Report Title:

High Technology Tax Credits; Cap

 

Description:

Caps the total amount of tax credits for technology infrastructure renovations, high technology business investments, and research activities at $50 million per year in the aggregate.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

188

TWENTY-FIFTH LEGISLATURE, 2009

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO TAX CREDITS.

 

 

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

 


     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-     Aggregate cap on tax credits for technology infrastructure renovations, high technology business investments, and research activities.  (a)  There shall be an aggregate cap on the amount of tax credits allowed for technology infrastructure renovations, high technology business investments, and research activities of $50,000,000 per year.  If in any taxable year the total annual amount of certified credits for technology infrastructure renovations, high technology business investments, and research activities reaches $50,000,000 in the aggregate, the department shall immediately discontinue certifying credits.  In no instance shall the department certify a total amount of credits exceeding $50,000,000 in the aggregate per taxable year.  To comply with this restriction, the department 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 $50,000,000  per taxable year.

(b)  The department may adopt rules pursuant to chapter 91 and forms necessary to carry out this section."

     SECTION 2.  Section 235-110.51, Hawaii Revised Statutes, is amended to read as follows:

     "§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)  Every taxpayer, before March 31 of each year following the taxable year in which technology infrastructure renovations were made, shall submit a written, certified statement to the director of taxation identifying:

     (1)  Technology infrastructure renovations made, if any, in the previous taxable year; and

     (2)  The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year.

     (j)  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 technology infrastructure renovation costs upon which the tax credit is based;

     (2)  Verify the nature and cost of the qualifying renovations;

     (3)  Total the cost of all qualifying and cumulative renovations 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 renovation costs, 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.

     Pursuant to section 235-  , if the total of the credits specified in that section that are claimed by all taxpayers exceeds $50,000,000 for the year, the department shall immediately discontinue certifying credits as required by section 235-   . 

     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.

     [(i)](k)  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)] (l)  No taxpayer that claims a credit under this section shall claim any other credit under this chapter."

     SECTION 3.  Section 235-110.9, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

     "(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.

     Pursuant to section 235-   , if the total of the credits specified in that section that are claimed by all taxpayers exceeds $50,000,000 for the year, the department shall immediately discontinue certifying credits as required by section 235-     . 

     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."

     SECTION 4.  Section 235-110.91, Hawaii Revised Statutes, is amended by amending subsections (e) and (f) to read as follows:

     "(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.

     Pursuant to section 235-  , if the aggregate total of the credits specified in that section that are claimed by all taxpayers exceeds $50,000,000 for the year, the department shall immediately discontinue certifying credits as required by section 235-   . 

     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.] state.

     "Qualified high technology business" means the same as in section 235-110.9.

     "Qualified research" under [section] Section 41(d)(1) of the Internal Revenue Code shall not include research conducted outside of the [State.] state."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.


     SECTION 6.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

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