HOUSE OF REPRESENTATIVES
TWENTY-NINTH LEGISLATURE, 2017
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- Agricultural food safety compliance income tax credit. (a) There shall be allowed to each taxpayer an agricultural food safety compliance 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. The tax credit amount shall be determined as follows:
(1) In the first year in which the credit is claimed, the lesser of the following:
(A) Twenty-five per cent of the qualified compliance costs incurred by the taxpayer after July 1, 2017; or
(B) $ ;
(2) In the second year in which the credit is claimed, the lesser of the following:
(A) Fifteen per cent of the qualified compliance costs incurred by the taxpayer after July 1, 2017; or
(B) $ ; and
(3) In the third year in which the credit is claimed, the lesser of the following:
(A) Ten per cent of the qualified compliance costs incurred by the taxpayer after July 1, 2017; or
The taxpayer may claim the credit in any taxable year after the taxable year during which the taxpayer incurred the qualified compliance costs upon which the credit is claimed. The taxpayer also may claim the credit in consecutive or nonconsecutive taxable years until exhausted.
(b) The cost upon which the tax credit is computed shall be determined at the entity level. In the case of a partnership, S corporation, estate, trust, or other pass through entity, distribution and share of the credit shall be determined pursuant to section 235-110.7(a).
(c) If the credit under this section exceeds the taxpayer's net income tax liability for the taxable year, the excess of the credit over liability shall be refunded to the taxpayer; provided that no refunds or payments on account of the credits allowed by this section shall be made for amounts less than $1.
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 credit is claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(d) The director of taxation:
(1) Shall prepare any forms that may be necessary to claim a credit under this section;
(2) May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and
(3) May adopt rules pursuant to chapter 91 to effectuate this section.
(e) The department of agriculture shall:
(1) Maintain records of the total amount of qualified compliance costs for each taxpayer claiming a credit;
(2) Verify the amount of the qualified compliance costs claimed;
(3) Total all qualified compliance costs claimed; and
(4) Certify the total amount of the tax credit for each taxable year.
Upon each determination, the department of agriculture shall issue a certificate to the taxpayer verifying the qualifying compliance costs and the credit amount certified for each taxable year. For a taxable year, the department of agriculture may certify a credit for a taxpayer who would have been eligible to claim the credit in a previous taxable year, but could not because the maximum annual credit amount under subsection (f) was reached in that taxable year.
The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation. Notwithstanding the department of agriculture's certification authority under this section, the director of taxation may audit and adjust certificates to conform to the facts.
Notwithstanding any other law to the contrary, the information required by this subsection shall be available for public inspection and dissemination under chapter 92F.
(f) If in any taxable year the annual amount of certified credits reaches $ in the aggregate, the department of agriculture shall immediately discontinue certifying credits and notify the department of taxation. In no instance shall the department of agriculture certify a total amount of credits exceeding $ per taxable year. To comply with this restriction, the department of agriculture shall certify credits on a first come, first served basis.
The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year.
(g) The department of agriculture, in consultation with the department of taxation, shall annually determine the information necessary to provide a quantitative and qualitative assessment of the outcomes of the tax credit.
Every taxpayer, no later than the last day of the taxable year following the close of the taxpayer's taxable year in which the credit is claimed, shall submit a certified written statement to the department of agriculture. Failure to provide the information shall result in ineligibility and a recapture of any credit already claimed for that taxable year. The amount of the recaptured tax credit shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs.
Notwithstanding any law to the contrary, a statement submitted under this subsection shall be a public document.
(h) The department of agriculture, in consultation with the department of taxation, shall annually submit a report evaluating the effectiveness of the tax credit. The report shall include findings and recommendations to improve the effectiveness of the tax credit to further encourage the development of agricultural businesses.
(i) As used in this section:
"Agricultural business" means any person with a commercial agricultural, silvicultural, or aquacultural facility or operation, including:
(1) The care and production of livestock and livestock products, poultry and poultry products, apiary products, and plant and animal production for nonfood uses;
(2) The planting, cultivating, harvesting, and processing of crops; and
(3) The farming or ranching of any plant or animal species in a controlled salt, brackish, or freshwater environment;
provided that the principal place of the agricultural business is maintained in the State.
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"Qualified compliance costs" means losses of income incurred by an agricultural business as a result of taking land out of active production or use as required for compliance with federal food safety requirements, including the Food Safety Modernization Act.
(j) The department of agriculture shall cease certifying credits pursuant to this section after the fourth taxable year following the taxable year during which the credits are first claimed; provided that a taxpayer with accumulated but unclaimed certified credits may continue claiming the credits in subsequent taxable years until exhausted.
(k) The department of taxation, in consultation with the department of agriculture, shall submit to the legislature an annual report, no later than twenty days prior to the convening of each regular session, beginning with the regular session of 2019, regarding the quantitative and qualitative assessment of the impact of the agricultural food safety compliance income tax credit."
SECTION 2. New statutory material is underscored.
SECTION 3. This Act shall take effect on July 31, 2150 and shall apply to taxable years beginning after December 31, 2016.
Agricultural Lands; Food Safety; Income Tax Credit
Establishes an income tax credit for agricultural businesses that lose income because the business took land out of active production to comply with federal food safety requirements. (HB230 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.