House File 2228 - Introduced
HOUSE FILE
BY MAXWELL
A BILL FOR
1 An Act creating a tax credit against the individual and
2 corporate income taxes, the franchise tax, insurance
3 premiums tax, and the moneys and credits tax for a
4 charitable contribution to certain institutions engaged in
5 regenerative medicine research and including applicability
6 provisions.
7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. LEGISLATIVE FINDINGS AND PURPOSE. The general
1 2 assembly finds that research on regenerative medicine has the
1 3 potential to produce valuable advances in the field of medicine
1 4 and that an increase in such research in this state could
1 5 result in a substantial benefit to the state and its citizens.
1 6 The purpose of the regenerative medicine research tax credit
1 7 enacted in this Act is to induce taxpayers to make monetary
1 8 contributions to regenerative medicine research institutions
1 9 above amounts that would have been contributed absent state
1 10 support, thereby increasing the overall level of funding
1 11 available for regenerative medicine research in this state.
1 12 Sec. 2. Section 2.48, subsection 3, Code 2018, is amended by
1 13 adding the following new paragraph:
1 14 NEW PARAGRAPH. 0h. In 2021, the regenerative medicine
1 15 research tax credit available under section 422.10C.
1 16 Sec. 3. NEW SECTION. 422.10C Regenerative medicine research
1 17 tax credit.
1 18 1. Definitions. For purposes of this section, "certified
1 19 regenerative medicine research institution" means an organization
1 20 meeting the requirements of subsection 2 and certified by the
1 21 department pursuant to that subsection.
1 22 2. Regenerative medicine research institution certification.
1 23 a. An organization may apply to the department in the manner
1 24 prescribed by the department to be certified as a regenerative
1 25 medicine research institution.
1 26 b. In order to be certified as a regenerative medicine
1 27 research institution, an organization shall meet all of the
1 28 following requirements:
1 29 (1) The organization is organized under chapter 504 and
1 30 qualifying under section 501(c)(3) of the Internal Revenue Code
1 31 as an organization exempt from federal income tax under section
1 32 501(a) of the Internal Revenue Code.
1 33 (2) The organization has a principal place of business in
1 34 this state.
1 35 (3) The organization is directly engaged in research in
2 1 this state solely using adult stem cells, which research is
2 2 designed to improve patient care through the development and
2 3 dissemination of novel clinical therapies for the functional
2 4 repair and replacement of diseased tissues and organs,
2 5 including research for the treatment of cancer.
2 6 (4) The organization spends at least fifty=one percent of
2 7 its annual budget on laboratory or clinical research that is
2 8 conducted by the organization and that meets the requirements
2 9 of subparagraph (3).
2 10 (5) The organization does not operate as a conduit
2 11 for research by another organization by redistributing a
2 12 contribution it receives to that other organization.
2 13 (6) The organization is not a postsecondary institution or
2 14 an entity receiving twenty=five percent or more of its annual
2 15 budget from a postsecondary institution.
2 16 (7) The organization agrees to provide to the department all
2 17 of the following information:
2 18 (a) Information to verify that the organization meets the
2 19 requirements of subparagraphs (1) through (6), including but
2 20 not limited to information relating to funding received by the
2 21 organization and expenditures made on research and other items
2 22 by the organization.
2 23 (b) Information to verify the receipt, donor identity,
2 24 value, and tax credit eligibility of contributions received by
2 25 the organization.
2 26 (c) Information regarding the amount of charitable
2 27 contributions received by the organization prior to
2 28 certification under this section, and the amount of charitable
2 29 contributions received for each fiscal year the organization is
2 30 a certified regenerative medicine research institution.
2 31 (d) Any other information reasonably required by the
2 32 department in order to properly administer this section.
2 33 c. Unless certification is revoked pursuant to paragraph
2 34 "d", a certification received pursuant to this subsection shall
2 35 be valid for one year, at which time the organization may apply
3 1 to the department in the manner prescribed by the department to
3 2 become recertified pursuant to this subsection.
3 3 d. An organization shall notify the department in a timely
3 4 manner of any changes that affect the organization's ability
3 5 to qualify as a certified regenerative medicine research
3 6 institution. The department shall revoke the certification of
3 7 an organization certified pursuant to this subsection if that
3 8 organization subsequently fails to meet the requirements of
3 9 paragraph "b". The revocation of a certification under this
3 10 paragraph shall not prohibit an organization from subsequently
3 11 applying to be certified under this subsection.
