Bill Text: HI SB3051 | 2022 | Regular Session | Introduced
Bill Title: Relating To Tax Credit For Research Activities.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-01-26 - Referred to EET, WAM. [SB3051 Detail]
Download: Hawaii-2022-SB3051-Introduced.html
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THE SENATE |
S.B. NO. |
3051 |
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THIRTY-FIRST LEGISLATURE, 2022 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-110.91, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.91 Tax credit for research activities.
(a) Section 41 (with respect to
the credit for increasing research activities) and section 280C(c) (with
respect to certain expenses for which the credit for increasing research
activities are allowable) of the Internal Revenue Code shall be operative for
the purposes of this chapter as provided in this section; provided that the
federal tax provisions in section 41 of the Internal Revenue Code, as that
section was enacted on December 31, 2011, irrespective of any subsequent
changes to section 41 of the Internal Revenue Code, shall remain in effect for
purposes of determining the state income tax credit under this section;
provided further that the federal tax provisions in section 41 of the Internal
Revenue Code, as enacted on December 31, 2011, irrespective of any subsequent
amendments to section 41 of the Internal Revenue Code, shall apply only to
expenses incurred for qualified research activities after December 31, 2012.
(b)
All references to Internal Revenue Code sections within sections 41 and
280C(c) of the Internal Revenue Code shall be operative for purposes of this
section; provided that references to the base amount in section 41 of the
Internal Revenue Code shall not apply, and credit for all qualified research
expenses may be taken without regard to the amount of expenses for previous
years.
(c)
There shall be allowed to each qualified high technology business
subject to the tax imposed by this chapter an income tax credit for qualified
research activities equal to the credit for research activities provided by
section 41 of the Internal Revenue Code and as modified by this section;
provided that, in addition to any other requirements established in this
section, in order to qualify for the tax credit established in this section, the
qualified high technology business shall also claim a federal tax credit for
the same qualified research activities under section 41 of the Internal Revenue
Code, as enacted on December 31, 2011, irrespective of any subsequent
amendments to section 41 of the Internal Revenue Code. The credit 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. Each taxpayer, together with all of its
related entities, may not be eligible for any more than $1,000,000 in tax
credits provided by this section per taxable year.
(d) [Every]
To be eligible for the credit, every qualified high technology business,
[before March 31 of each year] no later than the last day of the
third month immediately following the end of each taxable year in which
qualified research and development activity was conducted [in the previous
taxable year], shall submit a written, certified statement to the department
of business, economic development, and tourism, identifying[:] at
a minimum:
(1) Qualified
expenditures, if any, expended in the previous taxable year; [and]
(2) The amount of tax credits claimed pursuant to this
section, if any, in the previous taxable year[.];
(3) The
industry sector or sectors in which the qualified high technology business
conducts business, as set forth in paragraphs (2) to (8) of the definition of "qualified
research" in section 235‑7.3(c);
(4) Revenue
and expense data, including a breakdown of any licensing royalty or other forms
of income generated from intellectual property;
(5) Hawaii
employment and wage data, including the numbers of full-time and part-time
employees retained, new jobs, temporary positions, external services procured
by the business, and payroll taxes;
(6) The
number of filed intellectual property, including invention disclosures,
provisional patents, and patents issued or granted; and
(7) The
number of new companies spun out or established in Hawaii to commercialize the
intellectual property owned by the qualified high technology business.
Failure
to meet the requirements of this subsection shall constitute a waiver of the
right to claim the credit.
The department of business, economic
development, and tourism shall request information in each of these categories
sufficient to measure the effectiveness of the tax credit under this
section. The department of business,
economic development, and tourism may request any additional information
necessary to measure the effectiveness of the tax credit, such as additional information
related to patents.
(e)
The department of business, economic development, and tourism shall:
(1) Maintain
records of the names and addresses of the taxpayers claiming the credits under
this section and the total amount of the qualified research and development
activity costs upon which the tax credit is based;
(2) Verify
the nature of the qualifying research activity and the amount of the qualifying
costs or expenditures;
(3) Total
all qualifying and cumulative costs or expenditures that the department
certifies; and
(4) Certify
the amount of the tax credit for each taxable year and cumulative amount of the
tax credit.
Upon each determination made under this
subsection, the department of business, economic development, and tourism shall
issue a certificate to the taxpayer verifying information submitted to the
department of business, economic development, and tourism, including the
qualifying costs or expenditure amounts, the credit amount certified for each
taxable year, and the cumulative amount of the tax credit during the credit
period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department of
taxation. Notwithstanding the authority
of the department of business, economic development, and tourism under this
section, the director of taxation may audit and adjust the tax credit amount to
conform to the facts.
The department of business, economic
development, and tourism may assess and collect a fee to offset the costs of
certifying tax credit claims under this section.
