Report Title:

Corporate Accountability for Tax Expenditures Act

 

Description:

Requires businesses receiving tax credits, or "development assistance," to report on job loss and gain.  Establishes a uniform application for assistance.  Makes businesses ineligible for credits if they fail to report.  (HB1752 HD1)

 

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1752

TWENTY-FOURTH LEGISLATURE, 2007

H.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 Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

TAX CREDIT ACCOUNTABILITY ACT

     §   -1  Definitions.  As used in this chapter, unless the context clearly requires otherwise:

     "Base years" means the first two complete calendar years following the effective date of a recipient receiving development assistance.

     "Business" means any corporation, limited liability company, partnership, joint venture, association, sole proprietorship, or other legally recognized entity.

"Date of assistance" means the date on which assistance to be provided under the assistance agreement begins.

     "Department" means the department of taxation.

     "Development assistance" means any tax credit of not less than $10,000 given to a business to promote expansion or relocation of the business.  "Development assistance" does not include tax increment financing.

     "Full-time, permanent job" means either:

     (1)  The definition of "full-time, permanent job", or like term in the legislation authorizing the development assistance; or

     (2)  If there is no such definition, then "full-time, permanent job" as defined in administrative rules implementing that legislation and in place prior to the effective date of this chapter; or

     (3)  If, on and after the effective date of this chapter, there is no definition of "full-time, permanent job" pursuant to paragraph (1) or (2), then "full-time, permanent job" means a job in which the new employee works for the recipient at a rate of at least thirty-five hours per week.

     "New employee":

     (1)  Means:

         (A)  The definition of "new employee" in the legislation authorizing the development assistance requested or received by a business under this chapter;

         (B)  If there is no such definition, then "new employee" as defined in administrative rules implementing that legislation and in place prior to the effective date of this chapter; or

         (C)  If, on and after the effective date of this chapter, there is no definition of "new employee" pursuant to subparagraph (A) or (B), then "new employee" means a full-time, permanent employee who represents a net increase in the number of the recipient's employees statewide;

     (2)  Includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years; and

     (3)  Does not include any of the following:

         (A)  An employee of the recipient who performs a job that was previously performed by another employee in the state, if that job existed in the state for at least six months before hiring the employee; and

         (B)  A child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least five per cent in the profits, capital, or value of any member of the recipient.

     "Part-time job" means:

     (1)  The definition of "part-time" in the legislation authorizing the development assistance requested or received by a business under this chapter;

     (2)  If there is no such definition, then "part-time job" as defined in administrative rules implementing that legislation and in place prior to the effective date of this chapter; or

     (3)  If, on and after the effective date of this chapter, there is no definition of "part-time job" pursuant to paragraph (1) or (2), then "part-time job" means a job in which the new employee works for the recipient at a rate of less than thirty-five hours per week.

     "Recipient" means any business that receives development assistance.

     "Retained employee" means:

     (1)  The definition of "retained employee" in the legislation authorizing the development assistance requested or received by a business under this chapter;

     (2)  If there is no such definition, then "retained employee" as defined in administrative rules implementing that legislation and in place prior to the effective date of this chapter; or

     (3)  If, on and after the effective date of this chapter, there is no definition of "retained employee" pursuant to paragraph (1) or (2), then "retained employee" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance.

     "Specific project site" means that distinct operational unit to which any development assistance is applied.

     "Temporary job" means:

     (1)  The definition of "temporary job" in the legislation authorizing the development assistance requested or received by a business under this chapter;

     (2)  If there is no such definition, then "temporary job" as defined in administrative rules implementing that legislation and in place prior to the effective date of this chapter; or

     (3)  If, on and after the effective date of this chapter, there is no definition of "temporary job" pursuant to paragraph (1) or (2), then "temporary job" means a job in which the new employee is hired for a specific duration of time or season.

     §   -2  Development assistance request required.  Each business to become eligible for any development assistance tax credit under title 14 shall request development assistance under this chapter.

     §   -3  Standardized applications for state development assistance.  (a)  A final application submitted to the department requesting development assistance shall contain, at a minimum:

     (1)  An application tracking number that is specific to the application;

     (2)  The office mailing address, telephone number, four-digit standard industrial classification number, and the name of the chief officer of the applicant or authorized designee for the specific project site for which development assistance is requested;

     (3)  The applicant's total number of employees at the specific project site on the date that the application is submitted to the department, including:

         (A)  The number of full-time, permanent jobs,

         (B)  The number of part-time jobs; and

         (C)  The number of temporary jobs;

     (4)  The type of development assistance and value of assistance being requested;

     (5)  A list of all other forms of development assistance that the applicant is requesting for the specific project site; and

     (6)  The applicant's agreement to comply with section

   -4 reporting, inspection, and record disclosure requirements.

     (b)  The department shall complete, or shall require the applicant to complete, an application form that meets the minimum requirements as prescribed in this section each time an applicant applies for development assistance under this chapter.

     §   -4  State development assistance disclosure.  (a)  If a recipient of development assistance fails to comply with subsection (b), the recipient shall not be eligible for development assistance for the taxable year prior to the year in which the noncompliance occurs and shall be ineligible for any future development assistance until the department receives proof that the recipient has complied with the requirements of subsection (b).

     (b)  For each development assistance agreement for which the date of assistance has occurred in the prior calendar year, each recipient shall submit to the department by the submittal deadline specified by the department, a report that shall include but not be limited to the following:

     (1)  The application tracking number;

     (2)  The office mailing address, telephone number, four-digit standard industrial classification number or successor number, and the name of the chief officer of the applicant or authorized designee for the specific project site for which the development assistance was approved by the department;

     (3)  The type of development assistance program and value of assistance that was approved by the department;

     (4)  The applicant's total number of employees at the specific project site on the date that the application was submitted to the department and the applicant's total number of employees at the specific project site on the date of the report, including:

         (A)  The number of full-time, permanent jobs,

         (B)  The number of part-time jobs;

         (C)  The number of temporary jobs; and

         (D)  A computation of the gain or loss of jobs in each category;

     (5)  A detailed list of the occupation or job classifications and number of:

         (A)  New employees or retained employees to be hired in full-time, permanent jobs;

         (B)  A schedule of anticipated starting dates of the new hires; and

         (C)  The actual average wage by occupation or job classification and total payroll to be created as a result of the development assistance;

     (6)  A narrative, if necessary, describing how the recipient's use of the development assistance during the reporting year has reduced employment at any site in the state; and

     (7)  A certification by the chief officer of the applicant or the chief officer's authorized designee that the information in the report contains no knowing misrepresentation of material facts upon which eligibility for development assistance is based.

     (c)  The department shall have full authority to verify information contained in the recipient's report, including the authority to inspect the specific project site and the records of the recipient that support reporting requirements under the development assistance agreement.

     (d)  By June 1, 2009, and by June 1 of each year thereafter, the department shall aggregate and publish the data in the reports in both written and electronic form.

     §   -5  Unified economic development budget.  (a)  For each fiscal year ending on or after June 30, 2007, the department shall submit an annual unified economic development budget to the legislature.  The unified economic development budget shall be due within three months after the end of the fiscal year and shall report all development assistance granted during the prior fiscal year, including the aggregate amount of unrealized tax revenues resulting from each type of development assistance provided by law under title 14, as reported to the department of taxation on tax returns filed during the fiscal year.

     (b)  All data contained in the unified economic development budget presented to the legislature shall be government records."

SECTION 2.  This Act shall take effect upon its approval.