Report Title:

High Technology Tax Credits; Extension; Recapture; Workforce

 

Description:

Extends the high technology business investment, research, and technology infrastructure renovation tax credits to 12/31/2015.  Caps aggregate investment credits for a year to $      .  Caps aggregate credits in a year for investments in a single qualified business to $10,000,000.  Establishes review board to decide appeals of Department of Taxation denials of certification of credits claimed for investments in wholly-owned subsidiaries.  (HB1451 HD1)

 

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1451

TWENTY-FIFTH LEGISLATURE, 2009

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO TAXATION.

 

 

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

 


     SECTION 1.  Section 235-110.51, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:

     "(h)  The tax credit allowed under this section shall not be available for taxable years beginning after December 31, [2010.] 2015."

     SECTION 2.  Section 235-110.9, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a high technology business investment tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the investment was made and the following four years provided the credit is properly claimed.  The tax credit shall be as follows:

     (1)  In the year the investment was made, thirty-five per cent;

     (2)  In the first year following the year in which the investment was made, twenty-five per cent;

     (3)  In the second year following the investment, twenty per cent;

     (4)  In the third year following the investment, ten per cent; and

     (5)  In the fourth year following the investment, ten per cent;

of the investment made by the taxpayer in each qualified high technology business, up to a maximum allowed credit in the year the investment was made, $700,000; in the first year following the year in which the investment was made, $500,000; in the second year following the year in which the investment was made, $400,000; in the third year following the year in which the investment was made, $200,000; and in the fourth year following the year in which the investment was made, $200,000.  The aggregate of the credits claimed by taxpayers for investments in any single qualified high technology business in a taxable year shall not exceed $10,000,000.  The aggregate of the credits claimed by all taxpayers for investments in qualified high technology business in a taxable year shall not exceed

$          ."

     2.  By amending subsection (i) to read:

     "(i)  This section shall not apply to taxable years beginning after December 31, [2010.] 2015."

     SECTION 3.  Section 235-110.91, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  Section 41 (with respect to the credit for increasing research activities) and [section] Section 280C(c) (with respect to certain expenses for which the credit for increasing research activities are allowable) of the Internal Revenue Code shall be operative for the purposes of this chapter as provided in this section; except that references to the base amount shall not apply and credit for all qualified research expenses may be taken without regard to the amount of expenses for previous years.  If [section] Section 41 of the Internal Revenue Code is repealed or terminated prior to January 1, [2011,] 2015, its provisions shall remain in effect for purposes of the income tax law of the State as modified by this section, as provided for in subsection (j)."

     2.  By amending subsection (d) to read as follows:

     "(d)  Every [qualified high technology business] taxpayer, before March 31 of each year in which an investment in a qualified [research and development activity was conducted] high technology business was made in the previous taxable year, shall submit a written, certified statement to the director of taxation identifying:

     (1)  Qualified investments, if any, expended in the previous taxable year; [and]

(2)  Whether any qualified investment expended in the previous taxable year was made in a qualified high technology business that is a wholly-owned subsidiary; and

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

     3.  By amending subsection (j) to read:

     "(j)  This section shall not apply to taxable years beginning after December 31, [2010.] 2015."

     SECTION 4.  Act 206, Session Laws of Hawaii 2007, is amended by amending section 8 to read as follows:

     "SECTION 8.  This Act shall take effect on July 1, 2007, and shall apply to investments received by a qualified high technology business after June 30, 2007; provided that this Act shall be repealed on January 1, 2011, and [sections] section 235-20.5 [and 235-110.9(b)], Hawaii Revised Statutes, shall be reenacted in the form in which [they] it read on the day before the effective date of this Act."

     SECTION 5.  (a)  There is established the high technology business investment tax credit review board within the department of taxation for administrative purposes only.  The review board shall be comprised of the following seven members:

     (1)  The director of taxation or the director's designee;

     (2)  Two members representing qualified high technology businesses other than performing arts businesses, one of whom shall be appointed by the president of the senate and one of whom shall be appointed by the speaker of the house of representatives from a list of nominees submitted by the Hawaii Science and Technology Council;

     (3)  Two members representing venture capital and financing companies, one of whom shall be appointed by the president of the senate and one of whom shall be appointed by the speaker of the house of representatives from a list of nominees submitted by the Hawaii Science and Technology Council; and

     (4)  Two members representing performing arts businesses, one of whom shall be appointed by the president of the senate and one of whom shall be appointed by the speaker of the house of representatives.

     (b)  The members of the review board shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

     (c)  The review board shall select a chairperson by a majority vote of its members.  A majority of the review board shall constitute quorum to do business.  The concurrence of a majority of all the members to which the review board is entitled shall be necessary to make any action of the review board valid.

     (d)  The review board shall be exempt from chapter 92, Hawaii Revised Statutes; provided that the review board shall make a good faith effort to make its proceedings and work products accessible and available to the general public in a manner consistent with the intent of chapter 92, Hawaii Revised Statutes.  Information and data concerning a qualified high technology business or taxpayer investor that is proprietary in nature or qualifies as commercially sensitive information shall be treated and protected as confidential by the review board.

     (e)  Any applicant for certification under section 235-110.9(e), Hawaii Revised Statutes, of an investment made in a wholly-owned subsidiary, whose application for certification of the credit is rejected by the department of taxation may appeal the rejection to the high technology business investment tax credit review board.  The review board shall review the claim and reject or accept the application within thirty days of the filing of the appeal.  The decision of the review board shall be final for the purposes of certifying the claim.

     (f)  The department of taxation may consult with the review board before certifying credits under section 235-110.9(e), Hawaii Revised Statutes.

     (g)  The high technology business investment tax credit review board shall submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2010, and annually thereafter, containing  recommendations for legislation or other means of increasing fairness and accountability in the administration of the high technology business investment tax credit.

     (h)  The high technology business investment tax credit review board shall cease to exist on July 1, 2021

     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on December 31, 2009.