Cesspool Upgrade Tax Credit

In June of 2015, Act 120 was pushed through the Hawai’i state legislature. It was cordially called the Cesspool Tax Credit. Act 120 provides a temporary income tax credit for the cost of upgrading or converting a qualified cesspool to a septic system or an aerobic treatment unit system, or for the connection to a sewer system. Two years later, in August of 2017, Act 125 expanded the class of cesspools for which a tax credit can be claimed.

This is what Laulea Engineering specializes in. We have the expertise to custom design your project and to work with the Department of Health Wastewater Branch (DOH WWB), who issues the permits and the tax credit, to ensure that yours can be one of the 500 residencies per year to get up to $10,000 in possible tax credit per cesspool upgrade before the program ends in 2020.

It is important to note that your cesspool needs to fulfill certain conditions to qualify for this program. It needs to be either within 500 feet of the ocean shoreline or a water source (such as a lake or stream), be shown to impact drinking water or recreational water supplies, or be certified by a sewer company to be appropriate for connection to its existing sewer system. The DOH WWB has a list of cesspools on every island that qualify for this credit. However, the lists are not complete. If you have an existing cesspool that is not on the list, we can register it for you.

Any large-capacity cesspool serving 2 or more households and/or 20 or more people has been required by the Environmental Protection Agency (EPA) to be replaced with an alternative wastewater system since April 5, 2005. The remainder of the estimated 90,000 cesspools in Hawaii that do not meet the federal criteria of large-capacity cesspools will also have to be upgraded or converted before January 1, 2050. The only exceptions to this requirement by the Department of Health can be due to small lot size, poor soil, steep location or limited accessibility.

The process of upgrading your cesspool is easy and can be explained in the following steps:

Step 1: Is my cesspool on the DOH list?
Search for your cesspool either by Tax Map Key (TMK) number on the lists of the DOH (Hawaii, KauaiMauiMolokaiOahu) or by location on the Web App. If you cannot find your cesspool, please contact us and we will work with the DOH to get it on the list.

Step 2: What is the certification status of my cesspool?
Once you have found your cesspool on either the lists or the web app, you can see whether or not a certification is required to make sure your cesspool is qualified for the program. As licensed engineers, we are qualified to perform a site visit and will gladly give your cesspool the certification if possible by filling out the location certification form.

Step 3: How do I apply for the tax credit?
The application for income tax credit has to be submitted to the DOH wastewater branch at 919 Ala Moana Blvd., Honolulu, HI, 96814. If a certification was required, the location certification form needs to be attached. The application will be reviewed and you will receive a letter of confirmation.

Step 4: What do I upgrade my cesspool to?
There are different options for upgrading your cesspool depending on the individual situation. We will gladly assist you in finding the best solution for you. Alternatives include septic tank systems, aerobic treatment unit systems or the connection to an existing sewer system. Laulea Engineering provides a full scope of services including design, planning, construction and inspection of the new system while also coordinating with and reporting to the DOH wastewater branch.

Step 5: How big will my tax credit be?
After all receipts have been submitted to them, the wastewater branch will determine the total qualified expenses and complete tax form N-350 (cesspool upgrade, conversion or connection income tax credit). This will be mailed to you and can be submitted with your other tax documents.