Report Title:

Tax Credit; Hotel Renovation

 

Description:

Provides a tax credit equal to 15% of the costs of hotel renovations between 2014 and 2019.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

2985

TWENTY-FOURTH LEGISLATURE, 2008

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO TAXATION.

 

 

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

 


     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-    Hotel renovation tax credit.  (a)  There shall be allowed to each taxpayer, subject to the taxes imposed by this chapter and chapter 237D, an income tax credit that 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.

     (b)  The amount of the credit shall be fifteen per cent of the renovation costs incurred during the taxable year for each hotel facility located in the State and shall not include the construction or renovation costs for which another credit was claimed under this chapter for the taxable year.

     (c)  In the case of a partnership, S corporation, estate, or trust, the tax credit shall be determined at the entity level.  Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

     (d)  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 renovation cost for which the deduction is taken.

     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 allowable and claimed.  In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

     (e)  The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.

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

     (g)  As used in this section:

     "Hotel facility" means an establishment consisting of any building or structure used primarily for the business of providing, for consideration, transient accommodation lodging facilities that furnish, as part of its routine operations, one or more customary lodging services, other than living accommodations and furniture and fixtures, including but not limited to, restaurant facilities, room attendant or bell services, telephone switchboard operations, laundry services, or concierge servicers, and is subject to the transient accommodations tax under chapter 237-D.  "Hotel facility" does not include any building that is used or contains any room that is used as a "condominium" as defined under section 514B-3 or "time-share unit" as defined under section 514E-1.

     "Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

     "Renovation" means any costs incurred after December 31, 2007, for plans, design, construction, and equipment related to renovations, alterations, or modifications to a hotel facility.

     "Taxpayer" means an owner of a hotel facility located in the State.

     (h)  No taxpayer that claims a credit under this section shall claim a credit under chapter 235D.

     (i)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1.

     All 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.

     (j)  The director of taxation:

     (1)  Shall prepare forms as may be necessary to claim a tax credit under this section;

     (2)  May require proof of the claim for the tax credit; and

     (3)  May adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

     (k)  The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2013 for building permits submitted to the appropriate county agency before December 31, 2014, and shall not be available for taxable years beginning after December 31, 2019."

     SECTION 2.  New statutory material is underscored.


     SECTION 3.  This Act shall take effect upon approval and shall apply to taxable years beginning after December 31, 2007 and ending before January 1, 2020.

 

INTRODUCED BY:

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