REPORT TITLE:
Taxation
DESCRIPTION:
Establishes a qualified improvement tax credit for capitalized
costs of construction and equipment of a permanent nature with
respect to resort and hotel properties. (SB1325 HD2)
1325
THE SENATE S.B. NO. S.D. 1
TWENTIETH LEGISLATURE, 1999 H.D. 2
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. The Hawaii Revised Statutes is amended by adding
2 a new chapter to be appropriately designated and to read as
3 follows:
4 "CHAPTER
5 QUALIFIED IMPROVEMENT TAX CREDIT
6 § -1 Definitions. Whenever used in this chapter, unless
7 the context otherwise requires:
8 "Net income tax liability" means income tax liability reduced
9 by all other allowed credits, as determined under chapter 235.
10 "Qualified general facility" means any building or
11 improvement that is not a qualified resort facility.
12 "Qualified improvement costs" means any capitalized costs for
13 construction and equipment of a permanent nature related to a
14 qualified resort facility or a qualified general facility,
15 including infrastructure costs, but shall not include the costs
16 for which another tax credit was claimed for the taxable year.
17 "Qualified resort facility" means any building or improvement
18 located or to be located:
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1 (1) On property designated primarily for resort or hotel use
2 by the applicable county zoning ordinances or general
3 plan; or
4 (2) On property not so designated, but the primary purpose
5 of which is for commercial or recreational use to
6 support or service a hotel or resort use, such as a golf
7 course, golf course clubhouse, or retail center.
8 § -2 Qualified improvement tax credit.(a) There shall
9 be allowed to each taxpayer subject to the taxes imposed by
10 chapters 235, 237, 237D, and 239, a qualified improvement tax
11 credit, which shall be available to reduce the taxpayer's net
12 income tax liability, general excise tax, transient
13 accommodations tax, or public service company tax imposed by
14 these chapters.
15 (b) The total amount of the qualified improvement tax
16 credit shall be determined by applying the applicable credit
17 percentage to the qualified improvement costs paid by the
18 taxpayer in the taxable year. For qualified improvement costs to
19 a qualified resort facility totalling $1,000,000 or more over a
20 three-year period, the applicable credit percentage shall
21 be per cent. For qualified improvement costs to a
22 qualified general facility totalling $1,000,000 or more over a
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1 three-year period, the applicable credit percentage shall
2 be per cent.
3 (c) The tax credit allowed under this chapter may be taken
4 over a period not to exceed ten consecutive taxable years. The
5 taxpayer shall elect the period and annual allocation of the tax
6 credit in the initial year for which the credit is claimed.
7 (d) In the case of a partnership, S corporation, estate, or
8 trust, the allowable tax credit is for qualified improvement
9 costs incurred by the entity for the taxable year. The costs
10 upon which the tax credit is computed shall be determined at the
11 entity level. Distribution and share of the tax credit shall be
12 determined by rules adopted pursuant to section -4.
13 (e) If a deduction is taken under section 179 (with respect
14 to election to expense depreciable business assets) of the
15 Internal Revenue Code of 1986, as amended, no tax credit shall be
16 allowed for that portion of the qualified improvement costs for
17 which the deduction is taken.
18 (f) The basis of eligible property for depreciation or
19 accelerated cost recovery system purposes for state income taxes
20 shall be reduced by the amount of credit allowed and claimed
21 under this chapter.
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1 (g) The tax credit allowed under this chapter shall be
2 claimed against any or all net income tax liability, general
3 excise tax, transient accommodations tax, or public service
4 company tax for the taxable years over which the credit is
5 claimed.
6 § -3 No refund; failure to file. If the amount of the
7 tax credit claimed in any year exceeds the total of the
8 taxpayer's net income tax liability, general excise tax,
9 transient accommodations tax, or public service company tax
10 payable for that taxable year, the excess of credit over
11 liability shall not be refunded to the taxpayer. All claims for
12 a tax credit under this chapter shall be filed on or before the
13 end of the twelfth month following the close of the initial
14 taxable year for which the credit may be claimed. Failure to
15 comply with this section shall constitute a waiver of the right
16 to claim the credit.
17 § -4 Forms; rules. The director of taxation shall
18 prepare forms as may be necessary to claim a tax credit under
19 this chapter. The director of taxation may also require the
20 taxpayer to furnish information to ascertain the validity of a
21 claim for a tax credit made under this chapter and may adopt
22 rules necessary to effectuate the purposes of this chapter
23 pursuant to chapter 91.
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1 § -5 Limitation period. The tax credit allowed under
2 this chapter shall be available for qualified improvement costs
3 incurred during taxable years beginning after December 31, 1998,
4 and before January 1, 2006."
5 SECTION 2. Notwithstanding any statute, rule, ordinance, or
6 law to the contrary, any impact fees imposed upon a project, the
7 costs of which qualify for and are claimed as a tax credit under
8 this Act, shall be collected over a seven-year period, interest-
9 free, commencing with the completion of the project. For
10 purposes of this section, "impact fees" means the charges imposed
11 upon a developer by the state or a county to fund all or a
12 portion of the public facility capital improvement costs required
13 by the development, or to recoup the cost of existing public
14 facility capital improvements made in anticipation of the needs
15 of the development.
16 SECTION 3. This Act shall take effect upon its approval;
17 provided that section 1 of this Act shall apply to taxable years
18 beginning after December 31, 1998. Section 2 of this Act shall
19 be repealed on January 1, 2006.