§235-55.91  Credit for employmentof vocational rehabilitation referrals.  (a)  There shallbe allowed to each taxpayer subject to the tax imposed by this chapter, acredit for employment of vocational rehabilitation referrals which shall bedeductible from the taxpayer's net income tax liability, if any, imposed bythis chapter for the taxable year in which the credit is properly claimed.

(b)  The amount of the credit determined underthis section for the taxable year shall be equal to twenty per cent of thequalified first-year wages for that year.  The amount of the qualifiedfirst-year wages which may be taken into account with respect to any individualshall not exceed $6,000.

(c)  For purposes of this section:

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

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

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

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

(1)  Having a physical or mental disability which, forsuch individual, constitutes or results in a substantial handicap toemployment; and

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

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

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

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

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

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

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

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

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

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

(A)  Has received a certification from thedepartment of human services vocational rehabilitation and services for theblind division that the individual is a qualified vocational rehabilitationreferral; or

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

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

(2)  If an individual has been certified as avocational rehabilitation referral and the certification is incorrect becauseit was based on false information provided by the individual, the certificationshall be revoked and wages paid by the employer after the date on which noticeof revocation is received by the employer shall not be treated as qualifiedwages.

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

(e)  The following wages paid to vocationalrehabilitation referrals are ineligible to be claimed by the employer for thiscredit:

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

(A)  Bears any of the relationships describedin 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 orindirectly, more than fifty per cent in value of the outstanding stock of thecorporation (determined with the application of section 267(c) of the InternalRevenue Code);

(B)  If the taxpayer is an estate or trust, isa grantor, beneficiary, or fiduciary of the estate or trust, or is anindividual 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 theestate or trust; or

(C)  Is a dependent (described in section152(a)(9) of the Internal Revenue Code) of the taxpayer, or, if the taxpayer isa corporation, of an individual described in subparagraph (A), or, if thetaxpayer is an estate or trust, of a grantor, beneficiary, or fiduciary of theestate or trust.

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

(3)  No wages shall be taken into account under thissection with respect to any vocational rehabilitation referral unless suchindividual either:

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

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

(f)  In the case of a successor employerreferred to in section 3306(b)(1) of the Internal Revenue Code, thedetermination of the amount of the tax credit allowable under this section withrespect to wages paid by the successor employer shall be made in the samemanner as if the wages were paid by the predecessor employer referred to in thesection.

(g)  No credit shall be determined under thissection with respect to wages paid by an employer to a vocationalrehabilitation referral for services performed by the individual for anotherperson unless the amount reasonably expected to be received by the employer forthe services from the other person exceeds the wages paid by the employer tothe individual for such services.

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

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

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

(k)  The director of taxation may adopt anyrules 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 afterDecember 31, 2007; provided that the retroactive and prospective effectivedates contained in the congressional acts relating to the Internal Revenue Codeand enacted during 2007 shall be operative for chapter 235.  L 2008, c 93, §7.