§235-55.91  Credit for employment
of vocational rehabilitation referrals.  (a)  There shall
be allowed to each taxpayer subject to the tax imposed by this chapter, a
credit for employment of vocational rehabilitation referrals 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 credit determined under
this section for the taxable year shall be equal to twenty per cent of the
qualified first-year wages for that year.  The amount of the qualified
first-year wages which may be taken into account with respect to any individual
shall not exceed $6,000.



(c)  For purposes of this section:



"Hiring date" means the day the
vocational rehabilitation referral is hired by the employer.



"Qualified first-year wages" means,
with respect to any vocational rehabilitation referral, qualified wages
attributable to service rendered during the one-year period beginning with the
day the individual begins work for the employer.



"Qualified wages" means the wages
paid or incurred by the employer during the taxable year to an individual who
is a vocational rehabilitation referral and more than one-half of the wages
paid or incurred for such an individual is for services performed in a trade or
business of the employer.



"Vocational rehabilitation referral"
means any individual who is certified by the department of human services
vocational rehabilitation and services for the blind division in consultation
with the Hawaii state employment service of the department of labor and
industrial relations as:



(1)  Having a physical or mental disability which, for
such individual, constitutes or results in a substantial handicap to
employment; and



(2)  Having been referred to the employer upon
completion of (or while receiving) rehabilitative services pursuant to:



(A)  An individualized written rehabilitation
plan under the State's plan for vocational rehabilitation services approved
under the Rehabilitation Act of 1973, as amended;



(B)  A program of vocational rehabilitation
carried out under chapter 31 of Title 38, United States Code; or



(C)  An individual work plan developed and
implemented by an employment network pursuant to subsection (g) of section 1148
of the Social Security Act, as amended, with respect to which the requirements
of such subsection are met.



"Wages" has the meaning given to such
term by section 3306(b) of the Internal Revenue Code (determined without regard
to any dollar limitation contained in the Internal Revenue Code section). 
"Wages" shall not include:



(1)  Amounts paid or incurred by an employer for any
period to any vocational rehabilitation referral for whom the employer receives
state or federally funded payments for on-the-job training of the individual
for the period;



(2)  Amounts paid to an employer (however utilized by
the employer) for any vocational rehabilitation referral under a program
established under section 414 of the Social Security Act; and



(3)  If the principal place of employment is at a
plant or facility, and there is a strike or lockout involving vocational
rehabilitation referrals at the plant or facility, amounts paid or incurred by
the employer to the vocational rehabilitation referral for services which are
the same as, or substantially similar to, those services performed by employees
participating in, or affected by, the strike or lockout during the period of
strike or lockout.



(d)  The following shall apply to
certifications of vocational rehabilitation referrals:



(1)  An individual shall not be treated as a
vocational rehabilitation referral unless, on or before the day on which the
individual begins work for the employer, the employer:



(A)  Has received a certification from the
department of human services vocational rehabilitation and services for the
blind division that the individual is a qualified vocational rehabilitation
referral; or



(B)  Has requested in writing the certification
from the department of human services vocational rehabilitation and services
for the blind division that the individual is a qualified vocational
rehabilitation referral.



For purposes of the preceding sentence, if
on or before the day on which the individual begins work for the employer, the
individual has received from the department of human services vocational
rehabilitation and services for the blind division a written preliminary
determination that the individual is a vocational rehabilitation referral, then
"the fifth day" shall be substituted for "the day" in the
preceding sentence.



(2)  If an individual has been certified as a
vocational rehabilitation referral and the certification is incorrect because
it was based on false information provided by the individual, the certification
shall be revoked and wages paid by the employer after the date on which notice
of revocation is received by the employer shall not be treated as qualified
wages.



(3)  In any request for a certification of an
individual as  vocational rehabilitation referral, the employer shall certify
that a good faith effort was made to determine that such individual is a
vocational rehabilitation referral.



(e)  The following wages paid to vocational
rehabilitation referrals are ineligible to be claimed by the employer for this
credit:



(1)  No wages shall be taken into account under this
section with respect to a vocational rehabilitation referral who:



(A)  Bears any of the relationships described
in section 152(a)(1) to (8) of the Internal Revenue Code to the taxpayer, or,
if the taxpayer is a corporation, to an individual who owns, directly or
indirectly, more than fifty per cent in value of the outstanding stock of the
corporation (determined with the application of section 267(c) of the Internal
Revenue Code);



(B)  If the taxpayer is an estate or trust, is
a grantor, beneficiary, or fiduciary of the estate or trust, or is an
individual who bears any of the relationships described in section 152(a)(1) to
(8) of the Internal Revenue Code to a grantor, beneficiary, or fiduciary of the
estate or trust; or



(C)  Is a dependent (described in section
152(a)(9) of the Internal Revenue Code) of the taxpayer, or, if the taxpayer is
a corporation, of an individual described in subparagraph (A), or, if the
taxpayer is an estate or trust, of a grantor, beneficiary, or fiduciary of the
estate or trust.



(2)  No wages shall be taken into account under this
section with respect to any vocational rehabilitation referral if, prior to the
hiring date of the individual, the individual had been employed by the employer
at any time during which the individual was not a vocational rehabilitation
referral.



(3)  No wages shall be taken into account under this
section with respect to any vocational rehabilitation referral unless such
individual either:



(A)  Is employed by the employer at least
ninety days; or



(B)  Has completed at least one hundred-twenty
hours of services performed for the employer.



(f)  In the case of a successor employer
referred to in section 3306(b)(1) of the Internal Revenue Code, the
determination of the amount of the tax credit allowable under this section with
respect to wages paid by the successor employer shall be made in the same
manner as if the wages were paid by the predecessor employer referred to in the
section.



(g)  No credit shall be determined under this
section with respect to wages paid by an employer to a vocational
rehabilitation referral for services performed by the individual for another
person unless the amount reasonably expected to be received by the employer for
the services from the other person exceeds the wages paid by the employer to
the individual for such services.



(h)  The credit allowed under this section
shall be claimed against net income tax liability for the taxable year.  A tax
credit under this section which exceeds the taxpayer's income tax liability may
be used as a credit against the taxpayer's income tax liability in subsequent
years until exhausted.



(i)  All claims for tax credits under this
section, including any amended claims, shall be filed on or before the end of
the twelfth month following the close of the taxable year for which the credits
may be claimed.  Failure to comply with the foregoing provision shall
constitute a waiver of the right to claim the credit.



(j)  No deduction shall be allowed for that
portion of the wages or salaries paid or incurred for the taxable year that is
equal to the amount of the credit determined under this section.



(k)  The director of taxation may adopt any
rules under chapter 91 and forms necessary to carry out this section. [L 1990,
c 289, §1; am L 1991, c 137, §1; am L 2008, c 93, §5]



 



Note



 



  The 2008 amendment applies to taxable years beginning after
December 31, 2007; provided that the retroactive and prospective effective
dates contained in the congressional acts relating to the Internal Revenue Code
and enacted during 2007 shall be operative for chapter 235.  L 2008, c 93, §7.