THE SENATE	S.B. NO.	2108
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII

A BILL FOR AN ACT

relating to renewable energy tax credits.

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 part I to be appropriately designated and to read as follows:

"§235-   Transferability of renewable energy technologies income tax credits; condominium associations. (a) Each condominium association that claims a renewable energy technologies income tax credit under section 235-12.5, may transfer the credit, or a portion thereof, to another individual or corporate taxpayer that is not related to the condominium association for fair and reasonable consideration. The individual or corporate taxpayer that receives the transferred credit shall be known as the transferee taxpayer and shall be treated as the taxpayer for the purposes of subsections 235‑12.5(f) through 235-12.5(h).

(b) Any amount paid by the transferee taxpayer to the condominium association as consideration for the transfer of credits described in subsection (a) shall be paid in cash and shall not be:

(1) Included in the condominium association's gross income; or

(2) Deducted by the transferee taxpayer.

(c) The condominium association shall elect to transfer the credit, or a portion thereof, by filing with the department of taxation 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 transfer the credit. Transferred credits received during the taxable year by the transferee taxpayer may be claimed for that taxable year pursuant to subsection 235-12.5(f).

(d) Credit transfers shall become irrevocable upon election. A transferee taxpayer shall not transfer credits received pursuant to this section.

(e) The director of taxation shall prepare any forms that may be necessary to transfer and claim a tax credit under this section. The director may also require the taxpayer and transferee taxpayer to furnish reasonable information to ascertain the validity of the transfer of and claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(f) For purposes of this section, "transferee taxpayer" means an individual or corporate taxpayer that receives a tax credit transferred pursuant to this section."

SECTION 2. Section 235-12.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each individual or corporate taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed for every eligible renewable energy technology system that is installed and placed in service in the State by a taxpayer during the taxable year. The tax credit may be claimed as follows:

(1) For each solar energy system: thirty-five per cent of the actual cost or the cap amount determined in subsection (b); provided that:

(A) For taxable years beginning after December 31, 2019, and except as provided in subparagraphs (B) and (C), no tax credit may be claimed for a solar energy system that is five megawatts in total output capacity or larger and requires a power purchase agreement approved by the public utilities commission;

(B) A solar energy system that is five megawatts in total output capacity or larger, installed and placed in service pursuant to a power purchase agreement approved or pending approval by a decision and order by the public utilities commission [prior to] before December 31, 2019, shall continue to receive a tax credit equal to thirty-five per cent of the actual cost, or $500,000 per solar energy system that has a total output capacity of at least one thousand kilowatts per system of direct current, whichever is less; and

(C) For each solar energy system integrated with a pumped hydroelectric energy storage system, the tax credit may be claimed for thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less; provided that applicable project approval filings have been made to the public utilities commission by December 31, 2021; or

(2) For each wind-powered energy system: twenty per cent of the actual cost or the cap amount determined in subsection (b), whichever is less;

provided further that multiple owners of a single system shall be entitled to a single tax credit[; and provided further] that [the tax credit] shall be apportioned between the owners in proportion to their contribution to the cost of the system[.], except that when a condominium association transfers the tax credit, or a portion thereof, to a transferee taxpayer under section 235-  , the condominium association unit owners shall not be entitled to any apportionment or distribution of the transferred tax credit in proportion to their respective ownership share.

In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to administrative rule."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023.

INTRODUCED BY:

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Report Title:

DOTAX; Renewable Energy Technologies Income Tax Credit; Condominium Associations; Credit Transfers

Description:

Allows a condominium association that claims a Renewable Energy Technologies Income Tax Credit under section 235-12.5, HRS, to transfer the credit, or a portion thereof, to another individual or corporate taxpayer that is not related to the condominium association for fair and reasonable consideration; requires the Director of the Department of Taxation to prepare forms necessary for the transfer of Renewable Energy Technologies Income Tax Credits. Provides that condominium association unit owners shall not be entitled to any apportionment or distribution of a transferred Renewable Energy Technologies Income Tax Credit when a condominium association transfers the tax credit.

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