3 12 3. Application.
3 13 a. To receive a tax credit under this section, a taxpayer
3 14 must submit an application to the department in the manner and
3 15 form prescribed by the department on or after the date of the
3 16 charitable contribution to the certified regenerative medicine
3 17 research institution for which the tax credit is sought.
3 18 b. The department shall issue tax credits and related
3 19 tax credit certificates on a first=come, first=served basis
3 20 in the order the applications are received until the maximum
3 21 amount of tax credits authorized pursuant to subsection 4
3 22 is reached. If for a fiscal year the maximum amount of tax
3 23 credits applied for exceeds the amount specified in subsection
3 24 4, the department shall establish a wait list for tax credits.
3 25 Valid applications received but not approved by the department
3 26 shall be placed on a wait list in the order the applications
3 27 were received and those applicants shall be given priority for
3 28 receiving tax credits in succeeding fiscal years. Placement
3 29 on a wait list pursuant to this paragraph shall not constitute
3 30 a promise binding the state. The availability of a tax
3 31 credit and approval of a tax credit application pursuant to
3 32 this section in a future fiscal year is contingent upon the
3 33 availability of tax credits in that particular year.
3 34 4. Maximum tax credit amounts. The maximum aggregate amount
3 35 of tax credits issued in a fiscal year pursuant to this section
4 1 shall not exceed ten million dollars.
4 2 5. Regenerative medicine research tax credit.
4 3 a. The taxes imposed under this division, less the credits
4 4 allowed under section 422.12, or the taxes imposed in division
4 5 III or V of this chapter, or the taxes imposed in chapter 432,
4 6 or the moneys and credits tax imposed in section 533.329, shall
4 7 be reduced by a regenerative medicine research tax credit equal
4 8 to sixty percent of a taxpayer's charitable contribution to a
4 9 certified regenerative medicine research institution.
4 10 b. An individual may claim the tax credit allowed a
4 11 partnership, limited liability company, S corporation, estate,
4 12 or trust electing to have the income taxed directly to the
4 13 individual. The amount claimed by the individual shall be
4 14 based upon the pro rata share of the individual's earnings of
4 15 the partnership, limited liability company, S corporation,
4 16 estate, or trust.
4 17 c. For tax credit certificates issued by the department in
4 18 the fiscal year during which the charitable contribution is
4 19 made, the tax credit shall be claimed for the applicant's tax
4 20 year during which the charitable contribution is made. For tax
4 21 credit certificates issued in any fiscal year following the
4 22 fiscal year during which the charitable contribution is made,
4 23 the tax credit shall be claimed for the applicant's tax year
4 24 during which the tax credit is issued by the department. For
4 25 an individual claiming the tax credit allowed another entity
4 26 pursuant to paragraph "b", the tax credit shall be claimed for
4 27 the individual's tax year beginning on or after the first day
4 28 of the tax year for which the other entity was allowed to claim
4 29 the tax credit.
4 30 d. Any tax credit in excess of the taxpayer's tax liability
4 31 is not refundable but the excess for the tax year may be
4 32 credited to the tax liability for the following four years or
4 33 until depleted, whichever is earlier. A tax credit shall not
4 34 be carried back to a prior tax year.
4 35 e. (1) To claim a tax credit under this section, a taxpayer
5 1 shall include one or more tax credit certificates with the
5 2 taxpayer's tax return.
5 3 (2) The tax credit certificate shall contain the taxpayer's
5 4 name, address, tax identification number, the amount of the
5 5 credit, and any other information required by the department.
5 6 (3) The tax credit certificate, unless rescinded by the
5 7 department, shall be accepted by the department as payment
5 8 for the taxes imposed under this division, division III or V
5 9 of this chapter, chapter 432, and section 533.329, subject
5 10 to any conditions or restrictions placed by the department
5 11 upon the face of the tax credit certificate and subject to the
5 12 limitations of this section.
5 13 f. The amount of the charitable contribution for which the
5 14 tax credit is claimed shall not be deductible in determining
5 15 taxable income for state tax purposes.
5 16 Sec. 4. Section 422.33, Code 2018, is amended by adding the
5 17 following new subsection:
5 18 NEW SUBSECTION. 27. The taxes imposed under this division
5 19 shall be reduced by a regenerative medicine research tax credit
5 20 in the same manner, for the same amount, and under the same
5 21 conditions as provided in section 422.10C.
