HB51

Report Title:

Earned Income Tax Credit

Description:

Provides a 20% earned income tax credit to resident taxpayers.

HOUSE OF REPRESENTATIVES	H.B. NO.	51
TWENTY-FIRST LEGISLATURE, 2001
STATE OF HAWAII

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- Earned income tax credit. (a) Each resident individual taxpayer, who files an individual net income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for income tax purposes, may claim an earned income tax credit equal to twenty per cent of the federal earned income tax credit determined under section 32 of the Internal Revenue Code and reported as such on the resident individual's federal income tax return.

(b) In the case of a part-year resident, the credit shall equal the amount of the credit multiplied by the ratio of adjusted gross income attributed to this State to the entire adjusted gross income computed without regard to source in the State pursuant to section 235-5.

(c) A resident individual taxpayer shall use the same filing status (i.e., "married filing jointly", "head of household", "qualifying widow(er)", or "single") on their Hawaii tax return as used on the taxpayer's federal return for the taxable year.

(d) In the case of a husband and wife filing an individual net income tax return separately, the tax credit may be applied against the tax of either spouse; provided that the total amount of the tax credit claimed by both spouses shall not exceed the amount claimed under subsection (a).

(e) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. All claims, including any amended claims for tax credits 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 comply with the preceding sentence shall constitute a waiver of the right to claim the credit.

(f) The director of taxation:

(1) Shall prepare such forms as may be necessary to claim the tax credit under this section;

(2) May require proof of the claim for the tax credit;

(3) Shall make reasonable efforts to provide notice to taxpayers who may be eligible to receive the tax credit; and

(4) May adopt rules pursuant to chapter 91 necessary to effectuate this section."

SECTION 2. Section 231-3.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The department of taxation shall publish reports on the following:

(1) Hawaii income patterns -- individuals;

(2) Hawaii income patterns -- corporations, proprietorships, and partnerships; and

(3) Tax credits[.], that shall include annual statistical information on the total amount of revenue expended on the earned income credit under section 235- , the number of earned income credits claimed, and the average value of those credits granted to taxpayers whose earned income falls within various income ranges as determined by the director of taxation.

The department shall make each of these reports available in both paper form and commonly accessible electronic forms for a reasonable fee."

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

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2000.

INTRODUCED BY:	_____________________________