TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO THE CAPITAL INFRASTRUCTURE TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-17.5, Hawaii Revised Statutes, is amended to read as follows:
§235-17.5[ ]] Capital
infrastructure tax credit. (a) There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter a capital infrastructure 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 capital
infrastructure costs were paid or incurred.
(b) For the purpose of this section:
"Base investment" means the
amount of money invested by an investor.]
"Capital infrastructure costs" means capital
expenditures, as used in section 263 of the Internal Revenue Code and the
regulations promulgated thereunder[
; provided that the], or
capital expenditures [ are] for real property [ and],
fixtures, structures, machinery, equipment, or capital assets that are
paid or incurred in connection with the displaced tenant's move of the tenant's
current active trade or business to the tenant's new location[ ;] within
Honolulu harbor; provided further that the capital infrastructure costs
shall not include amounts for which another credit is claimed[ .] or
any amounts received in any form from the State.
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"Qualified infrastructure tenant"
(1) A business:
(1)] (A) That currently owns capital or
property or maintains an office, operations, or facilities at the former
Kapalama military reservation site;
(2)] (B) Whose principal business is
maritime, [ and] waterfront dependent, and [ is included under the
State's plan to relocate the business to piers twenty-four through twenty-eight]
to be relocated within Honolulu harbor; and
(3)] (C) [ Will] That will
be displaced and relocated by the State pursuant to the Kapalama container
terminal project[ .]; or
(2) A special purpose entity formed for purposes of raising investor capital pursuant to the claiming of this credit; provided that a special purpose entity cannot generate any additional credits beyond the limits of the qualified infrastructure tenant as provided in subsection (c).
(c) The amount of the tax credit shall be
equal to fifty per cent of the capital infrastructure costs paid or incurred by
the qualified infrastructure tenant during the taxable year up to a maximum credit
$2,500,000 in capital infrastructure costs] $
per qualified infrastructure tenant in any taxable year, provided that the
qualified infrastructure tenant shall notify the taxpayer claiming the credit
under subsection (a) of the amount of capital infrastructure costs which may be
claimed. If the capital infrastructure costs paid or incurred by the
qualified infrastructure tenant result in a tax credit in excess of $
in any taxable year, the excess capital infrastructure costs shall be applied
to a subsequent tax year or years, until exhausted, for computation of credit;
provided that in no event may the credit claimed in any one year exceed
$ per qualified infrastructure
tenant; and provided further that in no event shall a qualified infrastructure
tenant or taxpayer generate a credit under this section after December 31,
(d) In the case of an entity taxed as a partnership, credit shall be determined at the entity level, but distribution and share of the credit may be determined notwithstanding section 704 of the Internal Revenue Code.
(e) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted. All claims, 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) This section shall not apply to taxable years beginning after December 31, 2019.
(g) Any credit claimed under this section shall be recaptured following the close of the taxable year for which the credit is claimed if:
within] Within three
(1)] (A) The qualified
infrastructure tenant fails to continue the line of business it conducted as of
July 1, 2014; or
(2)] (B) The interest in the
qualified infrastructure tenant, whether in whole or in part, has been sold,
exchanged, withdrawn, or otherwise disposed of by the taxpayer claiming a
credit under this section[ .]; or
(2) The qualified infrastructure tenant fails to relocate from the former Kapalama military reservation site to another location, pursuant to a lease with the department of transportation, within days of the execution of the lease.
The recapture shall be equal to one hundred per cent of the amount of the total tax credit claimed under this section in the preceding five taxable years, and shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs pursuant to this subsection.
(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 claim for credit made under this section. The director of taxation may adopt rules to effectuate the purposes of this section pursuant to chapter 91.
(i) Any taxpayer claiming a tax credit under this section, within days of submitting the claim for credit, shall submit the following information to the legislature:
(1) The amount of the tax credit claimed; and
(2) The qualified infrastructure tenant for which the tax credit is claimed."
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act shall take effect on July 1, 2015, and shall apply to taxable years beginning after December 31, 2014.
Capital Infrastructure Tax Credit; Kapalama Container Terminal Project; Displaced Tenants
Includes structures, machinery, equipment, and capital assets in the definition of capital infrastructure costs. Sets a new maximum amount of capital infrastructure tax credits that may be issued in any taxable year per qualified infrastructure tenant. Specifies that excess tax credits may be carried forward. Specifies that special purpose entities may qualify as a qualified infrastructure tenant. (SB676 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.