HOUSE OF REPRESENTATIVES
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 matter of 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 open a new location in 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:
KAPOLEI JOBS INITIATIVE
§ -1 Definitions. As used in this chapter:
"Designated geographic area" means the regions represented by the zip codes of 96706, 96707, and 96709.
"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.
"Qualified business" means a business that:
(1) By December 31, 2021, establishes itself or opens a new location within the designated geographic area;
(2) Has a minimum net gain of ten full-time employees;
(3) Is participating in the state enterprise zone program pursuant to chapter 209E; and
(4) Has an establishment that remains in the designated geographic area for the duration of the program.
§ -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.
§ ‑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 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 -1, 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:
(1) Be equal to per cent of any tax imposed by this chapter for the first tax year and per cent less for each of the immediately succeeding four years for any tax liability; and
(2) Include the amount of unemployment insurance accrued or paid by an employer under chapter 383 as follows:
(A) For the first year, per cent of the amount accrued or paid;
(B) For the second year, per cent of the amount accrued or paid;
(C) For the third year, per cent of the amount accrued or paid;
(D) For the fourth year, per cent of the amount accrued or paid; and
(E) For the fifth year, per cent of the amount accrued or paid;
provided that a qualified business shall be allowed to carry over tax credits provided under this section in a loss year until the next income year; provided further that tax credits may be carried over for a maximum of the immediately succeeding five taxable years. A maximum of $ of tax credits in the aggregate for all eligible taxpayers may be used in any one taxable year.
(c) Any qualified business having taxable income from an establishment's business activity, both within and without the designated geographic area, as defined in section -1, shall allocate and apportion its taxable income attributable to the conduct of business. Tax credits provided for in this section shall only apply to taxable income of a qualified business attributable to the conduct of business within the designated geographic area defined in section -1.
(d) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of credit may be used as a tax credit against the taxpayer's net income tax liability in the immediately succeeded five taxable years until exhausted.
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.
(e) 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.
(f) 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.
(g) 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 ."
SECTION 4. New statutory material is underscored.
SECTION 5. This Act shall take effect on February 19, 2030, shall apply to taxable years beginning after December 31, 2016, and shall be repealed on December 31, 2021.
Kapolei Jobs Initiative; Qualified Business; Income Tax Credit; Unemployment Tax Credit
Establishes a Kapolei Jobs Initiative Program that offers tax incentives to increase the number of businesses willing to establish themselves or open a new location in the Kapolei region. Takes effect 2/19/2030. Repeals on 12/31/2021. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.