Bill Text: HI HB1743 | 2010 | Regular Session | Introduced
Bill Title: Income Tax; Reform
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2009-05-11 - Carried over to 2010 Regular Session. [HB1743 Detail]
Download: Hawaii-2010-HB1743-Introduced.html
Report Title:
Income Tax; Reform
Description:
Reduces the income tax rate for the lower brackets. Repeals various income tax credits and deductions.
|
HOUSE OF REPRESENTATIVES |
H.B. NO. |
1743 |
|
TWENTY-FIFTH LEGISLATURE, 2009 |
|
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The purpose of this Act is to address the income tax. More specifically, this Act:
(1) Reduces the income tax rates for taxpayers in the lower income brackets; and
(2) Repeals various credits and deductions.
SECTION 2. Section 201H-15, Hawaii Revised Statutes, is amended to read as follows:
"[[]§201H-15[]]
Administration of low-income housing credit allowed under section 235-110.8.
(a) The corporation is designated as a state housing credit agency to carry
out section 42(h) (with respect to limitation on aggregate credit allowable
with respect to a project located in a state) of the Internal Revenue Code of
1986, as amended. As a state housing credit agency, the corporation shall
determine the eligibility basis for a qualified low-income building, make the
allocation of housing credit dollar amounts within the State, and determine the
portion of the State's housing credit ceiling set aside for projects involving
qualified nonprofit organizations. The corporation shall file any
certifications and annual reports required by section 42 (with respect to
low-income housing credit) of the Internal Revenue Code of 1986, as amended.
(b) The state aggregate housing credit dollar amount shall be allocated annually as required by section 42 of the Internal Revenue Code of 1986, as amended, by the corporation in an amount equal to $1.25 multiplied by the state population in the calendar year or such greater or lesser amount as provided by section 42(h) of the Internal Revenue Code of 1986, as amended.
(c) The corporation shall adopt rules under
chapter 91 necessary to comply with federal and state requirements for
determining the amount of the tax credit allowed under section 42 of the
Internal Revenue Code of 1986, as amended[, and section 235-110.8]. The
corporation may establish and collect reasonable fees for administrative
expenses incurred in providing the services required by this section, including
fees for processing developer applications for the credit. All fees collected
for administering these provisions, including developer application fees, shall
be used to cover the administrative expenses of the corporation.
[(d) All claims for allocation of the
low-income housing credit under section 235-110.8 shall be filed with the
corporation. The corporation shall determine the amount of the credit
allocation, if necessary, and return the claim to the taxpayer. The taxpayer
shall file the credit allocation with the taxpayer's tax return with the
department of taxation.]"
SECTION 3. Section 209E-10, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The department shall certify annually to the department of taxation the applicability of the tax credit provided in this chapter for a qualified business against any taxes due the State. A qualified business shall be entitled to the tax credit only if it operated as a "qualified business" in an enterprise zone before July 1, 2009. Except for the general excise tax, the credit shall be eighty per cent of the tax due for the first tax year, seventy per cent of the tax due for the second tax year, sixty per cent of the tax due for the third year, fifty per cent of the tax due the fourth year, forty per cent of the tax due the fifth year, thirty per cent of the tax due the sixth year, and twenty per cent of the tax due the seventh year. Any tax credit not usable shall not be applied to future tax years."
SECTION 4. Section 235-2.3, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) The following Internal Revenue Code subchapters, parts of subchapters, sections, subsections, and parts of subsections shall not be operative for the purposes of this chapter, unless otherwise provided:
(1) Subchapter A (sections 1 to 59A) (with respect to
determination of tax liability), except section 1(h)(2) (relating to net
capital gain reduced by the amount taken into account as investment income)[,]
and except sections 2(a), 2(b), and 2(c) (with respect to the definition
of "surviving spouse" and "head of household")[, except
section 41 (with respect to the credit for increasing research activities),
except section 42 (with respect to low-income housing credit), and except
sections 47 and 48, as amended, as of December 31, 1984 (with respect to
certain depreciable tangible personal property). For treatment, see sections
235-110.91, 235-110.7, and 235-110.8];
(2) Section 78 (with respect to dividends received from certain foreign corporations by domestic corporations choosing foreign tax credit);
(3) Section 86 (with respect to social security and tier 1 railroad retirement benefits);
(4) Section 103 (with respect to interest on state and local bonds). For treatment, see section 235-7(b);
(5) Section 114 (with respect to extraterritorial income). For treatment, any transaction as specified in the transitional rule for 2005 and 2006 as specified in the American Jobs Creation Act of 2004 section 101(d) and any transaction that has occurred pursuant to a binding contract as specified in the American Jobs Creation Act of 2004 section 101(f) are inoperative;
(6) Section 120 (with respect to amounts received
under qualified group legal services plans)[. For treatment, see section
235-7(a)(9) to (11)];
(7) Section 122 (with respect to certain reduced uniformed services retirement pay). For treatment, see section 235-7(a)(3);
(8) Section 135 (with respect to income from United States savings bonds used to pay higher education tuition and fees). For treatment, see section 235-7(a)(1);
(9) Subchapter B (sections 141 to 150) (with respect to tax exemption requirements for state and local bonds);
(10) Section 151 (with respect to allowance of deductions for personal exemptions). For treatment, see section 235-54;
(11) Section 179B (with respect to expensing of capital costs incurred in complying with Environmental Protection Agency sulphur regulations);
(12) Section 181 (with respect to special rules for certain film and television productions);
(13) Section 196 (with respect to deduction for certain unused investment credits);
(14) Section 199 (with respect to the U.S. production activities deduction);
(15) Section 222 (with respect to qualified tuition and related expenses);
(16) Sections 241 to 247 (with respect to special deductions for corporations). For treatment, see section 235-7(c);
(17) Section 280C (with respect to certain expenses
for which credits are allowable)[. For treatment, see section 235-110.91];
(18) Section 291 (with respect to special rules relating to corporate preference items);
(19) Section 367 (with respect to foreign corporations);
(20) Section 501(c)(12), (15), (16) (with respect to exempt organizations);
(21) Section 515 (with respect to taxes of foreign countries and possessions of the United States);
(22) Subchapter G (sections 531 to 565) (with respect to corporations used to avoid income tax on shareholders);
(23) Subchapter H (sections 581 to 597) (with respect to banking institutions), except section 584 (with respect to common trust funds). For treatment, see chapter 241;
(24) Section 642(a) and (b) (with respect to special rules for credits and deductions applicable to trusts). For treatment, see sections 235-54(b) and 235-55;
(25) Section 646 (with respect to tax treatment of electing Alaska Native settlement trusts);
(26) Section 668 (with respect to interest charge on accumulation distributions from foreign trusts);
(27) Subchapter L (sections 801 to 848) (with respect to insurance companies). For treatment, see sections 431:7-202 and 431:7-204;
(28) Section 853 (with respect to foreign tax credit allowed to shareholders). For treatment, see section 235-55;
(29) Subchapter N (sections 861 to 999) (with respect to tax based on income from sources within or without the United States), except sections 985 to 989 (with respect to foreign currency transactions). For treatment, see sections 235-4, 235-5, and 235-7(b), and 235-55;
(30) Section 1042(g) (with respect to sales of stock in agricultural refiners and processors to eligible farm cooperatives);
(31) Section 1055 (with respect to redeemable ground rents);
(32) Section 1057 (with respect to election to treat transfer to foreign trust, etc., as taxable exchange);
(33) Sections 1291 to 1298 (with respect to treatment of passive foreign investment companies);
(34) Subchapter Q (sections 1311 to 1351) (with respect to readjustment of tax between years and special limitations);
(35) Subchapter R (sections 1352 to 1359) (with respect to election to determine corporate tax on certain international shipping activities using per ton rate);
(36) Subchapter U (sections 1391 to 1397F) (with respect to designation and treatment of empowerment zones, enterprise communities, and rural development investment areas). For treatment, see chapter 209E;
(37) Subchapter W (sections 1400 to 1400C) (with respect to District of Columbia enterprise zone);
(38) Section 1400O (with respect to education tax benefits);
(39) Section 1400P (with respect to housing tax benefits);
(40) Section 1400R (with respect to employment relief); and
(41) Section 1400T (with respect to special rules for mortgage revenue bonds)."
SECTION 5. Section 235-4.5, Hawaii Revised Statutes, is amended to read as follows:
"§235-4.5 Taxation of trusts, beneficiaries; credit. (a) There shall be excluded from gross income any intangible income, such as dividends and interest, earned by a trust sited in this State to the extent that, during the taxable year of the trust, the beneficial interest in the trust shall be held by a beneficiary or beneficiaries residing outside this State. This exclusion shall not apply to income received from real property held in a land trust formed under chapter 558.
(b) If a trust sited in this State owns one hundred per cent of the stock of a foreign corporation which does not engage in an active trade or business but acts solely as a holding company receiving intangible income, such as dividends and interest, the intangible income of the foreign corporation shall be excluded from gross income for Hawaii income tax purposes but only to the extent that the income of the trust beneficiaries is excluded from taxation under subsection (a). As used in this section, foreign corporation means a corporation not created or organized in the United States or under the laws of the United States, Hawaii, or any other state.
[(c) Any resident beneficiary of a trust
with a situs in another state may claim a credit for income taxes paid by the
trust to the other state on any income received which is attributable to assets
other than intangibles.]"
SECTION 6. Section 235-7, Hawaii Revised Statutes, is amended by (a) to read as follows:
"§235-7 Other provisions as to gross income, adjusted gross income, and taxable income. (a) There shall be excluded from gross income, adjusted gross income, and taxable income:
(1) Income not subject to taxation by the State under the Constitution and laws of the United States;
(2) Rights, benefits, and other income exempted from taxation by section 88-91, having to do with the state retirement system, and the rights, benefits, and other income, comparable to the rights, benefits, and other income exempted by section 88-91, under any other public retirement system;
(3) Any compensation received in the form of a pension for past services;
(4) Compensation paid to a patient affected with Hansen's disease employed by the State or the United States in any hospital, settlement, or place for the treatment of Hansen's disease;
(5) Except as otherwise expressly provided, payments made by the United States or this State, under an act of Congress or a law of this State, which by express provision or administrative regulation or interpretation are exempt from both the normal and surtaxes of the United States, even though not so exempted by the Internal Revenue Code itself;
(6) Any income expressly exempted or excluded from the measure of the tax imposed by this chapter by any other law of the State, it being the intent of this chapter not to repeal or supersede any express exemption or exclusion;
(7) Income received by each member of the reserve components of the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States of America, and the Hawaii national guard as compensation for performance of duty, equivalent to pay received for forty-eight drills (equivalent of twelve weekends) and fifteen days of annual duty, at an:
(A) E-1 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2004;
(B) E-2 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2005;
(C) E-3 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2006;
(D) E-4 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2007; and
(E) E-5 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2008;
(8) Income derived from the operation of ships or aircraft if the income is exempt under the Internal Revenue Code pursuant to the provisions of an income tax treaty or agreement entered into by and between the United States and a foreign country; provided that the tax laws of the local governments of that country reciprocally exempt from the application of all of their net income taxes, the income derived from the operation of ships or aircraft that are documented or registered under the laws of the United States; and
[(9) The value of legal services provided by
a prepaid legal service plan to a taxpayer, the taxpayer's spouse, and the
taxpayer's dependents;
(10) Amounts paid, directly or indirectly,
by a prepaid legal service plan to a taxpayer as payment or reimbursement for
the provision of legal services to the taxpayer, the taxpayer's spouse, and the
taxpayer's dependents;
(11) Contributions by an employer to a
prepaid legal service plan for compensation (through insurance or otherwise) to
the employer's employees for the costs of legal services incurred by the
employer's employees, their spouses, and their dependents;
(12)] (9) Amounts received in the form of
a monthly surcharge by a utility acting on behalf of an affected utility under section
269-16.3 shall not be gross income, adjusted gross income, or taxable income for
the acting utility under this chapter. Any amounts retained by the acting utility
for collection or other costs shall not be included in this exemption[; and
(13) One hundred per cent of the gain
realized by a fee simple owner from the sale of a leased fee interest in units
within a condominium project, cooperative project, or planned unit development
to the association of owners under chapter 514A or 514B, or the residential
cooperative corporation of the leasehold units.
For purposes of this paragraph:
"Fee simple owner" shall have
the same meaning as provided under section 516-1; provided that it shall
include legal and equitable owners;
"Legal and equitable owner", and
"leased fee interest" shall have the same meanings as provided under
section 516-1; and
"Condominium project" and
"cooperative project" shall have the same meanings as provided under
section 514C-1].
(b) There shall be included in gross income, adjusted gross income, and taxable income: (1) unless excluded by this chapter relating to the uniformed services of the United States, cost-of-living allowances and other payments exempted by section 912 of the Internal Revenue Code, but section 119 of the Internal Revenue Code nevertheless shall apply; (2) unless expressly exempted or excluded as provided by subsection (a)(6), interest on the obligations of a State or a political subdivision thereof.
