Tax Credits

Establishes Individual Development Account Contribution tax
credit equal to fifty per cent of the contribution.  Prevents
fiduciary organizations from taking both a charitable deduction
and the tax credit.  (CD1)

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

                   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-     Individual development account contribution tax
 5 credit.  (a)  There shall be allowed to each taxpayer subject to
 6 the tax imposed under this chapter, an individual development
 7 account contribution tax credit certified under chapter 257 which
 8 shall be applied against the taxpayer's net income tax liability,
 9 if any, imposed by this chapter for the taxable year in which the
10 credit is properly claimed.
11      (b)  The individual development account contribution tax
12 credit shall be equal to fifty per cent of the amount contributed
13 by the taxpayer to a fiduciary organization as defined by and in
14 the manner prescribed in chapter 257.  If a deduction is taken
15 under section 170 (with respect to charitable contributions and
16 gifts) of the Internal Revenue Code, no tax credit shall be
17 allowed for that portion of the contribution for which the
18 deduction was taken.
19      (c)  If the tax credit under this section exceeds the

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 1 taxpayer's income tax liability, the excess of the tax credit
 2 over liability may be used as a credit against the taxpayer's
 3 income tax liability in subsequent years until exhausted.  All
 4 claims, including any amended claims, for tax credits under this
 5 section shall be filed on or before the end of the twelfth month
 6 following the close of the taxable year for which the credit may
 7 be claimed.  Failure to comply with the foregoing provision shall
 8 constitute a waiver of the right to claim the credit.
 9      (d)  Application for the credit under this section shall be
10 upon forms provided by the department.
11      (e)  The credit under this section shall be available for
12 taxable years beginning after December 31, 1999, but shall not be
13 available for taxable years beginning after December 31, 2004."
14      SECTION 2.  Section 257-10, Hawaii Revised Statutes, is
15 amended as follows:
16      1.  By amending subsection (a) to read:
17      "(a)  [Individuals, organizations, or businesses
18 contributing matching funds for individual development accounts
19 shall receive a tax credit equal to fifty per cent of the amount
20 contributed.] Taxpayers subject to the tax imposed under
21 chapter 235 who contribute matching funds for individual
22 development accounts may be eligible for the tax credit provided
23 under section 235-   ."

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 1      2.  By amending subsection (c) to read:
 2      "(c)  The administrator of the fiduciary organization, with
 3 the cooperation of the participating organizations, shall
 4 maintain records of the names of contributors and the total
 5 amount each contributor contributes to an individual development
 6 account match fund for the [calendar] taxable year.  All
 7 contributions shall be verified by the department of human
 8 services.  The department of human services shall total all
 9 contributions that the department certifies.  Upon each
10 determination, the department of human services shall issue a
11 certificate to the taxpayer.  The taxpayer shall file the
12 certificate with the taxpayer's tax return with the department of
13 taxation.
14      When the total amount of certified contributions reaches
15 $1,000,000, the department shall immediately discontinue
16 certifying contributions and notify the department of taxation.
17 In no instance, shall the total amount of certified contributions
18 exceed $1,000,000 over the five year period between January 1,
19 2000, and December 31, 2004."
20      SECTION 3.  Act 160, Session Laws of Hawaii 1999, is amended
21 by amending section 33 to read as follows:
22      "SECTION 33.  This Act shall take effect upon its approval;
23 provided that:

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 1      (1)  Part I, Part III, and Part V, and sections 29 and 30 of
 2           this Act shall take effect on July 1, 1999; [and]
 3      (2)  Section 25 shall apply to taxable years beginning after
 4           December 31, 1999; and
 5     [(2)] (3)  Section 28 shall take effect on June 29, 1999."
 6      SECTION 4.  Statutory material to be repealed is bracketed.
 7 New statutory material is underscored.
 8      SECTION 5.  This Act, upon its approval, shall apply to
 9 taxable years beginning after December 31, 1999, and before
10 January 1, 2005; provided that section 3 shall take effect
11 retroactive to June 28, 1999.