Provides tax incentives for businesses doing medical research.
HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
relating to research.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Tax credit for medical research activities. (a) There shall be allowed to each taxpayer, subject to the tax imposed by this chapter, an income tax credit for qualified medical research activities. 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. The tax credit shall be equal to twenty per cent of the costs related to the qualified medical research.
(b) If the tax credit for qualified medical 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 may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.
(c) All claims for a tax credit 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 properly claim the credit shall constitute a waiver of the right to claim the credit.
(d) The director of taxation may adopt any rules under chapter 91 and forms necessary to carry out this section.
(e) As used in this section "qualified medical research" includes any research done to advance any field of medicine.
(f) This section shall apply to taxable years beginning after December 31, 2002, but not to taxable years beginning after December 31, ."
SECTION 2. Section 235-110.91, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:
"(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."
SECTION 3. Section 235-111.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) A qualified high technology business as defined in section 235-7.3 may apply to the department to sell its unused net operating loss carryover to another taxpayer. If approved by the department, a qualified high technology business may sell its unused net operating loss carryover to another taxpayer in an amount equal to at least seventy-five per cent of the amount of the surrendered tax benefit, computed at the corporate rate pursuant to section 235-71; provided that the qualified high technology business may sell no more than $500,000 of its unused net operating loss carryover to another taxpayer per year. In the case of partnerships, limited liability partnerships, limited liability companies classified as partnerships, and S corporations, each partner, member, or shareholder may sell [
its share] no more than $500,000 of the entity's total net operating loss. The tax benefit purchased by the buyer shall be claimed in the year for which the sale is approved by the department. Any use of the purchased net operating loss carryover for tax carryback or carryforward purposes shall comply with applicable law. The income from the sale of the net operating loss carryover received by the seller shall be reported on its tax return in the taxable year received but shall not be considered taxable income."
SECTION 4. The department of taxation shall submit a yearly report to the legislature no later than twenty days before the beginning of each regular session beginning in 2003 and ending with a final report to the regular session. The reports shall contain:
(1) The name and business address of every taxpayer that claimed the medical research tax credit in the previous year;
(2) The amount of the medical research tax credit claimed by each taxpayer in the previous year;
(3) The cost to the state of these tax credits for the previous years; and
(4) The sum of each of these for all the years since the tax credit became available.
If all of the information is not available for the first year's
report, that report shall include whatever requested information
The report shall also include:
(1) An analysis of the economic impact of the medical research tax credit on the state and the businesses that are eligible for the tax credit; and
(2) Recommendations on whether the availability or the credit should be amended or whether caps on the credit are warranted.
The department of taxation shall work with the department of business, economic development, and tourism for this analysis.
All reports to the legislature required by this section shall be made available to the public by the department of taxation.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval.