HB1629 HD1

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

"§235- Corporation prevailing wage tax credit. (a) There shall be allowed to each qualified corporation subject to the tax imposed by this part, a corporation prevailing wage tax credit which shall be applied against the qualified corporation's net income tax liability, if any, imposed by this part for the taxable year in which the credit is properly claimed.

(b) The corporation prevailing wage tax credit shall be equal to one hundred per cent of a qualified corporation's net income tax liability under this part for the taxable year in which the credit is claimed.

(c) 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.

(d) Application for the credit under this section shall be upon forms provided by the department. The director of taxation shall require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section.

(e) The department shall issue a certificate to the taxpayer verifying the information submitted to the department. The taxpayer shall file the certificate with the taxpayer's tax return with the department. The director of taxation may assess and collect a fee to offset the costs of certifying tax credit claims under this section. All fees collected under this section shall be deposited into the tax administration special fund established under section 235-20.5.

(f) The director of taxation may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(g) For the purposes of this section:

"Basic hourly wage" means the rate of wages paid to the greatest number of those employed in the state, the modal rate, in corresponding classes of similar employment.

"Basic salary" means the monthly salary paid to the greatest number of those employed in the state, the modal rate, in corresponding classes of similar employment.

"Prevailing wage" means the wage or salary, as the case may be, established by the director of taxation as the sum of the basic hourly rate or basic salary, and the cost to an employer of providing fringe benefits.

"Qualified corporation" means a corporation in which one hundred per cent of the corporation's employees are paid at least the prevailing wage."

SECTION 2. Section 235-20.5, Hawaii Revised Statutes, is amended to read as follows:

"§235-20.5 Tax administration special fund; established. There is established a tax administration special fund, into which shall be deposited fees collected under sections 235-20, 235- , 235-110.9, and 235-110.91, and penalties collected under section 2 of Act 206 [[]Session Laws of Hawaii 2007[]]. The moneys in the fund shall be expended by the department to offset the costs associated with:

(1) Issuing comfort letters;

(2) Administering the tax credit under section 235- , including issuing certificates;

[~~(2)~~] (3) Administering the tax credit under section 235-110.9, including issuing certificates; and

[~~(3)~~] (4) Issuing certificates under section 235-110.91."

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

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2008; provided that the amendments made to section 235-20.5, Hawaii Revised Statutes, by this Act shall not be repealed when that section is repealed and reenacted on January 1, 2011, by section 8 of Act 206, Session Laws of Hawaii 2007.

HOUSE OF REPRESENTATIVES	H.B. NO.	1629
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 1
STATE OF HAWAII