Bill Text: HI HB2478 | 2014 | Regular Session | Amended

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Bill Title: Individual with a Disability; Employment; Income Tax Credit

Spectrum: Moderate Partisan Bill (Democrat 17-2)

Status: (Enrolled - Dead) 2014-04-24 - Conference committee meeting to reconvene on 04-25-14 9:30AM in conference room 229. [HB2478 Detail]

Download: Hawaii-2014-HB2478-Amended.html

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HOUSE OF REPRESENTATIVES	H.B. NO.	2478
TWENTY-SEVENTH LEGISLATURE, 2014		H.D. 1
STATE OF HAWAII		S.D. 2

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-      Income tax credit for hiring an individual with a disability.  (a)  There shall be allowed to each taxpayer subject to the tax imposed by this chapter, a credit for each individual with a disability hired by the taxpayer 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.

     (b)  The amount of the credit shall be equal to          per cent of the qualified wages for the first six months after an individual with a disability is hired.  A tax credit that exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted; provided that in no taxable year shall the total amount of the tax credit claimed under this section for all individuals with a disability hired by the taxpayer exceed $          .

     (c)  Certification of an individual with a disability for the purpose of claiming a credit under this section shall be submitted to the department of taxation on forms prescribed by the department of taxation.

     (d)  An individual shall not be deemed an individual with a disability for the purpose of claiming a credit under this section unless, on or before the day on which the individual begins work for the employer, the employer has received certification from a qualified physician.  If an individual has been certified as an individual with a disability and the certification is incorrect because it was based on false information provided by the individual, the certification shall be revoked and any wages paid by the employer to the individual shall not be treated as qualified wages.

     In any request for a certification of an individual as an individual with a disability, the employer shall certify that a good faith effort was made to determine that such individual is an individual with a disability.

     (e)  The following wages paid to an individual with a disability are ineligible to be claimed by the employer for this credit:

     (1)  No wages shall be taken into account under this section with respect to an individual with a disability who:

         (A)  Bears any of the relationships described in Section 152(d)(2)(A) to (G) of the Internal Revenue Code to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than fifty per cent in value of the outstanding stock of the corporation (determined with the application of Section 267(c) of the Internal Revenue Code);

         (B)  If the taxpayer is an estate or trust, is a grantor, beneficiary, or fiduciary of the estate or trust, or is an individual who bears any of the relationships described in Section 152(d)(2)(A) to (G) of the Internal Revenue Code to a grantor, beneficiary, or fiduciary of the estate or trust; or

         (C)  Is a dependent (as described in Section 152(d)(2)(H) of the Internal Revenue Code) of the taxpayer, or, if the taxpayer is a corporation, of an individual described in subparagraph (A), or, if the taxpayer is an estate or trust, of a grantor, beneficiary, or fiduciary of the estate or trust; and

     (2)  No wages shall be taken into account under this section with respect to any individual with a disability if, prior to the day the individual is hired by the employer, the individual had been employed by the employer at any time.

     (f)  In the case of a successor employer referred to in Section 3306(b)(1) of the Internal Revenue Code, the determination of the amount of the tax credit allowable under this section with respect to wages paid by the successor employer shall be made in the same manner as if the wages were paid by the predecessor employer referred to in the section.

     (g)  Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following 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 tax credit.

     (h)  No deduction shall be allowed for any amount of wages that, in the same taxable year, qualifies the taxpayer for a credit claimed pursuant to this section.

     (i)  The director of taxation:

     (1)  Shall prepare any forms necessary to claim a credit under this section;

     (2)  May require a taxpayer to furnish reasonable information to ascertain the validity of a claim for credit; and

     (3)  May adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

     (j)  For purposes of this section:

     "Individual with a disability" means an individual having a physical or intellectual impairment that substantially limits one or more major life activities, having a record of that impairment, or being regarded as having that impairment; provided that the disabling impairment is certified by a qualified physician; and provided further that a temporary impairment shall not be considered a disability.

     "Qualified physician" means:

     (1)  A physician or osteopathic physician licensed under chapter 453;

     (2)  A qualified out-of-state physician who is currently licensed to practice in the state in which the physician resides; or

     (3)  A commissioned medical officer in the United States Army, Navy, Marine Corps, or Public Health Service, engaged in the discharge of one's official duty.

     "Qualified wages" means wages attributable to work rendered by an individual with a disability for the six-month period after the individual is initially hired.

     "Wages" means wages, commissions, fees, salaries, bonuses, and every and all other kinds of remuneration for, or compensation attributable to, services performed by an employee for the employee's employer, including the cash value of all remuneration paid in any medium other than cash and the cost-of-living allowances and other payments included in gross income by section 235-7(b), but excluding income excluded from gross income by section 235-7 or other provisions of this chapter."

     SECTION 2.  Section 235-55.91, Hawaii Revised Statutes, is repealed.

     ["§235-55.91  Credit for employment of vocational rehabilitation referrals.  (a)  There shall be allowed to each taxpayer subject to the tax imposed by this chapter, a credit for employment of vocational rehabilitation referrals which 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.

     (b)  The amount of the credit determined under this section for the taxable year shall be equal to twenty per cent of the qualified first-year wages for that year.  The amount of the qualified first-year wages which may be taken into account with respect to any individual shall not exceed $6,000.

     (c)  For purposes of this section:

     "Hiring date" means the day the vocational rehabilitation referral is hired by the employer.

     "Qualified first-year wages" means, with respect to any vocational rehabilitation referral, qualified wages attributable to service rendered during the one-year period beginning with the day the individual begins work for the employer.

     "Qualified wages" means the wages paid or incurred by the employer during the taxable year to an individual who is a vocational rehabilitation referral and more than one-half of the wages paid or incurred for such an individual is for services performed in a trade or business of the employer.

     "Vocational rehabilitation referral" means any individual who is certified by the department of human services vocational rehabilitation and services for the blind division in consultation with the Hawaii state employment service of the department of labor and industrial relations as:

     (1)  Having a physical or mental disability which, for such individual, constitutes or results in a substantial handicap to employment; and

     (2)  Having been referred to the employer upon completion of (or while receiving) rehabilitative services pursuant to:

         (A)  An individualized written rehabilitation plan under the State's plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973, as amended;

         (B)  A program of vocational rehabilitation carried out under chapter 31 of title 38, United States Code; or

         (C)  An individual work plan developed and implemented by an employment network pursuant to subsection (g) of section 1148 of the Social Security Act, as amended, with respect to which the requirements of such subsection are met.

     "Wages" has the meaning given to such term by section 3306(b) of the Internal Revenue Code (determined without regard to any dollar limitation contained in the Internal Revenue Code section).  "Wages" shall not include:

     (1)  Amounts paid or incurred by an employer for any period to any vocational rehabilitation referral for whom the employer receives state or federally funded payments for on-the-job training of the individual for the period;

     (2)  Amounts paid to an employer (however utilized by the employer) for any vocational rehabilitation referral under a program established under section 414 of the Social Security Act; and

     (3)  If the principal place of employment is at a plant or facility, and there is a strike or lockout involving vocational rehabilitation referrals at the plant or facility, amounts paid or incurred by the employer to the vocational rehabilitation referral for services which are the same as, or substantially similar to, those services performed by employees participating in, or affected by, the strike or lockout during the period of strike or lockout.

     (d)  The following shall apply to certifications of vocational rehabilitation referrals:

     (1)  An individual shall not be treated as a vocational rehabilitation referral unless, on or before the day on which the individual begins work for the employer, the employer:

         (A)  Has received a certification from the department of human services vocational rehabilitation and services for the blind division that the individual is a qualified vocational rehabilitation referral; or

         (B)  Has requested in writing the certification from the department of human services vocational rehabilitation and services for the blind division that the individual is a qualified vocational rehabilitation referral.

          For purposes of the preceding sentence, if on or before the day on which the individual begins work for the employer, the individual has received from the department of human services vocational rehabilitation and services for the blind division a written preliminary determination that the individual is a vocational rehabilitation referral, then "the fifth day" shall be substituted for "the day" in the preceding sentence.

     (2)  If an individual has been certified as a vocational rehabilitation referral and the certification is incorrect because it was based on false information provided by the individual, the certification shall be revoked and wages paid by the employer after the date on which notice of revocation is received by the employer shall not be treated as qualified wages.

     (3)  In any request for a certification of an individual as vocational rehabilitation referral, the employer shall certify that a good faith effort was made to determine that such individual is a vocational rehabilitation referral.

     (e)  The following wages paid to vocational rehabilitation referrals are ineligible to be claimed by the employer for this credit:

     (1)  No wages shall be taken into account under this section with respect to a vocational rehabilitation referral who:

         (A)  Bears any of the relationships described in section 152(a)(1) to (8) of the Internal Revenue Code to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than fifty per cent in value of the outstanding stock of the corporation (determined with the application of section 267(c) of the Internal Revenue Code);

         (B)  If the taxpayer is an estate or trust, is a grantor, beneficiary, or fiduciary of the estate or trust, or is an individual who bears any of the relationships described in section 152(a)(1) to (8) of the Internal Revenue Code to a grantor, beneficiary, or fiduciary of the estate or trust; or

         (C)  Is a dependent (described in section 152(a)(9) of the Internal Revenue Code) of the taxpayer, or, if the taxpayer is a corporation, of an individual described in subparagraph (A), or, if the taxpayer is an estate or trust, of a grantor, beneficiary, or fiduciary of the estate or trust.

     (2)  No wages shall be taken into account under this section with respect to any vocational rehabilitation referral if, prior to the hiring date of the individual, the individual had been employed by the employer at any time during which the individual was not a vocational rehabilitation referral.

     (3)  No wages shall be taken into account under this section with respect to any vocational rehabilitation referral unless such individual either:

         (A)  Is employed by the employer at least ninety days; or

         (B)  Has completed at least one hundred-twenty hours of services performed for the employer.

     (f)  In the case of a successor employer referred to in section 3306(b)(1) of the Internal Revenue Code, the determination of the amount of the tax credit allowable under this section with respect to wages paid by the successor employer shall be made in the same manner as if the wages were paid by the predecessor employer referred to in the section.

     (g)  No credit shall be determined under this section with respect to wages paid by an employer to a vocational rehabilitation referral for services performed by the individual for another person unless the amount reasonably expected to be received by the employer for the services from the other person exceeds the wages paid by the employer to the individual for such services.

     (h)  The credit allowed under this section shall be claimed against net income tax liability for the taxable year.  A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

     (i)  All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

     (j)  No deduction shall be allowed for that portion of the wages or salaries paid or incurred for the taxable year that is equal to the amount of the credit determined under this section.

     (k)  The director of taxation may adopt any rules under chapter 91 and forms necessary to carry out this section."]

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act, upon its approval, shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2050.

 

 

Report Title:

Individual with a Disability; Employment; Income Tax Credit

 

Description:

Provides a taxpayer who hires an individual with a disability a nonrefundable tax credit for the six-month period after the individual is initially hired by the taxpayer.  Repeals existing tax credit for taxpayers who hire vocational rehabilitation referrals.  Applies to taxable years beginning after 12/31/2050.  Effective 7/1/2050.  (SD2)

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.