Agricultural Development Income Tax Credit;
Provides for the preservation of agricultural use of important agricultural lands by providing an income tax credit for the waiver of nonagricultural development or the donation of important agricultural lands to an charitable organization. (HB1558 HD1)
HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO AGRICULTURAL LAND PRESERVATION.
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- Important agricultural lands; agricultural development rights income tax credit. (a) There shall be allowed to each eligible taxpayer subject to the taxes imposed by this chapter, an agricultural development rights 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 tax credit shall be an amount equal to:
(1) Fifty per cent of the value of the development rights of important agricultural lands that has been waived or precluded by the owner by the recordation of deed restrictions on the use of the land as provided by law; or
(2) One hundred per cent of the value of the development rights of important agricultural lands that has been donated by the owner to a charitable organization qualifying under section 501(c)(3) of the Internal Revenue Code, as amended.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).
(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.
(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims for a tax credit under this section, including amended claims, 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) The director of taxation shall prepare any forms that may be necessary to apply for or claim a credit under this section. In preparing the application form, the director shall make it easy to understand and use, including a list of requirements that shall be met to claim the credit. The director may also require the taxpayer to furnish information to ascertain the validity of the application or claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91, including the procedure to determine the value of the agricultural development rights.
(e) To qualify for theagricultural development rights income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.
(f) The credit allowed under this section may be applied for during taxable years beginning after December 31, 2002.
(g) For purposes of this section:
"Agricultural development rights" means the right to develop the lot, parcel, or area of land for purposes other than agricultural uses, including but not limited to industrial, commercial, and residential use, the valuation of which shall be determined as provided in this section. Development rights may be calculated and allocated in accordance with factors such as area, floor area ratios, density, height limitations, or any other criteria that will effectively quantify a value for the development right in a reasonable and uniform manner that will carry out the objectives of this section.
"Important agricultural lands" means:
(1) Agricultural lands that:
(A) Are within an agricultural district;
(B) Are currently in agricultural use;
(C) Have at least one hundred contiguous acres;
(D) Are irrigated or have a dependable and adequate moisture supply; and
(E) Have at least fifty per cent of the land area in the contiguous area with soils classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B;
(2) Agricultural lands not qualifying under paragraph (1) or designation as important agricultural lands and unique agricultural lands shall qualify for designation as important agricultural lands if the land:
(A) Is within an agricultural district; and
(B) Has been continuously in agricultural use for the past ten years."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.