(c) The deductions of or based on dividends paid or received, allowed to a corporation under chapter 1, subchapter B, Part VIII of the Internal Revenue Code, shall not be allowed. In lieu thereof there shall be allowed as a deduction the entire amount of dividends received by any corporation upon the shares of stock of a national banking association, qualifying dividends, as defined in section 243(b) of the Internal Revenue Code, received by members of an affiliated group, or dividends received by a small business investment company operating under the Small Business Investment Act of 1958 (Public Law 85-699) upon shares of stock qualifying under paragraph (3), seventy per cent of the amount received by any corporation as dividends:
(1) Upon the shares of stock of another corporation, if at the date of payment of the dividend at least ninety- five per cent of the other corporation's capital stock is owned by one or more corporations doing business in this State and if the other corporation is subjected to an income tax in another jurisdiction (but subjection to federal tax does not constitute subjection to income tax in another jurisdiction);
(2) Upon the shares of stock of a bank or insurance company organized and doing business under the laws of the State;
(3) Upon the shares of stock of another corporation, if at least fifteen per cent of the latter corporation's business, for the taxable year of the latter corporation preceding the payment of the dividend, has been attributed to this State.
However, except for national bank dividends, the deductions under this subsection are not allowed when they would not have been allowed under section 243 of the Internal Revenue Code, as amended by Public Law 85-866, by reason of subsections (b) and (c) of section 246 of the Internal Revenue Code. For the purposes of this subsection fifteen per cent of a corporation's business shall be deemed to have been attributed to this State if fifteen per cent or more of the entire gross income of the corporation as defined in this chapter (which for the purposes of this subsection shall be computed without regard to source in the State and shall include income not taxable by reason of the fact that it is from property not owned in the State or from a trade or business not carried on in the State in whole or in part), under section 235-5 and the other provisions of this chapter, shall have been attributed to the State and subjected to assessment of the taxable income therefrom (including the determination of the resulting net loss, if any).
(d) (1) For taxable years ending before January 1, 1967, the net operating loss deductions allowed as carrybacks and carryovers by the Internal Revenue Code shall not be allowed. In lieu thereof the net operating loss deduction shall consist of the excess of the deductions allowed by this chapter over the gross income, computed with the modifications specified in paragraphs (1) to (4) of section 172(d) of the Internal Revenue Code, and with the further modification stated in paragraph (3) hereof; and shall be allowed as a deduction in computing the taxable income of the taxpayer for the succeeding taxable year;
(2) (A) With respect to net operating loss deductions resulting from net operating losses for taxable years ending after December 31, 1966, the net operating loss deduction provisions of the Internal Revenue Code shall apply; provided that there shall be no net operating loss deduction carried back to any taxable year ending prior to January 1, 1967;
(B) In the case of a taxable year beginning in 1966 and ending in 1967, the entire amount of all net operating loss deductions carried back to the taxable year shall be limited to that portion of taxable income for such taxable year which the number of days in 1967 bears to the total days in the taxable year ending in 1967; and
(C) The computation of any net operating loss deduction for a taxable year covered by this subsection shall require the further modifications stated in paragraphs (3), (4), and (5) of this subsection;
(3) In computing the net operating loss deduction allowed by this subsection, there shall be included in gross income the amount of interest which is excluded from gross income by subsection (a), decreased by the amount of interest paid or accrued which is disallowed as a deduction by subsection (e). In determining the amount of the net operating loss deduction under this subsection of any corporation, there shall be disregarded the net operating loss of such corporation for any taxable year for which the corporation is an electing small business corporation;
(4) No net operating loss carryback or carryover shall be allowed by this chapter if not allowed under section 172 of the Internal Revenue Code;
(5) The election to relinquish the entire carryback period with respect to a net operating loss allowed under section 172(b)(3)(C) of the Internal Revenue Code shall be operative for the purposes of this chapter; provided that no taxpayer shall make such an election as to a net operating loss of a business where such net operating loss occurred in the taxpayer's business prior to the taxpayer entering business in this State; and
(6) The five-year carryback period for net operating losses for any taxable year ending during 2001 and 2002 in section 172(b)(1)(H) of the Internal Revenue Code shall not be operative for purposes of this chapter.
(e) There shall be disallowed as a deduction the amount of interest paid or accrued within the taxable year on indebtedness incurred or continued, (1) to purchase or carry bonds the interest upon which is excluded from gross income by subsection (a); or (2) to purchase or carry property owned without the State, or to carry on trade or business without the State, if the taxpayer is a person taxable only upon income from sources in the State.
(f) Losses of property as the result of tidal wave, hurricane, earthquake, or volcanic eruption, or as a result of flood waters overflowing the banks or walls of a river or stream, or from any other natural disaster, to the extent of the amount deductible, under this chapter, not compensated for by insurance or otherwise, may be deducted in the taxable year in which sustained, or at the option of the taxpayer may be deducted in equal installments over a period of five years, the first such year to be the calendar year or fiscal year of the taxpayer in which such loss occurred.
[(g) In computing taxable income there
shall be allowed as a deduction:
(1) Political contributions by any taxpayer
not in excess of $250 in any year; provided that such contributions are made to
a central or county committee of a political party whose candidates shall have
qualified by law to be voted for at the immediately previous general election;
or
(2) Political contributions by any
individual taxpayer in an aggregate amount not to exceed $1,000 in any year;
provided that such contributions are made to candidates as defined in section
11-191, who have agreed to abide by the campaign expenditure limits as set
forth in section 11-209; and provided further that not more than $250 of an
individual's total contribution to any single candidate shall be deductible for
purposes of this section.]"
SECTION 7. Section 235-9, Hawaii Revised Statutes, is amended to read as follows:
"§235-9 Exemptions; generally.
Except as provided in sections 235-61 to 235-67 relating to withholding and
collection of tax at source, and section 235-2.4 relating to "unrelated
business taxable income", the following persons and organizations shall
not be taxable under this chapter: banks, building and loan associations,
financial services loan companies, financial corporations, small business
investment companies, trust companies, mortgage loan companies, financial
holding companies, subsidiaries of financial holding companies as defined in
chapter 241, and development companies taxable under chapter 241; and
insurance companies, agricultural cooperative associations, and fish marketing
associations exclusively taxable under other laws[; and persons engaged in
the business of motion picture and television film production as defined by the
director of taxation]."
SECTION 8. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of (1) every taxpayer who files a joint return under section 235-93; and (2) every surviving spouse a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $4,000 1.40% of taxable income
Over $4,000 but $56.00 plus 3.20% of
not over $8,000 excess over $4,000
Over $8,000 but $184.00 plus 5.50% of
not over $16,000 excess over $8,000
Over $16,000 but $624.00 plus 6.40% of
not over $24,000 excess over $16,000
Over $24,000 but $1,136.00 plus 6.80% of
not over $32,000 excess over $24,000
Over $32,000 but $1,680.00 plus 7.20% of
not over $40,000 excess over $32,000
Over $40,000 but $2,256.00 plus 7.60% of
not over $60,000 excess over $40,000
Over $60,000 but $3,776.00 plus 7.90% of
not over $80,000 excess over $60,000
Over $80,000 $5,356.00 plus 8.25% of
excess over $80,000.
In the case of any taxable year beginning after December 31, 2006:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000 Over $96,000 $6,427.00 plus 8.25% of
excess over $96,000.
In the case of any taxable year beginning after December 31, 2009:
If the taxable income is: The tax shall be:
Not over $4,800 ____% of taxable income
Over $4,800 but $67.00 plus ____% of
not over $9,600 excess over $4,800
Over $9,600 but $______ plus ____% of
not over $19,200 excess over $9,600
Over $19,200 but $______ plus ____% of
not over $28,800 excess over $19,200
Over $28,800 but $________ plus ____% of
not over $38,400 excess over $28,800
Over $38,400 but $________ plus ____% of
not over $48,000 excess over $38,400
Over $48,000 but $________ plus ____% of
not over $72,000 excess over $48,000
Over $72,000 but $________ plus ____% of
not over $96,000 excess over $72,000 Over $96,000 $6,427.00 plus 8.25% of
excess over $96,000.
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $3,000 1.40% of taxable income
Over $3,000 but $42.00 plus 3.20% of
not over $6,000 excess over $3,000
Over $6,000 but $138.00 plus 5.50% of
not over $12,000 excess over $6,000
Over $12,000 but $468.00 plus 6.40% of
not over $18,000 excess over $12,000
Over $18,000 $852.00 plus 6.80% of
but not over $24,000 excess over $18,000
Over $24,000 but $1,260.00 plus 7.20% of
not over $30,000 excess over $24,000
Over $30,000 but $1,692.00 plus 7.60% of
not over $45,000 excess over $30,000
Over $45,000 but $2,832.00 plus 7.90% of
not over $60,000 excess over $45,000
Over $60,000 $4,017.00 plus 8.25% of
excess over $60,000.
In the case of any taxable year beginning after December 31, 2006:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 $4,820.00 plus 8.25% of
excess over $72,000.
In the case of any taxable year beginning after December 31, 2009:
If the taxable income is: The tax shall be:
Not over $3,600 ____% of taxable income
Over $3,600 but $_____ plus ____% of
not over $7,200 excess over $3,600
Over $7,200 but $______ plus ____% of
not over $14,400 excess over $7,200
Over $14,400 but $______ plus ____% of
not over $21,600 excess over $14,400
Over $21,600 but $________ plus ____% of
not over $28,800 excess over $21,600
Over $28,800 but $________ plus ____% of
not over $36,000 excess over $28,800
Over $36,000 but $________ plus ____% of
not over $54,000 excess over $36,000
Over $54,000 but $________ plus ____% of
not over $72,000 excess over $54,000
Over $72,000 but $________ plus ____% of
not over $96,000 excess over $72,000 Over $96,000 $________ plus ____% of
excess over $96,000.
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $2,000 1.40% of taxable income
Over $2,000 but $28.00 plus 3.20% of
not over $4,000 excess over $2,000
Over $4,000 but $92.00 plus 5.50% of
not over $8,000 excess over $4,000
Over $8,000 but $312.00 plus 6.40% of
not over $12,000 excess over $8,000
Over $12,000 but $568.00 plus 6.80% of
not over $16,000 excess over $12,000
Over $16,000 but $840.00 plus 7.20% of
not over $20,000 excess over $16,000
Over $20,000 but $1,128.00 plus 7.60% of
not over $30,000 excess over $20,000
Over $30,000 but $1,888.00 plus 7.90% of
not over $40,000 excess over $30,000
Over $40,000 $2,678.00 plus 8.25% of
excess over $40,000.
In the case of any taxable year beginning after December 31, 2006:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 $3,214.00 plus 8.25% of
excess over $48,000.
In the case of any taxable year beginning after December 31, 2009:
If the taxable income is: The tax shall be:
Not over $2,400 ____% of taxable income
Over $2,400 but $34.00 plus ____% of
not over $4,800 excess over $2,400
Over $4,800 but $______ plus ____% of
not over $9,600 excess over $4,800
Over $9,600 but $______ plus ____% of
not over $14,400 excess over $9,600
Over $14,400 but $______ plus ____% of
not over $19,200 excess over $14,400
Over $19,200 but $________ plus ____% of
not over $24,000 excess over $19,200
Over $24,000 but $________ plus ____% of
not over $36,000 excess over $24,000
Over $36,000 but $________ plus ____% of
not over $54,000 excess over $36,000
Over $54,000 but $________ plus ____% of
not over $72,000 excess over $54,000
Over $72,000 but $________ plus ____% of
not over $96,000 excess over $72,000- Over $96,000 $________ plus ____% of
excess over $96,000."
SECTION 9. Act 166, Session Laws of Hawaii 2007, section 3, is amended to read as follows:
"SECTION 3. This Act shall take effect
upon approval, and shall apply to taxable years beginning after December 31,
2007, and ending prior to January 1, [2013; provided that on January 1,
2013, this Act shall be repealed and section 235-7(a), Hawaii Revised Statutes,
shall be reenacted in the form in which it read on the day prior to the
effective date of this Act.] 2010."
SECTION 10. Section 235-5.5, Hawaii Revised Statutes, is repealed.
["§235-5.5 Individual housing
accounts. (a) There shall be allowed as a deduction from gross
income the amount, not to exceed $5,000, paid in cash during the taxable year
by an individual taxpayer to an individual housing account established for the
individual's benefit to provide funding for the purchase of the individual's
first principal residence. A deduction not to exceed $10,000 shall be allowed
for a married couple filing a joint return. No deduction shall be allowed on
any amounts distributed less than three hundred sixty-five days from the date
on which a contribution is made to the account. Any deduction claimed for a
previous taxable year for amounts distributed less than three hundred
sixty-five days from the date on which a contribution was made shall be
disallowed and the amount deducted shall be included in the previous taxable
year's gross income and the tax reassessed. The interest paid or accrued
within the taxable year on the account shall not be included in the
individual's gross income. For purposes of this section, the term "first
principal residence" means a residential property purchased with the
payment or distribution from the individual housing account which shall be
owned and occupied as the only home by an individual who did not have any
interest in, individually, or whose spouse did not have any interest in, if the
individual is married, a residential property within the last five years of
opening the individual housing account.
In the case of a married couple filing
separate returns, the sum of the deductions allowable to each of them for the
taxable year shall not exceed $5,000, or $10,000 for a joint return, for
amounts paid in cash, excluding interest paid or accrued thereon.
The amounts paid in cash allowable as a
deduction under this section to an individual for all taxable years shall not
exceed $25,000, excluding interest paid or accrued. In the case of married
individuals having separate individual housing accounts, the sum of the
separate accounts and the deduction under this section shall not exceed
$25,000, excluding interest paid or accrued thereon.
