the department in the fiscal year during which the charitable 4 29 contribution is made, the tax credit shall be claimed for the 4 30 tax year during which the charitable contribution is made. For 4 31 applications approved by the department in any later fiscal 4 32 year, the tax credit shall be claimed for the tax year during 4 33 which the application is approved. 4 34 The bill applies retroactively to January 1, 2017, for 4 35 tax years beginning on or after that date, and applies to 5 1 charitable contributions made on or after that date. LSB 1545XS (1) 87 mm/sc