SF 269 (LSB 1545XS (1) 87)

SENATE FILE 269

BY  ZAUN

(COMPANION TO HF 240 BY MAXWELL)

A BILL FOR

An Act creating 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 and other applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.10C  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 sixty percent of a taxpayer’s charitable contribution to an eligible research institution located in the state. A charitable contribution shall not be eligible for the tax credit to the extent the contribution was taken as a deduction pursuant to section 170 of the Internal Revenue Code for state tax purposes. 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, including research for the treatment of cancer. “Eligible research institution” excludes a postsecondary institution or an entity or organization receiving twenty-five percent or more of its annual budget from a postsecondary institution.
   c.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the 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 of the partnership, limited liability company, S corporation, estate, or trust.
   d.  Any tax credit in excess of the taxpayer’s tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following four tax years or until depleted, whichever is earlier.
   2.  a.  A taxpayer must submit an application to the department on or after the date the charitable contribution is made. The application must be approved by the department in order to claim the tax credit.
   b.  The department shall accept and approve applications on a first-come, first-served basis according to the date the application was received until the maximum amount of tax credits that may be approved under subsection 3 is reached. If for a fiscal year the aggregate amount of tax credits applied for exceeds the amount specified in subsection 3, the department shall establish a wait list for tax credits. Valid applications filed by the taxpayer but not approved by the department shall be placed on a wait list in the order the applications were received and those applicants shall be given priority for having their applications approved in succeeding years. Placement on a wait list pursuant to this paragraph shall not constitute a promise binding the state. The availability of a tax credit and approval of a tax credit application pursuant to this section in a future year is contingent upon the availability of tax credits in that particular year. 
   c.  For tax credit applications received and approved by the department in the fiscal year during which the charitable contribution is made, the tax credit shall be claimed for the tax year during which the charitable contribution is made. For tax credit applications approved in any fiscal year following the fiscal year during which the charitable contribution is made, the tax credit shall be claimed for the tax year during which the application is approved by the department. A tax credit shall not be carried back to a tax year prior to the tax year in which the taxpayer claims the tax credit. 
   3.  The maximum aggregate amount of tax credits approved in a fiscal year pursuant to this section, section 422.33, subsection 27, section 422.60, subsection 14, section 432.12N, and section 533.329, subsection 2, paragraph “m”, shall not exceed ten million dollars.
    Sec. 2.  Section 422.33, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  27.  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 422.10C.
    Sec. 3.  Section 422.60, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  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 422.10C.
    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 422.10C.
    Sec. 5.  Section 533.329, subsection 2, Code 2017, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  m.  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 422.10C.
    Sec. 6.  APPLICABILITY.  This Act applies to charitable contributions to an eligible research institution located in this state made on or after January 1, 2017.
    Sec. 7.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2017, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   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 60 percent of a taxpayer’s contribution to a regenerative medicine research institution located in the state. Contributions claimed as a charitable deduction for Iowa tax purposes shall not be eligible for the tax credit. In order to qualify for the credit, the regenerative medicine research institute must be qualified under 501(c)(3) of the Internal Revenue Code and must engage in research that is 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, including cancer research. Postsecondary institutions and entities that receive 25 percent or more of their annual budget from a postsecondary institution do not qualify. 
   In order to claim a tax credit, the taxpayer must submit an application to the department of revenue (department) on or after the date of the charitable contribution, and have that application approved by the department. No more than $10 million in tax credits may be approved per fiscal year. If applications for the tax credit exceed that amount, the department is required to establish a wait list in the order the applications were received and those applicants will receive priority for receiving tax credits in succeeding years.
   The tax credit is nonrefundable, but any amount in excess of the taxpayer’s tax liability may be carried forward for up to four years. The tax credit cannot be carried back to a prior tax year. For tax credit applications received and approved by the department in the fiscal year during which the charitable contribution is made, the tax credit shall be claimed for the tax year during which the charitable contribution is made. For applications approved by the department in any later fiscal year, the tax credit shall be claimed for the tax year during which the application is approved. 
   The bill applies retroactively to January 1, 2017, for tax years beginning on or after that date, and applies to charitable contributions made on or after that date.