Hawaii-2016-SB2546-Introduced

SECTION 1. The legislature finds that, although the high technology business investment tax credit was terminated on December 31, 2010, credits approved, but unclaimed, may continue to be claimed on a non-refundable basis until exhausted. In Report No. 15-11, entitled "Credits Continue to Tax the State: Follow-Up on Recommendations Made in Report No. 12-05, Audit of the Department of Taxation's Administrative Oversight of High-Technology Business Investment and Research Activities Tax Credits", the state auditor notes that "nearly $1 billion" in high technology business investment tax credits remained unclaimed in 2012. The unclaimed credits represent a liability for the State, a potential drain on the general fund that may diminish the legislature's ability to fund much-needed public programs or provide tax relief for Hawaii's families and individuals.

Consequently, the legislature finds that controlling the tax expenditures resulting from future claims of the high technology business investment tax credit is imperative. It is the legislature's intent to impose this control while also retaining the tax credit amounts to which taxpayers are entitled.

The legislature intends that this Act shall not be construed as re-authorizing the high technology business investment tax credits of section 235-110.9, Hawaii Revised Statutes, or permitting the department of taxation to re-commence certifying tax credits. The legislature emphasizes that no new high technology business investment tax credits shall be earned or certified.

The purpose of this Act is to address taxation by placing a maximum dollar amount on the certified, but yet unclaimed, high technology business investment tax credits that may be claimed annually. This Act shall apply to taxable years beginning after December 31, 2017, by which time the department of taxation is expected to have an operational information technology system capable of implementing this Act.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Unclaimed certified high technology business investment tax credit; maximum claimable. (a) For the purpose of this section, "unclaimed certified high technology business investment tax credit" means a high technology business investment tax credit:

(1) Certified as claimable by the department of taxation before section 235-110.9 became inapplicable pursuant to section 235-110.9(k); and

(2) Unclaimed by the taxpayer as of January 1, 2016.

(b) The aggregate dollar amount of unclaimed certified high technology business investment tax credits that may be claimed during a taxable year shall not exceed $40,000,000.

(c) During a taxable year, the department of taxation shall allow taxpayers to claim unclaimed certified high technology business investment tax credits until the aggregate amount claimed totals $40,000,000.

Once the amount claimed totals $40,000,000, the department shall not allow any taxpayer to claim any unclaimed certified high technology business investment tax credit for the remainder of the taxable year.

If, during a taxable year, a portion of a taxpayer's claim of an unclaimed certified high technology business investment tax credit causes the aggregate amount claimed to exceed the $40,000,000 maximum claimable for the taxable year, then the department of taxation shall not allow the taxpayer to claim the portion that causes the aggregate total to exceed $40,000,000. The department shall allow the taxpayer to claim only the portion that does not cause the aggregate total to exceed the $40,000,000 maximum.

If the department does not allow a taxpayer to claim all or a portion of the unclaimed certified high technology business investment tax credit because the claim would exceed the maximum claimable amount for the taxable year, the department may waive any penalty or interest attributable to the disallowed claim.

(d) In order to claim an unclaimed certified high technology business investment tax credit in any taxable year, a taxpayer shall file with the department of business, economic development, and tourism:

(1) A written, certified statement that includes the following information:

(A) The qualified high technology business, the investment for which the claim for an unclaimed certified high technology business investment tax credit is based;

(B) The investment amount and investment tax credit allocation ratio; and

(C) The number of employees employed by the qualified high technology business on the date the claim for an unclaimed certified high technology business investment tax credit is submitted, including a list of the employees and the salary of each employee; and

(2) Written consent that the information provided under paragraph (1) shall be available for public inspection and dissemination under chapter 92F.

The taxpayer shall file the statement and consent no later than the filing of the claim for the unclaimed certified high technology business investment tax credit with the department of taxation.

The department of business, economic development, and tourism shall annually aggregate the data received from taxpayers for a tax year and submit a report to the legislature with the data no later than twenty days prior to the convening of each regular session.

The department of business, economic development, and tourism shall not be required to monitor or require a taxpayer to comply with this section. If, however, the department of business, economic development, and tourism becomes aware that a taxpayer has not complied with this section, the department of business, economic development, and tourism shall notify the department of taxation.

Upon receiving the notification, the department of taxation shall deny the taxpayer's claim for an unclaimed certified high technology business investment tax credit and impose any applicable penalty and interest.

(e) A taxpayer who is precluded from claiming any unclaimed certified high technology business investment tax credits pursuant to subsections (b) and (c) may file a claim for the credits in subsequent taxable years."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2017.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2546
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII