SB467.DOC

SECTION 1. The purpose of this Act is to support the renewable energy industry in Hawaii by:

(1) Establishing a division of renewable energy in the department of business, economic development, and tourism to coordinate and promote renewable energy initiatives; and

(2) Establishing a renewable energy business investment earned income tax credit.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201- Renewable energy division; established. (a) There is established, within the department of business, economic development, and tourism, a division of renewable energy.

(b) The division shall:

(1) Develop policies that promote and strengthen the commercialization of Hawaii's renewable energy resources and technologies to reduce the State's high dependence on imported oil and increase local economic development;

(2) Support Hawaii's renewable portfolio standards pursuant to chapter 269, part V;

(3) Maintain renewable energy business investment earned income tax credit information pursuant to chapter 235‑ ;

(4) Provide resource data, technical and economic analyses, and support for research of renewable energy;

(5) Provide opportunities for demonstration, development, and application of renewable energy;

(6) Promote partnerships and technology transfer; and

(7) Assist with and promote public outreach related to renewable energy resources and technologies.

(c) Notwithstanding any other law to the contrary, if any of the responsibilities or duties of the division of renewable energy under this section overlap with the responsibilities or duties of another agency or authority under this chapter, the division of renewable energy shall have exclusive jurisdiction and authority over those responsibilities and duties."

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Renewable energy business investment, earned income tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a renewable energy business investment tax credit that shall be deductible from the taxpayer's earned income tax liability, if any, imposed by this chapter for the taxable year in which the investment was made and the following four years; provided the credit is properly claimed. The tax credit shall be as follows:

(1) In the year the investment was made, thirty-five per cent;

(2) In the first year following the year in which the investment was made, twenty-five per cent;

(3) In the second year following the investment, twenty per cent;

(4) In the third year following the investment, ten per cent; and

(5) In the fourth year following the investment, ten per cent;

of the investment made by the taxpayer in each qualified renewable energy business.

The credit allowed under this section shall be claimed against the earned income tax liability for the taxable year.

(b) If the tax credit under this section exceeds the taxpayer's earned income tax liability for any of the five years that the credit is taken, the excess of the tax credit over liability may be used as a credit against the taxpayer's earned income tax liability in subsequent years until exhausted. Every claim, including amended 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 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.

(1) The business no longer qualifies as a qualified renewable energy business;

(2) The business or an interest in the business has been sold by the taxpayer investing in the qualified renewable energy business; or

(3) The taxpayer has withdrawn the taxpayer's investment wholly or partially from the qualified renewable energy business;

the credit claimed under this section shall be recaptured. The recapture shall be equal to ten per cent of the amount of the total tax credit claimed under this section in the preceding two taxable years. The amount of the credit recaptured shall apply only to the investment in the particular qualified renewable energy business that meets the requirements of paragraph (1), (2), or (3). The recapture provisions of this subsection shall not apply to a tax credit claimed for a qualified renewable energy business that does not fall within the provisions of paragraph (1), (2), or (3). The amount of the recaptured tax credit determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(d) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director of taxation may also require the taxpayer to furnish information 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) Every taxpayer, no later than ninety days following the end of each taxable year an investment in a qualified renewable energy business was made in the previous taxable year, shall submit a written, certified statement to the department of business, economic development, and tourism, identifying:

(1) Qualified investments, if any, expended in the previous taxable year; and

(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year.

(f) The department of business, economic development, and tourism shall:

(1) Maintain records of the names and addresses of the taxpayers claiming the credits under this section and the total amount of the qualified investment costs upon which the tax credit is based;

(2) Verify the nature and amount of the qualifying investments;

(3) Total all qualifying and cumulative investments that the department certifies; and

(4) Certify the amount of the tax credit for each taxable year and cumulative amount of the tax credit.

Upon each determination made under this subsection, the department of business, economic development, and tourism shall issue a letter to the taxpayer verifying information submitted to the department, including qualifying investment amounts, the credit amount certified for each taxable year, and the cumulative amount of the tax credit during the credit period. The taxpayer shall file the letter with the taxpayer's tax return with the department of taxation. Notwithstanding the authority of the department of business, economic development, and tourism under this section, the director of taxation may audit and adjust the tax credit amount to conform to the information filed by the taxpayer.

(g) As used in this section:

"Earned income" means the net profit from the renewable energy business, but not investment income such as dividends and interest.

"Earned income tax liability" means net earned income tax liability reduced by all other credits allowed under this chapter.

"Qualified renewable energy business" means a renewable energy business established in this State after December 31, 2009, and before January 1, 2020.

"Renewable energy" means energy produced by solar, energy conserved by passive solar design/daylighting, ocean thermal, wind, wave, geothermal, waste-to-energy, or biomass power.

(h) This section shall not apply to taxable years beginning after December 31, 2019."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2009.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	467
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII