Bill Text: HI HB944 | 2023 | Regular Session | Introduced
Bill Title: Relating To Taxation.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2023-01-30 - Referred to ECD, FIN, referral sheet 3 [HB944 Detail]
Download: Hawaii-2023-HB944-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
944 |
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THIRTY-SECOND LEGISLATURE, 2023 |
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STATE OF HAWAII |
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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- Job
creation income tax credit. (a)
Notwithstanding any law to the contrary, there shall be allowed to each
taxpayer subject to the taxes imposed by this chapter, a job creation 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 amount
of the credit shall be equal to:
(1) $3,000 for each
new full-time employee hired in a qualified employment position in the first
year or partial year of employment;
(2) $3,000 for each
new full-time employee in a qualified employment position for the full taxable
year in the second year of continuous employment; and
(3) $3,000 for each
new full-time employee in a qualified employment position for the full taxable
year in the third year of continuous employment;
provided that the first year tax credit may only
be claimed for one thousand new full-time employees across all taxpayers.
(b) In the case of a partnership, S corporation,
estate, or trust, the tax credit allowable is for net increases in full-time
employees hired in qualified employment positions in the State as computed and
certified by the department of taxation for the taxable year. The cost upon which the tax credit is
computed shall be determined at the entity level. Distribution and share of credit shall be
determined by rule.
(d) To
qualify for this tax credit, and subject to certification by the department
pursuant to subsection (e), the taxpayer shall:
(1) Have capital
investments of at least $50,000; and
(2) Hire at least
one new full-time employee in a qualified employment position for each location
of its business before it claims a first year tax credit for the designated location.
provided that all requirements of this subsection
shall be met within twelve months after the start of the capital investments
made pursuant to paragraph (1).
(e) Every taxpayer, before March 31 of each year
in which a capital investment in a qualified employment position was made in
the previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Capital
investments, if any, expended in the previous taxable year;
(2) The number of
new full-time employees of the taxpayer hired in qualified employment positions
in the previous taxable year;
(3) The following
information for each new full-time employee the taxpayer hired in a qualified
employment position in the previous tax year:
(A) The
date of initial employment:
(B) The
number of hours worked during the year;
(C) Whether
the position is a full-time position;
(D) The
employee's annual compensation; and
(E) The
total cost of health insurance for the employee and the cost paid by the
employer; and
(4) The amount of
tax credits claimed pursuant to this section, if any, in the previous taxable
year.
(f) A taxpayer that meets the requirements of
subsection (d) shall be eligible to claim a first year tax credit for three
years beginning with the taxable year in which the requirements have been
met. Employees hired at the designated
location before the beginning of the taxable year but during the twelve-month
period allowed by subsection (d) shall be considered a new employee for the
taxable year in which the requirements of subsection (d) are met. Employees that are considered new employees
for the taxable year under this subsection shall not be included in the average
number of full-time employees during the tax year immediately preceding the tax
year in which the first year tax credit is claimed. An employee working at a temporary worksite
in the State while the designated location is under construction shall be
considered to be working at the designated location if:
(1) The employee is
hired at the start of the required investment at the designated location;
(2) The employee is
hired to work at the designated location after construction is completed;
(3) The payroll for
the employee at the designated location is segregated from other employees; and
(4) The employee is
moved to the designated location within thirty days after construction is
completed.
(g) For each year in which the taxpayer earned
and claimed or used the tax credit, or for each year in which the taxpayer is
carrying forward amounts from previously earned and claimed credits, the
taxpayer, subject to the requirements of subsection (i), shall submit a
written, certified statement to the director of taxation identifying the
following information:
(1) The business
name, mailing address, and any other contact information for the taxpayer
requested by the department;
(2) The physical
address of the designated location or locations and the number of employees
qualified for the credit at each location;
(3) The average
hourly wage and total compensation paid to all employees;
(4) The total
number of qualified employment positions and the amount of income tax or other
tax credits the taxpayer qualified for in the taxable year;
(5) The estimated
amount of tax credits to be used in the taxable year to offset tax liability;
(6) The estimated
amount of tax credits to be available to carry forward in the taxable year and
the year in which the credits expire;
(7) The number of
jobs and the amount of credits earned and claimed on the prior year's tax
return;
(8) The amount of
credits used to offset tax liabilities on the prior year's tax return;
(9) The amount of
credits available to carry forward as reported on the prior year's tax return
and the year the credit's expire;
(10) Capital
investments made during the taxable year and the preceding taxable year; and
(11) Other information
as requested by the department for the management and reporting of the tax
credit provided by this section.
(h) For any year in which the taxpayer is
claiming a first year credit, the taxpayer, subject to the requirements of subsection
(i), shall submit a written, certified statement to the director of taxation
that:
(1) The net
increase in the number of qualified employment positions for which the credit
is sought is the lesser of:
(A) The
total number of filled qualified employment positions created at the designated
location or locations during the taxable year; or
(B) The
difference between the average number of full-time employees employed by the
taxpayer in the State in the current taxable year and the average number of
full-time employees employed by the taxpayer in the State during the
immediately preceding taxable year;
(2) All employees
filling a qualified position were employed for at least ninety days during the
taxable year in which the first year credit is claimed; provided that employees
hired in the last ninety days of the taxable year in which the first year
credit is claimed are excluded from that taxable year and are considered to be
new employees for the following taxable year;
(3) No employee
filing a qualified employment position was employed by the taxpayer during the
twelve months before the current date of hire, except for those relocating to
the State;
(4) All employees
for whom second and third year tax credits are claimed are in qualified employment
positions for which first year credits were allowed and claimed by the taxpayer
on the original first and second year tax returns for those employees; and
(5) All employees
for whom credits are claimed performed their job duties primarily at the designated
location of the business.
(i) To qualify for this tax credit, the taxpayer
shall:
(1) For the first
year tax credit, submit the information required by subsections (g) and (h) by
the earlier of:
(A) Six
months after the end of the taxable year in which the qualified employment
positions were created; or
(B) March
31 for the taxable year in which the qualified employment positions were
created;
(2) For the second
year tax credit, submit the information required by subsection (g) by the earlier
of:
(A) Six
months after the end of the taxable year; or
(B) March
31 for the taxable year in which the second year credit is allowed; and
(3) For the third
year tax credit, submit the information required by subsection (g) by the
earlier of:
(A) Six
months after the end of the taxable year; or
(B) March
31 for the taxable year in which the third year credit is allowed.
(j) If a business is sold or changes ownership
through reorganization, stock purchase, or merger, the taxpayer who assumes new
ownership of the business may claim first year credits only for the qualified
employment positions that were created and filled with an eligible employee
after the sale or change of ownership was complete; provided that the taxpayer
may claim the second or third year credit if the taxpayer meets the other
eligibility requirements of this section.
Credits for which a taxpayer qualified before the business was sold or
changed ownership through reorganization, stock purchase, or merger are
terminated and shall be lost at the time of sale or change in ownership.
(k) If a full-time employee in a qualified
employment position leaves during the taxable year, the employee may be
replaced with another new full-time employee in the same employment position
and the new employee will be treated as being in the employee's second or third
full year of continuous employment for the purposes of this credit if:
(1) The total time
the position was vacant from the date the employment position was originally
filled to the end of the current tax year totals ninety days or less; and
(2) The new employee meets the same requirements the original employee was required to meet.
(l) The department shall:
(1) Maintain
records of the names and addresses of the taxpayers claiming the credits under
this section and the total amount of the qualified employment positions upon
which the tax credit is based;
(2) Verify the
nature and amount of the capital investments and qualified employment
positions;
(3) Total all
capital investments and qualified employment positions that the department
certifies; and
(4) Certify the
amount of the tax credit for each taxable year and cumulative amount of the tax
credit.
Upon each determination made
under this subsection, the department shall issue a certificate to the taxpayer
verifying information submitted to the department, including capital investment
amounts, number of new full-time employees, and number of qualified employment
positions, the credit amount certified for each taxable year, and the
cumulative amount of the tax credit during the credit period. The taxpayer shall file the certificate with
the taxpayer's tax return with the department.
(m) The director of taxation:
(1) Shall prepare
forms as may be necessary to claim a credit under this section;
(2) May audit and
adjust the tax credit amount to conform to the facts; and
(3) May adopt rules
necessary to effectuate the purposes of this section pursuant to chapter 91.
(n) The department shall submit a report to the governor,
president of the senate, speaker of the house of representatives, and
chairpersons of the senate ways and means committee and house of
representatives finance committee no later than September 30 of each year.
The report shall include the following information:
(1) The business
names, locations, number of employees, and amount of compensation paid to
employees qualifying for this tax credit;
(2) The total
amount of capital investment made during the preceding fiscal year; and
(3) The total
amount of this tax credit allowed for the preceding taxable year and the number
of qualified employment positions for which the tax credit was claimed.
(o)
For the purposes of this section,
"Capital investment" means an
expenditure to acquire, lease, or improve property that is used in operating a
business, including land, buildings, machinery, fixtures, and equipment.
"Designated location" means the
location at which the required capital investment is made.
"Location" means a single parcel or
contiguous parcel of owned or leased land, and the structures and personal
property contained on the land or any part of the structures occupied by the
owner or leasee.
"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.
"New full-time
employee" means a full-time employee who:
(1) First became
employed by the taxpayer within the fiscal year whose hire results in a net
increase in the taxpayer's full-time employees in the State; and
(2) Is receiving
compensation at least equal to or above the fiscal year's self-sufficiency
standard established by the department of business, economic development, and
tourism pursuant to section 201-3(5).
"New full-time
employee" does not include a person who was previously employed in the
State by the taxpayer, whose position was subsequently terminated or
eliminated, and who was later rehired by the taxpayer.
"Qualified employment position" means
employment that meets the following requirements:
(1) The position
consists of at least 1,750 hours per year of full-time permanent employment;
and
(2) The job duties
are performed primarily at the location or locations of the taxpayer's business
in the State."
SECTION 2. New statutory material is underscored.
SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after June 30, 2023.
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INTRODUCED BY: |
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Report Title:
Job Creation Income Tax Credit; Qualified Employment Positions; Capital Expenditures
Description:
Establishes a job creation income tax credit for employers who increase the number of full-time employees in the State and make certain capital investment expenditures.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
