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INSTRUCTIONS STATE OF HAWAII — DEPARTMENT OF TAXATION
FORM N-346A
(REV. 2021)
INSTRUCTIONSCERTIFIED STATEMENT OF RESEARCHFORAND DEVELOPMENTFORMCOSTS INCURREDN-346ABY A
QUALIFIED HIGH TECHNOLOGY AND CLAIM OF THE TAX CREDIT FOR RESEARCH ACTIVITIES
GENERAL INSTRUCTIONS Announcement is available at https://tax.hawaii. search activity conducted IN HAWAII for the cal-
gov/news/announce/. endar year.
Act 261, Session Laws of Hawaii 2019, If a properly completed Form N-346A is submit- Note: The tax credit is allocated by DBEDT on
amends the tax credit for research activities to ted, DBEDT will send the signed certificate to the a calendar year basis. This means that after tax
require that every qualified high technology busi- QHTB at the mailing address listed on the face year 2020, the credit allocated to a fiscal year
ness (QHTB) that wants to claim the tax credit for of Form N-346A. If the QHTB is a flow-through taxpayer may cover eligible research expenses
research activities (credit) submit a written, cer- entity, the QHTB will send copies of the certifi- incurred by the taxpayer in the same tax year as
tified statement to the Department of Business, cate to its partners, shareholders, beneficiaries, the calendar year and in the previous tax year. In
Economic Development, and Tourism (DBEDT), or patrons and they must each attach the certifi- this case, the fiscal year taxpayer may need to
on or before March 30 of each year, identifying cate behind Form N-346, along with a copy of the include amounts reported on federal Forms 6765
the qualified research expenditures in the previ- applicable Schedule K-1, when filing the income for more than one tax year.
ous year and the amount of credit to be claimed. tax return with the Department of Taxation. If the Expenses attributed to research activities
The requirement takes effect for taxable years QHTB is not a flow-through entity, it must attach OUTSIDE HAWAII do not qualify for the credit.
beginning after December 31, 2019. DBEDT is the certificate behind Form N-346 when it files its
allowed to certify no more than $5 million of cred- income tax return with the Department of Taxa- Line 1g — Add lines 1a through 1f and enter
its, in aggregate, per year. tion. the Total Eligible Research Expenses.
Purpose of Form N-346A — To claim the Fee for Certifying Amounts for the Credit Line 2 — Enter 20% of the amount on line 1g.
credit, the QHTB, or if the QHTB is a flow-through — DBEDT charges a fee for certifying credit Line 4 — If you are a partnership, S corpora-
entity for income tax purposes (a partnership, S amounts for the credit. The fee structure is as tion, estate, trust, or cooperative for income tax
corporation, estate, trust, or cooperative), the follows: purposes, attach a list of (a) the partners’, share-
partners, shareholders, beneficiaries or patrons,
must attach a certificate issued by DBEDT to $500 — Where the represented claim of credit holders’, beneficiaries’, or patrons’ names and
their tax return verifying the amount of credit that on the Form N-346A submitted by the QHTB is identifying numbers (SSN or FEIN) and (b) each
may be claimed. Form N-346A allows the QHTB $25,000 or more. partner’s, shareholder’s, beneficiary’s, or pa-
tron’s allocated or distributive share of the credit.
to submit the required information to DBEDT and $0 (No fee) — Where the represented claim
to request the certificate for itself or, if it is a flow- of credit on the Form N-346A submitted by Top of Page 2 of Form N-346A — At the top
through entity, for its partners, shareholders, ben- the QHTB is less than $25,000. However, the of Page 2, fill in the name and identifying number
eficiaries, or patrons. QHTB is still subject to the certification require- of the QHTB claiming the credit.
Certification Filing Requirements — Every ments and is required to submit Form N-346A .
taxpayer claiming the credit must attach Part II Part II
of Form N-346A (the certificate) that has been Note: Checks for the fee should be made pay- Line 1 — Enter the amount of eligible research
signed by DBEDT to the Hawaii income tax re- able to the Director of Finance. expenses attributable to the research activity
turn. If the QHTB is a flow-through entity, both conducted IN HAWAII for the calendar year (Part
the QHTB and its partners, shareholders, ben- SPECIFIC INSTRUCTIONS
I, line 1g).
eficiaries, or patrons must attach a certificate to For all dollar entries, round off amounts to the Line 2 — Enter the amount of credit for the cal-
their Hawaii income tax return to claim the credit. nearest whole dollar. endar year (Part I, line 2).
In addition, the partners, shareholders, beneficia-
ries or patrons must each attach a copy of the Top of Page 1 of Form N-346A — At the top of DBEDT, and not the QHTB, will sign Part II
Schedule K-1 issued by the QHTB, showing the Page 1, fill in the QHTB’s name, identifying num- (Page 2 of Form N-346A) if DBEDT finds that the
share of the total credit allowed for the QHTB. ber, mailing address, and contact information. Form N-346A is properly completed.
When and Where to File — To obtain the cer- Part I Upon completion, DBEDT will mail Part II (the
tificate, Part I of Form N-346A must be complet- certificate) to the QHTB at the address reported
ed, signed, and submitted by an authorized per- Lines 1a through 1f — Enter, in the appropri- on the face of Form N-346A. If the QHTB is a
son of the QHTB to DBEDT on or before March ate column, the amount of eligible research ex- flow-through entity, the QHTB is responsible for
30 of each year showing the eligible research penses reported on federal Form(s) 6765, lines mailing copies of the certificate to the taxpayers
expenses in the previous calendar year. 1, 2, 5, 6, 7, and 8 or lines 18, 19, 24, 25, 26, claiming the credit.
See Department of Taxation Announcement and the amount of
and 27 for the calendar year
eligible research expenses attributable to the re-
No. 2021-03, which provides Instructions on how
to submit Part I of Form N-346A to DBEDT. The
N-346A INSTRUCTIONS