Technology Infrastructure Renovation Tax Credit
Mandates a four-year increase in the technology infrastructure renovation tax credit starting in 2005 and ending in 2008.
HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2004
STATE OF HAWAII
A BILL FOR AN ACT
relating to economic development.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. In recent years, the legislature has adopted a number of initiatives to provide tax incentives for Hawaii businesses and to attract new business opportunities to the State. In addition, expansion of the state enterprise zone program, regulatory streamlining, and the funding of new economy growth initiatives have all had a positive impact on Hawaii's business climate.
This multi-faceted effort has not, however, had as significant an impact for many Hawaii companies that would benefit from upgrading obsolete telecommunications and information technology systems and infrastructures. New developments in information technology have removed many of the barriers that made it difficult or prohibitively expensive for Hawaii businesses to convert existing systems. Companies that have not adopted the previous generation of information technology are now in an excellent position to capture the increasingly sophisticated application of wireless technology, and at a lower cost. Projects such as a "wireless Waikiki" would provide economic benefits for both the immediate neighborhood and businesses, as well as the broader economic community.
For many in the Hawaii business community, upgrading information technology and telecommunication systems still requires an initial investment beyond their capability. The legislature finds that a short-term increase in the technology infrastructure renovation tax credit is an excellent means to boost these efforts to compete in increasingly complex markets.
The purpose of this Act is to support Hawaii's economic development by accelerating the upgrading of information technology and telecommunications capacity in businesses throughout Hawaii through a four-year increase in the technology infrastructure renovation tax credit.
SECTION 2. Section 235-110.51, Hawaii Revised Statutes, is amended to read as follows:
§235-110.51[ ]] Technology infrastructure renovation 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.
(b) The amount of the credit shall be four per cent of
the renovation costs incurred during the taxable year for
each commercial building located in Hawaii.
(c) In the case of a partnership, S corporation, estate, trust, or any developer of a commercial building, the tax credit allowable is for renovation costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).
(d) If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the renovation cost for which the deduction is taken.
(e) The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.
(f) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be carried forward until exhausted.
(h) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2000 and shall not be available for taxable years beginning after December 31, [
(i) As used in this section:
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"Renovation costs" means costs incurred after December 31, 2000, to plan, design, install, construct, and purchase technology-enabled infrastructure equipment to provide a commercial building with technology-enabled infrastructure.
"Technology-enabled infrastructure" means:
(1) High speed telecommunications systems that provide Internet access, direct satellite communications access, and videoconferencing facilities;
(2) Physical security systems that identify and verify valid entry to secure spaces, detect invalid entry or entry attempts, and monitor activity in these spaces;
(3) Environmental systems to include heating, ventilation, air conditioning, fire detection and suppression, and other life safety systems; and
(4) Backup and emergency electric power systems.
(j) No taxpayer that claims a credit under this section shall claim any other credit under this chapter.
(k) For the taxable year beginning after December 31, 2004, the following tax credit shall be available. The credit shall be per cent over four years for renovation costs incurred for each commercial building located in Hawaii as follows:
(1) In the year the renovation was made, per
(2) In the first year following the year in which the renovation was made, per cent;
(3) In the second year following the renovation, per cent;
(4) In the third year following the renovation, per cent;
(5) In the fourth year following the renovation, per cent;
of the renovation costs incurred by the taxpayer.
The tax credit allowed under this subsection shall be available for taxable years beginning after December 31, 2004, and shall not be available for taxable years beginning after December 31, 2008."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on its approval; provided that on December 31, 2008, section 2 of this Act shall be repealed and section 235-110.51, Hawaii Revised Statutes, is reenacted in the form in which it read on the day before the approval of this Act.