SENATE FLOOR AMENDMENT

 

FLOOR AMENDMENT NO. 9 DATE: 04-08-03

TO: H.B. No. 1225, S.D. 1

 

SECTION 1. H.B. No. 1225, S.D. 1, is amended by designating part III as part IV, and renumbering sections 4 and 5, to sections 9 and 10, respectively.

SECTION 2. H.B. No. 1225, S.D. 1, is amended by adding a part III to the measure to read as follows:

"PART III.

SECTION 4. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:

1. By amending its title and subsection (a) to read:

"235-110.91 Tax credit for increasing research activities. (a) Section 41 (with respect to the credit for increasing research activities) and section 280C(c) (with respect to certain expenses for which the credit for increasing research activities are allowable) of the Internal Revenue Code shall be operative for the purposes of this chapter as provided in this section[; except that references to the base amount shall not apply and credit for all qualified research expenses may be taken without regard to the amount of expenses for previous years]. If section 41 of the Internal Revenue Code is repealed or terminated prior to January 1, 2006, its provisions shall remain in effect for purposes of the income tax law of the State [as modified by this section,] as provided for in subsection (h)."

2. By amending subsection (c) to read:

"(c) There shall be allowed to each taxpayer, subject to the tax imposed by this chapter, an income tax credit for qualified research activities equal to the credit for research activities provided by section 41 of the Internal Revenue Code [and as modified by this section]. The credit 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."

3. By amending subsection (e) to read:

"(e) If the tax credit for qualified research activities claimed by a taxpayer exceeds the amount of income tax payment due from the taxpayer, the excess of the tax credit over payments due [shall be refunded to the taxpayer; provided that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.] may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted."

4. By amending subsection (h) to read:

"(h) This section shall apply to taxable years beginning after December 31, 2000, but not to taxable years beginning after December 31, 2005[.]; provided that research conducted after June 30, 2003, shall be subject to the amendments made by Act , Session Laws of Hawaii 2003."

SECTION 5. Act 221, Session Laws of Hawaii 2001, is amended by amending section 13 to read as follows:

"SECTION 13. It is the intention of the legislature that the amendments in this Act [be liberally construed.] encourage increased expenditures in Hawaii, promote long-term benefits to Hawaii and its economy, raise new capital, increase spending to accelerate research projects, create new jobs in Hawaii, and encourage the continued growth and development of high technology and certain performing arts ventures. The department of taxation is [further] given latitude to interpret these amendments in light of industry developments. The legislature does not intend by the amendments in this Act to opine on the interpretation taken by any taxpayer or the department of taxation on any issue arising under prior law."

SECTION 6. Act 297, Session Laws of Hawaii 2000, is amended by amending section 10 to read as follows:

"SECTION 10. It is the intention of the legislature in making amendments in this [Part] part to sections 235-7.3, 235-9.5, 235-110.9, and 235-110.91, Hawaii Revised Statutes, that the amendments [be liberally construed, and in this regard, the] encourage increased expenditures in Hawaii, promote long-term benefits to Hawaii and its economy, raise new capital, increase spending to accelerate research projects, create new jobs in Hawaii, and encourage the continued growth and development of high technology and certain performing arts ventures. The department of taxation is given latitude to interpret those amendments in light of current industry standards. The amendments made in this [Part] part to sections 235-7.3, 235-9.5, 235-110.9, and 235-110.91, Hawaii Revised Statutes, shall not be construed to disqualify any taxpayer who has received a favorable written determination from the department of taxation under the original provisions of those sections as enacted by Act 178, Session Laws of Hawaii, 1999."

SECTION 7. To prevent abuse and promote efficient administration of taxes, the department of taxation is authorized to prescribe rules, as may be necessary or appropriate, to carry out the purposes of sections 235-7.3, 235-9.5, 235-110.9, and 235-110.91, Hawaii Revised Statutes. The department of taxation may also provide guidance through various publications regarding the types of transactions that do not qualify for the high technology business investment tax credit, including:

(1) Investments that lack economic substance or a business purpose;

(2) Related party transactions that minimize the amount of actual investment or "new money";

(3) Certain restructuring and reorganizations that lack economic substance or a business purpose; and

(4) Investments in commercial television and film products and businesses that lack the long-term potential that this Act is intended to promote.

SECTION 8. Upon enactment, the revisor of statutes shall insert the number of this Act into section 235-110.91, Hawaii Revised Statutes, where indicated in section 4 of this Act."

 

 

 

 

 

Offered by:

( ) Carried

 

( ) Failed to Carry

 

( ) Withdrawn