(b) For purposes of this section, the term
"individual housing account" means a trust created or organized in
Hawaii for the exclusive benefit of an individual, or, in the case of a married
individual, for the exclusive benefit of the individual and spouse jointly, but
only if the written governing instrument creating the trust meets the following
requirements:
(1) Contributions shall not be accepted for
the taxable year in excess of $5,000 (or $10,000 in the case of a joint return)
or in excess of $25,000 for all taxable years, exclusive of interest paid or
accrued;
(2) The trustee is a bank, a savings and
loan association, a credit union, or a depository financial services loan
company, chartered, licensed, or supervised under federal or state law, whose
accounts are insured by the Federal Deposit Insurance Corporation, the National
Credit Union Administration, or any agency of this State or any federal agency
established for the purpose of insuring accounts in these financial
institutions. The financial institution must actively make residential real
estate mortgage loans in Hawaii;
(3) The assets of the trust shall be
invested only in fully insured savings or time deposits. Funds held in the
trust may be commingled for purposes of investment, but individual records
shall be maintained by the trustee for each individual housing account holder
which show all transactions in detail;
(4) The entire interest of an individual or
married couple for whose benefit the trust is maintained shall be distributed
to the individual or couple not later than one hundred twenty months after the
date on which the first contribution is made to the trust;
(5) Except as provided in subsection (g),
the trustee shall not distribute the funds in the account unless it (A)
verifies that the money is to be used for the purchase of a first principal
residence located in Hawaii, and provides that the instrument of payment is
payable to the mortgagor, construction contractor, or other vendor of the
property purchased; or (B) withholds an amount equal to ten per cent of the
amount withdrawn from the account and remits this amount to the director within
ten days after the date of the withdrawal. The amount so withheld shall be
applied to the liability of the taxpayer under subsections (c) and (e); and
(6) If any amounts are distributed before
the expiration of three hundred sixty-five days from the date on which a
contribution is made to the account, the trustee shall so notify in writing the
taxpayer and the director. If the trustee makes the verification required in
paragraph (5)(A), then the department shall disallow the deduction under
subsection (a) and subsections (c), (e), and (f) shall not apply to that
amount. If the trustee withholds an amount under paragraph (5)(B), then the
department shall disallow the deduction under subsection (a) and subsection (e)
shall apply, but subsection (c) shall not apply.
(c) Any contributions paid or distributed
out of an individual housing account shall be included in gross income by the
individual for whose benefit the account was established for the taxable year
in which the payment or distribution is received, unless the amount is used
exclusively in connection with the purchase of the first principal residence in
Hawaii for the individual for whose benefit the account was established.
(d) The transfer of an individual's
interest in an individual housing account to a spouse under a dissolution of
marriage decree or under a written instrument incident to a dissolution of
marriage shall not be considered a taxable transfer made by the individual, and
the interest, at the time of the transfer, shall be treated as part of an
individual housing account of the transferee, and not of the transferor. After
the transfer, the account shall be treated, for purposes of this section, as
maintained for the benefit of the transferee.
(e) If a distribution from an individual
housing account to an individual for whose benefit the account was established
is made and not used in connection with the purchase of the first principal
residence in Hawaii for the individual, the tax liability of the individual
under this chapter for the taxable year in which the distribution is received
shall be increased by an amount equal to ten per cent of the amount of the
distribution which is includable in the individual's gross income for the
taxable year.
If, during any taxable year, the individual
uses the account or any portion thereof as security for a loan, the portion so
used shall be treated as if it had been distributed to that individual.
(f) If the individual for whose benefit the
individual housing account was established purchases a residential property in
Hawaii with the distribution from the individual housing account:
(1) Before January 1, 1990, and if the
individual sells in any manner or method or by use of any instrument conveying
or transferring the residential property, the gross income of the individual
under this chapter for the taxable year in which the residential property is
sold, conveyed, or transferred, whichever is applicable, shall include an
amount equal to the amount of the distribution from the individual housing
account, and in addition, the gross income of the individual shall be increased
by an amount equal to ten per cent of the total distribution from the
individual housing account; or
(2) After December 31, 1989, the individual
shall report one-tenth of the total distribution from the individual housing
account used to purchase the residential property as gross income in the
taxable year in which the distribution is completed and in each taxable year
thereafter until all of the distribution has been included in the individual's
gross income at the end of the tenth taxable year after the purchase of the
residential property. If the individual sells in any manner or method or by
use of any instrument conveying or transferring the residential property, the
gross income of the individual under this chapter for the taxable year in which
the residential property is sold, conveyed, or transferred, whichever is
applicable, shall include an amount equal to the amount of the distribution
from the individual housing account not previously reported as gross income,
and in addition, the tax liability of the individual shall be increased by an
amount equal to ten per cent of the total distribution from the individual
housing account. If the individual sells the residential property in any
manner as provided in this paragraph after all of the distribution has been
included in the individual's gross income at the end of the tenth taxable year
after the purchase of the residential property, the tax liability of the
individual shall not be increased by an amount equal to ten per cent of the
total distribution from the individual housing account.
An individual who purchased a residential
property in Hawaii with the distribution from an individual housing account
before January 1, 1990, who is subject to paragraph (1) may elect to report as
provided in paragraph (2). The election shall be made before January 1, 1991.
If the individual makes the election, the individual shall report one-tenth of
the total distribution from the individual housing account as gross income in
the taxable year in which the election occurs and in each taxable year
thereafter until all of the distribution has been included in gross income as
provided by paragraph (2). If the individual making the election sells the
residential property in any manner as provided in paragraph (2), then the
individual shall include as income the amount of the distribution not
previously reported as income and increase the individual's tax liability as
provided in the second sentence of paragraph (2), except when the third
sentence of paragraph (2) applies.
In the alternative, any individual subject
to paragraph (2) who established the individual housing account before January
1, 1990, may elect within one year after the date of purchase, to be subject to
paragraph (1).
(g) No tax liability shall be imposed under
this section if:
(1) The payment or distribution is
attributable to the individual dying or becoming totally disabled; or
(2) Residential property subject to
subsection (f) is transferred by will or by operation of law or sold due to the
death or total disability of an individual or individual's spouse,
subject to the following:
An individual shall not be considered to be totally
disabled unless proof is furnished of the total disability in the form and
manner as the director may require.
Upon the death of an individual for whose
benefit an individual housing account has been established, the funds in the
account shall be payable to the estate of the individual; provided that if the
account was held jointly by the decedent and a spouse of the decedent, the
account shall terminate and be paid to the surviving spouse; or, if the
surviving spouse so elects, the spouse may continue the account as an
individual housing account. Upon the total disability of an individual for
whose benefit an individual housing account has been established, the
individual or the individual's authorized representative may elect to continue
the account or terminate the account and be paid the assets; provided that if
the account was held jointly by a totally disabled person and a spouse of that
person, then the spouse or an authorized representative may elect to continue
the account or terminate the account and be paid the assets.
(h) If the individual for whose benefit the
individual housing account was established subsequently marries a person who
has or has had any interest in residential property, the individual's housing
account shall be terminated, the funds therein shall be distributed to the
individual, and the amount of the funds shall be includable in the individual's
gross income for the taxable year in which such marriage took place; provided
that the tax liability defined under subsection (f) shall not be imposed.
(i) The trustee of an individual housing
account shall make reports regarding the account to the director and to the
individual for whom the account is maintained with respect to contributions,
distributions, and other matters as the director may require under rules. The
reports shall be filed at a time and in a manner as may be required by rules
adopted under chapter 91. A person who fails to file a required report shall
be subject to a penalty of $10 to be paid to the director for each instance of
failure to file."]
SECTION 11. Section 235-7.3, Hawaii Revised Statutes, is repealed.
["§235-7.3 Royalties derived from
patents, copyrights, or trade secrets excluded from gross income.
(a) In addition to the exclusions in section 235-7, there shall be excluded
from gross income, adjusted gross income, and taxable income, amounts received
by an individual or a qualified high technology business as royalties and other
income derived from any patents, copyrights, and trade secrets:
(1) Owned by the individual or qualified
high technology business; and
(2) Developed and arising out of a
qualified high technology business.
(b) With respect to performing arts
products, this exclusion shall extend to:
(1) The authors of performing arts
products, or any parts thereof, without regard to the application of the
work-for-hire doctrine under United States copyright law;
(2) The authors of performing arts
products, or any parts thereof, under the work-for-hire doctrine under United
States copyright law; and
(3) The assignors, licensors, and licensees
of any copyright rights in performing arts products, or any parts thereof.
(c) For the purposes of this section:
"Performing arts products" means:
(1) Audio files, video files, audiovideo
files, computer animation, and other entertainment products perceived by or
through the operation of a computer; and
(2) Commercial television and film products
for sale or license, and reuse or residual fee payments from these products.
"Qualified high technology
business" means a business that conducts more than fifty per cent of its
activities in qualified research.
"Qualified research" means:
(1) The same as in section 41(d) of the
Internal Revenue Code;
(2) The development and design of computer
software for ultimate commercial sale, lease, license or to be otherwise
marketed, for economic consideration. With respect to the software's
development and design, the business shall have substantial control and retain
substantial rights to the resulting intellectual property;
(3) Biotechnology;
(4) Performing arts products;
(5) Sensor and optic technologies;
(6) Ocean sciences;
(7) Astronomy; or
(8) Nonfossil fuel energy-related
technology."]
SECTION 12. Section 235-9.5, Hawaii Revised Statutes, is repealed.
["§235-9.5 Stock options from
qualified high technology businesses excluded from taxation. (a)
Notwithstanding any law to the contrary, all income earned and proceeds derived
from stock options or stock, including stock issued through the exercise of
stock options or warrants, from a qualified high technology business or from a
holding company of a qualified high technology business by an employee,
officer, or director of the qualified high technology business, or investor who
qualifies for the credit under section 235-110.9, that would otherwise be taxed
as ordinary income or as capital gains to those persons shall be excluded from
taxation under this chapter.
Similar provisions shall apply to options to
acquire equity interests and to equity interests themselves with regard to
entities other than corporations.
(b) For the purposes of this section:
"Holding company of a qualified high
technology business" means any business entity that possesses:
(1) At least eighty per cent of the total
voting power of the stock or other interest; and
(2) At least eighty per cent of the total
value of the stock or other interest;
in the qualified high technology business.
"Income earned and proceeds derived
from stock options or stock" includes income from:
(1) Dividends from stock or stock received
through the exercise of stock options or warrants;
(2) The receipt or the exercise of stock
options or warrants; or
(3) The sale of stock options or stock,
including stock issued through the exercise of stock options or warrants.
"Qualified high technology
business" means the same as defined in section 235-7.3."]
SECTION 13. Section 235-12, Hawaii Revised Statutes, is repealed.
["§235-12 Energy conservation;
income tax credit. (a) For taxable years ending before January 1,
1990, except in the case of ice storage systems for taxable years ending before
January 1, 1991, each individual and corporate resident taxpayer who files an
individual or corporate net income tax return for a taxable year, may claim a
tax credit under this section against the Hawaii state individual or corporate
net income tax. The tax credit may be claimed for any solar or wind energy
device, heat pump, or ice storage system in an amount not to exceed ten per
cent of the total cost of the device, heat pump, or ice storage system;
provided that the tax credit shall apply only to the actual cost of the solar
or wind energy device, the heat pump, or ice storage system, their accessories,
and installation and shall not include the cost of consumer incentive premiums
unrelated to the operation of the solar or wind energy device, the heat pump,
or ice storage system offered with the sale of the solar or wind energy device,
the heat pump, or ice storage system. The credit shall be claimed against net
income tax liability for the year in which the solar or wind energy device, the
heat pump, or ice storage system was purchased and placed in use; provided:
(1) The tax credit shall be applicable only
with respect to solar devices, which are erected and placed in service after
December 31, 1974, but before January 1, 1990;
(2) In the case of wind energy devices and
heat pumps, the tax credit shall be applicable only with respect to wind energy
devices and heat pumps which are installed and placed in service after December
31, 1980, but before January 1, 1990; and
(3) In the case of ice storage systems, the
tax credit shall be applicable only with respect to ice storage systems which
are installed and placed in service after December 31, 1985, but before January
1, 1990.
Tax credits which exceed the taxpayer's income
tax liability may be used as a credit against the taxpayer's income tax
liability in subsequent years until exhausted. If federal energy tax credits
are not extended beyond December 31, 1985, are not retroactively extended or
reenacted, or federal energy tax credits the same as or less in amount than the
credits in effect during the 1985 taxable year are not enacted during the
taxable year 1986, then the state tax credit shall be increased to fifteen per
cent of the total cost after December 31, 1985, but before January 1, 1990.
As used in this subsection:
"Solar or wind energy device"
means any new identifiable facility, equipment, apparatus, or the like which
makes use of solar or wind energy for heating, cooling, or reducing the use of
other types of energy dependent upon fossil fuel for their generation.
"Heat pump" means and refers to an
electric powered compression heating system which extracts energy from warm
ambient air or recovers waste heat to assist in the production of hot water.
"Ice storage system" refers to ice
banks or other cool energy storage tanks, containers, accessories, and controls
that are specifically designed to store ice or chilled fluids for the express
purpose of shifting the consumption of energy to off-peak periods.
