THE SENATE	S.B. NO.	902
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

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

     SECTION 1.  Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Section 63 (with respect to taxable income defined) of the Internal Revenue Code shall be operative for the purposes of this chapter, subject to the following:

(1) Section 63(c)(1)(B) (relating to the additional standard deduction), 63(c)(1)(C) (relating to the real property tax deduction), 63(c)(1)(D) (relating to the disaster loss deduction), 63(c)(1)(E) (relating to the motor vehicle sales tax deduction), 63(c)(4) (relating to inflation adjustments), 63(c)(7) (defining the real property tax deduction), 63(c)(8) (defining the disaster loss deduction), 63(c)(9) (defining the motor vehicle sales tax deduction), and 63(f) (relating to additional amounts for the aged or blind) of the Internal Revenue Code shall not be operative for purposes of this chapter;

(2)  Section 63(c)(2) (relating to the basic standard deduction) of the Internal Revenue Code shall be operative, except that the standard deduction amounts provided therein shall instead mean:

         (A)  $4,400 in the case of:

              (i)  A joint return as provided by section 235‑93; or

             (ii)  A surviving spouse (as defined in section 2(a) of the Internal Revenue Code);

          (B)  $3,212 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);

         (C)  [$2,200] $3,000 in the case of an individual who is not married and who is not a surviving spouse or head of household; or

         (D)  [$2,200] $3,000 in the case of a married individual filing a separate return;

(3) Section 63(c)(5) (limiting the basic standard deduction in the case of certain dependents) of the Internal Revenue Code shall be operative, except that the limitation shall be the greater of $500 or the individual's earned income; and

(4) The standard deduction amount for nonresidents shall be calculated pursuant to section 235-5."

     SECTION 2.  Section 235-55.7, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  Each taxpayer with an adjusted gross income of less than [$30,000] $           who has paid more than $1,000 in rent during the taxable year for which the credit is claimed may claim a tax credit of [$50] $           multiplied by the number of qualified exemptions to which the taxpayer is entitled; provided each taxpayer sixty-five years of age or over may claim double the tax credit; and provided that a resident individual who has no income or no income taxable under this chapter may also claim the tax credit as set forth in this section."

     SECTION 3.  Section 235-55.85, Hawaii Revised Statutes, is amended to read as follows:

"§235-55.85  Refundable food/excise tax credit.  (a)  Each [resident] individual taxpayer[,] who files an individual income tax return for a taxable year[,] and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, may claim a refundable food/excise tax credit against the [resident] taxpayer's individual income tax liability for the taxable year for which the individual income tax return is being filed; provided that [a resident] an individual who has no income or no income taxable under this chapter and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for federal or Hawaii state individual income tax purposes may claim this credit.

(b)  Each [resident] individual taxpayer may claim a refundable food/excise tax credit multiplied by the number of qualified exemptions to which the taxpayer is entitled in accordance with the table below; provided that a husband and wife filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled had a joint return been filed.

Adjusted gross income Credit per exemption

Under [$5,000] $                      [$85] $     

      [$5,000] $      under [$10,000] $      [75] $     

     [$10,000] $      under [$15,000] $      [65] $     

     [$15,000] $      under [$20,000] $         [55] $     

     [$20,000] $      under [$30,000] $     [45] $     

     [$30,000] $      under [$40,000] $         [35] $     

     [$40,000] $      under [$50,000] $         [25] $     

     [$50,000] $      and over                [0] $     

     [(c)  For the purposes of this section, a qualified exemption is defined to include those exemptions permitted under this chapter; provided that no additional exemption may be claimed by a taxpayer who is sixty-five years of age or older; provided that a person for whom exemption is claimed has physically resided in the State for more than nine months during the taxable year; and provided further that multiple exemptions shall not be granted because of deficiencies in vision or hearing, or other disability.  For purposes of claiming this credit only, a minor child receiving support from the department of human services of the State, social security survivor's benefits, and the like, may be considered a dependent and a qualified exemption of the parent or guardian.

