Provides an agricultural infrastructure improvement tax credit for improvements made to agricultural infrastructure on important agricultural lands. (HB1640 HD1)

A BILL FOR AN ACT

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Important agricultural lands; agricultural infrastructure improvement tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an agricultural infrastructure improvement tax credit for improvements made to agricultural infrastructure on important agricultural lands designated pursuant to chapter 205, which 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. The tax credit shall be an amount equal to the cost of improvements made by the taxpayer for agricultural infrastructure for the taxable year in which the improvements were made.

(b) The tax credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this tax credit, the "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for improvement costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule pursuant to chapter 91.

(d) A tax credit under this section that exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. 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 foregoing provision shall constitute a waiver of the right to claim the credit.

(e) The director of taxation shall prepare forms as may be necessary to claim a credit under this section and may adopt rules pursuant to chapter 91. The director may require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section.

(f) As used in this section:

"Agricultural infrastructure improvement" means the planning, design, construction, improvement, alteration, or repair of supporting infrastructure used or formerly used by a plantation system or other large agricultural operation, including irrigation systems, roads, and drainage systems.

"Drainage systems" means an agricultural system of channels, ditches, pipes, pumps, and accessory facilities established for the purpose of drawing water off a land area larger than twenty acres.

"Irrigation systems" means the agricultural system of intakes, diversions, wells, ditches, siphons, pipes, reservoirs, and accessory facilities established for the purpose of providing water for agricultural production.

"Roads" means an agricultural system of cane haul roads or ways established to transport agricultural products from the fields to processing facilities without using the public highways."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2005, and shall apply to taxable years beginning after December 31, 2004.