SB2514

THE SENATE	S.B. NO.	2514
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TAX CREDITS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. (a) There shall be allowed to each taxpayer in the upcountry Maui area and other areas in the sixth district who are not claimed, or are not otherwise eligible to be claimed, as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who files a net income tax return for a taxable year, a one-time nonrefundable tax credit that shall be deductible from the taxpayer's net income tax liability imposed by chapter 235, Hawaii Revised Statutes.

(b) The amount of the nonrefundable tax credit shall be

per cent of the losses incurred by the taxpayer for repairs, insurance, rental, or other expenses or costs related to the damage caused to the taxpayer's real or personal property in the upcountry Maui area and other affected areas in the sixth senatorial district by the flood and wind storm damage in December of 2007, provided that:

(1) The expenses or costs are not reimbursable by insurance proceeds or disaster relief payments from government agencies or non-profit organizations;

(2) The tax credit shall not exceed $ per taxpayer; and

(3) No refund or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

(c) If the tax credit under this section exceeds the taxpayer's net income tax liability, any excess of the tax credit may be used as a credit against the taxpayer's income tax liability in subsequent taxable years until exhausted.

(d) In the case of a partnership, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for expenses incurred and paid for 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), Hawaii Revised Statutes.

(e) If a deduction is taken under section 179 (with respect to election to expense certain depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the expenses 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.

(f) No taxpayer that claims the tax credit under this section shall claim any other credit for the same losses or other expenses or costs.

(g) Every claim, including amended claims, for the tax credit under this section shall be filed on or before December 31, 2008. Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

(h) The director of taxation:

(1) Shall determine the applicability of this Act with respect to the boundaries and locations of flood and wind storm damage in December of 2007 in the upcountry Maui area and other affected areas in the sixth senatorial district that are subject to this Act;

(2) Shall prepare any forms as may be necessary to claim a tax credit under this section;

(3) May require proof of the claim for the tax credit; and

(4) May adopt rules pursuant to chapter 91, Hawaii Revised Statutes, to effectuate the purposes of this Act.

SECTION 2. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2007.

INTRODUCED BY:	_____________________________