THE SENATE |
S.B. NO. |
1394 |
THIRTIETH LEGISLATURE, 2019 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 1 |
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A BILL FOR AN ACT
RELATING TO HISTORIC PRESERVATION.
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- Historic
preservation income tax credit. (a) Notwithstanding any law to the contrary,
there shall be allowed to each taxpayer subject to the tax imposed by this
chapter a historic preservation income 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 tax credit is properly claimed.
(b) In the case of a partnership, S corporation,
estate, trust, or any developer of a rehabilitated certified historic
structure, the tax credit allowable shall be as provided under subsection (d)
for the taxable year. The cost upon
which the credit is computed shall be determined at the entity level and the
distribution and share of the tax credit shall be determined pursuant to
section 704(b) of the Internal Revenue Code.
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
qualified expense for which the deduction is taken.
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.
(c) The amount of a historic preservation income
tax credit that is certified by qualified staff of the state historic
preservation division of the department of land and natural resources shall be
thirty per cent of the qualified rehabilitation expenditures.
(d) The tax credit allowed under this section
shall be available in the taxable year in which the substantially rehabilitated
certified historic structure is placed into service. In the case of projects completed in phases,
the tax credit shall be prorated to the substantially rehabilitated
identifiable portion of the certified historic structure placed into service
during that taxable year.
(e) If the tax credit under this section exceeds
the taxpayer's income tax liability, the excess of the credit over liability may
be used as a credit against the taxpayer's income tax liability in subsequent
years until either the credit is exhausted, or for a period of ten years,
whichever is earlier.
All claims
for the tax credit under this section, including amended claims, 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 right to claim the credit.
(f) The state historic preservation division
shall adopt rules pursuant to chapter 91 establishing standards and criteria
for the approval of rehabilitation of certified historic structures for which
the tax credit under this section is sought.
These standards and criteria shall take into account whether the
rehabilitation of a certified historic structure will preserve the historic
character of the building.
(g) Following the completion of rehabilitation of
a certified historic structure:
(1) The
taxpayer shall notify the state historic preservation division that the
rehabilitation has been completed and shall provide the state historic
preservation division with documentation and certification of the costs
incurred in rehabilitating the historic structure;
(2) Qualified staff of the
state historic preservation division shall review the rehabilitation and verify
the rehabilitation project's compliance with the rehabilitation plan;
(3) Upon
each determination made under this subsection, the state historic preservation
division shall issue a certificate to the taxpayer verifying that the
rehabilitation has been completed in accordance with the approved
rehabilitation plan;
(4) The
taxpayer shall file the certificate with the taxpayer's tax return with the
department; and
(5) The
department of land and natural resources may offset the costs of certifying tax
credit claims under this section by assessing and collecting a fee, which shall
be deposited into the Hawaii historic preservation special fund established
under section 6E-16.
(h) The director of taxation shall prepare any
forms that may be necessary to claim the tax credit under this section. The director may also require the taxpayer to
furnish reasonable information to ascertain the validity of the claim for
credit made under this section and may adopt rules necessary to effectuate the
purposes of this section pursuant to chapter 91.
(i) The aggregate amount of the tax credits
claimed for qualified rehabilitation projects shall not exceed:
(1) $ for
the 2020 taxable year;
(2) $
for the 2021 taxable year;
(3) $
for the 2022 taxable year;
(4) $
for the 2023 taxable year; and
(5) $
for the 2024 taxable year and every year thereafter.
(j) Each taxpayer claiming a tax credit under
this section, no later than the last day of the twelfth month following the
close of the taxable year in which qualified costs were expended, shall submit
a written, certified statement to the state historic preservation division
containing the qualified rehabilitation expenditures incurred by the taxpayer
and any other information the state historic preservation division or
department of taxation may require.
Any taxpayer failing to submit
information to the state historic preservation division in a manner prescribed
by the state historic preservation division prior to the last day of the twelfth
month following the close of the tax year in which qualified costs were expended
shall not be eligible to receive the tax credit for those expenses, and any
credit already claimed for that taxable year shall be recaptured in total. The amount of the recaptured tax credit shall
be added to the taxpayer's tax liability for the taxable year in which the
recapture occurs.
All information in the statement
submitted under this section shall be a public document, except for information
that is otherwise exempt from public disclosure in accordance with chapter 92F.
(k) Recapture of a previously claimed tax credit
shall be required from any taxpayer who received a credit under this section if
any of the following occur:
(1) The projected
qualified expenditures do not materialize; or
(2) The
rehabilitation of the certified historic structure does not proceed in a timely
manner and in accordance with the approved rehabilitation plan.
Any credit under this section shall be
recaptured following the close of the taxable year for which the credit is
claimed if the department of land and natural resources notifies the department
that the taxpayer has failed to comply with the requirements of this section or
its related rules promulgated by the state historic preservation division.
(l) The state historic preservation division, in
consultation with the department of taxation, shall determine the information
necessary to enable a quantitative and qualitative assessment of the outcomes
of the tax credit and submit a report to the legislature evaluating the
effectiveness of the tax credit no later than twenty days prior to the
convening of each regular legislative session.
The report shall include findings and recommendations to improve the
effectiveness of the tax credit in order to further encourage the rehabilitation
of historic properties.
(m) For the purposes of this section:
"Certified historic
structure" means any structure that is:
(1) Individually
listed in the Hawaii register of historic places or the national register of
historic places;
(2) Located in a
historic district that is listed in the Hawaii register of historic places or
the national register of historic places, and certified by the state historic
preservation division as contributing to the significance of the historic
district; or
(3) A structure
that the state historic preservation division has determined to be eligible for
inclusion in the Hawaii register of historic places, and that is subsequently
listed in the Hawaii register of historic places by the date of certification
by the administrator of the state historic preservation division in accordance
with subsection (g).
"Qualified rehabilitation
expenditures" means any costs incurred for the physical rehabilitation,
renovation, or construction of a certified historic structure pursuant to a
rehabilitation plan; provided that the term shall not include the taxpayer's
personal labor.
"Qualified staff" means
a staff person meeting the Secretary of the Interior's Historic Preservation
Professional Qualification Standards for an architectural historian or historic
architect.
"Rehabilitation plan"
means any construction plans and specifications for the proposed rehabilitation
of a historic structure in sufficient detail for evaluation of compliance with
the rules adopted by the state historic preservation division.
"Substantial rehabilitation"
means that the qualified rehabilitation expenditures on a certified historic
structure exceed twenty-five per cent of the assessed value of the structure."
SECTION 2. There is established within the state historic preservation division of the department of land and natural resources one temporary position to assist with the establishment and administration of the historic preservation income tax credit program. The authorization for this temporary position shall expire at the end of fiscal year .
SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $85,000 or so much thereof as may be necessary for fiscal year 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021 for one temporary position in the state historic preservation division to assist with the establishment and administration of the historic preservation income tax credit program.
The sums appropriated shall be expended by the department of land and natural resources for the purposes of this Act.
SECTION 4. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2050.
Report Title:
Historic Preservation; Rehabilitation; Tax Credit; Appropriation
Description:
Establishes a historic preservation income tax credit. Appropriates funds for one temporary position to assist with the establishment and administration of the historic preservation income tax credit program. (SB1394 HD1)
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not legislation or evidence of legislative intent.