HB707.DOC

HOUSE OF REPRESENTATIVES	H.B. NO.	707
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TAXATION.

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

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

"§235- Schools considered for closure; adopt a school program tax credit. (a) There shall be allowed to each taxpayer who is subject to the tax imposed by this chapter, a credit for products or services donated to a public school being considered for closure by the department of education.

(b) 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.

The amount of the credit shall be equal to per cent of the value of products or services donated; provided that the aggregate value of the donated products or services claimed by a taxpayer shall not exceed $ .

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

To qualify for the tax credit allowed under this section, the taxpayer shall obtain a tax clearance before a donation is certified under subsection (g).

(d) For purposes of this section:

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

"Value of products or services donated" means the fair market value of the donated products, 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 that 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) If warranted, all contributions shall be certified and totalled by the department of education. The department of education shall maintain records of the names of taxpayers eligible for certified claims for each taxable year. The certification shall include:

(1) The amount of the donation;

(2) A statement 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) A statement that the taxpayer has obtained a current and valid tax clearance from the department of taxation.

The taxpayer shall file the certificate from the department of education with the taxpayer's tax return with the department of taxation. The total amount of certified donations shall not exceed $ for each taxable year.

(h) 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 rules pursuant to chapter 91, Hawaii Revised Statutes, to effectuate this Act, including developing a program to certify the type of donations that may 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 its approval and shall apply to taxable years beginning after December 31, 2010.

INTRODUCED BY:	_____________________________