HF 636 (LSB 1743YH (3) 85)

HOUSE FILE 636

BY  JACOBY

A BILL FOR

An Act providing for a tax credit against the individual and corporate income taxes, the franchise tax, insurance premiums tax, and the moneys and credits tax for a charitable contribution to certain institutions engaged in regenerative medicine research and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.11E  Regenerative medicine research tax credit.
   1.
  a.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a regenerative medicine research tax credit.
   b.  The credit shall be in an amount equal to twenty percent of a taxpayer’s charitable contribution to an eligible research institution located in the state. For purposes of this section, “eligible research institution” means an organization qualifying under section 501(c)(3) of the Internal Revenue Code as an organization exempt from federal income tax under section 501(a) of the Internal Revenue Code that is engaged in research designed to improve patient care through the development and dissemination of novel clinical therapies for the functional repair and replacement of diseased tissues and organs.
   c.  An individual may claim a tax credit under this subsection of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
   d.  Any tax credit in excess of the taxpayer’s tax liability for the tax year is not refundable, but the taxpayer may elect to have the excess credited to the tax liability for the following four tax years or until depleted, whichever is earlier. 
   2.
  a.  To claim a tax credit under this section, the taxpayer shall apply to the department for a tax credit certificate. After verifying the eligibility of a taxpayer for a tax credit pursuant to this section, the department shall issue a tax credit certificate to be attached to the taxpayer’s tax return. The tax credit certificate shall be issued on a first-come, first-served basis based upon the date of the application and shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, the certificate expiration date, and any other information required by the department.
   b.  To claim a tax credit under this section, a taxpayer must attach one or more tax credit certificates to the taxpayer’s tax return. The tax credit certificate or certificates attached to the taxpayer’s tax return shall be issued in the taxpayer’s name, and the expiration date on the certificate shall be a date that falls on or after the last day of the taxable year for which the taxpayer is claiming the tax credit.
   c.  The tax credit certificate, unless otherwise void, shall be accepted by the department as payment toward the tax liability of the taxpayer, subject to any conditions or restrictions placed by the department upon the face of the tax credit certificate and subject to the limitations of this section. 
   d.  Tax credit certificates issued under this section are not transferable to any person or entity.
   3.  A deduction pursuant to section 170 of the Internal Revenue Code for the amount of the contribution eligible for the tax credit is not allowed for state tax purposes.
   4.  The maximum amount of tax credits issued in a fiscal year pursuant to this section, section 422.33, subsection 30, section 422.60, subsection 12, section 432.12N, and section 533.329, subsection 2, paragraph “k”, shall not exceed ten million dollars.
    Sec. 2.  Section 422.33, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  30.  The taxes imposed under this division shall be reduced by a regenerative medicine research tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11E.
    Sec. 3.  Section 422.60, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.  The taxes imposed under this division shall be reduced by a regenerative medicine research tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11E.
    Sec. 4.  NEW SECTION.  432.12N  Regenerative medicine research tax credit.
   The taxes imposed under this chapter shall be reduced by a regenerative medicine research tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11E.
    Sec. 5.  Section 533.329, subsection 2, Code 2013, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  k.  The moneys and credits tax imposed under this section shall be reduced by a regenerative medicine research tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11E.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2013, for tax years beginning on or after that date.
EXPLANATION
   This bill provides a credit against the individual or corporate income tax, the franchise tax, the insurance premiums tax, and the moneys and credits tax for 20 percent of a taxpayer’s contribution to a regenerative medicine research institution, as defined in the bill, and located in the state. Generally, such contributions are tax deductible under current federal and state law, and taking a deduction for the contribution precludes the taxpayer from claiming the credit.
   The tax credit is not refundable but, at the taxpayer’s election, may be credited to the taxpayer’s tax liability for up to four subsequent tax years or until depletion, whichever is earlier. The tax credits are not transferable. The tax credits are issued on a first-come, first-served basis, and the maximum amount of tax credits is limited to $10 million in any one fiscal year. The department of revenue approves the tax credits and issues the tax credit certificates to taxpayers.
   The bill applies retroactively to January 1, 2013, for tax years beginning on or after that date.