Tax Credit; Federally Qualified Health Centers
Provides a tax credit for improvements made to federally qualified health centers.
HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
RELATED TO QUALIFIED IMPROVEMENT TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235D-1, Hawaii Revised Statutes, is amended to read as follows:
§235D-1[ ]] Definitions. Whenever used in this chapter, unless the context otherwise requires:
"Federally qualified health center" means a qualified health facility that has entered into an agreement with the Center for Medicare and Medicaid Services, formerly known as Health Care Financing Administration to meet medicare program requirements under title 42 United States Code section 405.2434 and is receiving a grant under section 330 of the Public Health Service Act, or is receiving funding from the recipient of a grant under section 330 of the Public Health Service Act.
"Net income tax liability" means income tax liability reduced by all other allowed credits, as determined under chapter 235.
"Qualified general facility" means any building or improvement that is not a qualified health facility or qualified resort facility.
"Qualified health facility" means any land, buildings, or equipment:
(1) Owned or leased by a federally qualified health center; or
(2) Not owned or leased, but the primary purpose of which is for commercial use to support or service a federally qualified health center.
"Qualified improvement costs" means any capitalized costs for construction and equipment of a permanent nature related to a qualified resort facility [
or], a qualified general facility, or qualified health facility, including infrastructure costs, but shall not include the costs for which another tax credit was claimed for the taxable year.
"Qualified resort facility" means any building or improvement located or to be located:
(1) On property designated primarily for resort or hotel use by the applicable county zoning ordinances or general plan; or
(2) On property not so designated, but the primary purpose of which is for commercial or recreational use to support or service a hotel or resort use, such as a golf course, golf course clubhouse, or retail center."
SECTION 2. Section 235D-2, Hawaii Revised Statutes, is amended to read as follows:
§235D-2[ ]] Qualified improvement tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by chapters 235, 237, 237D, and 239, a qualified improvement tax credit, which shall be available to reduce the taxpayer's net income tax liability, general excise tax, transient accommodations tax, or public service company tax imposed by these chapters.
(b) The total amount of the qualified improvement tax credit shall be determined by applying the applicable credit percentage to the qualified improvement costs paid by the taxpayer in the taxable year[
.]; or in the case of a qualified health facility, incurred in the taxable year and the two preceding taxable years, if three year's cumulative amount of qualified improvement costs is to be applied. For qualified improvement costs to a [ qualified]:
(1) Qualified resort facility totalling $1,000,000 or more over a three-year period, the applicable credit percentage shall be per cent[
. For qualified improvement costs to a qualified];
(2) Qualified general facility totalling $1,000,000 or more over a three-year period, the applicable credit percentage shall be per cent[
(3) Qualified health facility totaling $300,000 or more in a taxable year or $1,000,000 or more over a three-taxable-year period, the applicable credit percentage shall be fifty per cent. For the purpose of calculating qualified improvement costs over a three-taxable-year period for qualified improvement tax credit application, the total amount of qualified improvement costs shall be reduced by any qualified improvement costs for which the qualified improvement tax credit was claimed for any of the three taxable years.
The] If the taxpayer is a tax exempt entity under Internal Revenue Code Section 501(c)(3), the qualified improvement tax credit shall be refundable to the not-for-profit entity in three equal installments over three taxable years beginning with the year in which the not-for-profit entity assumes ownership of the qualified improvement. The refund shall be used by the tax exempt entity receiving the refund solely for purposes of providing preventive health care, outreach, and other enabling services to high risk patients. Each 501(c)(3) entity receiving such a refund shall submit an annual report to the department of taxation to account for the expenditures.
(d) For any taxpayer other than a tax exempt entity in subsection (c), the tax credit allowed under this chapter may be taken over a period not to exceed ten consecutive taxable years. The taxpayer shall elect the period and annual allocation of the tax credit in the initial year for which the credit is claimed.
(d)] (e) In the case of a partnership, S corporation, estate, or trust, the allowable tax credit is for qualified improvement costs incurred by the entity for the taxable year. The costs upon which the tax credit is computed shall be determined at the entity level. Distribution and share of the tax credit shall be determined by rules adopted pursuant to section 235D-4.
(e)] (f) If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code of 1986, as amended, no tax credit shall be allowed for that portion of the qualified improvement costs for which the deduction is taken.
(f)] (g) 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 allowed and claimed under this chapter.
(g)] (h) The tax credit allowed under this chapter shall be claimed against any or all net income tax liability, general excise tax, transient accommodations tax, or public service company tax for the taxable years over which the credit is claimed."
SECTION 3. Section 235D-5, Hawaii Revised Statutes, is amended to read as follows:
§235D-5[ ]] Limitation period. (a) The tax credit allowed under this chapter for qualified general facilities at qualified resort facilities shall be available for qualified improvement costs incurred during taxable years beginning after December 31, 1998, and before January 1, 2006.
(b) The tax credit allowed under this chapter for qualified health facilities shall be available for qualified improvement costs incurred during taxable years beginning after December 31, 2002, and before January 1, 2011."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act, on approval, shall apply to taxable years beginning after December 31, 2002.