Bill Text: HI SB2637 | 2010 | Regular Session | Introduced

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Bill Title: Construction Task Force; Tax Credit; Hotel Construction; Remodeling; Resort Area

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2010-01-29 - (S) Re-Referred to TSM/EDT, WAM. [SB2637 Detail]

Download: Hawaii-2010-SB2637-Introduced.html

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THE SENATE	S.B. NO.	2637
TWENTY-FIFTH LEGISLATURE, 2010
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 effects of the September 11, 2001, terrorist attacks upon the United States had a devastating effect on Hawaii's economy.  In October of 2001, the legislature met in special session to approve emergency measures in response to the attacks.  One response was the enactment of Act 10, Third Special Session Laws of Hawaii 2001, which made the then existing hotel construction and remodeling tax credit more generous.  Act 10 altered the tax credit from a four per cent refundable credit to a ten per cent nonrefundable credit for costs incurred prior to July 1, 2003, to assist the tourism industry in its efforts to attract more visitors to Hawaii.

     Act 10 provided the stimulus needed to boost Hawaii's workforce and economy during difficult economic times.

     Hawaii is again in an economic recession.  Stimulus and other initiatives are needed to counteract the negative impact that the worlds' economy has had on our State.  Like the experience with Act 10, the legislature finds that a generous tax credit can provide an excellent means to boost Hawaii's tourism and construction industries.

     Senate Concurrent Resolution No. 132, S.D. 1 (2009), established a task force to determine the economic contributions of the construction industry in Hawaii.  As directed in the concurrent resolution, the task force has developed a series of proposals for state actions to preserve and create new jobs in the local construction industry.  The intent of this Act is to implement one of the task force's proposals.

     The purpose of this Act is to create a hotel construction and remodeling tax credit to boost Hawaii's construction and visitor industries.  The legislature finds that implementation of this legislation is necessary and warranted.

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

     "§235‑    Hotel construction and remodeling tax credit.  (a)  There shall be allowed to each taxpayer, subject to the taxes imposed by this chapter and chapter 237D, 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 tax credit shall be ten per cent of the construction or renovation costs incurred during the taxable year for each qualified hotel facility located in Hawaii, and shall not include the construction or renovation costs for which another credit was claimed under this chapter for the taxable year; provided that the construction or renovation costs are incurred before December 31, 2015.

     In the case of a partnership, S corporation, estate, trust, association of a qualified hotel facility, time share owners association, or any developer of a time share project, the tax credit allowable is for construction or 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 by rules.

     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 construction or renovation cost for which the deduction is taken.

     (b)  The credit allowed under this section shall be claimed against the net income tax liability, for the taxable year.

     (c)  If the tax 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 refund on account of the tax credit 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 may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

     (d)  The director of taxation shall prepare any forms that 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.

     (e)  The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2009, and shall not be available for taxable years beginning after December 31, 2015.

     (f)  To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations, including the Davis‑Bacon Act and chapter 104.

     (g)  As used in this section:

     "Construction or renovation cost" means any costs incurred after December 31, 2009, for plans, design, construction, and equipment related to new construction, alterations, or modifications to a qualified hotel facility.

     "Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

     "Qualified hotel facility" means:

     (1)  A hotel/hotel-condo as defined in section 486K-1;

     (2)  A time share facility or project; or

     (3)  Commercial buildings and facilities located within a qualified resort area.

     "Qualified resort area" means an area designated for hotel use, resort use, or transient vacation rentals, pursuant to county authority under section 46-4, or where the county, by its legislative process, designates hotel, transient vacation rental, or resort use.

     "Taxpayer" means a taxpayer under this chapter, and includes:

     (1)  An association of apartment owners; or

     (2)  A time share owners association.

     (h)  No taxpayer that claims a credit under this section shall claim a credit under chapter 235D."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2009.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Construction Task Force; Tax Credit; Hotel Construction; Remodeling; Resort Area

 

Description:

Creates a 10% refundable tax credit for construction or renovation costs incurred on a qualified hotel facility before December 31, 2015.

 

 

 

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