House File 636 - Introduced HOUSE FILE 636 BY JACOBY 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 1743YH (3) 85 mm/sc

H.F. 636 Section 1. NEW SECTION . 422.11E 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 Code 10 as an organization exempt from federal income tax under section 11 501(a) of the Internal Revenue Code that is engaged in research 12 designed to improve patient care through the development and 13 dissemination of novel clinical therapies for the functional 14 repair and replacement of diseased tissues and organs. 15 c. An individual may claim a tax credit under this 16 subsection of a partnership, limited liability company, 17 S corporation, estate, or trust electing to have income 18 taxed directly to the individual. The amount claimed by the 19 individual shall be based upon the pro rata share of the 20 individual’s earnings from the partnership, limited liability 21 company, S corporation, estate, or trust. 22 d. Any tax credit in excess of the taxpayer’s tax liability 23 for the tax year is not refundable, but the taxpayer may 24 elect to have the excess credited to the tax liability for 25 the following four tax years or until depleted, whichever is 26 earlier. 27 2. a. To claim a tax credit under this section, the 28 taxpayer shall apply to the department for a tax credit 29 certificate. After verifying the eligibility of a taxpayer for 30 a tax credit pursuant to this section, the department shall 31 issue a tax credit certificate to be attached to the taxpayer’s 32 tax return. The tax credit certificate shall be issued on 33 a first-come, first-served basis based upon the date of the 34 application and shall contain the taxpayer’s name, address, 35 -1- LSB 1743YH (3) 85 mm/sc 1/ 4

H.F. 636 tax identification number, the amount of the credit, the 1 certificate expiration date, and any other information required 2 by the department. 3 b. To claim a tax credit under this section, a taxpayer must 4 attach one or more tax credit certificates to the taxpayer’s 5 tax return. The tax credit certificate or certificates 6 attached to the taxpayer’s tax return shall be issued in the 7 taxpayer’s name, and the expiration date on the certificate 8 shall be a date that falls on or after the last day of the 9 taxable year for which the taxpayer is claiming the tax credit. 10 c. The tax credit certificate, unless otherwise void, 11 shall be accepted by the department as payment toward the 12 tax liability of the taxpayer, subject to any conditions or 13 restrictions placed by the department upon the face of the 14 tax credit certificate and subject to the limitations of this 15 section. 16 d. Tax credit certificates issued under this section are not 17 transferable to any person or entity. 18 3. A deduction pursuant to section 170 of the Internal 19 Revenue Code for the amount of the contribution eligible for 20 the tax credit is not allowed for state tax purposes. 21 4. The maximum amount of tax credits issued in a fiscal 22 year pursuant to this section, section 422.33, subsection 30, 23 section 422.60, subsection 12, section 432.12N, and section 24 533.329, subsection 2, paragraph “k” , shall not exceed ten 25 million dollars. 26 Sec. 2. Section 422.33, Code 2013, is amended by adding the 27 following new subsection: 28 NEW SUBSECTION . 30. The taxes imposed under this division 29 shall be reduced by a regenerative medicine research tax credit 30 in the same manner, for the same amount, and under the same 31 conditions as provided in section 422.11E. 32 Sec. 3. Section 422.60, Code 2013, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 12. The taxes imposed under this division 35 -2- LSB 1743YH (3) 85 mm/sc 2/ 4

H.F. 636 shall be reduced by a regenerative medicine research tax credit 1 in the same manner, for the same amount, and under the same 2 conditions as provided in section 422.11E. 3 Sec. 4. NEW SECTION . 432.12N Regenerative medicine research 4 tax credit. 5 The taxes imposed under this chapter shall be reduced by a 6 regenerative medicine research tax credit in the same manner, 7 for the same amount, and under the same conditions as provided 8 in section 422.11E. 9 Sec. 5. Section 533.329, subsection 2, Code 2013, is amended 10 by adding the following new paragraph: 11 NEW PARAGRAPH . k. The moneys and credits tax imposed 12 under this section shall be reduced by a regenerative medicine 13 research tax credit in the same manner, for the same amount, 14 and under the same conditions as provided in section 422.11E. 15 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 16 retroactively to January 1, 2013, for tax years beginning on 17 or after that date. 18 EXPLANATION 19 This bill provides a credit against the individual or 20 corporate income tax, the franchise tax, the insurance premiums 21 tax, and the moneys and credits tax for 20 percent of a 22 taxpayer’s contribution to a regenerative medicine research 23 institution, as defined in the bill, and located in the 24 state. Generally, such contributions are tax deductible under 25 current federal and state law, and taking a deduction for the 26 contribution precludes the taxpayer from claiming the credit. 27 The tax credit is not refundable but, at the taxpayer’s 28 election, may be credited to the taxpayer’s tax liability for 29 up to four subsequent tax years or until depletion, whichever 30 is earlier. The tax credits are not transferable. The tax 31 credits are issued on a first-come, first-served basis, and the 32 maximum amount of tax credits is limited to $10 million in any 33 one fiscal year. The department of revenue approves the tax 34 credits and issues the tax credit certificates to taxpayers. 35 -3- LSB 1743YH (3) 85 mm/sc 3/ 4