HB2972.DOC

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

"§235- Adopt a school program tax credit. (a) There shall be allowed to each taxpayer who is subject to the tax imposed by this chapter, and does not owe the State delinquent taxes, penalties, or interest, a credit for products or services donated to reduce the amount of state funds expended on the operating costs of a public school being considered for closure by the department of education. The credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the credit determined under this section for the taxable year shall be equal to per cent of the value of products or services donated to the department of education; provided that the aggregate value of the donated products or services claimed by a taxpayer shall not exceed $ .

(c) The department of education shall determine whether a product or service may be accepted for the purposes of this section. The department of education shall base this determination on whether a donation of the product or service offered will result in a reduction of the amount of state funds expended on a public school being considered for closure.

In order to qualify for the tax credit allowed under this section, the product or service offered by a taxpayer for donation must be determined, by the department of education, to be acceptable for the purposes of this section.

(d) For purposes of this section:

"Public school" has the same meaning as "public schools" defined in section 302A-101.

"Value of products or services donated" means the fair market value of donated products or uncompensated services or labor as determined and certified by the department of accounting and general services.

(e) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(f) All claims for 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 credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(g) The department of education shall maintain records of the names of taxpayers eligible for the credit and the total value of products or services donated for the taxable year. All contributions shall be verified by the department of education. The department of education shall total all contributions that the department of education certifies. Upon each determination, the department of education shall issue a certificate to the taxpayer certifying:

(1) The amount of the donation;

(2) That the donation shall be used to reduce the amount of state funds expended on operating costs for a public school being considered for closure; and

(3) That the taxpayer has obtained a current and valid certificate signed by the director of taxation, showing that the taxpayer does not owe the State any delinquent taxes, penalties, or interest.

The taxpayer shall file the certificate from the department of education with the taxpayer's tax return with the department of taxation. When the total amount of certified donations reaches $ , the department of education shall immediately discontinue certifying donations and notify the department of taxation. In no instance shall the total amount of certified donations exceed $ for each taxable year.

(h) The State shall provide not more than $ in tax credits for products or services donated to reduce the amount of state funds expended on the operating costs of a public school being considered for closure by the department of education.

(i) The director of taxation:

(1) Shall prepare any forms that may be necessary to allow a credit to be claimed under this section; and

(2) May adopt rules pursuant to chapter 91 to effectuate the purposes of this section."

SECTION 2. The department of education shall adopt or amend rules pursuant to chapter 91, Hawaii Revised Statutes, to develop a program to determine what donations can be accepted to reduce the amount of state funds expended on the operating costs of public schools being considered for closure.

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon approval and shall apply to taxable years beginning after December 31, 2009.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2972
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII