House Study Bill 665 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act providing for a tax credit against the individual 1 and corporate income taxes, the franchise tax, insurance 2 premiums tax, and the moneys and credits tax for a 3 charitable contribution to certain institutions engaged in 4 regenerative medicine research and including retroactive 5 applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5547YC (4) 84 mm/sc

H.F. _____ Section 1. NEW SECTION . 422.11L Regenerative medicine 1 research tax credit. 2 1. a. The taxes imposed under this division, less the 3 credits allowed under section 422.12, shall be reduced by a 4 regenerative medicine research tax credit. 5 b. The credit shall be in an amount equal to twenty percent 6 of a taxpayer’s charitable contribution to an eligible research 7 institution located in the state. For purposes of this 8 section, “eligible research institution” means an organization 9 qualifying under section 501(c)(3) of the Internal Revenue 10 Code as an organization exempt from federal income taxation 11 under section 501(a) of the Internal Revenue Code that is 12 engaged in research designed to improve patient care through 13 the development and dissemination of novel clinical therapies 14 for the functional repair and replacement of diseased tissues 15 and organs, including research for the treatment of cancer. 16 “Eligible research institution” excludes a postsecondary 17 institution or an entity or organization receiving twenty-five 18 percent or more of its annual budget from a postsecondary 19 institution. 20 c. An individual may claim a tax credit under this 21 subsection of a partnership, limited liability company, 22 S corporation, estate, or trust electing to have income 23 taxed directly to the individual. The amount claimed by the 24 individual shall be based upon the pro rata share of the 25 individual’s earnings from the partnership, limited liability 26 company, S corporation, estate, or trust. 27 d. Any tax credit in excess of the taxpayer’s tax liability 28 for the tax year is not refundable, but the taxpayer may 29 elect to have the excess credited to the tax liability for 30 the following four tax years or until depleted, whichever is 31 earlier. 32 2. a. To claim a tax credit under this section, the 33 taxpayer shall apply to the department for a tax credit 34 certificate. After verifying the eligibility of a taxpayer for 35 -1- LSB 5547YC (4) 84 mm/sc 1/ 4

H.F. _____ a tax credit pursuant to this section, the department shall 1 issue a tax credit certificate to be attached to the taxpayer’s 2 tax return. The tax credit certificate shall be issued on 3 a first-come, first-served basis based upon the date of the 4 application and shall contain the taxpayer’s name, address, 5 tax identification number, the amount of the credit, the 6 certificate expiration date, and any other information required 7 by the department. 8 b. To claim a tax credit under this section, a taxpayer must 9 attach one or more tax credit certificates to the taxpayer’s 10 tax return. The tax credit certificate or certificates 11 attached to the taxpayer’s tax return shall be issued in the 12 taxpayer’s name, and the expiration date on the certificate 13 shall be a date that falls on or after the last day of the 14 taxable year for which the taxpayer is claiming the tax credit. 15 c. The tax credit certificate, unless otherwise void, 16 shall be accepted by the department as payment toward the 17 tax liability of the taxpayer, subject to any conditions or 18 restrictions placed by the department upon the face of the 19 tax credit certificate and subject to the limitations of this 20 section. 21 d. Tax credit certificates issued under this section are not 22 transferable to any person or entity. 23 3. A deduction pursuant to section 170 of the Internal 24 Revenue Code for the amount of the contribution eligible for 25 the tax credit is not allowed for state tax purposes. 26 4. The maximum amount of tax credits issued in a fiscal 27 year pursuant to this section, section 422.33, subsection 29, 28 section 422.60, subsection 14, section 432.12N, and section 29 533.329, subsection 2, paragraph “m” , shall not exceed ten 30 million dollars. 31 Sec. 2. Section 422.33, Code Supplement 2011, is amended by 32 adding the following new subsection: 33 NEW SUBSECTION . 29. The taxes imposed under this division 34 shall be reduced by a regenerative medicine research tax credit 35 -2- LSB 5547YC (4) 84 mm/sc 2/ 4

H.F. _____ in the same manner, for the same amount, and under the same 1 conditions as provided in section 422.11L. 2 Sec. 3. Section 422.60, Code Supplement 2011, is amended by 3 adding the following new subsection: 4 NEW SUBSECTION . 14. The taxes imposed under this division 5 shall be reduced by a regenerative medicine research tax credit 6 in the same manner, for the same amount, and under the same 7 conditions as provided in section 422.11L. 8 Sec. 4. NEW SECTION . 432.12N Regenerative medicine research 9 tax credit. 10 The taxes imposed under this chapter shall be reduced by a 11 regenerative medicine research tax credit in the same manner, 12 for the same amount, and under the same conditions as provided 13 in section 422.11L. 14 Sec. 5. Section 533.329, subsection 2, Code Supplement 15 2011, is amended by adding the following new paragraph: 16 NEW PARAGRAPH . m. The moneys and credits tax imposed 17 under this section shall be reduced by a regenerative medicine 18 research tax credit in the same manner, for the same amount, 19 and under the same conditions as provided in section 422.11L. 20 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 21 retroactively to January 1, 2012, for tax years beginning on 22 or after that date. 23 EXPLANATION 24 This bill provides a credit against the individual or 25 corporate income tax, the franchise tax, the insurance premiums 26 tax, and the moneys and credits tax for 20 percent of a 27 taxpayer’s contribution to a regenerative medicine research 28 institution located in the state. In order to qualify for the 29 credit, the regenerative medicine research institute must be 30 qualified under 501(c)(3) of the Internal Revenue Code and must 31 engage in research that is designed to improve patient care 32 through the development and dissemination of novel clinical 33 therapies for the functional repair and replacement of diseased 34 tissues and organs, including cancer research. Postsecondary 35 -3- LSB 5547YC (4) 84 mm/sc 3/ 4

H.F. _____ institutions and entities that receive 25 percent or more of 1 their annual budget from a postsecondary institution do not 2 qualify. 3 Generally, such contributions are tax deductible under 4 current federal and state law, and taking a deduction for the 5 contribution precludes the taxpayer from claiming the credit 6 under the bill. 7 The tax credit is not refundable but, at the taxpayer’s 8 election, may be credited to the taxpayer’s tax liability for 9 up to four subsequent tax years or until depletion, whichever 10 is earlier. The tax credits are not transferable. The maximum 11 amount of tax credits is limited to $10 million in any one 12 fiscal year. The department of revenue approves the tax 13 credits and issues the tax credit certificates to taxpayers. 14 The bill applies retroactively to January 1, 2012, for tax 15 years beginning on or after that date. 16 -4- LSB 5547YC (4) 84 mm/sc 4/ 4