SB 33: "An Act relating to the taxation of income and to individual tax credits, including, as the taxpayer's option, application of the taxpayer's permanent fund dividend as a credit against the tax due; and providing for an effective date."
00SENATE BILL NO. 33 01 "An Act relating to the taxation of income and to individual tax credits, 02 including, as the taxpayer's option, application of the taxpayer's permanent fund 03 dividend as a credit against the tax due; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 43.20.011 is amended by adding new subsections to read: 06 (g) There is imposed for each taxable year upon the taxable income of every 07 resident, nonresident, and part-year resident individual and fiduciary of the state, 08 except those subject to the rates in (h), (i), and (j) of this section, a tax computed 09 according to the following table: 10 If the taxable income is: Then the tax is: 11 Over $31 but less than $30,000 3.2 percent of taxable income 12 $30,000 or more $960 plus 5.7 percent of the 13 excess over $30,000. 14 (h) There is imposed for each taxable year upon the taxable income of every
01 resident, nonresident, and part-year resident married individual who makes a single 02 return jointly with a spouse, as provided in 26 U.S.C. 6013 (Internal Revenue Code), 03 and upon every resident, nonresident, and part-year resident surviving spouse, as 04 defined in 26 U.S.C. 2(a) (Internal Revenue Code), a tax computed according to the 05 following table: 06 If the taxable income is: Then the tax is: 07 Over $31 but less than $50,000 3.2 percent of taxable income 08 $50,000 or more $1,600 plus 5.7 percent of the 09 excess over $50,000. 10 (i) There is imposed for each taxable year upon the taxable income of every 11 resident, nonresident, and part-year resident head of a household, as defined in 26 12 U.S.C. 2(b) (Internal Revenue Code), a tax computed according to the following table: 13 If the taxable income is: Then the tax is: 14 Over $31 but less than $40,000 3.2 percent of taxable income 15 $40,000 or more $1,280 plus 5.7 percent of the 16 excess over $40,000. 17 (j) There is imposed for each taxable year upon the taxable income of every 18 resident, nonresident, and part-year resident married individual who does not make a 19 single return jointly with a spouse a tax computed according to the following table: 20 If the taxable income is: Then the tax is: 21 Over $31 but less than $25,000 3.2 percent of taxable income 22 $25,000 or more $800 plus 5.7 percent of the 23 excess over $25,000. 24 (k) In (g) - (j) of this section, the tax on a nonresident or part-year resident 25 individual or fiduciary is the tax computed on taxable income from all sources, 26 multiplied by a fraction the numerator of which is adjusted gross income from sources 27 in the state and the denominator of which is adjusted gross income from all sources. 28 (l) An individual shall determine the tax under this section using the same 29 filing status as used on the individual's return filed under the provisions of 26 U.S.C. 30 (Internal Revenue Code). 31 * Sec. 2. AS 43.20.030(a) is amended to read:
01 (a) An individual, fiduciary, [IF A] corporation, or [A] partnership that has 02 a corporation as a partner, that is required to make a return under the provisions of 03 the Internal Revenue Code, [IT] shall file with the department [, WITHIN 30 DAYS 04 AFTER THE FEDERAL RETURN IS REQUIRED TO BE FILED,] a return setting 05 out 06 (1) the amount of tax due under this chapter, less allowable credits and 07 payments claimed against the tax; and 08 (2) other information for the purpose of carrying out the 09 provisions of this chapter that the department requires. 10 * Sec. 3. AS 43.20.030(c) is amended to read: 11 (c) The [NOTWITHSTANDING (a) OF THIS SECTION, THE] total amount 12 of tax imposed by this chapter is due and payable to the department at the same time 13 and in the same manner as the tax payable to the United States Internal Revenue 14 Service. 15 * Sec. 4. AS 43.20.030(d) is amended to read: 16 (d) A taxpayer [, UPON REQUEST BY THE DEPARTMENT,] shall file with 17 the return [FURNISH TO THE DEPARTMENT] a [TRUE AND] correct copy of the 18 taxpayer's tax return [WHICH THE TAXPAYER HAS] filed with the United States 19 Internal Revenue Service for the taxable year. Every taxpayer shall file an amended 20 return with the department, and remit any additional tax and interest due 21 [NOTIFY THE DEPARTMENT IN WRITING OF ANY ALTERATION IN, OR 22 MODIFICATION OF, THE TAXPAYER'S FEDERAL INCOME TAX RETURN 23 AND OF A RECOMPUTATION OF TAX OR DETERMINATION OF DEFICIENCY 24 (WHETHER WITH OR WITHOUT ASSESSMENT). A FULL STATEMENT OF 25 THE FACTS SHALL ACCOMPANY THIS NOTICE. THE NOTICE SHALL BE 26 FILED] within 60 days after the final determination of the taxpayer's federal tax 27 liability [MODIFICATION, RECOMPUTATION OR DEFICIENCY, AND THE 28 TAXPAYER SHALL PAY THE ADDITIONAL TAX OR PENALTY UNDER THIS 29 CHAPTER]. For purposes of this section, a final determination means [SHALL 30 MEAN] the time that an amended federal return is filed or the date a federal [A 31 NOTICE OF DEFICIENCY OR AN] assessment is made [MAILED TO THE
