CONFERENCE COMMITTEE REP. NO. 132

Honolulu, Hawaii

                 , 2009

RE:    S.B. No. 199

       S.D. 1

       H.D. 1

       C.D. 2

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam and Sir:

     Your Committee on Conference to which was recommitted S.B. No. 199, S.D. 1, H.D. 1, C.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

     As originally received, this measure limits claims for business tax credits for taxable years beginning January 1, 2009, and ending before January 1, 2011, to seventy-five per cent of the taxpayer's liability for the taxable year in which the credit is claimed.  The measure also exempts certain tax credits from this limitation.

     The measure in its amended form limits claims for the high technology business investment tax credit and the technology infrastructure renovation tax credit for taxable years beginning January 1, 2009, and ending before January 1, 2011, to ninety per cent of the taxpayer's liability for the taxable year in which the credit is claimed.

     In addition, this measure:

     (1)  Prohibits tax credit carryovers into subsequent taxable years of any high technology business investment tax credit and technology infrastructure renovation tax credit generated between January 1, 2009, and December 31, 2010;

     (2)  Provides for the temporary treatment of pass-through entities for income tax credit allocation purposes;

     (3)  Temporarily removes the partner distributive share tax incentive for the high technology business investment tax credit; and

     (4)  Temporarily suspends the capital goods excise tax credit for one year to coincide with the federal capital goods excise tax credit under section 179 of the Internal Revenue Code.

     Upon reconsideration, your Committee has further amended this measure by:

     (1)  Changing the amount of the tax credit claim limitation from ninety per cent to eighty per cent of a taxpayer's tax liability;

     (2)  Removing the provisions for the temporary treatment of pass-through entities for income tax credit allocation purposes;

     (3)  Clarifying that the investment credit allocation ratio shall be 1 to 1 for any investment made on or after May 1, 2009;

     (4)  Specifying that applicable sections of the measure apply to investments made, renovation costs incurred, or eligible tangible property placed in service on or after May 1, 2009;

     (5)  Prohibiting tax credit carryover for any tax credits claimed for taxable years beginning on or after January 1, 2009 to December 31, 2010;

     (6)  Removing the measure's sunset date; and

     (7)  Making technical, nonsubstantive amendments for the purposes of consistency, clarity, and style.

     As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 199, S.D. 1, H.D. 1, C.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 199, S.D. 1, H.D. 1, C.D. 2.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________ MARCUS R. OSHIRO, Chair

____________________________ DONNA MERCADO KIM, Chair