HOUSE OF REPRESENTATIVES

H.B. NO.

1954

TWENTY-FIFTH LEGISLATURE, 2010

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO EMPLOYMENT.

 

 

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

 

     SECTION 1.  The purpose of this Act is to establish a short-term tax credit for an employer who hires more employees and increases the wages paid by the employer from 2009 to 2010.

     The legislature has purposely applied the tax credit to employers who were in business in 2009 to recognize the difficulty of operating during the present severe economic downturn.  The legislature finds that these employers should be given the opportunity to benefit from this tax credit.

     SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     §235-     Employment increase tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an employment increase tax credit.  A taxpayer shall be eligible for the tax credit if the taxpayer is an employer who increased the:

     (1)  Number of employees in the taxpayer's business in calendar year 2010 by at least ten per cent over the number of employees in the taxpayer's business in calendar year 2009; and

     (2)  Total wages paid by the taxpayer in calendar year 2010 over the total wages paid in calendar year 2009.

The "number of employees" and "total wages paid" shall be computed in accordance with the definitions under subsection (j).

     A taxpayer who did not employ any person or pay any wages in calendar year 2009 shall not be eligible for the tax credit.

     (b)  The amount of the credit shall be ten per cent of the amount of the increase between:

     (1)  The total wages paid in calendar year 2010; and

     (2)  The total wages paid in calendar year 2009.

     The tax credit shall be deductible from the taxpayer's net income tax liability for the taxable year beginning after December 31, 2011.

     (c)  To determine the amount of the tax credit for a taxpayer who acquires the business of, or succeeds an employer who had previously paid wages in calendar year 2009, the following shall apply:

     (1)  If the taxpayer acquires the business of, or succeeds an employer who paid total wages in calendar year 2009, those total wages shall be deemed to have been paid by the taxpayer in calendar year 2009.  Those total wages shall be added to the total wages actually paid by the taxpayer in calendar year 2009 for comparison with the total wages paid by the taxpayer in calendar year 2010; and

     (2)  If the taxpayer acquires the business of, or succeeds an employer who paid total wages in calendar years 2009 and 2010, those total wages shall be deemed to have been paid by the taxpayer in each of those calendar years, respectively.  The total wages deemed paid in the calendar years 2009 and 2010 shall be added to the total wages actually paid by the taxpayer in calendar years 2009 and 2010, respectively, for comparison with the total wages paid by the taxpayer.

     (d)  Subject to the limit of subsection (f), the credit allowed under this section shall be claimed against the net income tax liability of the taxpayer for the taxable year beginning after December 31, 2011.

     (e)  If the tax credit claimed by a taxpayer under this section exceeds the taxpayer's income tax liability for the taxable year beginning after December 31, 2011, the excess of credit over liability may be carried forward by the taxpayer and, subject to the limit under subsection (f), claimed against the taxpayer's income tax liability in future taxable years until exhausted.

     (f)  A taxpayer shall not claim more than $50,000 of the tax credit allowed under this section in any single taxable year.

     (g)  All 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 beginning after December 30, 2011.  If a portion of the tax credit is unused in that taxable year and carried forward, the carried forward credit shall be claimed on or before the twelfth month following the close of each succeeding taxable year until exhausted.

     The failure to comply with the foregoing provisions shall constitute a waiver of the right to claim the credit.

     (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 claim for the credit and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

     (i)  To qualify for the tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

     (j)  As used in this section:

     "Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

     "Number of employees" means the sum of the number of covered employees of a taxpayer during each quarter of a calendar year as prescribed and reported under chapter 383.

     "Total wages" means the total wages paid by a taxpayer during each quarter of a calendar year as prescribed and reported under chapter 383."

     SECTION 3.  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, 2009.

 

INTRODUCED BY:

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Report Title:

Tax Credit; Employment Increase

 

 

Description:

Provides a tax credit for increases in the total wages paid by a taxpayer between 2009 and 2010.

 

 

 

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