THE SENATE	S.B. NO.	401
TWENTY-EIGHTH LEGISLATURE, 2015		S.D. 1
STATE OF HAWAII		H.D. 1

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-    Income tax credit for qualified cigar producers.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an 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 credit shall be     per cent of the qualifying costs incurred during the taxable year.

     (c)  In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for qualified production costs incurred by the entity for the taxable year.  The cost upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined by rule.

     If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code of 1986, as amended, no tax credit shall be allowed for those costs for which the deduction is taken.

     The basis for eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed.

     (d)  The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.  For the purposes of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.  A taxpayer eligible to claim a tax credit under this section may assign all or a portion of a tax credit under this section to any assignee.  An assignee may subsequently assign a tax credit or any portion of a tax credit assigned under this subsection to one or more assignees.  A taxpayer may claim a portion of a tax credit and assign the remaining tax credit amount.  A tax credit assignment made pursuant to this subsection shall be irrevocable and shall be made on a form prescribed by the department of taxation.  A taxpayer claiming a tax credit under this section shall submit a copy of the completed assignment form to the department in the tax year in which the assignment is made and shall attach a copy of the form to the tax return on which the tax credit is claimed.

     (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1.

     All claims, including any amended claims, for tax credits 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.

     (f)  To qualify for this tax credit, a taxpayer shall have filed income tax returns in this State for a period of not less than five consecutive years immediately prior to making a claim for credit under this section.

     (g)  The director of taxation shall prepare forms as 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.

     (h)  For the purposes of this section:

     "Cigar" means a large or little cigar, as those terms are defined pursuant to section 245-1.

     "Qualifying cigar producer" means a taxpayer that:

     (1)  Fulfills the requirements of subsection (f); and

     (2)  Produces, in the State, cigars for sale.

     "Qualifying costs" means costs incurred by a qualified cigar producer pursuant to the operation of a business that produces, in the State, cigars for sale."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2112.

 

 

Report Title:

Income Tax Credit; Qualified Cigar Producers

 

 

Description:

Establishes a refundable income tax credit for qualified cigar producers.  Applies to taxable years beginning after 12/31/2112.  (SB401 HD1)

 

 

 

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