Tax Credits; Tax Exemptions; Evaluation
Requires the Department of Taxation to evaluate certain tax credits and tax exemptions and report to the Legislature. Provides for automatic repeal of the tax credits and tax exemptions. Provides penalty for excessive amounts filed for tax refunds and credits. (SB2829 HD2)
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 231, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§231-A Erroneous claim for refund or credit. Unless a person making a claim for a tax refund or credit in an excessive amount can prove that there is a reasonable basis for the claim, the person shall be liable for a penalty in an amount equal to twenty per cent of the excessive amount. For the purposes of this section, the term "excessive amount" means the amount that exceeds the amount of a claim for a refund or credit that is allowed by law; provided that the excessive amount is greater than $5,000.
§231-B Tax credits and exemptions; evaluation; report. (a) The department shall perform an evaluation of the tax credits or tax exemptions provided in title 14 and scheduled for repeal in section 2 of Act , Session Laws of Hawaii 2008. (b) The department shall submit reports of the evaluations required by this section to the legislature no later than twenty days prior to the convening of:
(1) The regular session of 2009 for credits and exemptions that will be repealed on December 31, 2010;
(2) The regular session of 2010 for credits and exemptions that will be repealed on December 31, 2011; and
(3) The regular session of 2011 for credits and exemptions that will be repealed on December 31, 2012;
provided that no later than twenty days prior to the convening of the regular sessions of 2009 and 2010, the department shall also submit a progress report to the legislature on the planned uses and actual expenditures associated with the report.
(c) In evaluating the economic effects of the tax credits and tax exemptions provided in title 14 and scheduled for repeal in Act , Session Laws of Hawaii 2008, the department may:
(1) Contract with recognized technical experts knowledgeable in the field of economics;
(2) Establish a technical advisory group, which may include the department of labor and industrial relations, department of agriculture, department of commerce and consumer affairs, department of transportation, department of human services, and department of business, economic development, and tourism, to help identify and develop the data elements needed for the analyses; and
(3) Collect, process, and analyze data from federal, state, and local government sources.
(d) The data and economic analyses provided by the department in its reports to the legislature shall provide information sufficient to allow the legislature to determine whether the tax credits and tax exemptions provided under title 14 have achieved or are achieving their intended objectives, whether they are consistent with public policies, and whether they should be continued, modified, or permitted to expire.
(e) If the department recommends that a tax credit or tax exemption should be modified, it shall provide with its report to the legislature, and with the assistance from the departments listed in subsection (c)(2), proposed draft legislation that, upon enactment, would effect the recommended modifications.
(f) If the department recommends that the law establishing a tax credit or tax exemption should not be continued, it shall make appropriate recommendations, with assistance from the departments listed in subsection (c)(2), to improve the operation of the tax credit or tax exemption, including recommendations for appropriate restrictions to be placed on the tax credit or tax exemption."
SECTION 2. Repeal dates for tax credits and exemptions. (a) The following sections shall be repealed on December 31, 2010:
(1) Section 235-9.5 (stock options from qualified high technology businesses excluded from taxation);
(2) Section 235-15 (tax credits to promote the purchase of child passenger restraint systems);
(3) Section 235-110.2 (credit for school repair and maintenance);
(4) Section 235-110.51 (technology infrastructure renovation tax credit);
(5) Section 237-24 (general excise tax; amounts not taxable), except for section 237-24(6) (salaries or wages for services rendered);
(6) Section 237-24.3 (general excise tax; additional amounts not taxable);
(7) Section 237-24.9 (general excise tax; aircraft service and maintenance facility);
(8) Section 237-27 (general excise tax; exemption of certain petroleum refiners);
(9) Section 237-29.53 (general excise tax; exemption for contracting or services exported out of state);
(10) Section 237-29.55 (general excise tax; exemption for sale of tangible personal property for resale at wholesale);
(11) Section 237-29.8 (general excise tax; call centers; exemption; engaging in business; definitions); and
(12) Section 239-12 (public service company tax; call centers; exemption; engaging in business; definitions).
(b) The following sections shall be repealed on December 31, 2011:
(1) Section 235-110.6 (fuel tax credit for commercial fishers);
(2) Section 235-110.7 (capital goods excise tax credit);
(3) Section 237-16.8 (general excise tax; exemption of certain convention, conference, and trade show fees);
(4) Section 237-23 (general excise tax; exemptions, persons exempt, applications for exemption), except for section 237-23(a)(1) (public service companies);
(5) Section 237-23.5 (general excise tax; related entities; common paymaster; certain exempt transactions);
(6) Section 237-24.5 (general excise tax; additional exemptions);
(7) Section 237-24.7 (general excise tax; additional amounts not taxable);
(8) Section 237-24.75 (general excise tax; additional exemptions);
(9) Section 237-25 (general excise tax; exemptions of sales and gross proceeds of sales to federal government, and credit unions);
(10) Section 237-28.1 (general excise tax; exemption of certain shipbuilding and ship repair business); and
(11) Section 237-29.5 (general excise tax; exemption for sales of tangible personal property shipped out of the state).
(c) The following sections shall be repealed on December 31, 2012:
(1) Section 235-12.5 (renewable energy technologies; income tax credit);
(2) Section 235-17 (motion picture, digital media, and film production income tax credit);
(3) Section 235-110.8 (low-income housing tax credit);
(4) Section 237-26 (general excise tax; exemption of certain scientific contracts with the United States);
(5) Section 237-27.5 (general excise tax; air pollution control facility);
(6) Section 237-27.6 (general excise tax; solid waste processing, disposal, and electric generating facility; certain amounts exempt);
(7) Section 237-29 (general excise tax; exemptions for certified or approved housing projects);
(8) Section 241-4.7 (low-income housing; income tax credit); and
(9) Section 244D-4.3 (liquor tax; exemption for sales of liquor out of the state).
SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 to carry out the purposes of this Act, including additional resources, funding for permanent, full-time equivalent ( .00 FTE) positions (an economist, a research statistician, and an administrative rules specialist) in the department of taxation, and to reimburse other state agencies for costs incurred in performing tasks required by this Act.
The sum appropriated shall be expended by the department of taxation for the purposes of this Act.
SECTION 4. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
SECTION 5. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2020.