01 TAXPAYER BY THE INTERNAL REVENUE SERVICE, EXCEPT THAT IN NO 02 EVENT WILL THERE BE A FINAL DETERMINATION FOR PURPOSES OF THIS 03 SECTION UNTIL THE TAXPAYER HAS EXHAUSTED RIGHTS OF APPEAL 04 UNDER FEDERAL LAW]. 05 * Sec. 5. AS 43.20.031 is amended by adding new subsections to read: 06 (j) The gross income of an individual or a fiduciary is gross income as defined 07 in 26 U.S.C. 61 (Internal Revenue Code), and includes those items specifically 08 included in gross income under 26 U.S.C. 71 - 26 U.S.C. 90 (Subtitle A, Ch. 1B, Part 09 II of the Internal Revenue Code) and excludes those items specifically excluded from 10 gross income under 26 U.S.C. 101 - 26 U.S.C. 137 (Subtitle A, Ch. 1B, Part III of the 11 Internal Revenue Code), with the following modifications: 12 (1) a taxpayer who receives a cost-of-living allowance that is exempt 13 from federal income tax shall determine and include that amount as part of the 14 taxpayer's income as if the cost-of-living allowance were not exempt; 15 (2) a taxpayer who receives interest upon obligations of a state, or 16 interest upon obligations of a political or municipal subdivision of a state, that is 17 exempt from federal income tax shall determine and include that amount as part of the 18 taxpayer's income as if the interest were not exempt. 19 (k) The following adjustments to the gross income of an individual or fiduciary 20 are allowed as deductions in arriving at adjusted gross income under this section: 21 (1) the deductions allowable under 26 U.S.C. 62 (Internal Revenue 22 Code) 23 (A) attributable to a trade or business carried on by a taxpayer; 24 (B) from the sale or exchange of property; 25 (C) attributable to property held for the production of rents or 26 royalties; 27 (D) for the premature withdrawal of money from time savings 28 accounts or deposits; 29 (E) for alimony; 30 (2) interest received on obligations of the United States; 31 (3) refunds of state income taxes included in gross income.
01 (l) The taxable income of a fiduciary is its adjusted gross income. 02 (m) The taxable income of an individual taxpayer is the taxpayer's adjusted 03 gross income, less personal exemptions. An individual taxpayer may deduct from 04 adjusted gross income an amount that is the greater of 05 (1) the number of personal exemptions to which the taxpayer is entitled 06 under 26 U.S.C. 151 (Internal Revenue Code) multiplied by the amount per exemption 07 authorized by that section, limited to $3,000 per exemption, and not adjusted for 08 inflation; or 09 (2) an amount of the taxpayer's income equal to 100 percent of the 10 federal poverty level guidelines for the tax year applicable to the number of 11 exemptions claimed by the taxpayer; the federal poverty level guidelines are those 12 computed for Alaska and reported as required by 42 U.S.C. 9847 and 42 U.S.C. 13 9902(2). 14 (n) In this section, "individual" means a resident, nonresident, or part-year 15 resident individual, and "fiduciary" means a resident, nonresident, or part-year resident 16 fiduciary. 17 * Sec. 6. AS 43.20 is amended by adding a new section to read: 18 Sec. 43.20.032. TAX CALCULATION FOR NONRESIDENTS AND PART- 19 YEAR RESIDENTS AND FIDUCIARIES. (a) In computing the tax of a nonresident, a part-year resident individual, 20 or a fiduciary under AS 43.20.011(k), the part of the adjusted gross 21 income attributable to sources in the state is determined under AS 43.20.040. 22 (b) In computing adjusted gross income attributable to sources in the state for 23 a nonresident, a part-year resident individual, or a fiduciary, deductions and 24 adjustments are allowed only to the extent that they are connected with income that 25 arises from sources in the state or property having a situs for taxation in the state. 26 (c) In computing the personal exemptions authorized by AS 43.20.031(m), a 27 nonresident or part-year resident is allowed a prorated deduction in the ratio provided 28 by this subsection. The ratio for prorating is the taxpayer's adjusted gross income 29 from state sources divided by the taxpayer's adjusted gross income from all sources. 30 The ratio may not exceed 100 percent. For purposes of this subsection, the adjusted 31 gross income means the taxpayer's gross income as defined by 26 U.S.C. 62, modified
01 by AS 43.20.031(j) and (k). 02 * Sec. 7. AS 43.20 is amended by adding a new section to read: 03 Sec. 43.20.034. SURCHARGE ON INDIVIDUAL TAXABLE INCOME. (a) 04 In addition to the tax imposed by AS 43.20.011(g) - (j), there is levied a surcharge on 05 the amount of the income taxable under AS 43.20.011(g) - (j). The surcharge is 06 computed according to the following table: 07 If the taxable income is: Then the surcharge is: 08 $50,000, but less than $100,000 one percent of taxable income 09 $100,000 or more $1,000, plus an additional one 10 percent of taxable income for each 11 $50,000 or fraction of $50,000 of 12 taxable income that exceeds 13 $100,000, not to exceed a total of 14 eight percent of taxable income. 15 (b) The surcharge imposed by (a) of this section is in addition to the tax 16 imposed by AS 43.20.011. A person required to pay the surcharge imposed by (a) of 17 this section shall make a report and pay the tax in the same manner as required for the 18 tax imposed by AS 43.20.011. Provisions in this chapter applicable to determination 19 of and adjustments to the tax imposed by AS 43.20.011(g) - (j) also apply to the 20 surcharge imposed by (a) of this section. 21 * Sec. 8. AS 43.20.040(b) is amended to read: 22 (b) In this section, income is from a source having a taxable or business situs 23 in the state if it is derived from 24 (1) owning or operating business facilities or property in the state; 25 (2) conducting business, farming, or fishing operations in the state; 26 (3) [REPEALED 27 (4)] a partnership that [WHICH] transacts business in the state; 28 (4) [(5)] a corporation that [WHICH] transacts business in the state 29 and that [WHICH] has elected to file federal returns under 26 U.S.C. 1361 - 1379 30 (Subtitle A, Ch. 1S, Internal Revenue Code) [SUBCHAPTER S OF THE 31 INTERNAL REVENUE CODE];
01 (5) [(6) REPEALED 02 (7)] engaging in any other activity from which income is received, 03 realized, or derived in the state; 04 (6) working for salary or wages in the state; 05 (7) an estate or trust deriving income from sources in the state. 06 * Sec. 9. AS 43.20.040 is amended by adding a new subsection to read: 07 (d) With regard to the tax under AS 43.20.011(g) - (j), if a business, trade, or 08 profession, other than the rendering of purely personal services, is carried on partly 09 inside and partly outside the state, the income from sources in the state is determined 10 under AS 43.19 (Multistate Tax Compact). 11 * Sec. 10. AS 43.20 is amended by adding a new section to read: 12 Sec. 43.20.062. CREDITS AGAINST TAX. (a) A resident is allowed as a 13 credit against the tax otherwise due under this chapter the amount of income tax 14 imposed on the taxpayer for the taxable year by another state or territory of the United 15 States on income derived from sources in the other state or territory that is also subject 16 to tax under this chapter. 17 (b) The credit allowed in (a) of this section is limited to that proportion of the 18 tax computed under this chapter that the taxable income from the other state or 19 territory bears to total taxable income. The credit may not exceed the actual tax paid 20 to the other state or territory. 21 (c) The amounts deducted and withheld as taxes under this chapter during a 22 calendar year are allowed as credits to the taxpayer against the tax imposed by this 23 chapter. 24 (d) A taxpayer who qualifies for receipt of the Alaska permanent fund 25 dividend under AS 43.23 may, under regulations adopted by the department, request 26 the department to apply the dividend as a credit against the tax imposed by this 27 chapter. 28 * Sec. 11. AS 43.20.065 is amended to read: 29 Sec. 43.20.065. ALLOCATION AND APPORTIONMENT. A corporate 30 taxpayer who has income from business activity that [WHICH] is taxable both inside 31 and outside the state or income from other sources both inside and outside the state
01 shall allocate and apportion net income under AS 43.19 (Multistate Tax Compact), or 02 as provided by this chapter. 03 * Sec. 12. AS 43.20 is amended by adding a new section to read: 04 Sec. 43.20.171. COLLECTION OF INCOME TAX AT SOURCE. (a) Every 05 employer making payment of wages or salaries shall deduct and withhold an amount 06 of tax computed in a manner to approximate the amount of tax due on those wages 07 under this chapter for that year. The employer shall remit withheld taxes to the 08 department, together with a return or report prescribed by the department, at the time 09 or times required by the department by regulation. The department shall publish the 10 rate of withholding required by this section. Every employer making a deduction and 11 a withholding shall furnish to the employee no later than January 31 of the succeeding 12 year, or within 30 days after termination of employment, whichever is earlier, a written 13 statement on a form prescribed by the department showing 14 (1) the name and taxpayer identification number of the employer; 15 (2) the name and social security number of the employee; 16 (3) the total amount of wages and other compensation; and 17 (4) the total amount deducted and withheld as tax. 18 (b) Every employer making payments of wages or salaries earned in the state, 19 regardless of the place where the payment is made, 20 (1) is liable for the payment of the tax required to be deducted and 21 withheld under this section and is not liable to an individual for the amount of the 22 payment; and 23 (2) shall make return of and pay to the department the amount of tax 24 levied that the employer is required to deduct and withhold under this chapter. 25 (c) An employer who fails to comply with this section is subject to the 26 penalties set out in AS 43.05.220(d). 27 (d) If the employer is the United States or the state or a political subdivision 28 of the state, or an agency or instrumentality of one or more of those entities, the return 29 of the amount deducted and withheld on wages or salaries may be made by an officer 30 of the employer having control of the payment of the wages or salaries or who is 31 appropriately designated for that purpose.