(f)
If in any [taxable] calendar year the annual amount of
certified credits reaches $5,000,000 in the aggregate, the department of
business, economic development, and tourism shall immediately discontinue
certifying credits and notify the department of taxation. In no instance shall the department of
business, economic development, and tourism certify a total amount of credits
exceeding $5,000,000 per [taxable] calendar year. To comply with this restriction, the
department of business, economic development, and tourism shall certify credits
on a [first come, first served] first-come, first-served basis[.],
which is determined based on the date a complete application is received by the
department of business, economic development, and tourism; provided that a taxpayer
who is unable to receive a credit certification solely because the $5,000,000
aggregate cap has been reached shall receive certification priority in the
following calendar year for the certification requested in the submitted
application if the taxpayer is still eligible to claim that tax credit under
subsection (h). In no event shall this subsection
be interpreted to extend the deadline to claim the credit under subsection (h). The department of taxation in conjunction
with the department of business, economic development, and tourism shall issue
guidance addressing the allocation of credits when the amount of credits
requested in complete applications received on the same day exceeds the amount
of credit available for allocation.
The department of taxation shall not allow
the aggregate amount of credits claimed to exceed that amount per taxable year.
(g)
If the tax credit for qualified research activities claimed by a
taxpayer exceeds the amount of income tax payment due from the taxpayer, the
excess of the tax credit over payments due shall be refunded to the taxpayer;
provided that no refund on account of the tax credit allowed by this section
shall be made for amounts less than $1.
(h)
All claims for a tax credit under this section 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 properly claim the credit shall constitute a waiver of the right to claim
the credit.
[(i)
A qualified high technology business that claims the credit under this
section shall complete and file with the department of business, economic
development, and tourism, through that department's website, an annual survey
on electronic forms prepared and prescribed by the department of business,
economic development, and tourism. The
annual survey shall be filed before June 30 of each calendar year following the
calendar year in which the credit may be claimed under this section. The department of business, economic
development, and tourism may adjust the due date of the annual survey by rules
adopted pursuant to chapter 91.
(j)
The annual survey under subsection (i) shall include the following
information for the time period or periods specified by the department of
business, economic development, and tourism:
(1) Identification
of the industry sector or sectors in which the qualified high technology
business conducts business, as set forth in paragraphs (2) to (8) of the
definition of "qualified research" in section 235‑7.3(c);
(2) Total
expenditures and the qualified expenditures, if any, expended in the previous
taxable year;
(3) Revenue
and expense data, including a breakdown of any licensing royalty or other forms
of income generated from intellectual property;
(4) Hawaii
employment and wage data, including the numbers of full-time and part-time
employees retained, new jobs, temporary positions, external services procured
by the business, and payroll taxes;
(5) Filed
intellectual property, including invention disclosures, provisional patents,
and patents issued or granted; and
(6) The
number of new companies spun out or established to commercialize the
intellectual property owned by the qualified high technology business.
The department of business, economic
development, and tourism shall request information in each of these categories
sufficient to measure the effectiveness of the tax credit under this
section. The department of business,
economic development, and tourism may request any additional information
necessary to measure the effectiveness of the tax credit, such as information
related to patents. In preparing the survey
and requesting any additional information, the department of business, economic
development, and tourism shall ensure that qualified high technology businesses
are not subject to duplicative reporting requirements.
(k)] (i) The department of business, economic
development, and tourism shall use information collected under this section and
through its other reporting requirements to prepare summary descriptive
statistics by category. The information
shall be reported at the aggregate level to prevent compromising identities of
qualified high technology business investors or other confidential
information. The department of business,
economic development, and tourism shall also identify each qualified high technology
business that applies for or is the beneficiary of tax credits claimed under
this section. The department of
business, economic development, and tourism shall report the information
required under this subsection to the legislature by September 1 of each year.
[(l)] (j) The department of business, economic development,
and tourism, in collaboration with the department of taxation, shall use the
information collected to study the effectiveness of the tax credit under this
section. The department of business,
economic development, and tourism shall submit a report to the legislature on
the following:
(1) The
amount of tax credits claimed and total taxes paid by qualified high technology
businesses;
(2) The
number of qualified high technology businesses in each industry sector;
(3) The
numbers and types of jobs created by qualified high technology businesses;
(4) External
services and materials procured by the businesses;
(5) The
compensation levels of jobs provided by qualified high technology businesses;
(6) Qualified
research activities; and
(7) Any
other factors the department of business, economic development, and tourism
deems relevant.
The
department of business, economic development, and tourism shall submit the
report to the legislature by September 1 of each year.
[(m)] (k) The director of taxation may adopt any rules
under chapter 91 and forms necessary to carry out this section.
[(n)] (l) This section shall not apply to taxable years
beginning after December 31, 2024.
[(o)] (m) As used in this section:
"Qualified high technology business"
shall have the same meaning as in section 235-7.3(c).
"Qualified research" shall have
the same meaning as in section 41(d) of the Internal Revenue Code.
"Qualified research expenses"
shall have the same meaning as in section 41(b) of the Internal Revenue Code;
provided that it shall not include research expenses incurred outside of the
State."
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2021.
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INTRODUCED BY: |
_____________________________ |
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BY REQUEST |
Report Title:
Tax Credit for Research Activities
Description:
Consolidates the survey and the certification requirements for the research activities tax credit, requires the certification based on the date a complete application is received subject to certain conditions, and adds a cap for an eligible taxpayer and the taxpayer's related entities.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
