Bill Text: HI HB2203 | 2012 | Regular Session | Introduced

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Bill Title: Job Creation Tax Credit

Spectrum: Slight Partisan Bill (Republican 6-2)

Status: (Introduced - Dead) 2012-01-23 - (H) Referred to ERB, LAB, FIN, referral sheet 6 [HB2203 Detail]

Download: Hawaii-2012-HB2203-Introduced.html

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HOUSE OF REPRESENTATIVES	H.B. NO.	2203
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO JOB CREATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  Hawaii has felt the adverse impacts of national and global economies that have seen rising unemployment, business closures, personal and business bankruptcies, and contraction of economic activity worldwide.  Hawaii's unemployment rate has risen from 3.0 per cent in January 2008 to 6.5 per cent in November 2011.  While the November 2011 unemployment rates for the islands of Oahu and Lana'i were below the national average, the rates for the remaining islands ranged between 7.4 per cent and 15.5 per cent.  It is unacceptable to have this many people without work.

     The State recognizes that encouraging job creation is one of the most significant steps that can be taken to help the State regain its economic footing and help families regain their ability to support themselves.  The State also recognizes that our economy is built upon thousands of small businesses that are the backbone of our economic well-being and provide the vast majority of employment in our state.

     However, these businesses are facing uncertainty and thus are hesitant to create additional employment until such time as the current economic trends improve.  Job creation incentives have been successfully used in other states including Ohio, Alabama, Kentucky, Tennessee, Indiana, and Kansas.

     The purpose of this Act is to help encourage businesses to employ Hawaii residents and spur economic growth by providing a tax credit for creating and maintaining new full-time positions in the workforce.

     SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-    Job creation tax credit.  (a)  There shall be allowed to each taxpayer that qualifies as a business firm subject to taxes imposed by this chapter a job creation tax credit that shall be deductible from the business firm's net income tax liability, if any, for the taxable year in which the credit is properly claimed.

     (b)  The amount of the job creation tax credit a business may claim for a taxable year shall be equal to the amount of unemployment insurance taxes paid to the State during that taxable year on each eligible employee hired after April 30, 2012, and before May 1, 2013, into a new permanent full-time employment position created above the base employment level.

     (c)  A business firm's eligibility to claim the credit shall be suspended until after the eligible employee has been continuously employed by the firm for at least nine months, including the eligible employee's date of hire, unless that employee dies or is terminated for cause.

     (d) If the eligible employee is employed for the time period required in the foregoing provision, but the suspension of eligibility prevents the firm from claiming the credit earned in a taxable year, the credit earned during that taxable year may be used as a credit against the business firm's income tax liability in subsequent years until exhausted.

     (e)  Upon hiring the eligible employee, the business firm must continue to employ at least the number of full-time employees on an annualized basis that the business firm had as a result of hiring the additional full-time employee.  If the firm fails to comply with the foregoing provision during the suspension period described in subsection (c), the firm will be ineligible to claim any amount of tax credit.

     (f)  If the business firm complies with the requirements of subsections (c) and (d), the firm may continue to earn additional tax credits on unemployment insurance taxes paid to the State on the eligible employee, up to the end of that employee's second year of employment with the firm, so long as the eligible employee has been continuously employed by the business firm since the date of hire, and the business firm continues to employ at least same number of full-time employees on an annualized basis.

     (g)  The job creation tax credit shall be taken against the net income tax liability of the business firm after all other tax credits have been taken.  Any tax credit that exceeds the business firm's income tax liability may be used as a credit against the business firm's income tax liability in subsequent years until exhausted.

     (h)  Claims for tax credits under this section, including amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the tax credit may be claimed.  Failure to file within the twelve-month period shall constitute a waiver of the right to claim the credit.

     (i)  The director of taxation may prepare any forms and procedures that may be necessary to claim a credit under this section.  The director may also require the business firm to furnish information to ascertain the validity of the claims for credit made under this section and may adopt, pursuant to chapter 91, rules necessary to effectuate the purposes of this section.

     (j)  A business firm applying for a tax credit under this section shall be ineligible to claim a tax credit or use an exemption under sections 209E-10, 209E-11, or 235-55.91.

     (k)  Any business firm receiving credit under this section must maintain substantial operations in the State for at least two years beyond the term of its last receipt of income tax credits.  Failure to comply with the foregoing provision shall result in recapture of fifty per cent of the credit claim under this section in all prior taxable years.  In determining whether a business firm is maintaining substantial business operation in the State, the deparment of taxation may consider:

     (1)  The number and wages of employees in the firm;

     (2)  The revenues of the firm; and

     (3)  Other factors as determined by rule.

     (l)  Notwithstanding any other law to the contrary limiting the disclosure of tax returns or return information, the department of business, economic development, and tourism, and the department of labor and industrial relations shall be entitled to inspect and receive tax returns and return information in the administration of this credit.

     (m)  As used in this section:

     "Base employment level" means the number of persons employed by an eligible business on the effective date of enactment of this Act as evidenced by payroll records submitted as part of the firm's monthly remittance of unemployment tax payments to the State.

     "Business firm" means any corporation, partnership, subchapter S corporation, limited liability company, or sole proprietorship registered to do business in the State with the department of commerce and consumer affairs and the department of taxation, subject to the taxes imposed under this chapter.

     "Eligible employee" means an individual who resides in the

State and who is receiving unemployment insurance benefits, or is eligible to receive such benefits.

     "New permanent full-time position" means a position newly created in the State, and, prior to the ninetieth day preceding the business firm's filling of that position, did not exist in the State as a job position of the business firm or of another related business entity; and the job position was filled during the first year of credit eligibility and continued to exist at the end of that year.

     "Permanent full-time employment" means a job of indefinite duration at a business firm located within the State and requiring either:

     (1)  A minimum of thirty-five hours of an employee’s time a week for the entire taxable year of the business firm where the taxable year consists of not less than forty-eight weeks or a portion thereof when the employee was initially hired by the business firm; or

     (2)  A minimum of one thousand six hundred eighty hours a year of employment, or the pro-rata share from the initial hire date within the year, when two thousand eighty hours is considered a full work year."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect July 1, 2012; provided that this Act shall be repealed on December 31, 2015; provided further that even though this Act is repealed all unexhausted tax credits allowed under this Act shall be valid until exhausted; and provided further that applications for tax credits and tax credits claimed under this Act for taxable years ending before January 1, 2016 shall be valid even though claimed after December 31, 2015.

 

INTRODUCED BY:	_____________________________
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Report Title:

Job Creation Tax Credit

 

Description:

Provides for a job creation income tax credit for each new full time employee hired after April 30, 2012 and before May 1, 2013.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.