(b) For taxable years beginning after
December 31, 1989, each individual or corporate resident taxpayer who files an
individual or corporate net income tax return for a taxable year, may claim a
tax credit under this section against the Hawaii state individual or corporate
net income tax. The tax credit may be claimed as follows:
(1) For wind energy systems that are
installed and placed in service after December 31, 1989, but before July 1,
2003, the credit shall be twenty per cent of the actual cost;
(2) For solar energy systems that are
installed and placed in service after December 31, 1989, but before July 1,
2003, on new and existing single family residential buildings, the credit shall
be in an amount not to exceed thirty-five per cent or $1,750, whichever is
less, of the actual cost of the solar energy system;
(3) For solar energy systems that are
installed and placed in service after December 31, 1989, but before July 1,
2003, on new and existing multiunit buildings used primarily for residential
purposes, the credit shall be in an amount not to exceed thirty-five per cent
or $350 per building unit, whichever is less, of the actual cost of the solar
energy system;
(4) For solar energy systems that are
installed and placed in service after December 31, 1989, but before July 1,
2003, in new and existing hotel, commercial, and industrial facilities, the
credit shall be in an amount not to exceed thirty-five per cent of the actual
cost of the solar energy system;
(5) For heat pumps that are installed and
placed in service after December 31, 1989, but before July 1, 2003, in new and
existing single-family residential buildings, the credit shall be in an amount
not to exceed twenty per cent or $400, whichever is less, of the actual cost of
the heat pump;
(6) For heat pumps that are installed and
placed in service after December 31, 1989, but before July 1, 2003, in new and
existing multiunit buildings used primarily for residential purposes, the
credit shall be in an amount not to exceed twenty per cent or $200 per building
unit, whichever is less, of the actual cost of the heat pump; provided that a
licensed professional engineer reviews the design of the system and provides a written
opinion that the system, in accordance with recognized engineering practice, is
designed to provide not less than ninety per cent of the daily annual average
hot water needs of all of the occupants of the building;
(7) For heat pumps that are installed and
placed in service after December 31, 1989, but before July 1, 2003, in new and
existing hotel, commercial, and industrial facilities, the credit shall be in
an amount not to exceed twenty per cent of the actual cost of the heat pump;
and
(8) For ice storage systems that are
installed and placed in service after December 31, 1990, but before July 1,
2003, the credit shall be in an amount not to exceed fifty per cent of the
actual cost of the ice storage system.
The per unit of actual cost of a solar energy
system or heat pump referred to in subsection (b)(3) and (6) shall be
determined by multiplying the actual cost of the solar energy system or heat
pump installed and placed in service in the multiunit building by a fraction,
the numerator being the total square feet of that unit in the multiunit
building, and the denominator being the total square feet of all the units in
the multiunit building.
If federal energy tax credits similar to any
of those provided in paragraphs (1) to (8) are established after June 30, 1998,
but before July 1, 2003, then the state tax credit provided in the respective
paragraph or paragraphs shall be reduced by the amount of the applicable
federal energy tax credit.
(c) Tax credits shall apply only to the
actual cost of the solar or wind energy system, heat pump, or ice storage
system, including their accessories and installation, and shall not include the
cost of consumer incentive premiums unrelated to the operation of the system or
offered with the sale of the system or heat pump. The tax credit shall be
claimed against net income tax liability for the year in which the solar or
wind energy system, heat pump, or ice storage system was purchased and placed
in use in Hawaii. Tax credits that exceed the taxpayer's income tax liability
may be used as credit against the taxpayer's income tax liability in subsequent
years until exhausted.
(d) The director of taxation shall prepare
such forms as may be necessary to claim a credit under this section. The
director may also require the taxpayer to furnish reasonable information to
ascertain the validity of the claim for credit made under this section and may
adopt rules necessary to effectuate the purposes of this section pursuant to
chapter 91.
(e) As used in this section:
"Solar or wind energy system"
means any new identifiable facility, equipment, apparatus, or the like that
converts solar insolation or wind energy to useful thermal or electrical energy
for heating, cooling, or reducing the use of other types of energy dependent
upon fossil fuel for their generation.
"Heat pump" means an electric
powered compression heating system that extracts energy from warm ambient air
or recovers waste heat to assist in the production of hot water.
"Ice storage system" refers to ice
banks or other cool energy storage tanks, containers, accessories, and controls
that are specifically designed to store ice or chilled fluids for the express
purpose of shifting the consumption of energy to off-peak periods."]
SECTION 14. Section 235-12.5, Hawaii Revised Statutes, is repealed.
["§235-12.5 Renewable energy
technologies; income tax credit. (a) When the requirements of
subsection (c) are met, each individual or corporate taxpayer that files an
individual or corporate net income tax return for a taxable year may claim a
tax credit under this section against the Hawaii state individual or corporate
net income tax. The tax credit may be claimed for every eligible renewable
energy technology system that is installed and placed in service in the State
by a taxpayer during the taxable year. This credit shall be available for
systems installed and placed in service in the State after June 30, 2003. The
tax credit may be claimed as follows:
(1) Solar thermal energy systems for:
(A) Single-family residential
property for which a building permit was issued prior to January 1, 2010:
thirty-five per cent of the actual cost or $2,250, whichever is less;
(B) Multi-family residential
property: thirty-five per cent of the actual cost or $350 per unit, whichever
is less; and
(C) Commercial property:
thirty-five per cent of the actual cost or $250,000, whichever is less;
(2) Wind-powered energy systems for:
(A) Single-family residential
property: twenty per cent of the actual cost or $1,500, whichever is less;
(B) Multi-family residential
property: twenty per cent of the actual cost or $200 per unit, whichever is
less; and
(C) Commercial property: twenty per
cent of the actual cost or $500,000, whichever is less; and
(3) Photovoltaic energy systems for:
(A) Single-family residential
property: thirty-five per cent of the actual cost or $5,000, whichever is
less;
(B) Multi-family residential
property: thirty-five per cent of the actual cost or $350 per unit, whichever
is less; and
(C) Commercial property:
thirty-five per cent of the actual cost or $500,000, whichever is less;
provided that multiple owners of a single system
shall be entitled to a single tax credit; and provided further that the tax
credit shall be apportioned between the owners in proportion to their
contribution to the cost of the system.
In the case of a partnership, S corporation,
estate, or trust, the tax credit allowable is for every eligible renewable
energy technology system that is installed and placed in service in the State
by the entity. The cost upon which the tax credit is computed shall be
determined at the entity level. Distribution and share of credit shall be
determined pursuant to section 235-110.7(a).
(b) For the purposes of this section:
"Actual cost" means costs related
to the renewable energy technology systems under subsection (a), including
accessories and installation, but not including the cost of consumer incentive
premiums unrelated to the operation of the system or offered with the sale of
the system and costs for which another credit is claimed under this chapter.
"Renewable energy technology
system" means a new system that captures and converts a renewable source
of energy, such as wind, heat (solar thermal), or light (photovoltaic) from the
sun into:
(1) A usable source of thermal or
mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system"
means any identifiable facility, equipment, apparatus, or the like that
converts insolation or wind energy to useful thermal or electrical energy for
heating, cooling, or reducing the use of other types of energy that are
dependent upon fossil fuel for their generation.
(c) For taxable years beginning after
December 31, 2005, the dollar amount of any utility rebate shall be deducted
from the cost of the qualifying system and its installation before applying the
state tax credit.
(d) The director of taxation shall prepare
any forms that may be necessary to claim a tax credit under this section,
including forms identifying the technology type of each tax credit claimed
under this section, whether for solar thermal, photovoltaic from the sun, or
wind. The director may also require the taxpayer to furnish reasonable
information to ascertain the validity of the claim for credit made under this
section and may adopt rules necessary to effectuate the purposes of this
section pursuant to chapter 91.
(e) If the tax credit under this section
exceeds the taxpayer's income tax liability, the excess of the credit over
liability may be used as a credit against the taxpayer's income tax liability
in subsequent years until exhausted. All claims for the tax credit under this
section, including amended claims, shall be filed on or before the end of the
twelfth month following the close of the taxable year for which the credit may
be claimed. Failure to comply with this subsection shall constitute a waiver
of the right to claim the credit.
(f) By or before December, 2005, to the
extent feasible, using existing resources to assist the energy-efficiency
policy review and evaluation, the department shall assist with data collection
on the following:
(1) The number of renewable energy
technology systems that have qualified for a tax credit during the past year
by:
(A) Technology type (solar thermal,
photovoltaic from the sun, and wind); and
(B) Taxpayer type (corporate and
individual); and
(2) The total cost of the tax credit to the
State during the past year by:
(A) Technology type; and
(B) Taxpayer type.
(g) For systems installed and placed in
service in 2009, no residential home developer shall be entitled to claim the
credit under subsections (a)(1)(A), (a)(2)(A), and (a)(3)(A). A residential
home developer is defined as a person who holds more than one residential dwelling
for sale as inventory."]
SECTION 15. Section 235-15, Hawaii Revised Statutes, is repealed.
["[§235-15] Tax credits to
promote the purchase of child passenger restraint systems. (a) Any
taxpayer who files an individual income tax return for a taxable year may claim
an income tax credit under this section against the Hawaii state individual net
income tax.
(b) The tax credit shall be $25; provided
that the taxpayer purchases one or more new child passenger restraint systems
in the tax year for which the credit is properly claimed; and provided that
such restraint system can be shown to be in substantial conformity with
specifications for such restraint systems set forth by the federal motor
vehicle safety standards which were in effect at the time of such purchase.
(c) If the tax credit claimed by the
taxpayer under this section exceeds the amount of the income tax payments due
from the taxpayer, the excess of credit over payments due shall be refunded to
the taxpayer; provided that the tax credit properly claimed by a taxpayer who
has no income tax liability shall be paid to the taxpayer; and provided that no
refunds or payments on account of the tax credit allowed by this section shall
be made for amounts less than $1.
(d) The director of taxation shall prepare
such forms as may be necessary to claim a credit under this section, may
require proof of the claim for the tax credit, and may adopt rules pursuant to
chapter 91.
(e) All of the provisions relating to
assessments and refunds under this chapter and under section 231-23(c)(1) shall
apply to the tax credit under this section.
(f) Claims for the tax credit under this
section, including any amended claims, shall be filed on or before the end of
the twelfth month following the taxable year for which the credit may be
claimed."]
SECTION 16. Section 235-17, Hawaii Revised Statutes, is repealed.
["§235‑17 Motion picture,
digital media, and film production income tax credit. (a) Any law
to the contrary notwithstanding, there shall be allowed to each taxpayer
subject to the taxes imposed by this chapter, an income tax credit which shall
be deductible from the taxpayer's net income tax liability, if any, imposed by
this chapter for the taxable year in which the credit is properly claimed. The
amount of the credit shall be:
(1) Fifteen per cent of the qualified
production costs incurred by a qualified production in any county of the State
with a population of over seven hundred thousand; or
(2) Twenty per cent of the qualified
production costs incurred by a qualified production in any county of the State
with a population of seven hundred thousand or less.
A qualified production occurring in more than one
county may prorate its expenditures based upon the amounts spent in each
county, if the population bases differ enough to change the percentage of tax
credit.
In the case of a partnership, S corporation,
estate, or trust, the tax credit allowable is for qualified production costs
incurred by the entity for the taxable year. The cost upon which the tax
credit is computed shall be determined at the entity level. Distribution and
share of credit shall be determined by rule.
If a deduction is taken under section 179
(with respect to election to expense depreciable business assets) of the Internal
Revenue Code of 1986, as amended, no tax credit shall be allowed for those
costs for which the deduction is taken.
The basis for eligible property for
depreciation of accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed.
(b) The credit allowed under this section
shall be claimed against the net income tax liability for the taxable year.
For the purposes of this section, "net income tax liability" means
net income tax liability reduced by all other credits allowed under this
chapter.
(c) If the tax credit under this section
exceeds the taxpayer's income tax liability, the excess of credits over
liability shall be refunded to the taxpayer; provided that no refunds or
payment on account of the tax credits allowed by this section shall be made for
amounts less than $1. All claims, including any amended claims, for tax
credits under this section shall be filed on or before the end of the twelfth
month following the close of the taxable year for which the credit may be
claimed. Failure to comply with the foregoing provision shall constitute a
waiver of the right to claim the credit.
(d) To qualify for this tax credit, a
production shall:
(1) Meet the definition of a qualified production
specified in subsection (l);
(2) Have qualified production costs
totaling at least $200,000;
(3) Provide the State, at a minimum, a
shared-card, end-title screen credit, where applicable;
(4) Provide evidence of reasonable efforts
to hire local talent and crew; and
(5) Provide evidence of financial or
in-kind contributions or educational or workforce development efforts, in
partnership with related local industry labor organizations, educational
institutions, or both, toward the furtherance of the local film and television
and digital media industries.
(e) On or after July 1, 2006, no qualified
production cost that has been financed by investments for which a credit was
claimed by any taxpayer pursuant to section 235-110.9 is eligible for credits
under this section.
(f) To receive the tax credit, the taxpayer
shall first prequalify the production for the credit by registering with the
department of business, economic development, and tourism during the
development or preproduction stage. Failure to comply with this provision may
constitute a waiver of the right to claim the credit.
(g) The director of taxation shall prepare
forms as may be necessary to claim a credit under this section. The director
may also require the taxpayer to furnish information to ascertain the validity
of the claim for credit made under this section and may adopt rules necessary
to effectuate the purposes of this section pursuant to chapter 91.
