SB801

SECTION 1. The legislature finds that local students will have a better chance at surviving and thriving in Hawaii if they have an opportunity to participate in a high-quality work-based learning experience before they graduate from high school. While partnerships between schools and employers have expanded in the past decade, the legislature also finds that equitable access to a diverse range of industries will require significantly greater employer participation in these programs.

The legislature further finds that, to drastically increase work-based learning experience opportunities for students, offering additional financial resources for employers will both incentivize companies to offer work-based learning opportunities and increase capacity to host student interns. Without crucial assistance to support work-based learning experiences, many employers, especially small to medium-sized companies, may encounter difficulties in hiring and retention of student interns.

Accordingly, the purpose of this Act is to establish a qualified internship tax credit.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§235- Qualified internship tax credit. (a) There shall be allowed to each qualified taxpayer subject to the tax imposed under this chapter, a qualified internship income tax credit that 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 tax credit shall be equal to fifty hours of the value of salaries, wages, or other renumeration services paid to a qualified intern by the qualified taxpayer, up to a maximum of $ in any taxable year; provided that the qualified intern was not employed by the taxpayer within the six months immediately preceding the commencement of the internship; provided further that this credit shall be provided for not more than 5,250 qualified interns per calendar year; provided further that the qualified internship tax credit, combined with other credits allowed pursuant to this chapter during the privilege period, shall not exceed fifty per cent of the taxpayer's tax liability and shall not reduce the taxpayer's minimum income tax liability.

(c) Any unused credit resulting from the limitations pursuant to subsection (b), the excess credit over liability may be carried forward, if necessary, for use in the seven privilege periods following the privilege period for which the credit is allowed.

(d) A credit claimed pursuant to this section shall not be disbursed unless the taxpayer submits an application to the department of taxation and receives an initial approval in accordance with this subsection and complies with the filing requirements in accordance with subsection (i). The application shall include:

(1) A description of the daily tasks to be completed by the qualified intern;

(2) Expected student learning outcomes by the completion of the internship period; and

(3) Other questions or prompts as necessary to qualify the internship under the department of education or University of Hawaii-approved work-based learning program.

Failure of the taxpayer to fulfill the requirements set forth by the department of education or University of Hawaii to qualify as a work-based learning program shall result in denial of the application.

(e) The taxpayer shall certify that the taxpayer would not have employed the qualified intern but substantially for the credit allowed pursuant to this section, and that the taxpayer expects that the number of hours worked by the qualified intern will increase in the privilege period for which the application is submitted compared to the immediately preceding privilege period.

(f) The taxpayer, upon initial approval of the application pursuant to subsection (d), shall certify that the qualified intern was employed and supervised in the State in a position that:

(1) Provides training and experience to the qualified intern in their chosen field of study; and

(2) The qualified intern was paid a wage of not less than $12.00 per hour for a term of employment that includes at least one hundred fifty hours; provided that the qualified intern works not more than fifteen hours per week during the academic year and not more than forty hours per week during winter, spring, and summer holiday break periods.

(g) The director of taxation:

(1) Shall prepare forms as may be necessary to claim a credit under this section;

(2) May require the taxpayer to furnish information to ascertain the validity of the claim for the tax credit under this section; and

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

(h) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(i) 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 credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(j) As used in this section, "qualified intern" means an individual who is:

(1) Enrolled in a department of education school or public charter school;

(2) Employed and supervised in a position located in the State in a position that provides training and experience to the individual in their chosen field of study; and

(3) Paid a wage of not less than $12.00 per hour for a term of employment that includes at least one hundred fifty hours; provided that the qualified intern works not more than fifteen hours per week during the academic year and not more than forty hours per week during the winter, spring, and summer holiday periods."

SECTION 3. (a) The department of taxation shall submit a report of on the qualified internship tax credit, to the legislature no later than January 1, 2024.

(b) The report shall include:

(1) The total value of qualified internship tax credits allowed for each taxable year;

(2) The total number of qualified interns for which a credit was issued for each taxable year;

(3) Information on the department of taxation's process in administering the qualified internship tax credit, including but not limited to a description of departmental personnel tasked with issuing the qualified internship tax credit; and

(4) An analysis on the effectiveness of the qualified internship tax credit as an incentive to encourage employment of qualified interns.

SECTION 4. 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 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 for the establishment and implementation of the qualified internship tax credit.

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

SECTION 5. New statutory material is underscored.

SECTION 6. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	801
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII