Bill Text: HI SB148 | 2012 | Regular Session | Introduced
Bill Title: Biofuel Facilities; Income Tax; Tax Credit
Spectrum: Partisan Bill (Democrat 9-0)
Status: (Introduced - Dead) 2011-12-01 - Carried over to 2012 Regular Session. [SB148 Detail]
Download: Hawaii-2012-SB148-Introduced.html
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THE SENATE |
S.B. NO. |
148 |
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TWENTY-SIXTH LEGISLATURE, 2011 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO RENEWABLE FUELS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that green diesel, biodiesel, biojet, and ethanol are examples of fuels that could be produced in Hawaii from locally grown feedstock. The local production of these biofuels could contribute to Hawaii's renewable liquid fuel objectives, reduce the impact of world oil price volatility, provide a measure of energy security, provide economic diversification, and circulate Hawaii's energy expenditures within Hawaii's economy.
The purpose of this Act is to expand the existing ethanol facility tax incentive to include other liquid biofuels and to enable larger facilities to be eligible for the tax incentive without changing the level of the incentive or the fuel cap per facility.
SECTION 2. Section 235-110.3, Hawaii Revised Statutes, is amended as follows:
1. By amending its title and subsections (a) to (c) to read:
"§235-110.3 [Ethanol] Biofuel
facility tax credit. (a) Each year during the credit period, there shall
be allowed to each taxpayer subject to the taxes imposed by this chapter, [an
ethanol] a biofuel facility tax credit that shall be applied to the
taxpayer's net income tax liability, if any, imposed by this chapter for the
taxable year in which the credit is properly claimed.
For each [qualified ethanol] qualifying
biofuel production facility, the annual dollar amount of the [ethanol]
biofuel facility tax credit during the eight-year period shall be equal
to thirty [per cent] cents per gallon of its nameplate capacity
if the nameplate capacity is greater than five hundred thousand [but less
than fifteen million] gallons. A taxpayer may claim this credit for the
first fifteen million gallons of capacity of each qualifying [ethanol]
biofuel production facility; provided that:
(1) The claim for this credit by any taxpayer of a
qualifying [ethanol] biofuel production facility shall not exceed
one hundred per cent of the total of all investments made by the taxpayer in
the qualifying [ethanol] biofuel production facility [during
the credit period];
(2) The qualifying [ethanol] biofuel
production facility operated at a level of production of at least seventy-five
per cent of its nameplate capacity on an annualized basis;
(3) The qualifying biofuel production facility uses agricultural feedstock for at least seventy-five per cent of its production output;
[(3)] (4) The qualifying [ethanol]
biofuel production facility is in production on or before January 1, 2017;
and
[(4)] (5) No taxpayer that claims the
credit under this section shall claim any other tax credit under this chapter
for the same taxable year.
(b) As used in this section:
"Agricultural feedstock" includes but is not limited to:
(1) Sugar cane, byproducts from sugar cane, sweet sorghum, sugar beets, biomass, oil, fiber, and other materials grown on farms that were not previously used for other purposes; and
(2) Unused byproducts of food, feed, fiber, or other products, or electricity production;
provided that used cooking oils shall not be considered agricultural feedstock.
"Biofuel" means ethanol, biodiesel, diesel, jet fuel, or any other liquid fuel that meets the relevant fuel specifications of the American Society for Testing and Materials International or specifications for electrical generation and is produced from agricultural feedstock.
"Credit period" means a maximum
period of eight years beginning from the first taxable year in which the
qualifying [ethanol] biofuel production facility begins
production, even if actual production is not at seventy-five per cent of
nameplate capacity.
"Investment" means a nonrefundable
capital expenditure related to the development and construction of any
qualifying [ethanol] biofuel production facility, including
processing equipment, waste treatment systems, pipelines, and liquid storage
tanks at the facility or remote locations, including expansions or modifications[.];
provided that the term "investment" shall include direct capital
expenditures in agricultural infrastructure, including irrigation and drainage
systems, land clearing and leveling, establishment of crops, planting, and
cultivation where the biofuel production facility and agricultural operations
are integrated. Capital expenditures shall be those direct and certain
indirect costs determined in accordance with section 263A of the Internal
Revenue Code, relating to uniform capitalization costs, and utility costs incurred
during construction that are capitalized and not expensed, but shall not
include expenses for compensation paid to officers of the taxpayer, pension and
other related costs, rent for land, the costs of repairing and maintaining the
equipment or facilities, training of operating personnel, [utility costs
during construction,] property taxes, costs relating to negotiation of
commercial agreements not related to development or construction, or service
costs that can be identified specifically with a service department or function
or that directly benefit or are incurred by reason of a service department or
function. For the purposes of determining a capital expenditure under this
section, the provisions of section 263A of the Internal Revenue Code shall
apply as it read on March 1, 2004. For purposes of this section, investment
excludes land costs and includes any investment for which the taxpayer is at
risk, as that term is used in section 465 of the Internal Revenue Code (with
respect to deductions limited to amount at risk).
"Nameplate capacity" means the
qualifying [ethanol] biofuel production facility's production
design capacity, in gallons of [motor fuel grade ethanol] biofuel
per year.
"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.
"Qualifying [ethanol] biofuel
production" means [ethanol] biofuel produced from [renewable,
organic feedstocks, or waste materials, including municipal solid waste.] agricultural
feedstock. All qualifying production shall be fermented, distilled, transesterified,
gasified, pyrolized, or produced by other physical,
chemical, biochemical, or thermochemical conversion methods [such as
reformation and catalytic conversion and dehydrated at the facility].
"Qualifying [ethanol] biofuel
production facility" or "facility" means a facility located in
Hawaii [which] that produces [motor] fuel grade [ethanol
meeting the minimum specifications by the American Society of Testing and
Materials standard D-4806, as amended.] biofuel meeting the relevant
American Society for Testing and Materials International specifications for the
particular fuel or other specifications for electrical production.
(c) In the case of a taxable year in which the
cumulative claims for the credit by the taxpayer of a qualifying [ethanol]
biofuel production facility [exceeds] exceed the
cumulative investment made in the qualifying [ethanol] biofuel
production facility by the taxpayer, only that portion that does not exceed the
cumulative investment shall be claimed and allowed."
2. By amending subsections (f) to (m) to read:
"(f) If a qualifying [ethanol] biofuel
production facility or an interest therein is acquired by a taxpayer prior to
the expiration of the credit period, the credit allowable under subsection (a)
for any period after such acquisition shall be equal to the credit that would
have been allowable under subsection (a) to the prior taxpayer had the taxpayer
not disposed of the interest. If an interest is disposed of during any year
for which the credit is allowable under subsection (a), the credit shall be
allowable between the parties on the basis of the number of days during the
year the interest was held by each taxpayer. In no case shall the credit allowed
under subsection (a) be allowed after the expiration of the credit period.
(g) Once the total nameplate capacities of
qualifying [ethanol] biofuel production facilities built within
the State reaches or exceeds a level of forty million gallons per year, credits
under this section shall not be allowed for new [ethanol] biofuel
production facilities. If a new facility's production capacity would cause the
statewide [ethanol] biofuel production capacity to exceed forty
million gallons per year, only the [ethanol] biofuel production
capacity that does not exceed the statewide forty million gallon per year level
shall be eligible for the credit.
(h) Prior to construction of any new
qualifying [ethanol] biofuel production facility, the taxpayer
shall provide written notice of the taxpayer's intention to begin construction
of a qualifying [ethanol] biofuel production facility. The
information shall be provided to the department of taxation and the department
of business, economic development, and tourism on forms provided by the
department of business, economic development, and tourism, and shall include
information on the taxpayer, facility location, facility production capacity,
anticipated production start date, and the taxpayer's contact information.
Notwithstanding any other law to the contrary, this information shall be
available for public inspection and dissemination under chapter 92F.
(i) The taxpayer shall provide written notice
to the director of taxation and the director of business, economic development,
and tourism within thirty days following the start of production. The notice
shall include the production start date and expected [ethanol fuel] biofuel
production for the next twenty-four months. Notwithstanding any other law to
the contrary, this information shall be available for public inspection and
dissemination under chapter 92F.
(j) If a qualifying [ethanol] biofuel
production facility fails to achieve an average annual production of at least
seventy-five per cent of its nameplate capacity for two consecutive years, the
stated capacity of that facility may be revised by the director of business,
economic development, and tourism to reflect actual production for the purposes
of determining [statewide production capacity under subsection (g) and]
allowable credits for that facility under subsection (a). Notwithstanding any
other law to the contrary, this information shall be available for public
inspection and dissemination under chapter 92F.
(k) Each calendar year during the credit
period, the taxpayer shall provide information to the director of business,
economic development, and tourism on the [number of] gallons [of
ethanol] and type of biofuel produced and sold during the previous
calendar year, how much was sold in Hawaii versus overseas, [feedstocks]
the percentage of Hawaii-grown feedstock and other feedstock used for [ethanol]
biofuel production, the number of employees of the facility, and the
projected [number of] gallons [of ethanol] and type of biofuel
production for the succeeding year.
(l) In the case of a partnership, S
corporation, estate, or trust, the tax credit allowable is for every qualifying
[ethanol] biofuel production facility. The cost upon which the
tax credit is computed shall be determined at the entity level. Distribution
and share of tax credit shall be determined pursuant to section
235-110.7(a).
(m) Following each year in which a credit
under this section has been claimed, the director of business, economic
development, and tourism shall [submit a written] include in its
annual report to the governor and legislature [regarding the production
and sale of ethanol. The report shall include:] the following:
(1) The number, location, and nameplate capacities of
qualifying [ethanol] biofuel production facilities in the State;
(2) The total number of gallons of [ethanol] biofuel
produced and sold by those facilities and total biofuel sales during the
previous year; and
(3) The projected number of gallons of [ethanol
production for] biofuel expected to be produced in the succeeding
year[.] and expected total biofuels sales in the succeeding year."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2010.
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INTRODUCED BY: |
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Report Title:
Biofuel Facilities; Income Tax; Tax Credit
Description:
Amends the ethanol facility income tax credit to include other liquid biofuels and to enable larger facilities to be eligible for the tax incentive.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
