House File 240 - Introduced HOUSE FILE 240 BY MAXWELL A BILL FOR An Act creating a tax credit against the individual and 1 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 and 5 other applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 1545YH (3) 87 mm/sc

H.F. 240 Section 1. NEW SECTION . 422.10C 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 sixty percent 6 of a taxpayer’s charitable contribution to an eligible research 7 institution located in the state. A charitable contribution 8 shall not be eligible for the tax credit to the extent the 9 contribution was taken as a deduction pursuant to section 170 10 of the Internal Revenue Code for state tax purposes. For 11 purposes of this section, “eligible research institution” 12 means an organization qualifying under section 501(c)(3) of 13 the Internal Revenue Code as an organization exempt from 14 federal income tax under section 501(a) of the Internal 15 Revenue Code that is engaged in research designed to improve 16 patient care through the development and dissemination of novel 17 clinical therapies for the functional repair and replacement 18 of diseased tissues and organs, including research for the 19 treatment of cancer. “Eligible research institution” excludes 20 a postsecondary institution or an entity or organization 21 receiving twenty-five percent or more of its annual budget from 22 a postsecondary institution. 23 c. An individual may claim the tax credit allowed a 24 partnership, limited liability company, S corporation, estate, 25 or trust electing to have the income taxed directly to the 26 individual. The amount claimed by the individual shall be 27 based upon the pro rata share of the individual’s earnings of 28 the partnership, limited liability company, S corporation, 29 estate, or trust. 30 d. Any tax credit in excess of the taxpayer’s tax liability 31 is not refundable but the excess for the tax year may be 32 credited to the tax liability for the following four tax years 33 or until depleted, whichever is earlier. 34 2. a. A taxpayer must submit an application to the 35 -1- LSB 1545YH (3) 87 mm/sc 1/ 5

H.F. 240 department on or after the date the charitable contribution is 1 made. The application must be approved by the department in 2 order to claim the tax credit. 3 b. The department shall accept and approve applications 4 on a first-come, first-served basis according to the date 5 the application was received until the maximum amount of tax 6 credits that may be approved under subsection 3 is reached. 7 If for a fiscal year the aggregate amount of tax credits 8 applied for exceeds the amount specified in subsection 3, 9 the department shall establish a wait list for tax credits. 10 Valid applications filed by the taxpayer but not approved by 11 the department shall be placed on a wait list in the order 12 the applications were received and those applicants shall 13 be given priority for having their applications approved 14 in succeeding years. Placement on a wait list pursuant to 15 this paragraph shall not constitute a promise binding the 16 state. The availability of a tax credit and approval of a tax 17 credit application pursuant to this section in a future year 18 is contingent upon the availability of tax credits in that 19 particular year. 20 c. For tax credit applications received and approved by 21 the department in the fiscal year during which the charitable 22 contribution is made, the tax credit shall be claimed for the 23 tax year during which the charitable contribution is made. For 24 tax credit applications approved in any fiscal year following 25 the fiscal year during which the charitable contribution is 26 made, the tax credit shall be claimed for the tax year during 27 which the application is approved by the department. A tax 28 credit shall not be carried back to a tax year prior to the tax 29 year in which the taxpayer claims the tax credit. 30 3. The maximum aggregate amount of tax credits approved 31 in a fiscal year pursuant to this section, section 422.33, 32 subsection 27, section 422.60, subsection 14, section 432.12N, 33 and section 533.329, subsection 2, paragraph “m” , shall not 34 exceed ten million dollars. 35 -2- LSB 1545YH (3) 87 mm/sc 2/ 5

H.F. 240 Sec. 2. Section 422.33, Code 2017, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 27. The taxes imposed under this division 3 shall be reduced by a regenerative medicine research tax credit 4 in the same manner, for the same amount, and under the same 5 conditions as provided in section 422.10C. 6 Sec. 3. Section 422.60, Code 2017, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 14. The taxes imposed under this division 9 shall be reduced by a regenerative medicine research tax credit 10 in the same manner, for the same amount, and under the same 11 conditions as provided in section 422.10C. 12 Sec. 4. NEW SECTION . 432.12N Regenerative medicine research 13 tax credit. 14 The taxes imposed under this chapter shall be reduced by a 15 regenerative medicine research tax credit in the same manner, 16 for the same amount, and under the same conditions as provided 17 in section 422.10C. 18 Sec. 5. Section 533.329, subsection 2, Code 2017, is amended 19 by adding the following new paragraph: 20 NEW PARAGRAPH . m. The moneys and credits tax imposed 21 under this section shall be reduced by a regenerative medicine 22 research tax credit in the same manner, for the same amount, 23 and under the same conditions as provided in section 422.10C. 24 Sec. 6. APPLICABILITY. This Act applies to charitable 25 contributions to an eligible research institution located in 26 this state made on or after January 1, 2017. 27 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies 28 retroactively to January 1, 2017, for tax years beginning on 29 or after that date. 30 EXPLANATION 31 The inclusion of this explanation does not constitute agreement with 32 the explanation’s substance by the members of the general assembly. 33 This bill provides a credit against the individual or 34 corporate income tax, the franchise tax, the insurance premiums 35 -3- LSB 1545YH (3) 87 mm/sc 3/ 5

H.F. 240 tax, and the moneys and credits tax for 60 percent of a 1 taxpayer’s contribution to a regenerative medicine research 2 institution located in the state. Contributions claimed as 3 a charitable deduction for Iowa tax purposes shall not be 4 eligible for the tax credit. In order to qualify for the 5 credit, the regenerative medicine research institute must be 6 qualified under 501(c)(3) of the Internal Revenue Code and must 7 engage in research that is designed to improve patient care 8 through the development and dissemination of novel clinical 9 therapies for the functional repair and replacement of diseased 10 tissues and organs, including cancer research. Postsecondary 11 institutions and entities that receive 25 percent or more of 12 their annual budget from a postsecondary institution do not 13 qualify. 14 In order to claim a tax credit, the taxpayer must submit 15 an application to the department of revenue (department) on 16 or after the date of the charitable contribution, and have 17 that application approved by the department. No more than 18 $10 million in tax credits may be approved per fiscal year. 19 If applications for the tax credit exceed that amount, the 20 department is required to establish a wait list in the order 21 the applications were received and those applicants will 22 receive priority for receiving tax credits in succeeding years. 23 The tax credit is nonrefundable, but any amount in excess of 24 the taxpayer’s tax liability may be carried forward for up to 25 four years. The tax credit cannot be carried back to a prior 26 tax year. For tax credit applications received and approved by 27 the department in the fiscal year during which the charitable 28 contribution is made, the tax credit shall be claimed for the 29 tax year during which the charitable contribution is made. For 30 applications approved by the department in any later fiscal 31 year, the tax credit shall be claimed for the tax year during 32 which the application is approved. 33 The bill applies retroactively to January 1, 2017, for 34 tax years beginning on or after that date, and applies to 35 -4- LSB 1545YH (3) 87 mm/sc 4/ 5