Report Title:

Tax Credit; Private Marina Development

Description:

Establishes a tax credit for qualified costs to renovate a publicly-owned small boat harbor or develop private marina facilities in the state; maximum tax credit of $2,000,000 per private marina development and no more than five projects qualified per year. (SD1)

THE SENATE

S.B. NO.

1377

TWENTY-THIRD LEGISLATURE, 2005

S.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO TAXATION.

 

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

SECTION 1. The legislature finds that private marina facility development could bring extensive economic benefits and result in the creation of hundreds of construction and permanent jobs. The legislature believes that private marina facilities can play a vital role in sustaining the State's economy and provide ocean- and marine-related businesses and enthusiasts with more opportunities to succeed in business and enjoy Hawaii's natural environment. The development of private marina facilities will attract visitors from local, national, and international markets and complement each island's major tourist areas by creating a broad-based visitor destination.

The purpose of this Act is to establish a tax credit for qualified costs in the development of private marina facilities.

SECTION 2. The legislature further finds and declares that the tax credit established under this Act is in the public interest and for the public health, safety, and general welfare of the people of Hawaii.

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Marina facilities development tax credit. (a) There shall be allowed a tax credit to each qualified taxpayer per year subject to the taxes imposed by this chapter or chapter 237 that may be claimed for taxable years beginning after December 31, 2005, for qualified costs in the renovation of publicly-owned small boat harbor or the development of private marina facilities within the State, provided that credits shall be claimed for no more than five qualified private marina facilities as allowed in subsection (i). The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter and, at the election of the taxpayer, from the tax liability imposed by chapter 237.

(b) The tax credit earned shall be equal to the qualified costs incurred from January 1, 2006, through December 31, 2010, up to a maximum of $2,000,000 of credits in the aggregate for each qualified publicly-owned small boat harbor renovation or private marina facilities development project for each taxable year. In the case of a partnership, limited liability company, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for qualified costs incurred by the entity. The costs upon which the tax credit is computed shall be determined at the entity level.

(c) To qualify for the tax credit, a taxpayer shall have expended qualified costs on and be renovating a publicly-owned small boat harbor or developing a private marina facility that is open for use by the public.

(d) If the tax credit under this section exceeds $2,000,000 in the aggregate for a qualified publicly-owned small boat harbor renovation or private marina facility development project for any taxable year, or exceeds a qualified taxpayer's tax liability under this chapter or chapter 237 for any year for which the credit is taken, the excess of the tax credit may be used as a credit against the taxpayer's tax liability for the taxes set forth in this section in subsequent years until exhausted; provided that the taxpayer may continue to claim the credit provided in this section if the qualified costs are incurred before January 1, 2011.

(e) 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.

(f) If, at any time during the five-year period in which tax credits are earned under this section, the costs incurred no longer meet the definition of qualified costs, the credits claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the total tax credits claimed under this section for the preceding taxable year; provided that the amount of the credits recaptured shall apply only to those costs that no longer meet the definition of qualified costs. The amount of the recaptured tax credits 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.

(g) If any credit is claimed under this section, then no taxpayer shall claim a credit under any chapter identified in this section or section 235-110.46 for the same qualified costs for which a credit is claimed under this section.

(h) 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 claims for credits made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

Every qualified taxpayer, no later than March 31 of each year in which qualified costs were expended in the previous taxable year, shall submit a written, certified statement to the director of business, economic development, and tourism, in the form specified by the director of business, economic development, and tourism, identifying:

(1) Qualified costs, if any, expended in the previous taxable year;

(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and

(3) The tax liability under this chapter and chapter 237 against which the tax credits are claimed.

Any other law to the contrary notwithstanding, a statement submitted under this subsection shall be a public document.

(i) The department of business, economic development, and tourism shall maintain records of the names of taxpayers eligible for the credits and the total amount of qualified costs incurred from January 1, 2006, through December 31, 2010. The department of business, economic development, and tourism shall verify all qualified costs and, upon each determination, shall issue a certificate to the taxpayer certifying:

(1) The amount of the qualified costs; and

(2) The amount of tax credit that the taxpayer is allowed to use for the taxable year.

The department of business, economic development, and tourism shall certify no more than $2,000,000 in credits in the aggregate for each private marina facility development project for each taxable year, and shall certify no more than five private marina development projects per year. The taxpayer shall file the certificate with the taxpayer's return with the department of taxation.

(j) As used in this section:

"Private marina facility" means a privately-owned, operated, or developed marina or small boat harbor facility that is open for use by the public and includes any structures or buildings that are ancillary to the necessary operation of the marina facility to support marine-related activities.

"Qualified costs" means any costs for plans, design, and construction, costs for equipment that is permanently affixed to a building or structure, acquisition of facilities for a private marina facility use, and costs for renovating a publicly-owned small boat harbor by a private developer, up to a total of $5,000,000 in the aggregate for each publicly-owned small boat harbor renovation or private marina facility development project, incurred after December 31, 2005, and before January 1, 2011, at a site designated and approved for the development of a private marina facility; provided that "qualified costs" shall not include land acquisition costs.

"Qualified taxpayer" means a person who fulfills the requirements of subsection (c)."

SECTION 4. Section 235-2.45, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Section 704 of the Internal Revenue Code (with respect to a partner's distributive share) shall be operative for purposes of this chapter; except that section 704(b)(2) shall not apply to:

(1) Allocations of the high technology business investment tax credit allowed by section 235-110.9;

(2) Allocations of net operating loss pursuant to section 235-111.5; [or]

(3) Allocations of the attractions and educational facilities tax credit allowed by section 235-110.46[.]; and

(4) Allocations of the marina facilities development tax credit allowed by section 235-  ."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act, upon its approval, shall apply to qualified costs, as defined in section 3 of this Act, incurred after December 31, 2005.