REPORT TITLE:
Taxation


DESCRIPTION:
Allows a 4 per cent hotel construction and remodeling income tax
credit.  Exempts certain activities of call centers from the
general excise tax and public service company tax. (CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2781
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 2
STATE OF HAWAII                                            C.D. 1
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION.



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

 1      SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "235-    Hotel construction and remodeling tax credit.
 
 5 (a)  There shall be allowed to each taxpayer subject to the taxes
 
 6 imposed by this chapter and chapter 237D, an income tax credit,
 
 7 which shall be deductible from the taxpayer's net income tax
 
 8 liability, if any, imposed by this chapter for the taxable year
 
 9 in which the credit is properly claimed.
 
10      The amount of the credit shall be four per cent of the
 
11 construction or renovation costs incurred during the taxable year
 
12 for each qualified hotel facility located in Hawaii, and shall
 
13 not include the construction or renovation costs for which
 
14 another credit was claimed under this chapter for the taxable
 
15 year.
 
16      In the case of a partnership, S corporation, estate, trust,
 
17 association of apartment owners of a qualified hotel facility,
 
18 time share owners association, or any developer of a time share
 
19 project, the tax credit allowable is for construction or
 

 
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 1 renovation costs incurred by the entity for the taxable year.
 
 2 The cost upon which the tax credit is computed shall be
 
 3 determined at the entity level.  Distribution and share of credit
 
 4 shall be determined pursuant to section 235-110.7(a).
 
 5      If a deduction is taken under section 179 (with respect to
 
 6 election to expense depreciable business assets) of the Internal
 
 7 Revenue Code, no tax credit shall be allowed for that portion of
 
 8 the construction or renovation cost for which the deduction is
 
 9 taken.
 
10      The basis of eligible property for depreciation or
 
11 accelerated cost recovery system purposes for state income taxes
 
12 shall be reduced by the amount of credit allowable and claimed.
 
13 In the alternative, the taxpayer shall treat the amount of the
 
14 credit allowable and claimed as a taxable income item for the
 
15 taxable year in which it is properly recognized under the method
 
16 of accounting used to compute taxable income.
 
17      (b)  The credit allowed under this section shall be claimed
 
18 against the net income tax liability for the taxable year.
 
19      (c)  If the tax credit under this section exceeds the
 
20 taxpayer's income tax liability, the excess of credit over
 
21 liability shall be refunded to the taxpayer; provided that no
 
22 refunds or payment on account of the tax credits allowed by this
 
23 section shall be made for amounts less than $1.  All claims for a
 

 
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 1 tax credit under this section shall be filed on or before the end
 
 2 of the twelfth month following the close of the taxable year for
 
 3 which the credit may be claimed.  Failure to comply with the
 
 4 foregoing provision shall constitute a waiver of the right to
 
 5 claim the credit.
 
 6      (d)  The director of taxation shall prepare any forms that
 
 7 may be necessary to claim a credit under this section.  The
 
 8 director may also require the taxpayer to furnish information to
 
 9 ascertain the validity of the claim for credit made under this
 
10 section and may adopt rules necessary to effectuate the purposes
 
11 of this section pursuant to chapter 91.
 
12      (e)  The tax credit allowed under this section shall be
 
13 available for taxable years beginning after December 31, 1998,
 
14 and shall not be available for taxable years beginning after
 
15 December 31, 2002.
 
16      (f)  To qualify for the income tax credit, the taxpayer
 
17 shall be in compliance with all applicable federal, state, and
 
18 county statutes, rules, and regulations.
 
19      (g)  As used in this section:
 
20      "Construction or renovation cost" means any costs incurred
 
21 after December 31, 1998, for plans, design, construction, and
 
22 equipment related to new construction, alterations, or
 
23 modifications to a qualified hotel facility.
 

 
Page 4                                                     2781
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 1      "Net income tax liability" means income tax liability
 
 2 reduced by all other credits allowed under this chapter.
 
 3      "Qualified hotel facility" means a hotel/hotel-condo as
 
 4 defined in section 486K-1, and includes a time share facility or
 
 5 project.
 
 6      "Taxpayer" means a taxpayer under this chapter, and
 
 7 includes:
 
 8      (1)  Association of apartment owners; or
 
 9      (2)  Time share owners association;
 
10      (h)  No taxpayer that claims a credit under this section
 
11 shall claim a credit under chapter 235D."
 
12      SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended
 
13 by adding a new section to be appropriately designated and to
 
14 read as follows:
 
15      "237-    Call centers; exemption; engaging in business;
 
16 definitions.  (a)  This chapter shall not apply to amounts
 
17 received from a person operating a call center by a person
 
18 engaged in business as a telecommunications common carrier for
 
19 interstate or foreign telecommunications services, including
 
20 toll-free telecommunications, telecommunications capabilities for
 
21 electronic mail, voice, and data telecommunications, computerized
 
22 telephone support, facsimile, wide area telecommunications
 
23 services, or computer-to-computer communication.
 

