Report Title:

Mental Health Centers; Incentives; New Treatment Modalities

Description:

Provides income tax credit for investments in qualified mental health centers using new treatment modalities in decreasing percentages beginning in the year the investment is made and for the following four years. Requires certification from director of health. Applies to tax years beginning after 12/31/2003.

THE SENATE

S.B. NO.

2298

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to qualified mental health center investment tax credit.

 

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

SECTION 1. The legislature finds that mental illness and alcohol or drug abuse and dependence often occur at the same time in the same individual. Both conditions need to be treated. However, for various reasons, many current treatment modalities focus exclusively on either one or the other, without giving due recognition that mental illness and alcohol or drug abuse and dependence are co-occurring within the same individual.

The legislature finds that certain entities have introduced innovative treatment modalities that address both mental illness and alcohol or drug abuse and dependence within the same patient. One example is the Betty Ford Center in California. The Betty Ford Center offers a variety of levels of care, specialty programs, and other services for adult patients. However, the Center also recognizes that chemical dependency affects the entire family. Thus, it offers support and education for family members to learn about the disease affecting their loved ones, which encourage them to engage in the recovery process themselves. The family program is a five-day intensive process of therapeutic education for adolescents and adults designed to support family members and friends and help them begin their own recovery from the effects of addictive disease. The Center also offers a four-day children's program to help children between the ages of seven and twelve learn about addiction through age-appropriate activities, so they realize that the disease is not their fault, they are not alone, and they are not to blame. The program enables children to talk openly in a safe and supportive atmosphere and encourages them to express their feelings. Parents join the children during the last two days of the program and also participate in their own parent group. The children and their families are referred to local continuing care programs at the end of the four-day program.

As for the patient, the levels of care available include inpatient, day treatment, intensive outpatient, and therapeutic residential community and focused continuing care (in which patients receive telephone counseling calls for a full year following discharge). The specialty programs are offered at most levels of care and include gender-specific care for women, gender-specific care for men, a relapse program, and a program for professionals who are addicted. Other services include pain management, smoking cessation, counseling for eating disorders, and spiritual care through the twelve-step program.

The legislature finds that there is a need to encourage the establishment and operation of mental illness and alcohol or drug abuse and dependence centers that offer innovate treatment modalities in Hawaii. The purpose of this Act is to provide incentives for the establishment and operation of such centers 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-    Qualified mental health center investment tax credit; use of new treatment modalities. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a qualified mental health center investment 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 investment was made and for the following four years provided the credit is properly claimed. The tax credit shall be as follows:

(1) In the year the investment was made, thirty-five per cent, up to a maximum of $       ;

(2) In the first year following the year in which the investment was made, twenty-five per cent, up to a maximum of $       ;

(3) In the second year following the year in which the investment was made, twenty per cent, up to a maximum of $       ;

(4) In the third year following the year in which the investment was made, ten per cent, up to a maximum of $       ; and

(5) In the fourth year following the year in which the investment was made, ten per cent, up to a maximum of $       ;

of the investment made by the taxpayer in each qualified mental health center.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) If the tax credit under this section exceeds the taxpayer's net income tax liability for any of the five years that the credit is taken, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. Every claim, including amended 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 comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) If at the close of any taxable year in the five-year period in subsection (a):

(1) The mental health center no longer qualifies as a qualified mental health center;

(2) The mental health center or an interest in the mental health center has been sold by the taxpayer investing in the qualified mental health center; or

(3) The taxpayer has withdrawn the taxpayer's investment wholly or partially from the qualified mental health center,

the credit claimed under this section shall be recaptured. The recapture shall be equal to         per cent of the amount of the total tax credit claimed under this section in the preceding two taxable years. The amount of the credit recaptured shall apply only to the investment in the particular qualified mental health center that meets the requirements of paragraph (1), (2), or (3). The amount of the recaptured tax credit determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(e) To qualify for the income tax credit, the taxpayer shall:

(1) Apply for and obtain certification from the director of health that the mental health center in which the investment is made is a qualified mental health center; and

(2) Submit the certification to the director of taxation.

(f) The director of taxation shall prepare any forms that may be necessary, except the certification form required under subsection (e), which shall be prepared by the director of health, to claim a credit under this section. The director of taxation shall require the taxpayer to furnish the certification required under subsection (e), 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.

(g) As used in this section:

"New treatment modalities" means methods of effectively treating individuals who suffer from either mental illness or alcohol or drug abuse and dependence, or both, and their families, in an integrated and organized way that is innovative, as determined by the department of health through rules to be adopted pursuant to chapter 91.

"Qualified mental health center" means a new or existing facility in the State that uses new treatment modalities to treat mental illness and alcohol or drug abuse and dependence in individuals who may suffer from one or both conditions."

SECTION 3. Chapter 321, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§321-    Qualified mental health center; certification for tax credit; rules; form. (a) The director of health shall provide written certification to a taxpayer upon request, for the purpose of claiming an income tax credit under section 235-   , attesting to the director's determination that a mental health center is a "qualified mental health center" as this term is defined in section 235-   . The director shall issue the certification only if the director determines that the mental health center in which the investment is made qualifies as using "new treatment modalities", as this term is defined in section 235-   .

(b) The director of health shall adopt rules to supplement and expand the definition of "new treatment modalities" under subsection (a), in order to qualify a mental health center for certification, and to implement this section generally.

(c) The director of health shall prepare a simple one-page certification form for the purposes of this section."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on upon approval; provided that section 2 shall apply to taxable years beginning after December 31, 2003, for investments made pursuant to section 235-   , Hawaii Revised Statutes, on or after the effective date of this Act.

INTRODUCED BY:

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