Asset Building; Omnibus Package
Establishes a refundable state earned income tax credit. Provides financial education to TANF applicants and recipients. Expands the provision of individual development accounts. Appropriates funds. (SB1919 HD2)
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII
A BILL FOR AN ACT
relating to asset building.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
EARNED INCOME TAX CREDIT
SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Earned income tax credit. (a) Each individual taxpayer who:
(1) Files an individual income tax return for a taxable year; and
(2) Is not claimed or is not eligible to be claimed as a dependent by another taxpayer for income tax purposes,
may claim a refundable earned income tax credit. The tax credit, for the appropriate taxable year, shall be equal to per cent of the federal earned income tax credit allowed under section 32 (with respect to earned income) of the Internal Revenue Code and reported as such on the resident individual's federal income tax return.
(b) In the case of a part-year resident, the tax credit shall equal the amount of the tax credit calculated in subsection (a) multiplied by the ratio of adjusted gross income attributed to this state to the entire adjusted gross income computed without regard to source in the state pursuant to section 235-5.
(c) For purposes of claiming the tax credit allowed by this section, an individual taxpayer shall use the same filing status (i.e., "married filing jointly", "head of household", "surviving spouse", or "single") on the taxpayer's Hawaii tax return as used on the taxpayer's federal tax return for the taxable year. In the case of a husband and wife filing separately, the credit allowed may be applied against the tax of either or divided between them, as they elect.
(d) 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 tax credit may be claimed. Failure to comply with this subsection shall constitute a waiver of the right to claim the tax credit.
(e) The director of taxation:
(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;
(2) May require proof of the claim for the tax credit;
(3) Shall alert eligible taxpayers of the tax credit using appropriate and available data;
(4) Shall prepare an annual report to be presented to the legislature and the public containing the:
(A) Number of credits granted for the prior calendar year;
(B) Total amount of the credits granted; and
(C) Average value of the credits granted to taxpayers whose earned income falls within various income ranges;
(5) May adopt rules pursuant to chapter 91 to effectuate this section."
SECTION 2. Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§346‑ Financial education. In addition to any mandatory programs for certain applicants for and recipients of temporary assistance for needy families required by federal law, the department shall offer financial education to applicants for and recipients of temporary assistance for needy families. For purposes of this section, "financial education" means education that promotes an understanding of consumer, economic, and personal finance concepts, including the basic principles involved with earning, budgeting, spending, saving, investing, and taxation."
SECTION 3. 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 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, for the department of human services to offer financial education to applicants for and recipients of temporary assistance for needy families.
The sums appropriated shall be expended by the department of human services for the purposes of this part.
SECTION 4. Section 257-3, Hawaii Revised Statutes, is amended to read as follows:
Fiduciary organizations. (a) Fiduciary organizations shall serve as an
intermediary between individual development account holders and financial
institutions holding accounts. The fiduciary organization's responsibilities
(1) Marketing participation;
(2) Soliciting matching contributions;
(3) Counseling program participants; and
(4) Conducting verification and compliance activities.
(b) Locally-based organizations shall enter
into a competitive process for the right to become fiduciary organizations for
a portion of the state matching dollars [
that would be authorized initially].
Fiduciary organization proposals shall be evaluated and participation rights
awarded on the basis of [ such items as]:
(1) Their ability to market the program to potential individual development account holders and potential matching fund contributors;
(2) Their ability to provide safe and secure investments for individual development accounts;
(3) Their overall administrative capacity, including:
(A) Certifications or verifications required to assure compliance with eligibility requirements;
(B) Authorized uses of the accounts matching contributions by individuals or businesses; and
(C) Penalties for unauthorized distributions;
(4) Their capacity to provide financial counseling and other related services to potential participants; and
(5) Their links to other activities designed to increase the independence of individuals and families through high return investments, including homeownership, education and training, and small business development.
The department of human services, or an agency contracted by the department of human services, shall provide technical and administrative assistance to fiduciary organizations to meet the criteria under this subsection; provided that the State may expend appropriate federal moneys, including temporary assistance for needy families and community development block grants, for this purpose, as applicable.
(c) If the [
State] the department of
human services approves an application to fund an individual development
account project under this section, the [ State] department of human
services shall[ , not later than one month after June 28, 1999,]
authorize the applicant to conduct the project with state funds [ for five
project years] in accordance with the approved application and this
section; provided that an applicant may apply for funding during future fiscal
years [ for five project years if the State lacks the] if there are
insufficient resources to fund an individual development account project
pursuant to this subsection.
(d) For each individual development
account program approved under this section, the State shall make a grant to
the qualified entity or collaboration of entities authorized to conduct the
project on the first day of the project year in an amount not to exceed
$100,000 per year for five years. (e)] (d) From among the
individuals eligible for assistance under the Hawaii individual development
account program, each selected fiduciary organization shall select the
individuals whom the fiduciary organization deems to be best suited to receive
SECTION 5. Section 257-11, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) The fiduciary organization running
an individual development account program shall have sole authority over the
administration of the project. The [
State] department of human
services may [ prescribe only such regulations] adopt rules with
respect to demonstration projects [ under this chapter] as are necessary
to ensure compliance [ pursuant to] with this chapter."
2. By amending subsection (d) to read:
"(d) Selected fiduciary organizations may
use no more than [
ten] twenty-five per cent of state funds as
appropriated under this [ chapter[ ]] to cover [ administrative]
operating costs in any given year."
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 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, for fiduciary organizations, as defined in section 257-1, Hawaii Revised Statutes, to conduct individual development account programs, as provided in section 257-3, Hawaii Revised Statutes.
The sum appropriated shall be expended by the department of human services for the purposes of this section.
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, 2020; provided that, upon its approval, section 1 shall apply to taxable years beginning after December 31, ; provided further that sections 2, 3, 4, 5, and 6 shall take effect on July 1, 2020.