Report Title:

Tax Credit Family Leave

 

Description:

Establishes a tax credit for employers who offer paid family leave to employees.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

89

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to taxation.

 

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

SECTION 1. The legislature finds that Hawaii's family leave law, chapter 398, Hawaii Revised Statutes, requires an employer who employs one hundred or more employees for twenty or more calendar weeks per year to provide an employee with a total of four weeks of family leave during any calendar year upon the birth or adoption of a child, or to care for a child, spouse, reciprocal beneficiary, or parent with a serious health condition.

The legislature further finds that while this law provides a much-needed benefit for Hawaii families whose members are employed by large businesses, it does not apply to companies with fewer than one hundred employees. Over sixty per cent of employees in the private sector in Hawaii work for companies with fewer than one hundred employees.

The legislature believes that family-friendly policies should be extended to all employees, regardless of the size of the employer. However, the legislature also recognizes that for many small businesses, providing paid family leave would be a severe financial burden and could adversely affect the success of the business.

The purpose of this Act is to establish a tax credit for employers who grant paid family leave, as an incentive for small businesses to provide family-friendly policies for their employees.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Family leave; income tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The amount of the credit shall be equal to       per cent of the salary or wage costs incurred in granting to any employee paid family leave, pursuant to chapter 398 or by agreement between the employer or employee; provided that the amount of the credit shall not exceed $           for any employee.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. 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 credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) As used in this section:

"Employee" means a person who performs services for hire for not fewer than six consecutive months for the taxpayer for whom a tax credit is sought under this section.

"Family leave" means a total not to exceed four weeks of paid leave during any calendar year for:

(1) The birth of a child of the employee or the adoption of a child; and

(2) The care of the employee's child, spouse or reciprocal beneficiary, or parent with a serious health condition.

Family leave includes two parent-teacher conferences per year, not to exceed four hours total.

"Serious health condition" means a physical or mental condition that warrants the participation of the employee to provide care during the period of treatment or supervision by a health care provider, and:

(1) Involves inpatient care in a hospital, hospice, or residential health care facility; or

(2) Requires continuing treatment or continuing supervision by a health care provider.

(e) The director of taxation shall prepare forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2001.

INTRODUCED BY:

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