 
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 1      (b)  The establishment of a call center in this State by any
 
 2 person shall not be used by itself by the State to find that any
 
 3 other part of the person's business is engaged in business in
 
 4 this State for the purposes of this chapter.  Gross income or
 
 5 gross proceeds received by a call center for customer service and
 
 6 support shall be exempt from the measure of taxes imposed by this
 
 7 chapter.
 
 8      (c)  The department, by rule, may provide that the person
 
 9 providing the telecommunications service may take from the person
 
10 operating a call center a certificate, in a form that the
 
11 department shall prescribe, certifying that the amounts received
 
12 for telecommunications services are for operating a call center.
 
13 If the certificate is required by rule of the department, the
 
14 absence of the certificate in itself shall give rise to the
 
15 presumption that the amounts received from the sale of
 
16 telecommunications services are not for operating a call center.
 
17      (d)  As used in this section:
 
18      "Call center" means a physical or electronic operation that
 
19 focuses on providing customer service and support for computer
 
20 hardware and software companies, manufacturing companies,
 
21 software service organizations, and telecommunications support
 
22 services, within an organization in which a managed group of
 
23 individuals spend most of their time engaging in business by
 

 
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 1 telephone, usually working in a computer-automated environment;
 
 2 provided that the operation shall not include telemarketing or
 
 3 sales.
 
 4      "Customer service and support" means product support,
 
 5 technical assistance, sales support, phone or computer-based
 
 6 configuration assistance, software upgrade help lines, and
 
 7 traditional help desk services.
 
 8      "Telecommunications common carrier" means any person that
 
 9 owns, operates, manages, or controls any facility used to furnish
 
10 telecommunications services for profit to the public, or to
 
11 classes of users as to be effectively available to the public,
 
12 engaged in the provision of services, such as voice, data, image,
 
13 graphics, and video services, that make use of all or part of
 
14 their transmission facilities, switches, broadcast equipment,
 
15 signalling, or control devices.
 
16      "Telecommunications service" or "telecommunications" means
 
17 the offering of transmission between or among points specified by
 
18 a user, of information of the user's choosing, including voice,
 
19 data, image, graphics, and video without change in the form or
 
20 content of the information, as sent and received, by means of
 
21 electromagnetic transmission, or other similarly capable means of
 
22 transmission, with or without benefit of any closed transmission
 
23 medium.
 

 
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 1      (e)  This section shall not apply to gross proceeds or gross
 
 2 income received after June 30, 2010."
 
 3      SECTION 3.  Chapter 239, Hawaii Revised Statutes, is amended
 
 4 by adding a new section to be appropriately designated and to
 
 5 read as follows:
 
 6      "239-    Call centers; exemption; engaging in business;
 
 7 definitions.  (a)  This chapter shall not apply to amounts
 
 8 received from a person operating a call center by a person
 
 9 engaged in business as a telecommunications common carrier for
 
10 interstate or foreign telecommunications services, including
 
11 toll-free telecommunications, telecommunications capabilities for
 
12 electronic mail, voice and data telecommunications, computerized
 
13 telephone support, facsimile, wide area telecommunications
 
14 services, or computer to computer communication.
 
15      (b)  The department, by rule, may provide that the person
 
16 providing the telecommunications service may take from the person
 
17 operating a call center a certificate, in a form that the
 
18 department shall prescribe, certifying that the amounts received
 
19 for telecommunications services are for operating a call center.
 
20 If the certificate is required by rule of the department, the
 
21 absence of the certificate in itself shall give rise to the
 
22 presumption that the amounts received from the sale of
 
23 telecommunications services are not for operating a call center.
 

 
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 1      (c)  As used in this section:
 
 2      "Call center" means a physical or electronic operation that
 
 3 focuses on providing customer service and support for computer
 
 4 hardware and software companies, manufacturing companies,
 
 5 software service organizations, and telecommunications support
 
 6 services, within an organization in which a managed group of
 
 7 individuals spend most of their time engaging in business by
 
 8 telephone, usually working in a computer-automated environment;
 
 9 provided that the operation shall not include telemarketing or
 
10 sales.
 
11      "Customer service and support" means product support,
 
12 technical assistance, sales support, phone or computer-based
 
13 configuration assistance, software upgrade help lines, and
 
14 traditional help desk services.
 
15      (d)  This section shall not apply to income received after
 
16 June 30, 2010."
 
17      SECTION 4.  New statutory material is underscored.
 
18      SECTION 5.  This Act shall take effect upon approval;
 
19 provided that:
 
20      (1)  Section 1 shall apply to taxable years beginning after
 
21           December 31, 1998;
 
22      (2)  Section 2 shall apply to gross income or gross proceeds
 
23           received after June 30, 2000; and
 

 
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 1      (3)  Section 3 shall apply to the entire gross income
 
 2           received by a public service company for the fiscal
 
 3           year preceding July 1, 2001; provided that in the case
 
 4           of a public service company operating on a calendar
 
 5           year, this Act shall apply to the entire gross income
 
 6           received for the calendar year in which July 1, 2001,
 
 7           occurs and for fiscal years thereafter.