Haw. Code R. § 15-6-10

Current through November, 2024
Section 15-6-10 - Business application procedure
(a) A business interested in participating in the enterprise zones program should obtain an application form from the department. The form should be completed by the business, reviewed by an independent accountant who shall be responsible for verifying the accuracy of the information in the application, and submitted to the department.
(b) The business shall submit separate applications for each zone in which it conducts trade or business.
(c) A business may participate in the program for a seven-year cycle. A business engaged in manufacturing tangible personal property or producing or processing of agricultural products may participate in the program for an additional three-year cycle. During the initial year of the seven-year cycle, the department shall determine if the applying business is eligible to participate in the enterprise zones program. The business shall be advised of the department's decision. The seven-year cycle will commence on the first of the month following the date that the department determines that the business is eligible to participate in the program. The business may claim the exemption from the general excise tax from the first of the month following the date the department determines that the business is eligible to participate in the program. If the business is not certified at the end of the year, however, the business shall pay all taxes, penalties, and interest normally levied by law to the department of taxation.
(d) A qualified business shall not be entitled to a credit against taxes due the State, until certified by the department. The department of taxation shall reject any claim for exemption in a return filed without the certification. At the end of each taxable year of the business" qualification period, including the initial year, the department shall determine if the business should be certified to receive the state income tax credits and general excise tax exemption available under this program. For the department to make this determination, the business must submit to the department a form designated by the department.

Following its review of the forms, the department shall return the certified form to the business and notify the department of taxation if the business is certified.

(e) A business that has been certified shall:
(1) File the applicable state tax returns;
(2) Attach copies of the appropriate department form and department of taxation enterprise zone tax credit form to the tax return; and
(3) Forward a copy of the certified department form to the governing body of the county in which the qualified business is located.
(f) The business tax credits may be claimed at the end of each tax year of the business' qualification period, including the initial year, if the appropriate tax returns are filed and a credit is claimed against any taxes due the State on the tax returns. These returns need not be prepared by an accountant. The department of taxation enterprise zone tax credit form shall be attached to the tax returns filed with the department of taxation. All taxes, penalties, and interest normally levied by law shall be paid to the department of taxation for the period that the business is not certified to receive enterprise zone tax benefits. Additionally, the department of taxation, during the statutory limitations period, may audit a business to determine whether:
(1) The business is engaged in an eligible business activity, as defined in chapter 209E, HRS;
(2) The business has properly allocated and apportioned income from trade or business in a zone, which is eligible for the income tax credits and the general excise tax exemption, from other income that is not eligible for the credits and exemption, including income from business activity within the zone which does not fall within the definition of an eligible business activity or income from business activity conducted outside the zone; and
(3) The business has properly allocated the business tax credits based upon the number of months it is qualified during the taxable year.
(g) The exemption from the general excise tax may be claimed at the time of the filing of the returns during the initial year, as provided in subsection (c), and in subsequent years of the business' qualification period at the time of the filing of the returns if the tax returns are filed as required by law. A business shall submit standard periodic tax returns (monthly, quarterly, or semiannually) as required under chapter 237, HRS, and claim an exemption from the general excise tax for trade or business in the zone. The periodic returns and the annual return need not be prepared by an accountant. These returns shall be filed, claiming the exemption, even when no tax is due. The appropriate department form shall also be attached to the annual tax return. All taxes, penalties, and interest normally levied by law shall be paid to the department of taxation for the period that the business is not certified to receive enterprise zone tax benefits. Additionally, the department of taxation, during the statutory limitations period, may audit a business to determine whether (l) the business is engaged in an eligible business activity, as defined in chapter 209E, HRS; (2) the business has properly allocated and apportioned income from trade or business in a zone which is eligible for the business tax credits and the general excise tax exemption, from other income that is not eligible for the credits and exemption, including income from business activity within the zone that does not fall within the definition of eligible business activity or income from business activity conducted outside the zone; and (3) the business has properly allocated the general excise exemption based upon the number of months it is qualified during the taxable year.

Haw. Code R. § 15-6-10

[Eff 11/3/90; am and comp2/28/2015] (Auth: HRS § 209E-8) (Imp: HRS § 209E-9)