Report Title:

Tax Credits; Economy; Computer Software

Description:

Stimulates the economy and generates local capital by providing a tax credit to computer manufacturers that purchase the rights to software made in the State.

THE SENATE

S.B. NO.

1685

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO TAX CREDITS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that despite the recent collapse and downsizing of many computer and high-tech related companies, small pockets of the computer industry still flourish in many parts of the country.

In Hawaii, small entrepreneurial software companies strive to break into a highly competitive market. With little or no capital, these young and energetic software writers have produced programs that are second to none and have the potential to not only revive a struggling computer industry, but to also generate local capital, expand the local high-tech industry, and revitalize an economy still reeling from September 11.

The purpose of this Act is to support the high tech industry and generate capital for the local economy by providing tax credits to software manufacturers that purchase the rights to computer programs made in the State.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Computer software tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a computer software 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 apply to manufacturers of computer programs who purchase the legal right to manufacture computer programs made in the State. The tax credit shall be $_____ for every software program rights purchased by a manufacturer. For the purposes of this section, "made in the State" means or refers to computer software that is written or programmed in the State by software writers whose primary place of business is situated in the State and whose business is subject to this chapter, chapter 237, and any other applicable law of this State.

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 cost for which the deduction is taken.

(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 claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(e) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and apply to taxable years beginning after December 31, 2002.

INTRODUCED BY:

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