Bill Text: HI SB2294 | 2010 | Regular Session | Introduced
Bill Title: Renewable Energy Tax Credit; Commercial Property
Spectrum: Moderate Partisan Bill (Democrat 6-1)
Status: (Introduced - Dead) 2010-02-05 - (S) Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. [SB2294 Detail]
Download: Hawaii-2010-SB2294-Introduced.html
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THE SENATE |
S.B. NO. |
2294 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
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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. Following the 2009 legislative session, the chairs of the senate committee on economic development and technology and the house committee on economic revitalization, business and military affairs convened a technology caucus work group to bring together industry stakeholders and interested policymakers to develop recommendations for legislation to enhance Hawaii's struggling economy. The work group provided a forum to review the current status of Hawaii's science/technology industry, identify state or county actions that impede long-term growth and expansion of technology companies, and develop recommendations to address these impediments. The work group also identified best practices supporting the growth and development of science/technology industries in other jurisdictions to aid in developing proposed suggestions for future legislation.
The legislature finds that with respect to commercial renewable energy project developments, a number of industry members have been faced with difficulties in raising sufficient investment capital and construction financing. Some commercial renewable energy projects in this State have also not been financially feasible or practical for investors to engage into because of the current limitations to the federal and State renewable energy tax incentives. Further complicating commercial projects in this State are the unique characteristics of Hawaii, such as the high cost and scarcity of land, high construction and labor costs, difficulties in engaging specialized service providers (resulting in engagement of mainland service providers), and higher shipping and freight costs. Moreover, companies frequently cited experiences with investors who believe Hawaii's regulatory agencies and legislative branch are not consistent and certain laws of the State are not applied with absolute certainty on a going forward basis.
These concerns have been fueled by recent legislative and judicial activities, such as Act 178, Session Laws of Hawaii 2009 (affecting the high technology business investment tax credit), and the Superferry case, which have led to a perceived high political risk associated with making large financial investments in Hawaii.
In order for Hawaii to be a leader in the renewable energy industry and to also meet the objectives of the Hawaii Clean Energy Initiative, the State needs to revise its tax incentives related to the renewable energy technologies income tax credit so that the State can strive to be at the forefront of the competition. Tax incentives that are financially sensible for the State but still generous to investors will help to attract much needed capital from local, mainland, and international investors that will help to stimulate renewable energy activity in Hawaii.
The purpose of this Act is to implement recommendations of the technology caucus work group by revising the existing renewable energy technologies income tax credit to provide tax incentives that make financial sense for investors to develop large commercial renewable energy projects in this State.
SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 7 to be appropriately designated and to read as follows:
"§431:7- Renewable energy technologies; income tax credit. The renewable energy technologies income tax credit provided under section 235-12.5 shall be operative for all taxpayers subject to this chapter for taxable years beginning after December 31, 2009; provided that the renewable energy system was installed and placed in service after December 31, 2009."
SECTION 3. Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:
"§235-12.5 Renewable energy technologies; income tax credit. (a) When the requirements of subsection (d) are met, each individual or corporate taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed for every eligible renewable energy technology system that is installed and placed in service in the State by a taxpayer during the taxable year. The tax credit may be claimed as follows:
(1) For each solar energy system installed and
operated on residential property: thirty-five per cent of the actual cost
or the cap amount determined in subsection (b), whichever is less; [or]
(2) For each solar energy system installed and operated on commercial property:
(A) Thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less, in the year the solar energy system is placed in service;
(B) Ten per cent of the actual cost or the cap amount determined in subsection (b), whichever is less, in the second year following the year the solar energy system is placed in service; and
(C) Five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less, in the third year following the year the solar energy system is placed in service; or
[(2)] (3) For each wind-powered energy
system: twenty per cent of the actual cost or the cap amount determined in
subsection (b), whichever is less;
provided that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).
(b) The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:
(1) If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:
(A) $2,250 per system for single-family residential property;
(B) $350 per unit per system for multi-family residential property; and
(C) [$250,000]
per system for commercial property;
(2) For all other solar energy systems, the cap amounts shall be:
(A) $5,000 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for multi-family residential property; and
(C) [$500,000]
per system for commercial property; and
(3) For all wind-powered energy systems, the cap amounts shall be:
(A) $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for multi-family residential property; and
(C) [$500,000]
per system for commercial property.
(c) For the purposes of this section:
"Actual cost" means costs related to the renewable energy technology systems under subsection (a), including accessories and installation, but not including the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system and costs for which another credit is claimed under this chapter.
"Commercial property" means real property that is zoned for business or industrial use and includes a building or structure that operates a service, or retail-oriented, business or organization for public consumers.
"Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.
"Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as solar or wind energy, into:
(1) A usable source of thermal or mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.
(d) For taxable years beginning after December 31, 2005, the dollar amount of any utility rebate shall be deducted from the cost of the qualifying system and its installation before applying the state tax credit.
(e) The director of taxation shall prepare any forms that may be necessary to claim a tax credit under this section, including forms identifying the technology type of each tax credit claimed under this section, whether for solar or wind. The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.
(f) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted, unless otherwise elected by the taxpayer pursuant to subsection (g) or (h). All claims for the tax credit under this section, including amended claims, 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 this subsection shall constitute a waiver of the right to claim the credit.
(g) For solar energy systems, a taxpayer may
elect to reduce the eligible credit amount by [thirty] ten per
cent and if this reduced amount exceeds the amount of income tax payment due
from the taxpayer, the excess of the credit amount over payments due shall be
refunded to the taxpayer; provided that tax credit amounts properly claimed by
a taxpayer who has no income tax liability shall be paid to the taxpayer; and
provided further that no refund on account of the tax credit allowed by this
section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
(h) Notwithstanding subsection (g), for any renewable energy technology system, an individual taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A husband and wife who do not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
(i) No taxpayer shall be allowed a credit under this section for the portion of the renewable energy technology system required by section 196-6.5 that is installed and placed in service on any newly constructed single-family residential property authorized by a building permit issued on or after January 1, 2010.
(j) Any taxpayer eligible to claim a credit under this section may transfer the credit to another taxpayer for a cash payment on a dollar-for-dollar basis that is equal to the present value of the tax credit the taxpayer is eligible to claim.
[(j)] (k) To the extent
feasible, using existing resources to assist the energy-efficiency policy
review and evaluation, the department shall assist with data collection on the
following for each taxable year:
(1) The number of renewable energy technology systems that have qualified for a tax credit during the calendar year by:
(A) Technology type; and
(B) Taxpayer type (corporate and individual); and
(2) The total cost of the tax credit to the State during the taxable year by:
(A) Technology type; and
(B) Taxpayer type.
[(k)] (l)
This section shall apply to eligible renewable energy technology systems that
are installed and placed in service on or after July 1, 2009."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2009; provided that
the renewable energy system that is subject to this Act was installed and placed in service after December 31, 2009.
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INTRODUCED BY: |
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Report Title:
Renewable Energy Tax Credit; Commercial Property; Transfer
Description:
Amends section 235-12.5, HRS, to expand the credit for renewable energy projects installed on commercial properties, reduces the credit reduction for taxpayers seeking a refundable credit, allows the tax credit to be transferred between taxpayers, and amends chapter 431, HRS, to expressly allow insurance companies to be eligible to claim a renewable energy technologies income tax credit.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
