| 47 | | - | SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Wildfire relief investment tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a wildfire relief 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, thirty-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 business or redevelopment resiliency project, up to a maximum allowed credit in the year the investment was made, $50,000,000; in the first year following the year in which the investment was made, $35,000,000; in the second year following the year in which the investment was made, $25,000,000; in the third year following the year in which the investment was made, $12,500,000; and in the fourth year following the year in which the investment was made, $12,500,000; provided that the tax credit provided under this section shall not be used to offset any tax liability incurred under chapter 240, 241, or 431; provided further that a taxpayer shall waive tax information confidentiality in order to claim a tax credit under this section. (b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter. Application of at-risk rules shall be made under section 49 of the Internal Revenue Code. Section 469 (with respect to passive activity losses and credits limited) of the Internal Revenue Code shall be applied in claiming the credit under this section. (c) If the tax credit under this section exceeds the taxpayer's income tax liability for any of the five years that the credit is taken, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. Every claim, including amended claims, for a tax credit 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 right to claim the credit. (d) If at the close of any taxable year in the five-year period described in subsection (a): (1) The business no longer qualifies as a qualified business or redevelopment resiliency project; (2) The business or an interest in the business has been sold by the taxpayer investing in the qualified business or redevelopment resiliency project; or (3) The taxpayer has withdrawn the taxpayer's investment wholly or partially from the qualified business or redevelopment resiliency project, the credit claimed under this section shall be recaptured. The recapture shall be equal to ten per cent of the amount of the total tax credit claimed under this section in the preceding two taxable years. The amount of the credit recaptured shall apply only to the investment in the particular qualified business or redevelopment resiliency project that meets the requirements of paragraph (1), (2), or (3). The recapture provisions of this subsection shall not apply to a tax credit claimed for a qualified business or redevelopment resiliency project that does not fall within the provisions of paragraph (1), (2), or (3). The amount of the recaptured tax credit determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection. (e) Before March 31 of each year in which an investment in a qualified business or redevelopment resiliency project was made in the previous taxable year, every taxpayer 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) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year. (f) The department shall: (1) Maintain records of the names and addresses of the taxpayers claiming the credits under this section and the total amount of the qualified investment costs upon which the tax credit is based; (2) Verify the nature and amount of the qualifying investments; (3) Total all qualifying and cumulative investments that the department certifies; and (4) Certify the amount of the tax credit for each taxable year and cumulative amount of the tax credit. Upon each determination made under this subsection, the department shall issue a certificate to the taxpayer verifying information submitted to the department, including qualifying investment amounts, the credit amount certified for each taxable year, and the cumulative amount of the tax credit during the credit period. The taxpayer shall file the certificate with the taxpayer's tax return with the department. The director of taxation may assess and collect a fee to offset the costs of certifying tax credits claimed under this section. All fees collected under this section shall be deposited into the tax administration special fund established under section 235-20.5. (g) The department shall 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 any findings and recommendations to improve the effectiveness of the tax credit in order to further encourage investment in areas affected by the Lahaina wildfire of 2023. (h) This section shall not apply to taxable years beginning after December 31, 2028. (i) As used in this section: "Department" means the department of taxation. "Lahaina district" has the same meaning as used in section 4-1(2)(D). "Qualified business" means a business, employing or owning capital or property, or maintaining an office, in this State; provided that: (1) The business is registered to do business in the State; (2) The business maintains its headquarters or principal place of business in the Lahaina district; (3) The business shall have existed prior to August 8, 2023; (4) The business can demonstrate that it has experienced financial hardship due to the Lahaina wildfire of 2023; and (5) The business is a small business. "Redevelopment resiliency project" means a project to redevelop areas damaged by the Lahaina wildfire of 2023. "Small business" has the same meaning as defined in section 201M-1." SECTION 2. New statutory material is underscored. SECTION 3. This Act shall take effect on January 1, 2060, and shall apply to taxable years beginning after December 31, 2024. |
