HB1917

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

"§235- Medical services excise tax credit. (a) Each resident individual taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state individual income tax purposes, may claim a medical services excise tax credit against the resident taxpayer's individual income tax liability for the taxable year for which the individual income tax return is being filed; provided that a resident individual who has no income or no income taxable under this chapter and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for Hawaii state individual income tax purposes may also claim this tax credit.

(b) The medical services excise tax credit shall be equal to the amount of general excise tax paid by the provider or providers of the qualified medical services received and paid for by the taxpayer during the taxable year.

(c) The tax credit claimed by a resident taxpayer pursuant to this section shall be applied against the resident taxpayer's individual income tax liability, if any, for the tax year in which they are properly claimed. If the tax credit claimed by the resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of credit over payments due shall be refunded to the resident taxpayer; provided that a tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

(d) The director of taxation shall prepare such forms as necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information to enable the director 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) All claims for the tax credits under this section, including any 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.

(f) For purposes of this section:

"Prosthetic device" means any artificial device or appliance, instrument, apparatus, or contrivance, including their components, parts, accessories, and replacements thereof, used to replace a missing or surgically removed part of the human body, which is prescribed by a licensed practitioner of medicine, osteopathy, or podiatry and which is sold by the practitioner or which is dispensed and sold by a dealer of prosthetic devices; provided that "prosthetic device" shall not mean an auditory, ophthalmic, dental, or ocular device or appliance, instrument, apparatus, or contrivance.

"Qualified medical services" includes medical services provided by a hospital, infirmary, medical clinic, health care facility, pharmacy, or a practitioner licensed to administer drugs to an individual or to sell prescription drugs or prosthetic devices to an individual; provided the services are necessary to treat a person's medical or health condition, including physicians' visits and consultations; provided further that "medical services" shall not include cosmetic surgery or cosmetic care, plastic surgery, and cosmetic dentistry unless the costs and expenses from such medical services qualify as a deduction under Section 213 of the Internal Revenue Code."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2006.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1917
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII