Bill Text: HI HB1203 | 2024 | Regular Session | Amended
Bill Title: Relating To Taxation.
Spectrum: Partisan Bill (Democrat 30-0)
Status: (Engrossed - Dead) 2023-12-11 - Carried over to 2024 Regular Session. [HB1203 Detail]
Download: Hawaii-2024-HB1203-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1203 |
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THIRTY-SECOND LEGISLATURE, 2023 |
H.D. 2 |
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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:
SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Employer
child care tax credit. (a)
There shall be allowed to each taxpayer subject to the taxes imposed by
this chapter, an employer child care 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 credit is properly claimed.
The amount of the tax credit shall be equal
to:
(1)
per cent of the cost of operation to an employer less any amounts paid for by
employees during a taxable year; or
(2) per cent of the costs incurred by an employer as a result of providing employer-sponsored child care at a child care facility within a reasonable distance from the employer's workplace premises.
In the case of a partnership, S corporation,
estate, or trust, the tax credit allowable is for the cost of operation
incurred by the entity for the taxable year.
(b)
The tax credit allowed under this section shall be subject to the following
conditions and limitations:
(1) The credit
shall not exceed fifty per cent of the amount of the taxpayer's income tax
liability for the taxable year as computed without regard to any other credits;
(2) Any credit
claimed but not used in any taxable year may be carried forward for five years
from the close of the taxable year in which the cost of operation was incurred;
and
(3) The employer
shall certify to the department the names of the employees, name of the child
care provider, and other information as may be required by the department to
ensure that credits are granted only to employers who provide or sponsor
approved child care pursuant to this section.
(c) In addition to the tax credit provided under
this section, a taxpayer shall be allowed a credit against the tax imposed
under this chapter for the taxable year in which the taxpayer first places in
service qualified child care property and for each of the ensuing nine taxable
years following such taxable year. The
aggregate amount of the credit shall equal one hundred per cent of the cost of
all qualified child care property purchased or acquired by the taxpayer and
first placed in service during a taxable year, and the credit may be claimed at
a rate of ten per cent per year over a period of ten taxable years.
(d) The tax credit allowable under subsection (c)
shall be subject to the following conditions and limitations:
(1) Any credit
claimed in any taxable year but not used in that taxable year may be carried
forward for three years from the close of that taxable year; provided that the
sale, merger, acquisition, or bankruptcy of any taxpayer shall not create new
eligibility for the credit to any succeeding taxpayer;
(2) In no event
shall the amount of the tax credit, including any carryover of the credit from
a prior taxable year, exceed fifty per cent of the taxpayer's income tax
liability as determined without regard to any other credits; and
(3) For every year
in which a taxpayer claims the credit, the taxpayer shall attach a schedule to
the taxpayer's Hawaii income tax return setting forth the following information
with respect to the tax credit:
(A) A
description of the child care facility;
(B) The
amount of qualified child care property acquired during the taxable year and
the cost of the property;
(C) The
amount of tax credit claimed for the taxable year;
(D) The
amount of qualified child care property acquired in prior taxable years and the
cost of the property;
(E) Any
tax credit utilized by the taxpayer in prior taxable years;
(F) The
amount of tax credit carried over from prior years;
(G) The
amount of tax credit used by the taxpayer in the current taxable year;
(H) The
amount of tax credit to be carried forward to subsequent tax years; and
(I) A
description of any recapture event occurring during the taxable year, a
calculation of the resulting reduction in tax credits allowable for the
recapture year and future taxable years, and a calculation of the resulting
increase in tax for the recapture year.
(e) If a recapture event occurs with respect to
qualified child care property:
(1) The credit
otherwise allowable under subsection (c) with respect to the property for the
recapture year and all subsequent taxable years shall be reduced by the
applicable recapture percentage; and
(2) All credits
previously claimed with respect to the property under subsection (c) shall be
recaptured as follows:
(A) Any
carryover attributable to credits under subsection (d)(1) shall be reduced, but
not below zero, by the recapture amount;
(B) The
tax credit otherwise allowable under subsection (c) for the recapture year, if
any, as reduced under paragraph (1), shall be further reduced, but not below
zero, by the excess of the recapture amount over the amount taken into account
under subparagraph (A); and
(C) The
tax imposed under this section for the recapture year shall be increased by the
excess of the recapture amount over the amounts taken into account under
subparagraphs (A) and (B), as applicable.
(f) The director of taxation:
(1) Shall prepare
any forms that may be necessary to claim a tax credit under this section; and
(2) Shall adopt
rules pursuant to chapter 91 to effectuate the purposes of this section.
