HOUSE OF REPRESENTATIVES

H.B. NO.

2486

TWENTY-EIGHTH LEGISLATURE, 2016

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to economic development.

 

 

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

 


SECTION 1. The legislature finds that job growth in the Kapolei region is a community and state concern that affects employers and employees alike as households continue to outgrow the number of employment opportunities in the region.

The legislature further finds that the state enterprise zone program is restrictive and the participation has been relatively low, particularly in the Leeward enterprise zone.

The purpose of this Act is to establish a Kapolei jobs initiative to increase the number of jobs in Kapolei by creating incentives for businesses to establish themselves or relocate to the Kapolei region.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

KAPOLEI JOBS INITIATIVE

   -1 Definitions. As used in this chapter:

"Designated geographic area" means the regions represented by the zip codes of 96706 and 96707.

"Establishment" means a single physical location where business is conducted; provided that a business may include one or more establishments.

"Full-time employee" means any employee, including a leased employee and an employee under a joint employment arrangement, for whom the employer is legally required to provide employee fringe benefits.

   -2 Eligibility; qualified business defined. (a) There is established within the department of business, economic development, and tourism, the Kapolei jobs initiative program. Any qualified business is eligible to participate in the Kapolei jobs initiative and is eligible for the incentives available pursuant to this chapter.

(b) For purpose of this chapter, a "qualified business" means a business that:

(1) Establishes or relocates itself within the designated geographic area;

(2) Has a minimum of ten full-time employees; provided that a business that has already been established within the designated geographic area as of the effective date of this Act and has more than ten full-time employees shall be deemed a qualified business only if that business increases its number of employees to net ten additional full-time employees; and

(3) Is not participating in the state enterprise zone program pursuant to chapter 209E.

   ‑3 Kapolei jobs initiative income tax credit. (a) Each qualified business may apply for and receive, in addition to any other incentive offered pursuant to this chapter, the Kapolei jobs initiative income tax credit as provided under section 235‑  .

(b) Each qualified business shall submit annually to the department of taxation an approved form supplied by the department that provides the information necessary for the department to determine if it may certify the applicability of the tax credits provided in section 235-  .

(c) The form referred to in subsection (b) shall be prima facie evidence of the eligibility of a business for the purposes of this section.

   ‑4 Kapolei jobs initiative unemployment tax credit. Each qualified business may apply for and receive, in addition to any other incentive offered pursuant to this chapter, the Kapolei jobs initiative unemployment tax credit pursuant to section 383‑  .

   ‑5 Adoption of rules. The department of business, economic development, and tourism may adopt rules, pursuant to chapter 91, to effectuate the purposes of this chapter."

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

"235-   Kapolei jobs initiative tax credit. (a) There shall be allowed to each qualified business, as defined in section    -2, subject to the tax imposed by this chapter a Kapolei jobs initiative tax credit which 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 tax credit shall be equal to eighty per cent of any tax imposed by this chapter for the first tax year and eight per cent less for each of the subsequent ten years for any tax due; provided that a qualified business shall be allowed to carryover tax credits provided for pursuant to this section in a loss year until the next income year; provided further that tax credits may be carried over for a maximum of ten consecutive years. A maximum of $           of tax credits in the aggregate for all eligible taxpayers may be used in any one taxable year.

(c) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of credit over liability may be used as a tax credit against the taxpayer's net income tax liability in subsequent years until exhausted. For the purposes of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter and chapter      . All claims for a tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the tax credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.

(d) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for the qualified costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of the tax credit shall be determined pursuant to section 704(b) (with respect to partner's distributive share) of the Internal Revenue Code.

(e) 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 the tax credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91."

SECTION 4. Chapter 383, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"383‑   Kapolei jobs initiative unemployment tax credit. (a) There shall be allowed to each qualified business who is an employer subject to the contributions required pursuant to this chapter a Kapolei jobs initiative unemployment tax credit in an amount equal to:

(1) For the first year, eighty per cent of the contributions required pursuant to this chapter;

(2) For the second year, seventy-two per cent of the contributions required pursuant to this chapter;

(3) For the third year, sixty-four per cent of the contributions required pursuant to this chapter;

(4) For the fourth year, fifty-six per cent of the contributions required pursuant to this chapter;

(5) For the fifth year, forty-eight per cent of the contributions required pursuant to this chapter;

(6) For the sixth year, forty per cent of the contributions required pursuant to this chapter;

(7) For the seventh year, thirty-two per cent of the contributions required pursuant to this chapter;

(8) For the eighth year, twenty-four per cent of the contributions required pursuant to this chapter;

(9) For the ninth year, sixteen per cent of the contributions required pursuant to this chapter; and

(10) For the tenth year, eight per cent of the contributions required pursuant to this chapter.

(b) Tax credits provided pursuant to this section shall apply only to the contributions required to be made pursuant to this chapter that are attributed to employees employed at any establishment of the qualified business located within the designated geographic area; provided that a qualified business shall be allowed to carryover tax credits provided for pursuant to this section in a loss year until the next income year. Any tax credit not usable shall not be applied to future tax years.

(c) The director 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 the tax credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(d) For the purposes of the section, "designated geographic area" and "establishment", shall have the same meanings as in section    ‑1, and "qualified business" shall have the same meaning as in section   -2."

SECTION 5. New statutory material is underscored.

SECTION 6. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2015, and shall be repealed on June 30, 2026.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Kapolei Jobs Initiative; Qualified Business; Income Tax Credit; Unemployment Tax Credit

 

Description:

Establishes a Kapolei jobs initiative program that offers tax incentives to increase the number of businesses willing to establish or relocate themselves in the Kapolei region. Repeals 6/30/2026.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.