Bill Text: HI SB301 | 2014 | Regular Session | Amended

Hawaii Senate Bill 301 (Prior Session Legislation)

Bill Title: Earned Income Tax Credit; Asset Building

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Engrossed - Dead) 2013-12-18 - Carried over to 2014 Regular Session. [SB301 Detail]

Download: Hawaii-2014-SB301-Amended.html

THE SENATE	S.B. NO.	301
TWENTY-SEVENTH LEGISLATURE, 2013		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

RELATING TO ASSET BUILDING.

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

SECTION 1. The legislature finds that one-third of Hawaii's middle class families are asset poor, lacking the resources to subsist at the poverty level for three months in the absence of a source of income. The legislature further finds that assets are necessary to provide financial security during economically difficult times, create economic opportunities, and improve future generations' quality of life.

Senate Concurrent Resolution No. 92, S.D. 1 (2008), and Senate Resolution No. 52, S.D. 1 (2008), established the Hawaii state asset building and financial education task force, charged with developing policy recommendations to implement various asset building strategies in the State. In 2010, the task force submitted its recommendations to the legislature. The recommendations included implementing tax policies that make work pay, improving financial education, helping people start businesses, helping people become homeowners, and removing barriers to asset building.

The legislature further finds that financial education and tax workshops are important to ensure that those most in need will have the necessary skills to take advantage of tax policies and begin building assets. The tools and strategies from financial education and tax workshops will empower families by helping them to control their financial situation and increase their overall self-sufficiency and resiliency.

The purpose of this Act is to implement recommendations submitted by the Hawaii state asset building and financial education task force by enacting an earned income tax credit.

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

"§235- Earned income tax credit. (a) Each resident individual taxpayer who:

(1) Files an individual income tax return for a taxable year; and

(2) Is not claimed or is not eligible to be claimed as a dependent by another taxpayer for income tax purposes,

may claim an earned income tax credit. The tax credit, for the appropriate taxable year, shall be equal to per cent of the federal earned income tax credit allowed under section 32 of the Internal Revenue Code, as amended, and reported as such on the resident individual's federal income tax return. If the tax credits claimed by a resident taxpayer exceed the amount of income tax payment due from the resident taxpayer, it may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(b) In the case of a part-year resident, the tax credit shall equal the amount of the tax credit calculated in subsection (a) multiplied by the ratio of adjusted gross income attributed to this State to the entire adjusted gross income computed without regard to source in the State pursuant to section 235-5.

(c) To claim the tax credit allowed under this section, a resident individual taxpayer shall use the same filing status on the taxpayer's Hawaii income tax return as used on the taxpayer's federal income tax return for the taxable year.

(d) 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 tax credit may be claimed. Failure to comply with this subsection shall constitute a waiver of the right to claim the tax credit.

(e) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:

(1) The period of ten taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to fraud; and

(2) The period of two taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to reckless or intentional disregard of rules and regulations, but not due to fraud.

(f) Any person who is a tax return preparer, as defined under section 231-36.5(h), shall be subject to regulations in section 231-36.5. Any tax return preparer who fails to comply with due diligence requirements under the regulations with respect to determining eligibility for, or the amount of, the credit allowable by section 32 of the Internal Revenue Code shall pay a penalty of $100 for each failure.

(g) The director of taxation:

(1) Shall prepare any forms necessary to claim a tax credit under this section;

(2) May require proof of the claim for the tax credit;

(3) Shall alert eligible taxpayers of the tax credit using appropriate and available means;

(4) Shall prepare an annual report to the legislature, the governor, and the public containing the:

(A) Number of credits granted for the prior calendar year;

(B) Total amount of the credits granted; and

(5) May adopt rules pursuant to chapter 91 to effectuate this section."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2014.

Report Title:

Earned Income Tax Credit; Asset Building

Description:

Establishes a state earned income tax credit. Effective July 1, 2050. (SB301 HD1)

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