Senate
File
2044
-
Introduced
SENATE
FILE
2044
BY
JOHNSON
A
BILL
FOR
An
Act
relating
to
taxation
by
providing
for
the
protection
1
from
disallowance
of
tax
benefits
to
private
nonprofit
2
educational
institutions
because
of
certain
religious
3
beliefs
and
moral
convictions,
and
including
effective
date
4
provisions.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
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Section
1.
FINDINGS.
The
general
assembly
finds
all
of
the
1
following:
2
1.
Private
nonprofit
educational
institutions
play
a
vital
3
role
in
providing
formal
education
in
society,
and
the
United
4
States
and
Iowa
support
and
recognize
these
institutions
in
5
part
by
providing
important
and
necessary
tax
benefits.
6
2.
The
United
States
and
Iowa
have
a
long,
honorable
history
7
of
accommodating
religious
exercise
and
establishing
conscience
8
protections
based
on
religious
and
moral
convictions.
9
3.
Protecting
the
tax
benefits
available
to
private
10
nonprofit
educational
institutions
from
being
denied
based
11
on
religious
or
moral
convictions
is
a
state
interest
of
the
12
highest
order.
The
state
is
obligated
to
take
measures
that
13
advance
this
interest
by
remedying,
deterring,
and
preventing
14
government
interference
with
religious
exercise
in
a
way
that
15
complements
the
protections
mandated
by
the
Constitution
of
the
16
State
of
Iowa
and
the
Constitution
of
the
United
States.
17
4.
In
2015,
during
the
course
of
oral
argument
at
the
United
18
States
Supreme
Court,
in
Obergefell
v.
Hodges,
135
S.
Ct.
19
2584
(2015),
when
Justice
Alito
asked
whether
an
institution
20
could
lose
its
tax-exempt
status
for
maintaining
the
view
that
21
marriage
is
the
union
of
one
man
and
one
woman,
the
solicitor
22
general
of
the
United
States
admitted
it
was
“going
to
be
an
23
issue”.
24
5.
In
the
Obergefell
v.
Hodges
opinion,
the
United
States
25
Supreme
Court
held
same-sex
couples
have
a
right
to
marry,
but
26
also
noted,
“Many
who
deem
same-sex
marriage
to
be
wrong
reach
27
that
conclusion
based
on
decent
and
honorable
religious
or
28
philosophical
premises,
and
neither
they
nor
their
beliefs
are
29
disparaged
here”.
30
6.
In
the
wake
of
the
Obergefell
v.
Hodges
decision,
leading
31
legal
scholars
concur
that
conflict
between
same-sex
marriage
32
and
religious
liberty
are
inevitable
and,
therefore,
should
be
33
addressed
through
legislation.
34
7.
The
state
of
Iowa
has
an
obligation
to
refrain
from
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discriminating
against
those
who
maintain
a
belief
that
1
marriage
is
the
union
of
one
man
and
one
woman
based
on
2
religious
and
moral
convictions.
3
8.
Laws
that
protect
important
and
necessary
tax
benefits
4
from
being
denied
because
of
the
free
exercise
of
religious
5
beliefs
and
moral
convictions
about
marriage
will
encourage
6
private
citizens
and
institutions
to
demonstrate
tolerance
for
7
those
beliefs
and
convictions
and
therefore
contribute
to
a
8
more
respectful,
diverse,
and
peaceful
society.
9
Sec.
2.
NEW
SECTION
.
421.62
Private
educational
institution
10
tax
benefits
——
protection
of
the
free
exercise
of
religious
11
beliefs
and
moral
convictions.
12
1.
For
purposes
of
this
section,
unless
otherwise
required
13
by
the
context:
14
a.
“Private
educational
institution”
includes
a
private
15
elementary
or
secondary
school
in
the
state,
or
a
private
16
postsecondary
educational
institution
in
the
state.
17
b.
“Tax
benefit”
means
an
exclusion
from
the
operation
18
or
collection
of
a
tax
imposed
in
this
state,
including
tax
19
credits,
exemptions,
deductions,
rebates,
and
refunds.
20
2.
Notwithstanding
any
other
provision
of
state
law
to
21
the
contrary,
if
a
provision
of
the
Code
grants
a
tax
benefit
22
that
applies
to,
or
is
dependent
upon,
a
private
educational
23
institution
that
is
recognized
as
nonprofit,
or
exempt
from
24
federal
taxation
under
section
501(a)
of
the
Internal
Revenue
25
Code,
such
tax
benefit
shall
not
be
disallowed
on
or
after
the
26
effective
date
of
this
Act
because
the
private
educational
27
institution
believes,
acts,
or
teaches
in
accordance
with
a
28
religious
belief
or
moral
conviction
that
marriage
is
or
should
29
be
recognized
as
the
union
of
one
man
and
one
woman,
or
that
30
sexual
relations
are
properly
reserved
to
such
marriage,
or
31
because
the
private
educational
institution
was
disallowed
a
32
tax
exemption
under
section
501(a)
of
the
Internal
Revenue
Code
33
on
the
basis
of
those
beliefs,
acts,
or
teachings.
