Bill Text: HI HB400 | 2023 | Regular Session | Introduced
Bill Title: Relating To Taxation.
Spectrum: Partisan Bill (Democrat 16-0)
Status: (Engrossed - Dead) 2023-03-10 - Referred to LBT, WAM. [HB400 Detail]
Download: Hawaii-2023-HB400-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
400 |
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THIRTY-SECOND LEGISLATURE, 2023 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to taxation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that child care is a critical component to alleviating the worker shortage crisis. The lack of child care in the State, along with its cost skyrocketing in recent years, is keeping people out of the workforce. Today, many families with young children must choose between spending a significant portion of their income on child care or leaving the workforce altogether to become a full-time caregiver. This dilemma is compounded by the reality that a lower cost child care option may potentially provide lower quality care.
The legislature further finds that employers in the State provide resources to employees that help those employees live their day to day lives, including paid time off, health care, and other benefits. The legislature believes that by incentivizing employers to provide child care as an employee benefit would attract more people back into the workforce and reduce the financial burden on families who are struggling to make ends meet.
The purpose of this Act is to establish:
(1) An employer-provided or -sponsored child care income tax credit for employers that provide or sponsor child care as an employee benefit; and
(2) An employer child care property income tax credit for the purchase or acquisition of child care property by an employer for employer-provided child care.
SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§235-A Employer-provided or -sponsored child care
tax credit. (a)
Notwithstanding any law to the contrary, there shall be allowed to each
taxpayer subject to the taxes imposed by this chapter, an income tax credit as
provided in this section 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 credit is properly claimed. For
each taxpayer that employs at least one employee in the State and provides
employer-provided child care or employer-sponsored child care to those
employees, the amount of the credit shall be equal to seventy-five per cent of
the cost of operation to the employer less any amounts paid by the employees
during the taxable year.
(b)
In the case of a partnership, S corporation, estate, or trust, the tax
credit allowable is for the cost of operation 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.
The
sale, merger, acquisition, or bankruptcy of any taxpayer shall not create new
eligibility in any succeeding taxpayer.
(c) The amount of the credit applied under this
section against the tax imposed for a taxable year shall not exceed fifty per
cent of the tax liability otherwise due without regard to any other credits
allowed against the tax imposed. Any
unused credit resulting from the limitations of this section may be carried
forward, if necessary, for use in the five taxable years following the taxable
year in which the cost of operation was incurred.
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 the foregoing provision
shall constitute a waiver of the right to claim the credit.
(d) Employer-taxpayers shall maintain records
necessary for certifying the cost of operation to the department. These records shall include:
(1) The names of the employees who utilize the employer-provided child care or employer-sponsored child care;
(2) The names of the child care providers; and
(3) Any other information deemed necessary to ascertain
the validity of the claim for credit made under this section.
(e) The director:
(1) Shall prepare
forms as may be necessary to claim a credit under this section;
(2) May audit and
adjust the tax credit amount to conform to the information filed by the
taxpayer; and
(3) May adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.
(f) As used in this section:
"Child
care property" has the same meaning as in section 235-B.
"Cost of operation" means reasonable direct operational costs incurred by the employer-taxpayer as a result of providing employer-provided child care or employer-sponsored child care. "Cost of operation" does not include the cost of any property that is child care property.
"Employer-provided child care" means child care offered on the premises of the employer.
"Employer-sponsored child care" means child care provided through a contractual arrangement with a child care facility that is paid for by the employer.
"Premises
of the employer" means any location within the State and located on the
workplace premises of the employer providing the child care or one of the
employers providing the child care in the event that the child care property is
owned jointly or severally by the taxpayer and one or more other employers;
provided that if such workplace premises are impracticable or otherwise
unsuitable for the on-site location of such child care facility, as determined
by the director, such facility may be located within a reasonable distance of
the premises of the employer.
§235-B Employer child care property tax credit. (a) Notwithstanding any law to the contrary,
there shall be allowed to each taxpayer subject to the taxes imposed by this
chapter, an income tax credit as provided in this section 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 credit is properly claimed. The credit may be claimed for the taxable
year in which the taxpayer first places in service the child care property and
for each of the nine taxable years following that taxable year. For each taxpayer that employs at least one
employee in the State, the aggregate amount of the credit shall equal one
hundred per cent of the cost of child care property purchased or acquired by
the taxpayer and first placed in service during the taxable year and the credit
may be claimed at a rate of ten per cent per year for ten years.
(b)
In the case of a partnership, S corporation, estate, or trust, the tax
credit allowable is for the cost of operation 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.
The sale, merger, acquisition, or bankruptcy of any taxpayer shall not create new eligibility in any succeeding taxpayer.
(c) The amount of the credit applied under this section against the tax imposed for a taxable year shall not exceed fifty per cent of the tax liability otherwise due without regard to any other credits allowed against the tax imposed. Any unused credit resulting from the limitations of this section may be carried forward, if necessary, for use in the three taxable years following the taxable year in which the credit is claimed.
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 the foregoing provision
shall constitute a waiver of the right to claim the credit.
(1) Shall prepare forms as may be
necessary to claim a credit under this section;
(2) May also require the taxpayer to
furnish information to ascertain the validity of the claim for credit made
under this section;
(3) May audit and adjust the tax credit
amount to conform to the information filed by the taxpayer; and
(4) May adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.
(e) As used in this section:
"Child
care property" means all real and tangible personal property purchased or
acquired for use exclusively in the construction, expansion, improvement, or
operation of a facility for employer-provided child care.
"Employer-provided child care" has the same meaning as in section 235-A."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2022.
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INTRODUCED BY: |
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Report Title:
Taxation; Income Tax Credit; Employer-Provided Child Care; Employer-Sponsored Child Care; Child Care Property; Property
Description:
Establishes an employer-provided or -sponsored child care income tax credit for employers that make available child care services to their employees. Establishes an employer child care property income tax credit for the cost of child care property purchased or acquired by an employer and put into service for employer-provided child care. Applies to taxable years after 12/31/2022.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