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| 47 | + | SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Wildfire relief investment tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a wildfire relief 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, thirty-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 business or redevelopment resiliency project, up to a maximum allowed credit in the year the investment was made, $50,000,000; in the first year following the year in which the investment was made, $35,000,000; in the second year following the year in which the investment was made, $25,000,000; in the third year following the year in which the investment was made, $12,500,000; and in the fourth year following the year in which the investment was made, $12,500,000; provided that the tax credit provided under this section shall not be used to offset any tax liability incurred under chapters 240, 241, or 431; provided further that a taxpayer shall waive tax information confidentiality in order to claim a tax credit under this section. (b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter. Application of at-risk rules shall be made under section 49 of the Internal Revenue Code. Section 469 (with respect to passive activity losses and credits limited) of the Internal Revenue Code shall be applied in claiming the credit under this section. (c) If the tax credit under this section exceeds the taxpayer's income tax liability for any of the five years that the credit is taken, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. Every claim, including amended claims, for a tax credit 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 right to claim the credit. (d) If at the close of any taxable year in the five-year period described in subsection (a): (1) The business no longer qualifies as a qualified business or redevelopment resiliency project; (2) The business or an interest in the business has been sold by the taxpayer investing in the qualified business or redevelopment resiliency project; or (3) The taxpayer has withdrawn the taxpayer's investment wholly or partially from the qualified business or redevelopment resiliency project, the credit claimed under this section shall be recaptured. The recapture shall be equal to ten per cent of the amount of the total tax credit claimed under this section in the preceding two taxable years. The amount of the credit recaptured shall apply only to the investment in the particular qualified business or redevelopment resiliency project that meets the requirements of paragraph (1), (2), or (3). The recapture provisions of this subsection shall not apply to a tax credit claimed for a qualified business or redevelopment resiliency project that does not fall within the provisions of paragraph (1), (2), or (3). The amount of the recaptured tax credit determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection. (e) Before March 31 of each year in which an investment in a qualified business or redevelopment resiliency project was made in the previous taxable year, every taxpayer 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) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year. (f) The department shall: (1) Maintain records of the names and addresses of the taxpayers claiming the credits under this section and the total amount of the qualified investment costs upon which the tax credit is based; (2) Verify the nature and amount of the qualifying investments; (3) Total all qualifying and cumulative investments that the department certifies; and (4) Certify the amount of the tax credit for each taxable year and cumulative amount of the tax credit. Upon each determination made under this subsection, the department shall issue a certificate to the taxpayer verifying information submitted to the department, including qualifying investment amounts, the credit amount certified for each taxable year, and the cumulative amount of the tax credit during the credit period. The taxpayer shall file the certificate with the taxpayer's tax return with the department. The director of taxation may assess and collect a fee to offset the costs of certifying tax credits claims under this section. All fees collected under this section shall be deposited into the tax administration special fund established under section 235-20.5. (g) The department of taxation 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 any findings and recommendations to improve the effectiveness of the tax credit in order to further encourage investment in areas affected by the Lahaina wildfire of 2023. (h) This section shall not apply to taxable years beginning after December 31, 2028. (i) As used in this section: "Lahaina district" has the same meaning as used in section 4-1(2)(D). "Qualified business" means a business, employing or owning capital or property, or maintaining an office, in this State; provided that: (1) The business is registered to do business in the State; (2) The business maintains its headquarters or principal place of business in the Lahaina district; (3) The business shall have existed prior to August 8, 2023; (4) The business can demonstrate that it has experienced financial hardship due to the Lahaina wildfire of 2023; and (5) The business is a small business. "Redevelopment resiliency project" means a project to redevelop areas damaged by the Lahaina wildfire of 2023. "Small business" has the same meaning as defined in section 201M-1." SECTION 2. New statutory material is underscored. SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023. INTRODUCED BY: _____________________________ |
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