Income Tax; Water Conservation

Establishes a credit against income tax liability for taxpayers
who install agricultural water storage facilities.  (SD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 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-    Agricultural water storage credit.  (a)  Each
 5 farmer or rancher taxpayer, who files a state schedule F income
 6 tax return for a taxable year, and who is not claimed or is not
 7 otherwise eligible to be claimed as a dependent by another
 8 taxpayer for Hawaii state income tax purposes, may claim an
 9 agricultural water storage credit against the farmer or rancher
10 taxpayer's income tax liability for the taxable year for which
11 the income tax return is being filed.  The credit may be claimed
12 only in the taxable year following the year in which an
13 agricultural water storage facility was placed in service;
14 provided that the taxpayer has financially contributed in the
15 qualified water storage investment.
16      (b)  The amount of the allowable credit shall be ten per
17 cent of the investment paid by the taxpayer.  The credit may be
18 carried forward up to a maximum of ten years; provided that the
19 water storage facility remains in service, and continues to be

Page 2                                                     367
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 used by the taxpayer.  The amount of the credit which may be used
 2 in any tax year shall not exceed fifty per cent of the taxpayer's
 3 income tax liability as determined without regard to any other
 4 credits.
 5      (c)  The credit granted under this section shall be subject
 6 to the following conditions and limitations:
 7      (1)  In order to qualify as a basis for the credit, the new
 8           or expanded water storage facility shall not be placed
 9           in service before January 1, 1999;
10      (2)  In the initial year in which the taxpayer claims the
11           credit granted in this section, the taxpayer shall
12           include a description of the project and information
13           which demonstrates that the facility constructed with
14           the qualified water storage investment had a minimum
15           capacity of ten thousand gallons; and
16      (3)  Claiming the credit granted in this section shall have
17           no effect on the taxpayer's ability to claim
18           depreciation for tax purposes on assets acquired by the
19           taxpayer, nor shall the credit have any effect on the
20           taxpayer's basis in those assets for the purpose of
21           depreciation.
22      (d)  The director of taxation shall prepare forms as may be
23 necessary to claim a credit under this section.  The director may

Page 3                                                     367
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 also require the taxpayer to furnish reasonable information in
 2 order that the director may ascertain the validity of the claim
 3 for credit made under this section.  The director may adopt rules
 4 necessary to effectuate the purposes of this section pursuant to
 5 chapter 91.
 6      (e)  All claims for tax credits under this section,
 7 including any amended claims, shall be filed on or before the end
 8 of the twelfth month following the close of the taxable year for
 9 which the credits may be claimed.  Failure to comply with the
10 foregoing provision shall constitute a waiver of the right to
11 claim the credit.
12      (f)  For purposes of this section:
13      "Qualified water storage investment" means all spending by a
14 farmer or rancher taxpayer for use in this State for the
15 construction of a new water storage facility, or for the
16 expansion of an existing water storage facility that has been
17 certified pursuant to rules adopted by the department of
18 agriculture as necessary for drought mitigation purposes.
19      "Water storage facility" means any facility used for water
20 storage such as water tanks and water reservoir necessary to
21 claim a credit under this section."
22      SECTION 2.  New statutory material is underscored.
23      SECTION 3.  This Act, upon its approval, shall apply to

Page 4                                                     367
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 taxable years beginning after December 31, 1998.