34
3.
The
protection
of
tax
benefits
provided
in
this
section
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applies
to
but
is
not
limited
to
the
following
provisions:
1
a.
The
redevelopment
tax
credits
under
sections
15.291
2
through
15.295.
3
b.
The
workforce
housing
tax
incentives
under
sections
4
15.351
through
15.356.
5
c.
The
exemption
from
the
fee
for
new
registration
under
6
section
321.105A,
subsection
2,
paragraph
“c”
,
subparagraphs
7
(1)
and
(21),
and
subsection
3,
paragraph
“f”
.
8
d.
The
historic
preservation
and
cultural
and
entertainment
9
district
tax
credit
under
chapter
404A.
10
e.
The
charitable
contribution
deduction
in
section
422.9,
11
subsection
2.
The
amount
of
contributions
that
would
have
been
12
deductible
as
a
charitable
contribution
under
section
170
of
13
the
Internal
Revenue
Code
but
for
the
fact
that
the
private
14
educational
institution
that
was
the
recipient
or
beneficiary
15
of
the
contribution
was
disallowed
a
tax
exemption
under
16
section
501(a)
of
the
Internal
Revenue
Code
for
the
reason
17
described
in
subsection
2
of
this
section,
shall
be
allowed
18
as
a
deductible
charitable
contribution
under
section
422.9,
19
subsection
2.
20
f.
The
school
tuition
organization
tax
credit
under
section
21
422.11S.
22
g.
The
charitable
conservation
contribution
tax
credit
under
23
sections
422.11W
and
422.33,
subsection
25.
24
h.
The
tuition
tax
credit
under
section
422.12,
subsection
25
2,
paragraph
“b”
.
26
i.
The
exemption
from
corporate
income
tax
under
section
27
422.34,
subsection
2.
28
j.
The
charitable
contribution
deduction
in
determining
29
federal
taxable
income
of
a
corporation
or
financial
30
institution
for
purposes
of
the
net
income
computation
under
31
section
422.35
or
422.61,
as
applicable.
A
corporation
or
32
financial
institution
is
allowed
an
additional
subtraction
33
in
computing
net
income
equal
to
the
amount
of
contributions
34
that
would
have
been
deductible
as
a
charitable
contribution
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under
section
170
of
the
Internal
Revenue
Code
for
purposes
1
of
computing
federal
taxable
income
but
for
the
fact
that
the
2
private
educational
institution
that
was
the
recipient
or
3
beneficiary
of
the
contribution
was
disallowed
a
tax
exemption
4
under
section
501(a)
of
the
Internal
Revenue
Code
for
the
5
reason
described
in
subsection
2
of
this
section.
6
k.
The
sales
tax
exemptions
in
section
423.3,
subsections
7
17,
78,
80,
and
89.
8
l.
The
sales
tax
refunds
in
section
423.4,
subsections
1
9
and
6.
10
m.
The
property
tax
exemptions
in
section
427.1,
subsections
11
7
and
8.
12
n.
The
inheritance
tax
exemption
in
section
450.4,
13
subsection
2.
Property
that
passes
for
a
purpose
that
would
14
have
qualified
as
a
charitable,
educational,
or
religious
15
purpose
as
defined
in
sections
170(c)
and
2055
of
the
Internal
16
Revenue
Code
but
for
the
fact
that
the
private
educational
17
institution
that
was
the
recipient
or
beneficiary
of
the
18
property
was
disallowed
a
tax
exemption
under
section
501(a)
19
of
the
Internal
Revenue
Code
for
the
reason
described
in
20
subsection
2
of
this
section
shall
be
considered
exempt
from
21
inheritance
tax
under
section
450.4,
subsection
2.
22
4.
This
section
shall
be
construed
in
favor
of
a
broad
23
protection
of
free
exercise
of
religious
beliefs
and
moral
24
convictions,
to
the
maximum
extent
permitted
by
the
terms
of
25
this
section
and
the
Constitution
of
the
State
of
Iowa
and
the
26
Constitution
of
the
United
States.
27
5.
The
protection
of
free
exercise
of
religious
beliefs
28
and
moral
convictions
afforded
by
this
section
are
in
addition
29
to
the
protections
provided
under
federal
law,
state
law,
and
30
the
Constitution
of
the
State
of
Iowa
and
the
Constitution
of
31
the
United
States.
This
section
shall
not
be
construed
to
32
preempt
or
repeal
any
state
or
local
law
that
is
equally
or
33
more
protective
of
free
exercise
of
religious
beliefs
or
moral
34
convictions,
and
this
section
shall
not
be
construed
to
narrow
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the
meaning
or
application
of
any
state
or
local
law
protecting
1
free
exercise
of
religious
beliefs
or
moral
convictions.
2
6.
If
any
provision
of
this
section
or
the
application
3
thereof
to
any
person
or
circumstances
is
held
invalid,
the
4
invalidity
shall
not
affect
other
provisions
or
applications
5
of
this
section
which
can
be
given
effect
without
the
invalid
6
provisions
or
application
and,
to
this
end,
the
provisions
of
7
this
section
are
severable.
8
Sec.
3.
EFFECTIVE
UPON
ENACTMENT.
This
Act,
being
deemed
of
9
immediate
importance,
takes
effect
upon
enactment.
10
EXPLANATION
11
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
12
the
explanation’s
substance
by
the
members
of
the
general
assembly.
13
This
bill
protects
tax
benefits
of
private
nonprofit
14
educational
institutions
from
being
disallowed
because
of
15
certain
religious
beliefs
and
moral
convictions.
The
bill
also
16
makes
several
findings,
including
but
not
limited
to
findings
17
related
to
the
state
interest
in
protecting
tax
benefits
of
18
private
nonprofit
educational
institutions,
and
in
protecting
19
and
promoting
the
free
exercise
of
religious
beliefs
and
moral
20
convictions
about
marriage.
21
The
bill
provides
that
notwithstanding
any
other
provision
22
of
state
law
to
the
contrary,
if
a
tax
benefit
is
available
23
under
Iowa
law
that
applies
to,
or
is
dependent
upon,
a
private
24
educational
institution
that
is
recognized
as
nonprofit,
or
25
exempt
from
federal
taxation
under
Internal
Revenue
Code
(IRC)
26
§501(a),
such
tax
benefit
shall
not
be
disallowed
on
or
after
27
the
effective
date
of
the
bill
because
the
private
educational
28
institution
believes,
acts,
or
teaches
in
accordance
with
a
29
religious
belief
or
moral
conviction
that
marriage
is
or
should
30
be
recognized
as
the
union
of
one
man
and
one
woman,
or
that
31
sexual
relations
are
properly
reserved
to
such
marriage,
or
32
because
the
private
educational
institution
was
disallowed
a
33
tax
exemption
under
IRC
§501(a)
on
the
basis
of
those
beliefs,
34
acts,
or
teachings.
“Private
educational
institution”
and
“tax
35
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benefit”
are
both
defined
in
the
bill.
1
The
bill
provides
a
nonexhaustive
list
of
tax
benefits
to
2
which
the
protection
from
disallowance
applies
and
in
certain
3
cases
provides
for
how
those
tax
benefits
shall
be
administered
4
when
the
protection
from
disallowance
becomes
applicable.
5
The
nonexhaustive
list
includes
the
redevelopment
tax
6
credits,
the
workforce
housing
tax
incentives,
several
7
exemptions
from
the
fee
for
new
registration,
the
historic
8
preservation
and
cultural
and
entertainment
district
tax
9
credit,
the
school
tuition
organization
tax
credit,
the
10
charitable
conservation
contribution
tax
credit,
the
tuition
11
tax
credit,
the
exemption
from
the
corporate
income
tax,
12
several
sales
tax
exemptions
and
refunds,
several
property
tax
13
exemptions,
the
charitable
contribution
deductions
under
the
14
individual
and
corporate
income
tax
and
franchise
tax,
and
the
15
charitable
contribution
exemption
under
the
inheritance
tax.
16
With
regard
to
charitable
contributions,
the
bill
provides
17
that
contributions
or
bequests
that
would
have
qualified
as
18
tax-deductible
charitable
contributions
under
the
IRC
but
for
19
the
fact
that
the
private
educational
institution
that
was
the
20
recipient
or
beneficiary
of
the
property
was
disallowed
a
tax
21
exemption
under
IRC
§501(a)
for
believing,
acting,
or
teaching
22
in
a
way
described
in
the
bill,
shall
be
considered
deductible
23
contributions
under
the
individual
and
corporate
income
tax
24
and
franchise
tax,
and
shall
be
considered
exempt
under
the
25
inheritance
tax.
26
The
bill
is
to
be
construed
in
favor
of
a
broad
protection
27
of
free
exercise
of
religious
beliefs
and
moral
convictions,
28
to
the
maximum
extent
permitted
by
the
terms
of
the
bill
and
29
the
Constitutions
of
the
State
of
Iowa
and
of
the
United
30
States.
The
protection
of
free
exercise
of
religious
beliefs
31
and
moral
convictions
afforded
by
the
bill
are
in
addition
to
32
the
protections
provided
under
federal
law,
state
law,
and
the
33
Constitutions
of
the
State
of
Iowa
and
of
the
United
States,
34
and
the
bill
is
not
to
be
construed
to
preempt
or
repeal
any
35
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state
or
local
law
that
is
equally
or
more
protective
of
free
1
exercise
of
religious
beliefs
or
moral
convictions
or
to
narrow
2
the
meaning
or
application
of
any
state
or
local
law
protecting
3
free
exercise
of
religious
beliefs
or
moral
convictions.
4
The
provisions
of
the
bill
are
severable.
The
bill
takes
5
effect
upon
enactment.
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