(d)] (c)  The tax credit under this section shall not be available to:

(1) Any person who has been convicted of a felony and who has been committed to prison and has been physically confined for the full taxable year;

(2) Any person who would otherwise be eligible to be claimed as a dependent but who has been committed to a youth correctional facility and has resided at the facility for the full taxable year; or

(3) Any misdemeanant who has been committed to jail and has been physically confined for the full taxable year.

     [(e)] (d)  The tax credits claimed by a [resident] taxpayer pursuant to this section shall be deductible from the [resident] taxpayer's individual income tax liability, if any, for the tax year in which they are properly claimed.  If the tax credits claimed by a [resident] taxpayer exceed the amount of income tax payment due from the [resident] taxpayer, the excess of credits over payments due shall be refunded to the [resident] taxpayer; provided that tax credits properly claimed by [a resident] an individual who has no income tax liability shall be paid to the [resident] individual; and provided further that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1.

     [(f)] (e)  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)] (f)  For the purposes of this section[, "adjusted]:

"Adjusted gross income" means adjusted gross income as defined by the Internal Revenue Code.

"Qualified exemption" means those exemptions permitted under this chapter; provided that no additional exemption may be claimed by a taxpayer who is sixty-five years of age or older; provided further that a person who claims such an exemption shall have physically resided in the State for more than nine months during the taxable year; provided further that multiple exemptions shall not be granted because of deficiencies in vision or hearing or other disability.  For purposes of claiming this credit only, a minor child receiving support from the department of human services, social security survivor's benefits, and the like, may be considered a dependent and a qualified exemption of the child's parent or guardian."

     SECTION 4.  Section 237-13.3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Sections 237-4(a)(8), 237-4(a)(10), 237-4(a)(13), 237-13(2)(A), 237-13(4)(A), and 237-13(6)(A) to the contrary notwithstanding, instead of the tax levied under section 237‑13(2)(A) on wholesale sales subject to section 237‑4(a)(8)(B), under section 237-13(4)(A) on a wholesaler subject to section 237-4(a)(13), and under section 237-13(6)(A) on a wholesaler subject to section 237-4(a)(10) at one-half of one per cent, [during the period January 1, 2000, to December 31, 2005,] the tax shall be as follows:

     (1)  In calendar year 2000, 3.5 per cent;

     (2)  In calendar year 2001, 3.0 per cent;

     (3)  In calendar year 2002, 2.5 per cent;

     (4)  In calendar year 2003, 2.0 per cent;

     (5)  In calendar year 2004, 1.5 per cent;

     (6)  In calendar year 2005, 1.0 per cent; [and]

     (7)  In calendar year 2006 [and thereafter, the tax shall be] through December 31, 2015, 0.5 per cent[.]; and

(8) In calendar year 2016 and thereafter, 1.0 per cent."

     SECTION 5.  The department of taxation shall establish five additional full-time equivalent (5.0 FTE) permanent investigators to conduct investigations as directed by the director of taxation.

     SECTION 6.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 to fund the positions authorized in section 5 of this Act.

     The sums appropriated shall be expended by the department of taxation for the purposes of this Act.

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 2015, and sections 1 to 4 shall apply to taxable years beginning after December 31, 2015.

INTRODUCED BY:

_____________________________

Report Title:

Income Tax; Standard Deduction; Low-income Household Renters; Refundable Food/Excise Tax Credit; Wholesale; Department of Taxation Investigator Positions; Appropriation

Description:

Increases the income tax standard deduction for an individual who is not married and not a surviving spouse or a head of household or an individual who is married and filing a separate return; amends income tax credit for low-income household renters; amends the refundable food/excise tax credit by amending income-based credit amounts; increases the excise tax levied on wholesale sales from 0.5 per cent to 1.0 per cent; requires the department of taxation to establish an additional five full-time permanent investigators; and appropriates funds to the department of taxation to fund the additional investigator positions.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.