(h) Every taxpayer claiming a tax credit
under this section for a qualified production shall, no later than ninety days
following the end of each taxable year in which qualified production costs were
expended, submit a written, sworn statement to the department of business,
economic development, and tourism, identifying:
(1) All qualified production costs as
provided by subsection (a), if any, incurred in the previous taxable year;
(2) The amount of tax credits claimed
pursuant to this section, if any, in the previous taxable year; and
(3) The number of total hires versus the
number of local hires by category (i.e., department) and by county.
(i) The department of business, economic
development, and tourism shall:
(1) Maintain records of the names of the
taxpayers and qualified productions thereof claiming the tax credits under
subsection (a);
(2) Obtain and total the aggregate amounts
of all qualified production costs per qualified production and per qualified
production per taxable year; and
(3) Provide a letter to the director of
taxation specifying the amount of the tax credit per qualified production for
each taxable year that a tax credit is claimed and the cumulative amount of the
tax credit for all years claimed.
Upon each determination required under this
subsection, the department of business, economic development, and tourism shall
issue a letter to the taxpayer, regarding the qualified production, specifying
the qualified production costs and the tax credit amount qualified for in each
taxable year a tax credit is claimed. The taxpayer for each qualified production
shall file the letter with the taxpayer's tax return for the qualified
production to the department of taxation. Notwithstanding the authority of the
department of business, economic development, and tourism under this section,
the director of taxation may audit and adjust the tax credit amount to conform
to the information filed by the taxpayer.
(j) Total tax credits claimed per qualified
production shall not exceed $8,000,000.
(k) Qualified productions shall comply with
subsections (d), (e), (f), and (h).
(l) For the purposes of this section:
"Commercial":
(1) Means an advertising message that is
filmed using film, videotape, or digital media, for dissemination via
television broadcast or theatrical distribution;
(2) Includes a series of advertising
messages if all parts are produced at the same time over the course of six
consecutive weeks; and
(3) Does not include an advertising message
with Internet‑only distribution.
"Digital media" means production
methods and platforms directly related to the creation of cinematic imagery and
content, specifically using digital means, including but not limited to digital
cameras, digital sound equipment, and computers, to be delivered via film,
videotape, interactive game platform, or other digital distribution media
(excluding Internet-only distribution).
"Post production" means production
activities and services conducted after principal photography is completed,
including but not limited to editing, film and video transfers, duplication,
transcoding, dubbing, subtitling, credits, closed captioning, audio production,
special effects (visual and sound), graphics, and animation.
"Production" means a series of
activities that are directly related to the creation of visual and cinematic
imagery to be delivered via film, videotape, or digital media and to be sold,
distributed, or displayed as entertainment or the advertisement of products for
mass public consumption, including but not limited to scripting, casting, set
design and construction, transportation, videography, photography, sound
recording, interactive game design, and post production.
"Qualified production":
(1) Means a production, with expenditures
in the State, for the total or partial production of a feature-length motion
picture, short film, made-for-television movie, commercial, music video,
interactive game, television series pilot, single season (up to twenty‑two
episodes) of a television series regularly filmed in the State (if the number
of episodes per single season exceeds twenty‑two, additional episodes for
the same season shall constitute a separate qualified production), television
special, single television episode that is not part of a television series
regularly filmed or based in the State, national magazine show, or national
talk show. For the purposes of subsections (d) and (j), each of the
aforementioned qualified production categories shall constitute separate,
individual qualified productions; and
(2) Does not include: daily news; public
affairs programs; non-national magazine or talk shows; televised sporting
events or activities; productions that solicit funds; productions produced
primarily for industrial, corporate, institutional, or other private purposes;
and productions that include any material or performance prohibited by chapter
712.
"Qualified production costs" means
the costs incurred by a qualified production within the State that are subject
to the general excise tax under chapter 237 or income tax under this chapter
and that have not been financed by any investments for which a credit was or
will be claimed pursuant to section 235‑110.9. Qualified production
costs include but are not limited to:
(1) Costs incurred during preproduction
such as location scouting and related services;
(2) Costs of set construction and
operations, purchases or rentals of wardrobe, props, accessories, food, office
supplies, transportation, equipment, and related services;
(3) Wages or salaries of cast, crew, and
musicians;
(4) Costs of photography, sound
synchronization, lighting, and related services;
(5) Costs of editing, visual effects,
music, other post-production, and related services;
(6) Rentals and fees for use of local
facilities and locations;
(7) Rentals of vehicles and lodging for
cast and crew;
(8) Airfare for flights to or from Hawaii, and interisland flights;
(9) Insurance and bonding;
(10) Shipping of equipment and supplies to
or from Hawaii, and interisland shipments; and
(11) Other direct production costs specified
by the department in consultation with the department of business, economic
development, and tourism."]
SECTION 17. Section 235-19, Hawaii Revised Statutes, is repealed.
["[§235-19] Exceptional
trees; tax deduction. (a) Subject to subsection (b), there shall be
allowed as a deduction from gross income the amount, not to exceed $3,000 per
exceptional tree, for amounts paid, excluding interest paid or accrued thereon,
during the taxable year by an individual taxpayer for expenditures to maintain,
on the taxpayer's real property, each exceptional tree that has been designated
by the county arborist advisory committee under chapter 58 as an exceptional
tree.
(b) No deduction shall be allowed to exceed
the amount of expenditures deemed reasonably necessary by a certified
arborist. No deduction shall be allowed in more than one taxable year out of
every three consecutive taxable years.
(c) The director of taxation shall prepare
such forms as may be necessary to claim a tax deduction under this section, may
require proof of the claim for the tax deduction, including an affidavit signed
by the certified arborist, and may adopt rules pursuant to chapter 91.
(d) For the purpose of this section, the
term "exceptional tree" shall have the same meaning as defined in
section 58-3."]
SECTION 18. Section 235-55.91, Hawaii Revised Statutes, is repealed.
["§235-55.91 Credit
for employment of vocational rehabilitation referrals.
(a) There shall be allowed to each taxpayer subject to the tax imposed
by this chapter, a credit for employment of vocational rehabilitation referrals
which shall be deductible from the taxpayer's net income tax liability, if any,
imposed by this chapter for the taxable year in which the credit is properly
claimed.
(b) The amount of the credit determined
under this section for the taxable year shall be equal to twenty per cent of
the qualified first-year wages for that year. The amount of the qualified
first-year wages which may be taken into account with respect to any individual
shall not exceed $6,000.
(c) For purposes of this section:
"Hiring date" means the day the
vocational rehabilitation referral is hired by the employer.
"Qualified first-year wages"
means, with respect to any vocational rehabilitation referral, qualified wages
attributable to service rendered during the one-year period beginning with the
day the individual begins work for the employer.
"Qualified wages" means the wages
paid or incurred by the employer during the taxable year to an individual who
is a vocational rehabilitation referral and more than one-half of the wages
paid or incurred for such an individual is for services performed in a trade or
business of the employer.
"Vocational rehabilitation
referral" means any individual who is certified by the department of human
services vocational rehabilitation and services for the blind division in
consultation with the Hawaii state employment service of the department of
labor and industrial relations as:
(1) Having a physical or mental disability
which, for such individual, constitutes or results in a substantial handicap to
employment; and
(2) Having been referred to the employer
upon completion of (or while receiving) rehabilitative services pursuant to:
(A) An individualized written
rehabilitation plan under the State's plan for vocational rehabilitation
services approved under the Rehabilitation Act of 1973, as amended;
(B) A program of vocational
rehabilitation carried out under chapter 31 of Title 38, United States Code; or
(C) An individual work plan
developed and implemented by an employment network pursuant to subsection (g)
of section 1148 of the Social Security Act, as amended, with respect to which
the requirements of such subsection are met.
"Wages" has the meaning given to
such term by section 3306(b) of the Internal Revenue Code (determined without
regard to any dollar limitation contained in the Internal Revenue Code
section). "Wages" shall not include:
(1) Amounts paid or incurred by an employer
for any period to any vocational rehabilitation referral for whom the employer
receives state or federally funded payments for on-the-job training of the
individual for the period;
(2) Amounts paid to an employer (however
utilized by the employer) for any vocational rehabilitation referral under a
program established under section 414 of the Social Security Act; and
(3) If the principal place of employment is
at a plant or facility, and there is a strike or lockout involving vocational
rehabilitation referrals at the plant or facility, amounts paid or incurred by
the employer to the vocational rehabilitation referral for services which are
the same as, or substantially similar to, those services performed by employees
participating in, or affected by, the strike or lockout during the period of
strike or lockout.
(d) The following shall apply to
certifications of vocational rehabilitation referrals:
(1) An individual shall not be treated as a
vocational rehabilitation referral unless, on or before the day on which the
individual begins work for the employer, the employer:
(A) Has received a certification
from the department of human services vocational rehabilitation and services
for the blind division that the individual is a qualified vocational
rehabilitation referral; or
(B) Has requested in writing the
certification from the department of human services vocational rehabilitation
and services for the blind division that the individual is a qualified
vocational rehabilitation referral.
For purposes of the preceding sentence,
if on or before the day on which the individual begins work for the employer,
the individual has received from the department of human services vocational
rehabilitation and services for the blind division a written preliminary
determination that the individual is a vocational rehabilitation referral, then
"the fifth day" shall be substituted for "the day" in the
preceding sentence.
(2) If an individual has been certified as
a vocational rehabilitation referral and the certification is incorrect because
it was based on false information provided by the individual, the certification
shall be revoked and wages paid by the employer after the date on which notice
of revocation is received by the employer shall not be treated as qualified
wages.
(3) In any request for a certification of
an individual as vocational rehabilitation referral, the employer shall
certify that a good faith effort was made to determine that such individual is
a vocational rehabilitation referral.
(e) The following wages paid to vocational
rehabilitation referrals are ineligible to be claimed by the employer for this
credit:
(1) No wages shall be taken into account
under this section with respect to a vocational rehabilitation referral who:
(A) Bears any of the relationships
described in section 152(a)(1) to (8) of the Internal Revenue Code to the
taxpayer, or, if the taxpayer is a corporation, to an individual who owns,
directly or indirectly, more than fifty per cent in value of the outstanding
stock of the corporation (determined with the application of section 267(c) of
the Internal Revenue Code);
(B) If the taxpayer is an estate or
trust, is a grantor, beneficiary, or fiduciary of the estate or trust, or is an
individual who bears any of the relationships described in section 152(a)(1) to
(8) of the Internal Revenue Code to a grantor, beneficiary, or fiduciary of the
estate or trust; or
(C) Is a dependent (described in
section 152(a)(9) of the Internal Revenue Code) of the taxpayer, or, if the
taxpayer is a corporation, of an individual described in subparagraph (A), or,
if the taxpayer is an estate or trust, of a grantor, beneficiary, or fiduciary
of the estate or trust.
(2) No wages shall be taken into account
under this section with respect to any vocational rehabilitation referral if,
prior to the hiring date of the individual, the individual had been employed by
the employer at any time during which the individual was not a vocational
rehabilitation referral.
(3) No wages shall be taken into account
under this section with respect to any vocational rehabilitation referral
unless such individual either:
(A) Is employed by the employer at
least ninety days; or
(B) Has completed at least one
hundred-twenty hours of services performed for the employer.
(f) In the case of a successor employer
referred to in section 3306(b)(1) of the Internal Revenue Code, the
determination of the amount of the tax credit allowable under this section with
respect to wages paid by the successor employer shall be made in the same
manner as if the wages were paid by the predecessor employer referred to in the
section.
(g) No credit shall be determined under
this section with respect to wages paid by an employer to a vocational
rehabilitation referral for services performed by the individual for another
person unless the amount reasonably expected to be received by the employer for
the services from the other person exceeds the wages paid by the employer to
the individual for such services.
(h) The credit allowed under this section
shall be claimed against net income tax liability for the taxable year. A tax
credit under this section which exceeds the taxpayer's income tax liability may
be used as a credit against the taxpayer's income tax liability in subsequent
years until exhausted.
(i) All claims for tax credits under this
section, including any amended claims, shall be filed on or before the end of
the twelfth month following the close of the taxable year for which the credits
may be claimed. Failure to comply with the foregoing provision shall
constitute a waiver of the right to claim the credit.
(j) No deduction shall be allowed for that
portion of the wages or salaries paid or incurred for the taxable year that is
equal to the amount of the credit determined under this section.
(k) The director of taxation may adopt any
rules under chapter 91 and forms necessary to carry out this section."]
SECTION 19. Section 235-110.2, Hawaii Revised Statutes, is repealed.
["§235-110.2 Credit for school
repair and maintenance. (a) There shall be allowed to each
taxpayer licensed under chapter 444, 460J, or 464, who is subject to the tax
imposed by this chapter, and does not owe the State delinquent taxes,
penalties, or interest, a credit for contributions of in-kind services for the
repair and maintenance of public schools provided by the licensed taxpayer in
Hawaii. The credit shall be deductible from the taxpayer's net income tax
liability, if any, imposed by this chapter for the taxable year in which the
credit is properly claimed.
(b) The amount of the credit determined
under this section for the taxable year shall be equal to ten per cent of the
value of contributions of in-kind services to the Hawaii school repair and
maintenance fund for that taxable year; provided that the aggregate value of
the contributions of in-kind services claimed by a taxpayer shall not exceed
$40,000.
(c) For purposes of this section:
"Public schools" has the same
meaning as defined in section 302A-101.
"Value of contributions of in-kind
services" means the fair market value of uncompensated services or labor
as determined and certified by the department of accounting and general
services.
(d) The credit allowed under this section
shall be claimed against net income tax liability for the taxable year. A tax
credit under this section which exceeds the taxpayer's income tax liability may
be used as a credit against the taxpayer's income tax liability in subsequent
years until exhausted.
(e) All claims for tax credits under this
section, including any amended claims, shall be filed on or before the end of
the twelfth month following the close of the taxable year for which the credits
may be claimed. Failure to comply with the foregoing provision shall
constitute a waiver of the right to claim the credit.
(f) The department of education shall maintain
records of the names of taxpayers eligible for the credit and the total value
of in-kind services contributed for the repair and maintenance of public
schools for the taxable year. All contributions shall be verified by the
department of education. The department of education shall total all
contributions that the department of education certifies. Upon each
determination, the department of education shall issue a certificate to the
taxpayer certifying:
(1) The amount of the contribution;
(2) That the taxpayer is licensed under
chapter 444, 460J, or 464; and
(3) That the taxpayer has obtained a
current and valid certificate signed by the director of taxation, showing that
the taxpayer does not owe the State any delinquent taxes, penalties, or interest.
The taxpayer shall file the certificate from
the department of education with the taxpayer's tax return with the department
of taxation. When the total amount of certified contributions reaches
$2,500,000, the department of education shall immediately discontinue
certifying contributions and notify the department of taxation. In no instance
shall the total amount of certified contributions exceed $2,500,000 for each
taxable year.
(g) The State shall provide not more than
$250,000 in tax credits for contributions of in-kind services in Hawaii for the
repair and maintenance of public schools.
(h) The director of taxation shall prepare
any forms that may be necessary to allow a credit to be claimed under this
section."]
SECTION 20. Section 235-110.3, Hawaii Revised Statutes, is repealed.
["§235-110.3 Ethanol facility tax
credit. (a) Each year during the credit period, there shall be allowed to
each taxpayer subject to the taxes imposed by this chapter, an ethanol facility
tax credit that shall be applied to the taxpayer's net income tax liability, if
any, imposed by this chapter for the taxable year in which the credit is
properly claimed.
For each qualified ethanol production
facility, the annual dollar amount of the ethanol facility tax credit during
the eight-year period shall be equal to thirty per cent of its nameplate
capacity if the nameplate capacity is greater than five hundred thousand but
less than fifteen million gallons. A taxpayer may claim this credit for each
qualifying ethanol facility; provided that:
(1) The claim for this credit by any
taxpayer of a qualifying ethanol production facility shall not exceed one
hundred per cent of the total of all investments made by the taxpayer in the
qualifying ethanol production facility during the credit period;
(2) The qualifying ethanol production
facility operated at a level of production of at least seventy-five per cent of
its nameplate capacity on an annualized basis;
(3) The qualifying ethanol production
facility is in production on or before January 1, 2017; and
(4) No taxpayer that claims the credit
under this section shall claim any other tax credit under this chapter for the
same taxable year.
(b) As used in this section:
"Credit period" means a maximum
period of eight years beginning from the first taxable year in which the
qualifying ethanol production facility begins production even if actual
production is not at seventy-five per cent of nameplate capacity.
"Investment" means a nonrefundable
capital expenditure related to the development and construction of any
qualifying ethanol production facility, including processing equipment, waste
treatment systems, pipelines, and liquid storage tanks at the facility or
remote locations, including expansions or modifications. Capital expenditures
shall be those direct and certain indirect costs determined in accordance with
section 263A of the Internal Revenue Code, relating to uniform capitalization
costs, but shall not include expenses for compensation paid to officers of the taxpayer,
pension and other related costs, rent for land, the costs of repairing and
maintaining the equipment or facilities, training of operating personnel,
utility costs during construction, property taxes, costs relating to
negotiation of commercial agreements not related to development or
construction, or service costs that can be identified specifically with a
service department or function or that directly benefit or are incurred by
reason of a service department or function. For the purposes of determining a
capital expenditure under this section, the provisions of section 263A of the
Internal Revenue Code shall apply as it read on March 1, 2004. For purposes of
this section, investment excludes land costs and includes any investment for
which the taxpayer is at risk, as that term is used in section 465 of the
Internal Revenue Code (with respect to deductions limited to amount at risk).
"Nameplate capacity" means the
qualifying ethanol production facility's production design capacity, in gallons
of motor fuel grade ethanol per year.
"Net income tax liability" means
net income tax liability reduced by all other credits allowed under this
chapter.
"Qualifying ethanol production"
means ethanol produced from renewable, organic feedstocks, or waste materials,
including municipal solid waste. All qualifying production shall be fermented,
distilled, gasified, or produced by physical chemical conversion methods such
as reformation and catalytic conversion and dehydrated at the facility.
"Qualifying ethanol production
facility" or "facility" means a facility located in Hawaii which
produces motor fuel grade ethanol meeting the minimum specifications by the
American Society of Testing and Materials standard D-4806, as amended.
(c) In the case of a taxable year in which
the cumulative claims for the credit by the taxpayer of a qualifying ethanol
production facility exceeds the cumulative investment made in the qualifying
ethanol production facility by the taxpayer, only that portion that does not
exceed the cumulative investment shall be claimed and allowed.
(d) The department of business, economic
development, and tourism shall:
(1) Maintain records of the total amount of
investment made by each taxpayer in a facility;
(2) Verify the amount of the qualifying
investment;
(3) Total all qualifying and cumulative
investments that the department of business, economic development, and tourism
certifies; and
(4) Certify the total amount of the tax
credit for each taxable year and the cumulative amount of the tax credit during
the credit period.
Upon each determination, the department of
business, economic development, and tourism shall issue a certificate to the
taxpayer verifying the qualifying investment amounts, the credit amount
certified for each taxable year, and the cumulative amount of the tax credit
during the credit period. The taxpayer shall file the certificate with the
taxpayer's tax return with the department of taxation. Notwithstanding the
department of business, economic development, and tourism's certification
authority under this section, the director of taxation may audit and adjust
certification to conform to the facts.
If in any year, the annual amount of
certified credits reaches $12,000,000 in the aggregate, the department of
business, economic development, and tourism shall immediately discontinue
certifying credits and notify the department of taxation. In no instance shall
the total amount of certified credits exceed $12,000,000 per year.
Notwithstanding any other law to the contrary, this information shall be
available for public inspection and dissemination under chapter 92F.
(e) If the credit under this section
exceeds the taxpayer's income tax liability, the excess of credit over
liability shall be refunded to the taxpayer; provided that no refunds or
payments on account of the tax credit allowed by this section shall be made for
amounts less than $1. All claims for a credit under this section must be
properly filed on or before the end of the twelfth month following the close of
the taxable year for which the credit may be claimed. Failure to comply with
the foregoing provision shall constitute a waiver of the right to claim the
credit.
(f) If a qualifying ethanol production
facility or an interest therein is acquired by a taxpayer prior to the
expiration of the credit period, the credit allowable under subsection (a) for
any period after such acquisition shall be equal to the credit that would have
been allowable under subsection (a) to the prior taxpayer had the taxpayer not
disposed of the interest. If an interest is disposed of during any year for
which the credit is allowable under subsection (a), the credit shall be
allowable between the parties on the basis of the number of days during the
year the interest was held by each taxpayer. In no case shall the credit
allowed under subsection (a) be allowed after the expiration of the credit
period.
(g) Once the total nameplate capacities of
qualifying ethanol production facilities built within the State reaches or
exceeds a level of forty million gallons per year, credits under this section
shall not be allowed for new ethanol production facilities. If a new
facility's production capacity would cause the statewide ethanol production
capacity to exceed forty million gallons per year, only the ethanol production
capacity that does not exceed the statewide forty million gallon per year level
shall be eligible for the credit.
(h) Prior to construction of any new
qualifying ethanol production facility, the taxpayer shall provide written
notice of the taxpayer's intention to begin construction of a qualifying
ethanol production facility. The information shall be provided to the
department of taxation and the department of business, economic development,
and tourism on forms provided by the department of business, economic
development, and tourism, and shall include information on the taxpayer,
facility location, facility production capacity, anticipated production start
date, and the taxpayer's contact information. Notwithstanding any other law to
the contrary, this information shall be available for public inspection and
dissemination under chapter 92F.
(i) The taxpayer shall provide written
notice to the director of taxation and the director of business, economic
development, and tourism within thirty days following the start of production.
The notice shall include the production start date and expected ethanol fuel
production for the next twenty-four months. Notwithstanding any other law to
the contrary, this information shall be available for public inspection and
dissemination under chapter 92F.
(j) If a qualifying ethanol production
facility fails to achieve an average annual production of at least seventy-five
per cent of its nameplate capacity for two consecutive years, the stated
capacity of that facility may be revised by the director of business, economic
development, and tourism to reflect actual production for the purposes of
determining statewide production capacity under subsection (g) and allowable
credits for that facility under subsection (a). Notwithstanding any other law
to the contrary, this information shall be available for public inspection and
dissemination under chapter 92F.
(k) Each calendar year during the credit
period, the taxpayer shall provide information to the director of business,
economic development, and tourism on the number of gallons of ethanol produced
and sold during the previous calendar year, how much was sold in Hawaii versus
overseas, feedstocks used for ethanol production, the number of employees of
the facility, and the projected number of gallons of ethanol production for the
succeeding year.
(l) In the case of a partnership, S
corporation, estate, or trust, the tax credit allowable is for every qualifying
ethanol production facility. The cost upon which the tax credit is computed
shall be determined at the entity level. Distribution and share of credit
shall be determined pursuant to section 235-110.7(a).
(m) Following each year in which a credit
under this section has been claimed, the director of business, economic
development, and tourism shall submit a written report to the governor and
legislature regarding the production and sale of ethanol. The report shall
include:
(1) The number, location, and nameplate
capacities of qualifying ethanol production facilities in the State;
(2) The total number of gallons of ethanol
produced and sold during the previous year; and
(3) The projected number of gallons of
ethanol production for the succeeding year.
(n) The director of taxation shall prepare
forms that may be necessary to claim a credit under this section.
Notwithstanding the department of business, economic development, and tourism's
certification authority under this section, the director may audit and adjust
certification to conform to the facts. The director may also require the
taxpayer to furnish information to ascertain the validity of the claim for
credit made under this section and may adopt rules necessary to effectuate the
purposes of this section pursuant to chapter 91."]
SECTION 21. Section 235-110.51, Hawaii Revised Statutes, is repealed.
["§235-110.51 Technology
infrastructure renovation tax credit. (a) There shall be allowed
to each taxpayer subject to the taxes imposed by this chapter, an income tax
credit which shall be deductible from the taxpayer's net income tax liability,
if any, imposed by this chapter for the taxable year in which the credit is
properly claimed.
(b) The amount of the credit shall be four
per cent of the renovation costs incurred during the taxable year for each
commercial building located in Hawaii.
(c) In the case of a partnership, S
corporation, estate, trust, or any developer of a commercial building, the tax
credit allowable is for renovation costs incurred by the entity for the taxable
year. The cost upon which the tax credit is computed shall be determined at
the entity level. Distribution and share of credit shall be determined
pursuant to section 235-110.7(a).
(d) If a deduction is taken under section
179 (with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
renovation cost for which the deduction is taken.
(e) The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the
alternative, the taxpayer shall treat the amount of the credit allowable and
claimed as a taxable income item for the taxable year in which it is properly
recognized under the method of accounting used to compute taxable income.
(f) The credit allowed under this section
shall be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section
exceeds the taxpayer's income tax liability, the excess of credit over
liability may be carried forward until exhausted.
(h) The tax credit allowed under this
section shall not be available for taxable years beginning after December 31, 2010.
(i) As used in this section:
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Renovation costs" means costs
incurred after December 31, 2000, to plan, design, install, construct, and purchase
technology-enabled infrastructure equipment to provide a commercial building
with technology-enabled infrastructure.
"Technology-enabled
infrastructure" means:
(1) High speed telecommunications systems
that provide Internet access, direct satellite communications access, and
videoconferencing facilities;
(2) Physical security systems that identify
and verify valid entry to secure spaces, detect invalid entry or entry
attempts, and monitor activity in these spaces;
(3) Environmental systems to include
heating, ventilation, air conditioning, fire detection and suppression, and
other life safety systems; and
(4) Backup and emergency electric power
systems.
(j) No taxpayer that claims a credit under
this section shall claim any other credit under this chapter."]
SECTION 22. Section 235-110.6, Hawaii Revised Statutes, is repealed.
["[§235-110.6] Fuel tax
credit for commercial fishers. (a) Each principal operator of a
commercial fishing vessel who files an individual or corporate net income tax
return for a taxable year may claim an income tax credit under this section
against the Hawaii state individual or corporate net income tax.
(b) The tax credit shall be an amount equal
to the fuel taxes imposed under section 243-4(a) and paid by the principal
operator during the taxable year.
(c) The tax credit claimed under this
section by the principal operator shall be deductible from the principal
operator's individual or corporate income tax liability, if any, for the tax
year in which the credit is properly claimed; provided that a husband and wife
filing separate returns for a taxable year for which a joint return could have
been made by them shall claim only the tax credit to which they would have been
entitled had a joint return been filed. If the tax credit claimed by the
principal operator under this section exceeds the amount of the income tax
payments due from the principal operator, the excess of credit over payments
due shall be refunded to the principal operator; provided that the tax credit
properly claimed by a principal operator who has no income tax liability shall
be paid to the principal operator; and provided further no refunds or payments
on account of the tax credit allowed by this section shall be made for amounts
less than $1.
(d) The director of taxation shall prepare
such forms as may be necessary to claim a credit under this section, may
require proof of the claim for the tax credit, and may adopt rules pursuant to
chapter 91.
(e) All of the provisions relating to
assessments and refunds under this chapter and under section 231-23(c)(1) shall
apply to the tax credit under this section.
(f) Claims for the tax credit under this
section, including any amended claims thereof, shall be filed on or before the
end of the twelfth month following the taxable year for which the credit may be
claimed.
(g) As used in this section:
(1) "Commercial fishing vessel"
means any water vessel which is used to catch or process fish or transport fish
loaded on the high seas.
(2) "Principal operator" means
any individual or corporate resident taxpayer who derives at least fifty-one
per cent of the taxpayer's gross annual income from commercial fishing
operations."]
SECTION 23. Section 235-110.7, Hawaii Revised Statutes, is repealed.
["§235-110.7 Capital goods excise
tax credit. (a) There shall
be allowed to each taxpayer subject to the tax imposed by this chapter a
capital goods excise tax credit which shall be deductible from the taxpayer's
net income tax liability, if any, imposed by this chapter for the taxable year
in which the credit is properly claimed.
The amount of
the tax credit shall be determined by the application of the following rates
against the cost of the eligible depreciable tangible personal property used by
the taxpayer in a trade or business and placed in service within Hawaii after December 31, 1987. For calendar years beginning after: December 31, 1987,
the applicable rate shall be three per cent; December 31, 1988, and thereafter,
the applicable rate shall be four per cent. For taxpayers with fiscal taxable
years, the applicable rate shall be the rate for the calendar year in which the
eligible depreciable tangible personal property used in the trade or business
is placed in service within Hawaii.
In the case
of a partnership, S corporation, estate, or trust, the tax credit allowable is
for eligible depreciable tangible personal property which is placed in service
by the entity. The cost upon which the tax credit is computed shall be
determined at the entity level. Distribution and share of credit shall be
determined by rules.
In the case
of eligible depreciable tangible personal property for which a credit for sales
or use taxes paid to another state is allowable under section 238-3(i), the
amount of the tax credit allowed under this section shall not exceed the amount
of use tax actually paid under chapter 238 relating to such tangible personal
property.
If a
deduction is taken under section 179 (with respect to election to expense
certain depreciable business assets) of the Internal Revenue Code of 1954, as
amended, no tax credit shall be allowed for that portion of the cost of
property for which the deduction was taken.
(b) If the
capital goods excise tax credit allowed under subsection (a) exceeds the taxpayer's
net income tax liability, the excess of credit over liability shall be refunded
to the taxpayer; provided that no refunds or payment on account of the tax
credit allowed by this section shall be made for amounts less than $1.
All claims
for tax credits under this section, including any amended claims, must be filed
on or before the end of the twelfth month following the close of the taxable
year for which the credits may be claimed. Failure to comply with the
foregoing provision shall constitute a waiver of the right to claim the credit.
(c) Application for the capital goods
excise tax credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to
dispositions of section 38 property and the recapture percentages) of the
Internal Revenue Code of 1954, as amended, as of December 31, 1984, and 280F as
operative for this chapter (with respect to limitation on investment tax credit
and depreciation for luxury automobiles; limitation where certain property used
for personal purposes) of the Internal Revenue Code of 1954, as amended, shall
be operative for purposes of this section.
(e) As used
in this section, the definition of section 38 property (with respect to
investment in depreciable tangible personal property) as defined by section
48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c),
(f), (l), (m), and (s) of the Internal Revenue Code of 1954, as amended as of
December 31, 1984, is operative for the purposes of this section only.
As used in
this section:
"Cost"
means (1) the actual invoice price of the tangible personal property, or (2)
the basis from which depreciation is taken under section 167 (with respect to
depreciation) or from which a deduction may be taken under section 168 (with
respect to accelerated cost recovery system) of the Internal Revenue Code of
1954, as amended, whichever is less.
"Eligible
depreciable tangible personal property" is section 38 property as defined
by the operative provisions of section 48 and having a depreciable life under
section 167 or for which a deduction may be taken under section 168 of the
federal Internal Revenue Code of 1954, as amended.
"Placed
in service" means the earliest of the following taxable years:
(1) The
taxable year in which, under the:
(A) Taxpayer's
depreciation practice, the period for depreciation; or
(B) Accelerated
cost recovery system, a claim for recovery allowances; with respect to such
property begins; or
(2) The
taxable year in which the property is placed in a condition or state of
readiness and availability for a specifically assigned function.
"Purchase"
means an acquisition of property.
"Tangible
personal property" means tangible personal property which is placed in
service within Hawaii after December 31, 1987, and the purchase or
importation of which resulted in a transaction which was subject to the
imposition and payment of tax at the rate of four per cent under chapter 237 or
238. "Tangible personal property" does not include tangible personal
property which is an integral part of a building or structure or tangible
personal property used in a foreign trade zone, as defined under chapter 212."]
SECTION 24. Section 235-110.8, Hawaii Revised Statutes, is repealed.
["§235-110.8 Low-income housing tax
credit. (a) Section 42 (with respect to low-income housing credit)
of the Internal Revenue Code shall be operative for the purposes of this
chapter as provided in this section.
(b) Each taxpayer subject to the tax
imposed by this chapter, who has filed [a] net income tax return for a taxable
year may claim a low-income housing tax credit against the taxpayer's net
income tax liability. The amount of the credit shall be deductible from the
taxpayer's net income tax liability, if any, imposed by this chapter for the
taxable year in which the credit is properly claimed on a timely basis. A
credit under this section may be claimed whether or not the taxpayer claims a
federal low-income housing tax credit pursuant to section 42 of the Internal
Revenue Code.
(c) The low-income housing tax credit shall
be fifty per cent of the applicable percentage of the qualified basis of each
building located in Hawaii. The applicable percentage shall be calculated as
provided in section 42(b) of the Internal Revenue Code.
(d) For the purposes of this section, the
determination of:
(1) Qualified basis and qualified
low-income building shall be made under section 42(c);
(2) Eligible basis shall be made under
section 42(d);
(3) Qualified low-income housing project
shall be made under section 42(g);
(4) Recapture of credit shall be made under
section 42(j), except that the tax for the taxable year shall be increased
under section 42(j)(1) only with respect to credits that were used to reduce
state income taxes;
(5) Application of at-risk rules shall be
made under section 42(k);
of the Internal Revenue Code.
(e) As provided in section 42(e),
rehabilitation expenditures shall be treated as separate new building and their
treatment under this section shall be the same as in section 42(e). The
definitions and special rules relating to credit period in section 42(f) and
the definitions and special rules in section 42(i) shall be operative for the
purposes of this section.
(f) The state housing credit ceiling under
section 42(h) shall be zero for the calendar year immediately following the
expiration of the federal low-income housing tax credit program and for any
calendar year thereafter, except for the carryover of any credit ceiling amount
for certain projects in progress which, at the time of the federal expiration,
meet the requirements of section 42.
(g) The credit allowed under this section
shall be claimed against net income tax liability for the taxable year. For
the purpose of deducting this tax credit, net income tax liability means net
income tax liability reduced by all other credits allowed the taxpayer under
this chapter.
A tax credit under this section which
exceeds the taxpayer's income tax liability may be used as a credit against the
taxpayer's income tax liability in subsequent years until exhausted. All
claims for a tax credit under this section must be filed on or before the end
of the twelfth month following the close of the taxable year for which the
credit may be claimed. Failure to properly and timely claim the credit shall
constitute a waiver of the right to claim the credit. A taxpayer may claim a
credit under this section only if the building or project is a qualified
low-income housing building or a qualified low-income housing project under
section 42 of the Internal Revenue Code.
Section 469 (with respect to passive
activity losses and credits limited) of the Internal Revenue Code shall be
applied in claiming the credit under this section.
(h) The director of taxation may adopt any
rules under chapter 91 and forms necessary to carry out this section."]
SECTION 25. Section 235-110.9, Hawaii Revised Statutes, is repealed.
["§235-110.9 High technology
business investment tax credit. (a) There shall be allowed to each
taxpayer subject to the taxes imposed by this chapter a high technology
business investment tax credit that shall be deductible from the taxpayer's net
income tax liability, if any, imposed by this chapter for the taxable year in
which the investment was made and the following four years provided the credit
is properly claimed. The tax credit shall be as follows:
(1) In the year the investment was made,
thirty-five per cent;
(2) In the first year following the year in
which the investment was made, twenty-five per cent;
(3) In the second year following the
investment, twenty per cent;
(4) In the third year following the
investment, ten per cent; and
(5) In the fourth year following the
investment, ten per cent;
of the investment made by the taxpayer in each
qualified high technology business, up to a maximum allowed credit in the year
the investment was made, $700,000; in the first year following the year in
which the investment was made, $500,000; in the second year following the year
in which the investment was made, $400,000; in the third year following the
year in which the investment was made, $200,000; and in the fourth year
following the year in which the investment was made, $200,000.
(b) The credit allowed under this
section shall be claimed against the net income tax liability for the taxable
year. For the purpose of this section, "net income tax liability"
means net income tax liability reduced by all other credits allowed under this
chapter. By accepting an investment for which the credit allowed under this
section may be claimed, a qualified high technology business consents to the
public disclosure of the qualified high technology business' name and status as
a beneficiary of the credit under this section.
(c) If the tax credit under this section
exceeds the taxpayer's income tax liability for any of the five years that the
credit is taken, the excess of the tax credit over liability may be used as a
credit against the taxpayer's income tax liability in subsequent years until
exhausted. Every claim, including amended claims, for a tax credit under this
section shall be filed on or before the end of the twelfth month following the
close of the taxable year for which the credit may be claimed. Failure to
comply with the foregoing provision shall constitute a waiver of the right to
claim the credit.
(d) If at the close of any taxable year in
the five-year period in subsection (a):
(1) The business no longer qualifies as a
qualified high technology business;
(2) The business or an interest in the
business has been sold by the taxpayer investing in the qualified high
technology business; or
(3) The taxpayer has withdrawn the
taxpayer's investment wholly or partially from the qualified high technology
business;
the credit claimed under this section shall be
recaptured. The recapture shall be equal to ten per cent of the amount of the
total tax credit claimed under this section in the preceding two taxable
years. The amount of the credit recaptured shall apply only to the investment
in the particular qualified high technology business that meets the
requirements of paragraph (1), (2), or (3). The recapture provisions of this
subsection shall not apply to a tax credit claimed for a qualified high
technology business that does not fall within the provisions of paragraph (1),
(2), or (3). The amount of the recaptured tax credit determined under this
subsection shall be added to the taxpayer's tax liability for the taxable year
in which the recapture occurs under this subsection.
(e) Every taxpayer, before March 31 of each
year in which an investment in a qualified high technology business was made in
the previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Qualified investments, if any, expended
in the previous taxable year; and
(2) The amount of tax credits claimed
pursuant to this section, if any, in the previous taxable year.
(f) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified investment costs upon which the tax credit is
based;
(2) Verify the nature and amount of the
qualifying investments;
(3) Total all qualifying and cumulative
investments that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon each determination made under this
subsection, the department shall issue a certificate to the taxpayer verifying
information submitted to the department, including qualifying investment
amounts, the credit amount certified for each taxable year, and the cumulative
amount of the tax credit during the credit period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department.
The director of taxation may assess and
collect a fee to offset the costs of certifying tax credits claims under this
section. All fees collected under this section shall be deposited into the tax
administration special fund established under section 235-20.5.
(g) As used in this section:
"Investment tax credit allocation
ratio" means, with respect to a taxpayer that has made an investment in a
qualified high technology business, the ratio of:
(1) The amount of the credit under this
section that is, or is to be, received by or allocated to the taxpayer over the
life of the investment, as a result of the investment; to
(2) The amount of the investment in the
qualified high technology business.
"Qualified high technology
business" means a business, employing or owning capital or property, or
maintaining an office, in this State; provided that:
(1) More than fifty per cent of its total
business activities are qualified research; and provided further that the
business conducts more than seventy-five per cent of its qualified research in
this State; or
(2) More than seventy-five per cent of its
gross income is derived from qualified research; and provided further that this
income is received from:
(A) Products sold from, manufactured
in, or produced in this State; or
(B) Services performed in this
State.
"Qualified research" means the
same as defined in section 235-7.3.
(h) Common law principles, including the
doctrine of economic substance and business purpose, shall apply to any
investment. There exists a presumption that a transaction satisfies the
doctrine of economic substance and business purpose to the extent that the
special allocation of the high technology business tax credit has an investment
tax credit ratio of 1.5 or less of credit for every dollar invested.
Transactions for which an investment tax
credit allocation ratio greater than 1.5 but not more than 2.0 of credit for
every dollar invested and claimed may be reviewed by the department for
applicable doctrines of economic substance and business purpose.
Businesses claiming a tax credit for
transactions with investment tax credit allocation ratios greater than 2.0 of
credit for every dollar invested shall substantiate economic merit and business
purpose consistent with this section.
(i) This section shall not apply to taxable
years beginning after December 31, 2010."]
SECTION 26. Section 235-110.91, Hawaii Revised Statutes, is repealed.
["§235-110.91 Tax credit for
research activities. (a) Section 41 (with respect to the credit
for increasing research activities) and section 280C(c) (with respect to
certain expenses for which the credit for increasing research activities are
allowable) of the Internal Revenue Code shall be operative for the purposes of
this chapter as provided in this section; except that references to the base
amount shall not apply and credit for all qualified research expenses may be
taken without regard to the amount of expenses for previous years. If section
41 of the Internal Revenue Code is repealed or terminated prior to January 1,
2011, its provisions shall remain in effect for purposes of the income tax law
of the State as modified by this section, as provided for in subsection (j).
(b) All references to Internal Revenue Code
sections within sections 41 and 280C(c) of the Internal Revenue Code shall be
operative for purposes of this section.
(c) There shall be allowed to each
qualified high technology business subject to the tax imposed by this chapter
an income tax credit for qualified research activities equal to the credit for
research activities provided by section 41 of the Internal Revenue Code and as
modified by this section. The credit shall be deductible from the taxpayer's
net income tax liability, if any, imposed by this chapter for the taxable year
in which the credit is properly claimed.
(d) Every qualified high technology
business, before March 31 of each year in which qualified research and
development activity was conducted in the previous taxable year, shall submit a
written, certified statement to the director of taxation identifying:
(1) Qualified expenditures, if any,
expended in the previous taxable year; and
(2) The amount of tax credits claimed
pursuant to this section, if any, in the previous taxable year.
(e) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified research and development activity costs upon
which the tax credit is based;
(2) Verify the nature and amount of the
qualifying costs or expenditures;
(3) Total all qualifying and cumulative
costs or expenditures that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon each determination made under this
subsection, the department shall issue a certificate to the taxpayer verifying
information submitted to the department, including the qualifying costs or
expenditure amounts, the credit amount certified for each taxable year, and the
cumulative amount of the tax credit during the credit period. The taxpayer
shall file the certificate with the taxpayer's tax return with the department.
The director of taxation may assess and
collect a fee to offset the costs of certifying tax credit claims under this
section. All fees collected under this section shall be deposited into the tax
administration special fund established under section 235-20.5.
(f) As used in this section:
"Basic research" under section
41(e) of the Internal Revenue Code shall not include research conducted outside
of the State.
"Qualified high technology
business" means the same as in section 235-110.9.
"Qualified research" under section
41(d)(1) of the Internal Revenue Code shall not include research conducted
outside of the State.
(g) If the tax credit for qualified
research activities claimed by a taxpayer exceeds the amount of income tax
payment due from the taxpayer, the excess of the tax credit over payments due
shall be refunded to the taxpayer; provided that no refund on account of the
tax credit allowed by this section shall be made for amounts less than $1.
(h) All claims for a tax credit under this
section shall be filed on or before the end of the twelfth month following the
close of the taxable year for which the credit may be claimed. Failure to
properly claim the credit shall constitute a waiver of the right to claim the
credit.
(i) The director of taxation may adopt any
rules under chapter 91 and forms necessary to carry out this section.
(j) This section shall not apply to taxable
years beginning after December 31, 2010."]
SECTION 27. Section 235-110.93, Hawaii Revised Statutes, is repealed.
["[§235-110.93]
Important agricultural land qualified agricultural cost tax credit. (a)
There shall be allowed to each taxpayer an important agricultural land
qualified agricultural cost tax credit that may be claimed in taxable years
beginning after the taxable year during which the tax credit under section
235-110.46 is repealed, exhausted, or expired. The credit shall be deductible
from the taxpayer's net income tax liability, if any, imposed by this chapter
for the taxable year in which the credit is properly claimed. The tax credit
amount shall be determined as follows:
(1) In the first year in which the credit
is claimed, twenty-five per cent of the lesser of the following:
(A) The qualified agricultural costs
incurred by the taxpayer after July 1, 2008; or
(B) $625,000;
(2) In the second year in which the credit
is claimed, fifteen per cent of the lesser of the following:
(A) The qualified agricultural costs
incurred by the taxpayer after July 1, 2008; or
(B) $250,000; and
(3) In the third year in which the credit
is claimed, ten per cent of the lesser of the following:
(A) The qualified agricultural costs
incurred by the taxpayer after July 1, 2008; or
(B) $125,000.
The taxpayer may incur qualified agricultural
costs during a taxable year in anticipation of claiming the credit in future
taxable years during which the credit is available. The taxpayer may claim the
credit in any taxable year after the taxable year during which the taxpayer
incurred the qualified agricultural costs upon which the credit is claimed.
The taxpayer also may claim the credit in consecutive or inconsecutive taxable
years until exhausted.
(b) No other credit may be claimed under
this chapter for qualified agricultural costs for which a credit is claimed
under this section for the taxable year.
(c) The amount of the qualified agricultural
costs eligible to be claimed under this section shall be reduced by the amount
of funds received by the taxpayer during the taxable year from the irrigation
repair and maintenance special fund under section 167-24.
(d) The cost upon which the tax credit is
computed shall be determined at the entity level. In the case of a
partnership, S corporation, estate, trust, or other pass through entity,
distribution and share of the credit shall be determined pursuant to section
235-110.7(a).
If a deduction is taken under section 179
(with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
qualified agricultural cost for which a deduction was taken.
The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. No
deduction shall be allowed for that portion of otherwise deductible qualified
agricultural costs on which a credit is claimed under this section.
(e) If the credit under this section
exceeds the taxpayer's net income tax liability for the taxable year, the
excess of the credit over liability shall be refunded to the taxpayer; provided
that no refunds or payments on account of the credits allowed by this section
shall be made for amounts less than $1.
All claims for a tax credit under this
section, including amended claims, shall be filed on or before the end of the
twelfth month following the close of the taxable year for which the credit is
claimed. Failure to comply with the foregoing provision shall constitute a
waiver of the right to claim the credit.
(f) The director of taxation:
(1) Shall prepare any forms that may be
necessary to claim a credit under this section;
(2) May require the taxpayer to furnish
information to ascertain the validity of the claim for credit made under this
section; and
(3) May adopt rules pursuant to chapter 91
to effectuate this section.
(g) The department of agriculture shall:
(1) Maintain records of the total amount of
qualified agricultural costs for each taxpayer claiming a credit;
(2) Verify the amount of the qualified
agricultural costs claimed;
(3) Total all qualified agricultural costs
claimed; and
(4) Certify
the total amount of the tax credit for each taxable year.
Upon each determination, the department of
agriculture shall issue a certificate to the taxpayer verifying the qualifying
agricultural costs and the credit amount certified for each taxable year. For
a taxable year, the department of agriculture may certify a credit for a
taxpayer who could have claimed the credit in a previous taxable year, but
chose not to because the maximum annual credit amount under subsection (h) was
reached in that taxable year.
The taxpayer shall file the certificate with
the taxpayer's tax return with the department of taxation. Notwithstanding the
department of agriculture's certification authority under this section, the
director of taxation may audit and adjust certification to conform to the
facts.
Notwithstanding
any other law to the contrary, the information required by this subsection
shall be available for public inspection and dissemination under chapter 92F.
(h) If in
any taxable year the annual amount of certified credits reaches $7,500,000 in
the aggregate, the department of agriculture shall immediately discontinue
certifying credits and notify the department of taxation. In no instance shall
the department of agriculture certify a total amount of credits exceeding
$7,500,000 per taxable year. To comply with this restriction, the department
of agriculture shall certify credits on a first come, first served basis.
The
department of taxation shall not allow the aggregate amount of credits claimed
to exceed that amount per taxable year.
(i) The department of agriculture, in
consultation with the department of taxation, shall annually determine the
information necessary to provide a quantitative and qualitative assessment of
the outcomes of the tax credit.
Every taxpayer, no later than the last day
of the taxable year following the close of the taxpayer's taxable year in which
the credit is claimed, shall submit a certified written statement to the
department of agriculture. Failure to provide the information shall result in
ineligibility and a recapture of any credit already claimed for that taxable
year. The amount of the recaptured tax credit shall be added to the taxpayer's
tax liability for the taxable year in which the recapture occurs.
Notwithstanding any law to the contrary, a
statement submitted under this subsection shall be a public document.
(j) The department of agriculture, in
consultation with the department of taxation, shall annually submit a report
evaluating the effectiveness of the tax credit. The report shall include but
not be limited to findings and recommendations to improve the effectiveness of
the tax credit to further encourage the development of agricultural businesses.
(k) As used in this section:
"Agricultural business" means any
person with a commercial agricultural, silvicultural, or aquacultural facility
or operation, including:
(1) The care and production of livestock
and livestock products, poultry and poultry products, apiary products, and plant
and animal production for nonfood uses;
(2) The planting, cultivating, harvesting,
and processing of crops; and
(3) The farming or ranching of any plant or
animal species in a controlled salt, brackish, or freshwater environment;
provided that the principal place of the
agricultural business is maintained in the State and more than fifty per cent
of the land the agricultural business owns or leases, excluding land classified
as conservation land, is important agricultural land.
"Important agricultural lands"
means lands identified and designated as important agricultural lands pursuant
to part III of chapter 205.
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Qualified agricultural costs"
means expenditures for:
(1) The plans, design, engineering,
construction, renovation, repair, maintenance, and equipment for:
(A) Roads or utilities, primarily
for agricultural purposes, where the majority of the lands serviced by the
roads or utilities, excluding lands classified as conservation lands, are
important agricultural lands;
(B) Agricultural processing
facilities in the State, primarily for agricultural purposes, where the
majority of the crops or livestock processed, harvested, treated, washed,
handled, or packaged are from agricultural businesses;
(C) Water wells, reservoirs, dams,
water storage facilities, water pipelines, ditches, or irrigation systems in
the State, primarily for agricultural purposes, providing water for lands, the majority
of which, excluding lands classified as conservation lands, are important
agricultural lands; and
(D) Agricultural housing in the
State, exclusively for agricultural purposes; provided that:
(i) The housing units are occupied
solely by farmers or employees for agricultural businesses and their immediate
family members;
(ii) The housing units are owned by
the agricultural business;
(iii) The housing units are in the
general vicinity, as determined by the department of agriculture, of agricultural
lands owned or leased by the agricultural business; and
(iv) The housing units conform to any
other conditions that may be required by the department of agriculture;
(2) Feasibility studies, regulatory
processing, and legal and accounting services related to the items under
paragraph (1);
(3) Equipment, primarily for agricultural
purposes, used to cultivate, grow, harvest, or process agricultural products by
an agricultural business; and
(4) Regulatory processing, studies, and
legal and other consultant services related to obtaining or retaining
sufficient water for agricultural activities and retaining the right to farm on
lands identified as important agricultural lands.
(l) The department of agriculture shall
cease certifying credits pursuant to this section after the fourth taxable year
following the taxable year during which the credits are first claimed; provided
that a taxpayer with accumulated, but unclaimed, certified credits may continue
claiming the credits in subsequent taxable years until exhausted.
[(m)] The department of taxation, in
consultation with the department of agriculture, shall submit to the
legislature an annual report, no later than twenty days prior to the convening
of each regular session, beginning with the regular session of 2010, regarding
the quantitative and qualitative assessment of the impact of the important
agricultural land qualified agricultural cost tax credit."]
SECTION 28. Section 241-4.5, Hawaii Revised Statutes, is repealed.
["[§241-4.5] Capital goods
excise tax credit. The capital goods excise tax credit provided under
section 235-110.7 shall be operative for this chapter after December 31, 1987."]
SECTION 29. Section 241-4.6, Hawaii Revised Statutes, is repealed.
["§241-4.6 Renewable energy
technologies; income tax credit. The renewable energy technologies
income tax credit provided under section 235-12.5 shall be operative for this
chapter for taxable years beginning after December 31, 2002; provided that the
system was installed after June 30, 2003."]
SECTION 30. Section 241-4.7, Hawaii Revised Statutes, is repealed.
["[§241-4.7] Low-income
housing; income tax credit. The low- income housing tax credit provided
under section 235-110.8 shall be operative for this chapter."]
SECTION 31. Section 241-4.8, Hawaii Revised Statutes, is repealed.
["[§241-4.8] High technology
business investment tax credit. The high technology business investment
tax credit provided under section 235-110.9 shall be operative for this chapter
on July 1, 1999."]
SECTION 32. Section 431:7-208, Hawaii Revised Statutes, is repealed.
["[§431:7-208] Low-income
housing, insurance premium tax credit. The low-income housing tax credit
provided under section 235-110.8 shall be operative for this chapter and may be
claimed against the tax imposed under section 431:7-202."]
SECTION 33. Section 431:7-209, Hawaii Revised Statutes, is repealed.
["[§431:7-209] High
technology business investment tax credit. The high technology business
investment tax credit provided under section 235-110.9 shall be operative for
this chapter on July 1, 1999."]
SECTION 34. The repeal of a tax credit or deduction under this Act shall not affect the entitlement of a taxpayer to the unused amount of the credit or deduction that was accrued before the repeal.
SECTION 35. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 36. This Act shall:
(1) Take effect on January 1, 2010, and shall apply to taxable years beginning after December 31, 2009; and
(2) Be repealed on December 31, 2015; provided that any provision repealed by operation of law on or before December 31, 2015 shall not be deemed to be reenacted.
|
INTRODUCED BY: |
_____________________________ |
|
|
|
