HB2240.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- Headquarters relocation tax credit. (a) There shall be allowed to each qualifying taxpayer subject to the taxes imposed by this chapter, a headquarters relocation tax credit that shall be applied to 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 tax credit shall be equal to fifty per cent of the amount of the qualifying taxpayer's relocation costs in the taxable year.

(b) As used in this section:

"Corporate headquarters" means the building or buildings where the principal offices of the principal executive officers of an eligible business are located.

"Eligible business" means a business that:

(1) Is engaged in either interstate or intrastate commerce;

(2) Maintains a corporate headquarters at a location outside the State;

(3) Has not previously maintained a corporate headquarters at a location in the State;

(4) Had annual worldwide revenues of at least $100,000,000 for the taxable year immediately preceding the business's application for a tax credit under this section; and

(5) Commits contractually to relocating its corporate headquarters to a location in the State.

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

"Qualifying project" means the relocation of the corporate headquarters of an eligible business from a location outside the State to a location in the State.

"Qualifying taxpayer" means a taxpayer that:

(1) Is an eligible business;

(2) Completes a qualifying project;

(3) Incurs relocation costs; and

(4) Employs at least seventy-five employees in the State. For the purposes of this paragraph, the number of employees employed by the taxpayer in the State may include:

(A) Individuals who:

(i) Were employed in the State by the taxpayer before the taxpayer commenced a qualifying project; and

(ii) Remain employed in the State after the completion of the taxpayer's qualifying project; and

(B) Individuals who:

(i) Were not employed in the State by the taxpayer before the taxpayer commenced a qualifying project; and

(ii) Are employed in the State by the taxpayer as a result of the completion of the taxpayer's qualifying project.

"Relocation costs" means the reasonable and necessary expenses incurred by an eligible business for a qualifying project. Relocation costs include:

(1) Moving costs and related expenses;

(2) The purchase of new or replacement equipment;

(3) Capital investment costs; and

(4) Property assembly and development costs, including:

(A) The purchase, lease, or construction of buildings and land;

(B) Infrastructure improvements; and

In determining whether an expense of the eligible business directly resulted from the relocation of the business, the department shall consider whether the expense would likely have been incurred by the eligible business if the business had not relocated from its original location.

Relocation costs shall not include any costs that do not directly result from the relocation of the business to a location in the State.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims for the tax credit under this section, including amended claims, 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 this subsection shall constitute a waiver of the right to claim the credit.

(d) In the case of a partnership, S corporation, estate, or trust, the cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

(e) The director of taxation shall prepare 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 credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2011.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2240
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII