Report Title:

Income Tax Credit; School Tuition Orgs.

 

Description:

Allows income tax credits for contributions to a school tuition organization.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

802

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to income 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- Credit for contributions to a school tuition organization. (a) Each resident individual taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state individual income tax purposes, may claim a credit for contributions to a school tuition organization against the resident taxpayer's individual income tax liability for the taxable year for which the individual income tax return is being filed; provided that:

(1) The credit shall be for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization;

(2) The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the Internal Revenue Code and taken for state tax purposes; and

(3) The tax credit is allowed if the taxpayer designates the taxpayer's donation to the school tuition organization for the direct benefit of any resident child attending a qualified school, including any dependent of the taxpayer.

(b) The amount of the credit shall not exceed $         in any one taxable year. This limitation also applies to taxpayers who elect to file a joint return for the taxable year. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim not more than one-half of the tax credit that would have been allowed for a joint return.

(c) The tax credit claimed by a resident taxpayer pursuant to this section shall be applied against the resident taxpayer's individual income tax liability, if any, for the tax year in which the credit is properly claimed. If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of credit over payment due shall be refunded to the resident taxpayer, or, at the election of the taxpayer, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability; provided that the tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1. If a deduction is taken under section 170 (with respect to charitable contributions and gifts) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the contribution for which the deduction was taken.

(d) For the purposes of this section:

"Qualified school" means a nongovernmental primary or secondary school in this State that does not discriminate on the basis of race, color, disability, familial status, or national origin and that satisfies any requirements prescribed by law for private schools in this State that existed on January 1, 2001.

"School tuition organization" means a charitable organization in this State that is exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code and that allocates at least ninety per cent of its annual revenue for educational scholarships or tuition grants to children to allow them to attend any qualified school of their parents' choice. In addition, to qualify as a school tuition organization, the charitable organization shall provide educational scholarships or tuition grants to students without limiting availability to only students of one school.

(e) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information in order that the director may ascertain the validity of the claim for credit made under this section. The director may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(f) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2000.

INTRODUCED BY:

_____________________________