REPORT TITLE:
Improvement tax credit


DESCRIPTION:
Specifies the amount of tax credits that are allowed for
qualified improvement costs for property designated primarily for
resort or hotel use by the counties, or property in which the
primary purpose is for hotel or resort use or commercial or
recreational use to support or service a hotel or resort use.
Repeals the transient accommodations tax credit for qualified
improvement costs.  Requires the director of taxation to develop
procedures for the distribution and share of the tax credits.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2018 
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
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:

 1      SECTION 1.  Section 235D-1, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "[[]235D-1[]]  Definitions.  Whenever used in this chapter,
 
 4 unless the context otherwise requires:
 
 5      "Net income tax liability" means income tax liability
 
 6 reduced by all other allowed credits, as determined under chapter
 
 7 235.
 
 8      ["Qualified general facility" means any building or
 
 9 improvement that is not a qualified resort facility.]
 
10      "Qualified improvement costs" means any capitalized costs
 
11 for construction and equipment of a permanent nature [related to
 
12 a qualified resort facility or a qualified general facility,
 
13 including infrastructure costs,]:
 
14      (1)  On property designated primarily for resort or hotel
 
15           use by the applicable county zoning ordinances or
 
16           general plan; or
 
17      (2)  On property not so designated, but the primary purpose
 
18           of which is for:
 
19           (A)  Hotel or resort use; or
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           (B)  Commercial or recreational use to support or
 
 2                service a hotel or resort use, such as a golf
 
 3                course, golf course clubhouse, or retail center;
 
 4 but shall not include the costs for which another tax credit was
 
 5 claimed for the taxable year.
 
 6      ["Qualified resort facility" means any building or
 
 7 improvement located or to be located:
 
 8      (1)  On property designated primarily for resort or hotel
 
 9           use by the applicable county zoning ordinances or
 
10           general plan; or
 
11      (2)  On property not so designated, but the primary purpose
 
12           of which is for commercial or recreational use to
 
13           support or service a hotel or resort use, such as a
 
14           golf course, golf course clubhouse, or retail center.]"
 
15      SECTION 2.  Section 235D-2, Hawaii Revised Statutes, is
 
16 amended as follows:
 
17      1.  By amending subsections (a), (b), (c), and (d) to read:
 
18      "(a)  There shall be allowed to each taxpayer subject to the
 
19 taxes imposed by chapters 235, 237, [237D,] and 239, a qualified
 
20 improvement tax credit, which shall be available to reduce the
 
21 taxpayer's net income tax liability, general excise tax,
 
22 [transient accommodations tax,] or public service company tax
 
23 imposed by these chapters.
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (b)  [The total amount of the qualified improvement tax
 
 2 credit shall be determined by applying the applicable credit
 
 3 percentage to the qualified improvement costs paid by the
 
 4 taxpayer in the taxable year.]  For qualified improvement costs
 
 5 [to a qualified resort facility totalling $1,000,000 or more over
 
 6 a three-year period, the applicable credit percentage shall be
 
 7           per cent.  For qualified improvement costs to a
 
 8 qualified general facility totalling $1,000,000 or more over a
 
 9 three-year period, the applicable credit percentage shall be
 
10           per cent.] totalling over a three-year period:
 
11      (1)  $1,000,000 and over, but not exceeding $5,000,000, the
 
12           applicable credit percentage shall be ten per cent;
 
13      (2)  $5,000,000 and over, but not exceeding $10,000,000, the
 
14           applicable credit percentage shall be fifteen per cent;
 
15           and
 
16      (3)  $10,000,000 and over, the applicable credit percentage
 
17           shall be twenty per cent.
 
18      (c)  [The] Each tax credit allowed under this chapter may be
 
19 taken over a period not to exceed ten consecutive taxable years.
 
20 The taxpayer shall elect the period and annual allocation of
 
21 [the] each tax credit in the initial year for which the credit is
 
22 claimed.
 

 
 
 
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 1      (d)  In the case of a partnership, S corporation, estate, or
 
 2 trust, the allowable tax credit is for qualified improvement
 
 3 costs incurred by the entity for the taxable year.  The costs
 
 4 upon which the tax credit is computed shall be determined at the
 
 5 entity level.  Distribution and share of the tax credit shall be
 
 6 determined by [rules adopted pursuant to section 235D-4.]
 
 7 procedures developed by the director of taxation."
 
 8      2. By amending subsection (g) to read:
 
 9      "(g)  [The] Each tax credit allowed under this chapter shall
 
10 be claimed against any or all net income tax liability, general
 
11 excise tax, [transient accommodations tax,] or public service
 
12 company tax for the taxable [years over] year in which the credit
 
13 is claimed."
 
14      SECTION 3.  Section 235D-3, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "[[]235D-3[]]  No refund; failure to file.  If the amount
 
17 of the tax credit claimed [in any year] exceeds the total of the
 
18 taxpayer's net income tax liability, general excise tax,
 
19 [transient accommodations tax,] or public service company tax
 
20 payable for [that] the taxable year, the excess of credit over
 
21 liability shall not be refunded to the taxpayer.  All claims for
 
22 a tax credit under this chapter shall be filed on or before the
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 end of the twelfth month following the close of the [initial]
 
 2 taxable year for which the credit [may be] is claimed.  Failure
 
 3 to [comply with] meet the filing requirements of this section
 
 4 shall constitute a waiver of the right to claim the credit."
 
 5      SECTION 4.  Section 235D-4, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "[[]235D-4[]]  Forms; rules.  The director of taxation
 
 8 shall prepare forms and procedures as may be necessary to claim a
 
 9 tax credit under this chapter.  The director of taxation may also
 
10 require the taxpayer to furnish information to ascertain the
 
11 validity of a claim for a tax credit made under this chapter [and
 
12 may adopt rules necessary to effectuate the purposes of this
 
13 chapter pursuant to chapter 91]."
 
14      SECTION 5.  Statutory material to be repealed is bracketed.
 
15 New statutory material is underscored.
 
16      SECTION 6.  This Act shall take effect upon its approval. 
 
17 
 
18                       INTRODUCED BY:  ___________________________