Report Title:

Income Tax Credit; Automatic Fire Sprinkler System

Description:

Provides an income tax credit for qualifying costs of automatic fire sprinkler systems installed and placed into service after June 30, 2006. (HB1448 HD2)

HOUSE OF REPRESENTATIVES

H.B. NO.

1448

TWENTY-THIRD LEGISLATURE, 2005

H.D. 2

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to income tax credit.

 

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

SECTION 1. The purpose of this Act is to establish a capped income tax credit for qualifying costs of automatic fire sprinkler systems installed and placed into service after June 30, 2006.

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

"§235-   Automatic fire sprinkler system; income tax credit. (a) Each individual or corporate resident taxpayer who files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section which shall be deductible from the taxpayer's Hawaii state individual or corporate income tax liability, if any, for the taxable year in which the credit is properly claimed. The tax credit may be claimed for each automatic fire sprinkler system that is installed and placed into service by a taxpayer after June 30, 2006.

(b) The tax credit shall be equal to per cent of the qualifying costs of the automatic fire sprinkler system; provided that:

(1) The tax credit shall not exceed $1,000 in each taxable year for each individual automatic fire sprinkler system;

(2) The credit may be claimed for each taxable year up to five consecutive taxable years; provided that the taxpayer shall not be allowed to claim the credit after the fifth taxable year; and

(3) The excess of credits over a taxpayer's individual or corporate income tax liability for any taxable year shall not be refunded to the taxpayer.

(c) For the purposes of this section:

"Automatic fire sprinkler system" means an integrated system of underground and overhead piping designed in accordance with fire protection engineering standards. The portion of the sprinkler system above ground is a network of specially sized or hydraulically designed piping installed in a building, a structure, or area, generally overhead and to which sprinklers are connected in a systematic pattern. The valve controlling each system riser is located in the system riser or its supply piping. Each sprinkler system riser includes a device for activating an alarm when the system is in operation. The device is normally activated by heat from a fire and discharges water over the fire area.

"Qualifying costs" means costs incurred in purchasing or otherwise acquiring an automatic fire sprinkler system, including accessories and installation, for use:

(1) In any apartment or condominium built before 1975 or in any other multi-residential dwelling; and

(2) In single-family residential dwellings.

(d) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for actual cost 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 rule.

(e) 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 credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the rights to claim the credit.

(f) The director of taxation shall:

(1) Prepare any forms that may be necessary to claim a tax

credit under this section;

(2) Require the taxpayer to furnish reasonable information

to ascertain the validity of the claim for credit made

under this section; and

(3) Adopt rules necessary to effectuate the purposes of

this section pursuant to chapter 91."

SECTION 3. The department of taxation shall determine the estimated amount of tax credits that may be claimed and the estimated amount of state tax revenue that may be lost as a result of the tax credit and shall report its findings to the legislature no later than twenty days prior to the convening of the regular session of 2006.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2020.