(g) For the purposes of this section:
"Cost of operation"
means reasonable direct operational costs incurred by an employer as a result
of providing employer-provided child care facilities; provided that the term
"cost of operation" excludes the cost of any property that is qualified
child care property.
"Employer" means any
employer upon whom an income tax is imposed by this chapter.
"Employer-provided"
means child care offered on the premises of the employer.
"Employer-sponsored"
means a contractual arrangement with a child care facility that is paid for by
the employer.
"Premises of the
employer" means any location within the State and located on the workplace
premises of the employer providing the child care or one of the employers
providing the child care in the event that the child care property is owned
jointly or severally by the taxpayer and one or more employers; provided that
if such workplace premises are impracticable or otherwise unsuitable for the
on-site location of such child care facility, as determined by the director of
human services, such facility may be located within a reasonable distance of
the employer's workplace premises.
"Qualified child care
property" means all real property and tangible personal property purchased
or acquired on or after December 31, 1999, or which property is first placed in
service on or after December 31, 1999, for use exclusively in the construction,
expansion, improvement, or operation of an employer-provided child care
facility; provided that:
(1) The facility is
licensed and approved by the department of human services; and
(2) At least
ninety-five per cent of the children who use the facility are children of
employees of:
(A) The
taxpayer and other employers in the event that the child care property is owned
jointly or severally by the taxpayer and one or more employers; or
(B) A
corporation that is a member of the taxpayer's affiliated group, as defined by
section 1504(a) of the Internal Revenue Code of 1986, as amended; and
(C) The
taxpayer has not previously claimed any tax credit for the cost of operation
for the qualified child care property placed in service prior to taxable years
beginning on or after January 1, 2000.
"Qualified child care property"
includes but is not limited to amounts expended on land acquisition,
improvements, buildings, building improvements, and furniture, fixtures, and
equipment for the child care facility.
"Recapture amount"
means, with respect to property as to which a recapture event has occurred, an
amount equal to the applicable recapture percentage of the aggregate credits
claimed under subsection (c) for all taxable years preceding the recapture
year, whether or not the credits were used.
"Recapture event" means
any disposition of qualified child care property by the taxpayer, or any other
event or circumstance under which property ceases to be qualified child care
property with respect to the taxpayer, except for:
(1) Any transfer by
reason of death;
(2) Any transfer
between spouses or incident to divorce;
(3) Any change in
the form of conducting the taxpayer's trade or business; provided that the
property is retained in the trade or business as qualified child care property
and the taxpayer retains a substantial interest in the trade or business; or
(4) Any accident or
casualty.
"Recapture percentage"
means the applicable percentage set forth as follows:
(1) If the
recapture event occurs within five years after the qualified child care
property is placed in service, the percentage shall be one hundred per cent;
(2) If the
recapture event occurs within six years after the qualified child care property
is placed in service, the percentage shall be ninety per cent;
(3) If the
recapture event occurs within seven years after the qualified child care
property is placed in service, the percentage shall be eighty per cent;
(4) If the
recapture event occurs within eight years after the qualified child care
property is placed in service, the percentage shall be seventy per cent;
(5) If the
recapture event occurs within nine years after the qualified child care
property is placed in service, the percentage shall be sixty per cent;
(6) If the
recapture event occurs within ten years after the qualified child care property
is placed in service, the percentage shall be fifty per cent;
(7) If the
recapture event occurs within eleven years after the qualified child care
property is placed in service, the percentage shall be forty per cent;
(8) If the
recapture event occurs within twelve years after the qualified child care
property is placed in service, the percentage shall be thirty per cent;
(9) If the
recapture event occurs within thirteen years after the qualified child care
property is placed in service, the percentage shall be twenty per cent;
(10) If the recapture
event occurs within fourteen years after the qualified child care property is
placed in service, the percentage shall be ten per cent; and
(11) For any period
after the close of fourteen years after the qualified child care property is
placed in service, the percentage shall be zero.
"Recapture year" means
the taxable year in which a recapture event occurs with respect to qualified
child care property."
SECTION 2. New statutory material is underscored.
SECTION 3. This Act shall take effect on June 30, 3000, and shall apply to taxable years beginning after December 31, 2022.
Report Title:
Taxation; Tax Credit; Child Care; Employer; Department of Taxation; DHS
Description:
Establishes an employer child care tax credit for employers who provide or sponsor approved child care. Effective 6/30/3000. (HD2)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
