Establishes a tax credit for the acquisition of environmentally-friendly green technology facilities.

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- Green technology facility tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a green technology facility tax credit that 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 tax credit claimed under this section shall be equal to per cent of the qualified costs incurred by the taxpayer in acquiring a green technology facility. To qualify for the tax credit, the green technology facility shall be located in Hawaii and shall have been operational for at least one year prior to claiming the tax credit.

In the case of a partnership, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for qualified costs incurred by the entity. 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 or was 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 qualified costs 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) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted. All claims, including amended claims, for a tax credit under this section shall be filed on or before the end of the twenty-fourth 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.

(c) 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 determine 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.

(d) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2006.

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

(f) As used in this section:

"Qualified costs" means costs of:

"Green technology facility" means a facility that:

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

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.