5 22 Sec. 5. Section 422.60, Code 2018, is amended by adding the
5 23 following new subsection:
5 24 NEW SUBSECTION. 14. The taxes imposed under this division
5 25 shall be reduced by a regenerative medicine research tax credit
5 26 in the same manner, for the same amount, and under the same
5 27 conditions as provided in section 422.10C.
5 28 Sec. 6. NEW SECTION. 432.12N Regenerative medicine research
5 29 tax credit.
5 30 The taxes imposed under this chapter shall be reduced by a
5 31 regenerative medicine research tax credit in the same manner,
5 32 for the same amount, and under the same conditions as provided
5 33 in section 422.10C.
5 34 Sec. 7. Section 533.329, subsection 2, Code 2018, is amended
5 35 by adding the following new paragraph:
6 1 NEW PARAGRAPH. m. The moneys and credits tax imposed
6 2 under this section shall be reduced by a regenerative medicine
6 3 research tax credit in the same manner, for the same amount,
6 4 and under the same conditions as provided in section 422.10C.
6 5 Sec. 8. APPLICABILITY. This Act applies to charitable
6 6 contributions to a certified regenerative medicine research
6 7 institution made on or after January 1, 2019.
6 8 Sec. 9. TAX CREDIT CERTIFICATE ISSUANCES. Tax credit
6 9 certificates available pursuant to the regenerative medicine
6 10 research tax credit enacted in this Act shall not be issued by
6 11 the department of revenue prior to July 1, 2019.
6 12 EXPLANATION
6 13 The inclusion of this explanation does not constitute agreement with
6 14 the explanation's substance by the members of the general assembly.
6 15 This bill provides a tax credit against the individual or
6 16 corporate income tax, the franchise tax, the insurance premiums
6 17 tax, and the moneys and credits tax for 60 percent of a
6 18 taxpayer's charitable contribution to a certified regenerative
6 19 medicine research institution.
6 20 Regenerative medicine research institutions must apply
6 21 for and receive certification from the department of revenue
6 22 (department) as described in the bill in order for charitable
6 23 contributions to that institution to qualify for the tax
6 24 credit. To qualify for certification, a regenerative medicine
6 25 research institution must be a tax=exempt organization under
6 26 section 501(c)(3) of the Internal Revenue Code, must have
6 27 its principal place of business in Iowa, must be directly
6 28 engaged in research in this state solely using adult stem
6 29 cells designed to develop novel clinical therapies for the
6 30 functional repair and replacement of diseased tissues and
6 31 organs, including cancer research, must spend at least 51
6 32 percent of its annual budget on such research, and must agree
6 33 to provide the department with certain information necessary
6 34 to verify eligibility for the tax credits. In addition, a
6 35 regenerative medicine research institution must not be a
7 1 conduit for research by another organization, and must not be
7 2 a postsecondary institution or an entity receiving 25 percent
7 3 or more of its annual budget from a postsecondary institution.
7 4 Certification by the department is valid for one year, at which
7 5 time regenerative medicine research institutions may apply for
7 6 recertification.
7 7 In order to claim the tax credit, a taxpayer must submit an
7 8 application to the department as described in the bill on or
7 9 after the date of the charitable contribution and receive a tax
7 10 credit certificate. No more than $10 million in tax credit
7 11 certificates may be issued per fiscal year. If applications
7 12 for the tax credit exceed that amount in a fiscal year, the
7 13 department is required to establish a wait list in the order
7 14 the applications were received and those applications will
7 15 receive priority for receiving tax credits in succeeding years.
7 16 The bill provides procedures for when a tax credit shall be
7 17 claimed by a taxpayer. The tax credit is nonrefundable, but
7 18 any amount in excess of the taxpayer's tax liability may be
7 19 carried forward for up to four years. The tax credit cannot
7 20 be carried back to a prior tax year. The bill prohibits
7 21 contributions receiving a tax credit from also being deducted
7 22 as a charitable contribution.
7 23 Finally, the bill includes legislative findings and a
7 24 legislative purpose for the tax credit, and adds the tax
7 25 credit to the list of tax expenditures to be reviewed by the
7 26 legislative tax expenditure committee beginning in 2021.
7 27 The bill applies to charitable contributions to a certified
7 28 regenerative medicine research institution made on or after
7 29 January 1, 2019. However, the bill provides that tax credit
7 30 certificates shall not be issued by the department prior to
7 31 July 1, 2019.
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