1. The department of economic development shall establish and administer a university-based research utilization program for purposes of encouraging the utilization of university-based research, primarily in the area of high technology, in new or existing businesses. The program shall include the three universities under the control of the state board of regents and all accredited private universities located in the state.
2. A new or existing business that utilizes a technology developed by an employee at a university under the control of the state board of regents may apply to the department of economic development for approval to participate in the university-based research utilization program. The department shall approve an applicant if the applicant meets all of the following criteria:
a. The applicant utilizes a technology developed by an employee at a university under the control of the state board of regents, provided that the technology has received a patent after July 1, 2003. If the applicant has been in existence more than one year prior to applying, the applicant shall organize a separate company to utilize the technology. For purposes of this section, the separate company shall be considered the applicant and, if approved, the approved business.
b. The applicant develops a five-year business plan approved by the department. The plan shall include information concerning the applicant's Iowa employment goals and projected impact on the Iowa economy. The department shall only approve plans showing sufficient potential impact on Iowa employment and economic development.
c. The applicant meets a minimum-size business standard determined by the department.
d. The applicant provides annual reports to the department that include employment statistics for the applicant and the total taxable wages paid to Iowa employees and reported to the department of revenue pursuant to section 422.16.
3. A business approved under the program and the university employee responsible for the development of the technology utilized by the approved business shall be eligible for a tax credit. The credit shall be allowed against the taxes imposed in chapter 422, divisions II and III. An individual may claim a tax credit under this section 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. A tax credit shall not be claimed under this subsection unless a tax credit certificate issued by the department of economic development is attached to the taxpayer's tax return for the tax year for which the tax credit is claimed. The amount of a tax credit allowed under this subsection shall equal the amount listed on a tax credit certificate issued by the department of economic development pursuant to subsection 4. A tax credit certificate shall not be transferable. Any tax credit in excess of the taxpayer's liability for the tax year may be credited to the taxpayer's tax liability for the following five years or until depleted, whichever occurs first. A tax credit shall not be carried back to a tax year prior to the tax year in which the taxpayer redeems the tax credit.
4. For the five tax years following the tax year in which a business is approved under the program, the department of revenue shall provide the department of economic development with information required by the department of economic development from each tax return filed by the approved business. Upon receiving the tax return-related information, the department of economic development shall do all of the following:
a. Review the information provided by the department of revenue pursuant to this subsection and the annual report submitted by the applicant pursuant to subsection 2, paragraph "d". If the department determines that the business activities of the applicant are not providing the benefits to Iowa employment and economic development projected in the applicant's approved five-year business plan, the department shall not issue tax credit certificates for that year to the applicant or university employee and shall determine any related university share to be equal to zero for that year.
b. Effective for the fiscal year beginning July 1, 2004, and for subsequent fiscal years, issue a tax credit certificate to the approved business and the university employee responsible for the development of the technology utilized by the approved business in an amount determined pursuant to subsection 5. A tax credit certificate shall contain the taxpayer's name, address, tax identification number, the amount of the tax credit, and other information required by the department of revenue.
c. (1) Determine the university share which is equal to the value of thirty percent of the tax liability of the approved business for purposes of making an appropriation pursuant to section 262B.12, to the university where the technology utilized by the approved business was developed. A university share shall not exceed two hundred twenty-five thousand dollars per year per technology utilized. For each technology utilized, the aggregate university share over a five-year period shall not exceed six hundred thousand dollars.
(2) The department shall maintain records for each university during each fiscal year regarding the university share each university is entitled to receive through the appropriation in section 262B.12. A university shall be entitled to receive the total university share for that particular university during the previous fiscal year.
d. For the fiscal year beginning July 1, 2004, not more than two million dollars worth of certificates shall be issued pursuant to paragraph "b". For the fiscal year beginning July 1, 2005, and every fiscal year thereafter, not more than ten million dollars worth of certificates shall be issued pursuant to paragraph "b".
5. The tax credit certificates issued by the department for each of the five years following the tax year in which the business is approved under the program shall be for the following amounts:
a. For the approved business, the value of the tax credit certificate shall equal thirty percent of the tax liability of the approved business. The value of a certificate issued to an approved business shall not exceed two hundred twenty-five thousand dollars. The total aggregate value of certificates issued over a five-year period to an approved business shall not exceed six hundred thousand dollars.
b. For the university employee responsible for the development of the technology utilized by the approved business, the value of the tax credit certificate shall equal ten percent of the tax liability of the approved business. If more than one employee is responsible for the development of the technology, the value equal to ten percent of the tax liability of the approved business shall be divided equally and individual tax credit certificates shall be issued to each employee responsible for the development of the technology. Each year, the total value of a certificate or certificates issued for a utilized technology shall not exceed seventy-five thousand dollars. For each technology utilized, the total aggregate value of certificates issued over a five-year period to the university employee responsible for the development of the technology shall not exceed two hundred thousand dollars.
6. The department of economic development shall notify the department of revenue when a tax credit certificate is issued pursuant to subsection 4. The notification shall include the name and tax identification number appearing on any tax credit certificate.
2003 Acts, ch 145, §286; 2003 Acts, 1st Ex, ch 1, §111, 133
For future repeal of this section effective June 30, 2010, see 2003 Acts, 1st Ex, ch 1, §114
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