01 (e) In this section, "employee," "employer," and "wages" have the meanings 02 given to them under 26 U.S.C. (Internal Revenue Code). 03 * Sec. 13. AS 43.20.340 is amended to read: 04 Sec. 43.20.340. DEFINITIONS. In this chapter, 05 (1) "bank" means a financial institution, including a national banking 06 association; 07 (2) "corporation" includes an association, joint-stock company, and an 08 insurance company; 09 (3) [REPEALED, 10 (4)] "domicile" means the location of an individual's true, fixed, 11 permanent home and principal establishment, to which the individual intends to 12 return from a temporary or transitory absence; 13 (4) "fiduciary" means an estate, a trust, a guardian, trustee, 14 executor, administrator, receiver, conservator, or a person acting in a fiduciary 15 capacity for another or for the estate of a deceased person; 16 (5) "fiscal year" means an accounting period of 12 months ending on 17 the last day of a month other than December; 18 (6) [(5)] "includes" and "including" when used in a definition do not 19 exclude other things otherwise within the meaning of the word defined; 20 (7) "individual" means a natural person, married or unmarried, 21 adult or minor, subject to payment of an income tax under 26 U.S.C. (Internal 22 Revenue Code); 23 (8) [(6)] "Internal Revenue Code" means 26 U.S.C. (Internal Revenue 24 Code of the United States) [THE INTERNAL REVENUE CODE OF THE UNITED 25 STATES (26 U.S.C.)] as the code exists now or as hereafter amended, as the code and 26 amendments apply to the normal taxes and surtax on net incomes, which amendments 27 are operative for the purposes of this chapter as of the time they became operative or 28 will become operative under federal law; 29 (9) "nonresident" means an individual who is not a resident or 30 part-year resident; 31 (10) [(7)] "part-year resident" means an individual who enters or leaves
01 the state during the taxable year and who has resided or was domiciled in the state for 02 a period of less than 12 months during the taxable year; 03 (11) [(8)] "person" means an individual, a trust or estate, or partnership, 04 or a corporation; 05 (12) "resident" means an individual who, during the entire taxable 06 year, was domiciled in or resided in the state; an individual does not lose resident 07 status simply by reason of attending an educational institution or by serving in 08 the armed forces; 09 (13) [(9)] "taxable year" means the calendar year or the fiscal year 10 ending during the calendar year upon the basis of which the net income is computed 11 under this chapter; "taxable year" includes, in the case of a return made for a fractional 12 part of a year under this chapter, the period for which the return is made; 13 (14) [(10)] "taxpayer" means a person subject to a tax imposed by this 14 chapter; 15 (15) [(11)] "trade or business" includes the engaging in or carrying on 16 of a trade, business, profession, vocation, employment, and rendition of services or 17 commercial activity and includes the performance of the function of a public office. 18 * Sec. 14. AS 47.45.120(a) is amended to read: 19 (a) Bonuses received under this chapter are exempt from all municipal 20 [STATE AND POLITICAL SUBDIVISION] taxes except sales and use taxes. [NO 21 BONUS RECEIVED UNDER THIS CHAPTER MAY BE EXEMPT FROM A 22 FEDERAL TAX REQUIREMENT.] 23 * Sec. 15. AS 43.05.085, AS 43.20.012, and 43.20.013 are repealed. 24 * Sec. 16. Sections 1 - 14 of this Act apply to income received on or after the effective 25 date of this Act. 26 * Sec. 17. This Act takes effect January 1, 1996.