Provides a tax credit for taxpayers that incur costs for planning, designing, constructing, or otherwise modifying private facilities, which reinforces the facility's integrity pursuant to civil defense specifications.

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- Private facilities retrofit tax credit.

(a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit, 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 amount of the credit shall be four per cent of the retrofit construction or renovation costs incurred during the taxable year for each "qualified private facility" located in Hawaii, and shall not include the construction or renovation costs for which another credit was claimed under this chapter for the taxable year.

In the case of a partnership, corporation, estate, trust, or other association of owners of a qualified private facility, the tax credit allowable is for retrofit construction or renovation 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 pursuant to section 235-110.7(a).

If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the retrofit construction or renovation cost for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims for a 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 the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish 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.

(e) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2005.

(f) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(g) As used in this section:

"Retrofit construction or renovation cost" means any costs incurred after December 31, 2005, for plans, design, construction, and equipment related to new construction, alterations, or modifications to a qualified private facility that retrofits, updates, or hardens the existing structure or structures and appurtenances thereto for the purpose of reinforcing the integrity according to specifications adopted by the civil defense agency.

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified private facility" means:

(h) No taxpayer that claims a credit under this section shall claim a credit under chapter 235D."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2006.