HOUSE OF REPRESENTATIVES
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO HUMAN SERVICES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that one-third of Hawaii's middle class families are asset-poor, lacking the resources to subsist at the poverty level for three months in the absence of a source of income. The legislature further finds that assets are necessary to provide financial security during economically difficult times, create economic opportunities, and improve the quality of life of future generations.
Senate Concurrent Resolution No. 92, S.D. 1 (2008), and Senate Resolution No. 52, S.D. 1 (2008), established the Hawaii state asset building and financial education task force, which was charged with developing policy recommendations to implement various asset-building strategies in the State. In 2010, the task force submitted its recommendations to the legislature. The recommendations included implementing tax policies that make work pay, improving financial education, helping individuals start businesses, helping individuals become homeowners, and removing barriers to asset-building.
The purpose of this Act is to implement two recommendations submitted by the Hawaii state asset building and financial education task force by:
(1) Enacting a refundable earned income tax credit; and
(2) Requiring the department of human services to offer financial education to applicants for and recipients of temporary assistance for needy families and making an appropriation therefor.
SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part III 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 per cent of the federal earned income tax credit allowed under section 32 of the Internal Revenue Code and reported as such on the individual's federal income tax return. If the tax credit claimed by a taxpayer exceeds the amount of income tax payment due from the taxpayer, the excess of credit over payment due shall be refunded to the taxpayer; provided that a tax credit properly claimed by an individual who has no income tax liability shall be paid to the individual; and provided further that no refund or payment on account of the tax credit allowed by this section shall be made for an amount less than $1.
(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) To claim the tax credit allowed under this section, an individual taxpayer shall use the same filing status on the taxpayer's Hawaii income tax return as used on the taxpayer's federal income tax return for the taxable year.
(d) Any claim, including any amended claim, 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) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:
(1) The period of ten taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to fraud; and
(2) The period of two taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to the reckless or intentional disregard of rules and regulations to qualify for the tax credit, but not due to fraud.
(f) Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary of the United States Department of the Treasury by regulations with respect to determining eligibility for, or the amount of, the credit allowable by section 32 of the Internal Revenue Code shall pay a penalty of $100 for each failure.
(g) The director of taxation:
(1) Shall prepare any forms 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 means;
(4) Shall prepare an annual report to the legislature, the governor, 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; and
(5) May adopt rules pursuant to chapter 91 to effectuate this section."
SECTION 3. Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:
"§346‑ Financial education. The department shall offer financial education to applicants for and recipients of temporary assistance for needy families, in addition to any mandatory programs available to these applicants and recipients, as required by federal law.
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 in earning, budgeting, spending, saving, investing, and taxation."
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 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 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 Act.
SECTION 5. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2012; provided that section 4 shall take effect on July 1, 2050.
Earned Income Tax Credit; Asset Building; Appropriation
Establishes a refundable state Earned Income Tax Credit. Requires the Department of Human Services to offer financial education to applicants for and recipients of Temporary Assistance for Needy Families. Appropriates funds. Effective 07/01/2050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.