Provides an income tax credit and general excise tax credit for the construction or improvement of commercial harbors in Hawaii.

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- Harbor facilities development and improvement tax credit. (a) There shall be allowed to each qualified taxpayer subject to the taxes imposed by this chapter or chapter 237, a tax credit that may be claimed for taxable years beginning after December 31, 2004, for qualified costs in the new development or improvement of commercial harbor facilities in the State.

The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter and, at the election of the taxpayer, from the tax liability imposed by chapter 237.

(b) The tax credit earned shall be equal to the qualified costs incurred from January 1, 2005, through December 31, 2009, up to a maximum of $10,000,000 of credits in the aggregate for all qualified taxpayers for all years; provided that notwithstanding the amount of tax credits earned in any year, a maximum of $2,000,000 of tax credits in the aggregate for all qualified taxpayers may be used in any one taxable year. The credits over $2,000,000 shall be used as provided in subsection (d).

In the case of a partnership, limited liability company, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for qualified costs incurred by the entity. The costs upon which the tax credit is computed shall be determined at the entity level.

(c) To qualify for the tax credit, a taxpayer shall have expended qualified costs for the new development or the improvement of an existing commercial harbor facility in the State.

(d) If the tax credit under this section exceeds $2,000,000 in the aggregate for all qualified taxpayers for any taxable year or exceeds the taxpayer's tax liability under this chapter or chapter 237, in any year for which the credit is taken, the excess of the tax credit may be used as a credit against the taxpayer's tax liability for the taxes set forth in this section in subsequent years until exhausted; provided that the taxpayer may continue to claim the credit provided in this section if the qualified costs are incurred before January 1, 2010, subject to the monetary ceilings in subsection (b).

(e) Every claim, including amended 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 comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) If, at any time during the five-year period in which tax credits are earned under this section, the costs incurred no longer meet the definition of qualified costs, the credits claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the total tax credits claimed under this section for the preceding taxable year; provided that the amount of the credits recaptured shall apply only to those costs that no longer meet the definition of qualified costs. The amount of the recaptured tax credits determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(g) If any credit is claimed under this section, then no taxpayer shall claim a credit under any chapter other than chapter 235 or 237 for the same qualified costs for which a credit is claimed under this section.

(h) 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 claims for credits made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

Every qualified taxpayer, no later than March 31 of each year in which qualified costs were expended in the previous taxable year, shall submit a written, certified statement to the director of taxation, identifying:

(i) The department of taxation shall maintain records of the names of taxpayers eligible for the credits and the total amount of qualified costs incurred from January 1, 2005, through December 31, 2009. The department of taxation shall verify all qualified costs and, upon each determination, shall issue a certificate to the taxpayer certifying:

The department of taxation shall certify no more than $200,000 in credits in the aggregate for all taxpayers for each taxable year; provided that the department shall certify qualified costs of no more than $10,000,000 in the aggregate, from January 1, 2005, through December 31, 2009. The taxpayer shall file the certificate with the taxpayer's return with the department of taxation.

(j) As used in this section:

"Commercial harbor facilities" means any commercial harbor, roadstead, or other commercial waterfront facility in the State.

"Qualified costs" means any costs for the plans, design, construction, or equipment that is permanently affixed to a building or structure that are related to the new development or improvement of a commercial harbor facility constructed pursuant to federal, state, and county laws or ordinances, up to a total of $10,000,000, in the aggregate, incurred after December 31, 2004, and before January 1, 2010; provided that "qualified costs" shall not include land acquisition costs.

"Qualified taxpayer" means a person who fulfills the requirements of subsection (c)."

SECTION 2. New statutory material is underscored.

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