SSHB 199: "An Act relating to taxation, including taxation of income of individuals, estates, and trusts."
00 SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 199 01 "An Act relating to taxation, including taxation of income of individuals, estates, and 02 trusts." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.20 is amended by adding a new section to read: 05 Sec. 43.20.009. Tax on individuals, estates, and trusts. (a) There is 06 imposed for each taxable year an income tax, computed as provided in this section, on 07 every 08 (1) resident individual; and 09 (2) nonresident and part-year resident individual, estate, and trust, with 10 income from sources in the state. 11 (b) For a resident individual, 12 (1) for calendar year 2002, the tax under this section is one percent of 13 the individual's income; 14 (2) for each calendar year after 2002, the tax under this section is two
01 and one-fourth percent of the individual's taxable income. 02 (c) For a nonresident or part-year resident individual, or for an estate or a trust, 03 (1) for the calendar year 2002, the tax under this section is one percent 04 of the individual's, estate's, or trust's income, multiplied by a fraction, the numerator of 05 which is taxable income from sources in the state and the denominator of which is 06 taxable income from all sources; 07 (2) for each calendar year after 2002, the tax under this section is two 08 and one-fourth percent of the individual's, estate's, or trust's taxable income, multiplied 09 by a fraction, the numerator of which is taxable income from sources in the state and 10 the denominator of which is taxable income from all sources. 11 (d) An individual whose income includes a cost-of-living allowance that is 12 exempt from the federal income tax shall determine and include that amount as part of 13 the individual's taxable income as if the cost-of-living allowance were not exempt. 14 (e) In this section, "taxable income" means adjusted gross income, as defined 15 in 26 U.S.C. 62 (Internal Revenue Code), and includes the income described in (d) of 16 this section. 17 * Sec. 2. AS 43.20.030(a) is amended to read: 18 (a) Every individual, trust, estate, partnership, and [IF A] corporation 19 subject to tax under this chapter [, OR A PARTNERSHIP THAT HAS A 20 CORPORATION AS A PARTNER, IS] required to make a return of income under 21 the provisions of the Internal Revenue Code [, IT] shall file with the department, 22 within 30 days after the federal return is required to be filed, a return setting out 23 (1) the amount of tax due under this chapter, less allowable credits 24 and payments claimed against the tax; and 25 (2) other information that the department requires for the purpose of 26 carrying out the provisions of this chapter [THAT THE DEPARTMENT 27 REQUIRES]. 28 * Sec. 3. AS 43.20.031(c) is amended to read: 29 (c) In computing the tax under this chapter, a corporation [THE 30 TAXPAYER] is not entitled to deduct any taxes based on or measured by net income. 31 * Sec. 4. AS 43.20.040 is repealed and reenacted to read:
01 Sec. 43.20.040. Income from sources in the state. (a) In this chapter, 02 income from sources in the state includes 03 (1) compensation for personal services rendered in the state; 04 (2) working in the state for salary or wages; 05 (3) income from real or tangible personal property located in the state; 06 (4) income from stocks, bonds, notes, bank deposits, and other 07 intangible personal property having a taxable or business situs in the state; however, 08 the receipt of interest income from intangible property in the state does not alone 09 establish a taxable or business situs in the state; 10 (5) rentals and royalties for the use of or for the privilege of using, in 11 the state, patents, copyrights, secret processes and formulas, good will, marks, trade 12 brands, franchises, and other property having a taxable or business situs in the state; 13 (6) income distributed from a trust established under or governed by 14 the laws of the state; 15 (7) income of a trust established under or governed by the laws of the 16 state and income of the estate of a decedent who on the date of death was domiciled in 17 the state; 18 (8) income, from a source with a taxable or business situs in the state, 19 of 20 (A) a trust not established under or governed by the laws of the 21 state; or 22 (B) the estate of a decedent who on the date of death was not 23 domiciled in the state; 24 (9) income of whatever nature from a source with a taxable or business 25 situs in the state. 26 (b) Except as provided in (a)(4) of this section, in this section, income is from 27 a source with a taxable or business situs in the state if it is attributed to or derived from 28 (1) business facilities or property in the state; 29 (2) business, farming, or fishing activities in the state; 30 (3) conducting in the state the management or investment function for 31 intangible property;
01 (4) a partnership, limited liability company, estate, or trust conducting 02 business activities in the state; 03 (5) a corporation transacting business activities in the state that has 04 elected to file federal returns under subchapter S of the Internal Revenue Code; 05 (6) any other activity from which income is received, realized, or 06 derived in the state. 07 (c) If a business, trade, or profession is carried on partly inside and partly 08 outside the state, other than the rendering of purely personal services by an individual, 09 the income from sources in the state shall be determined as provided in AS 43.19. 10 * Sec. 5. AS 43.20 is amended by adding a new section to article 1 to read: 11 Sec. 43.20.046. Individual, trust, and estate tax credits. (a) For a resident, 12 a trust established under or governed by the laws of this state, or the estate of a 13 decedent who on the date of death was domiciled in this state, the income tax imposed 14 on that resident, trust, or estate by another state or territory of the United States for the 15 taxable year, on income derived from sources in that state or territory, is allowed as a 16 credit against the tax under this chapter. 17 (b) The credit under (a) of this section is determined by multiplying the tax 18 computed under this chapter by a fraction, the numerator of which is the income 19 derived from sources in the other state or territory and the denominator of which is 20 income derived from all sources. The credit under (a) of this section may not exceed 21 the actual tax paid to the other state or territory. 22 (c) An individual, estate, or trust is allowed only the state credits provided in 23 this section. The total state credit allowed under this section may not exceed the tax 24 liability for the taxable year for the individual, estate, or trust. A credit may not be 25 carried, in whole or in part, to a different taxable year. 26 * Sec. 6. AS 43.20 is amended by adding a new section to read: 27 Sec. 43.20.171. Tax withholding on wages of individuals. (a) Every 28 employer making payment of wages, salaries, or crew shares after December 31, 2002, 29 (1) shall deduct and withhold an amount of tax computed in a manner 30 to approximate the amount of tax due on those wages, salaries, or crew shares under 31 this chapter for that taxable year;
01 (2) shall remit the tax withheld to the department accompanied by a 02 return on a form prescribed by the department at the times required by the department 03 by regulation; 04 (3) is liable for the payment of the tax required to be deducted and 05 withheld under this section but is not liable to any individual for the amount of the 06 payment; and 07 (4) shall furnish to the employee on or before January 31 of the 08 succeeding year, or within 30 days after a request by the employee after the 09 employee's termination if the 30-day period ends before January 31, a written 10 statement on a form prescribed by the department showing 11 (A) the name and taxpayer identification number of the 12 employer; 13 (B) the name and social security number of the employee; 14 (C) the total amount of wages, salary, or crew shares for the 15 taxable year; and 16 (D) the total amount deducted and withheld as tax for the 17 taxable year. 18 (b) The department shall publish the rate of withholding required by this 19 section. 20 (c) In this section, 21 (1) "employee" includes an individual who receives compensation on a 22 crew share basis in connection with a commercial fishing activity; 23 (2) "employer" includes a person who pays compensation to an 24 individual on a crew share basis in connection with a commercial fishing activity. 25 * Sec. 7. AS 43.20.340 is amended by adding new paragraphs to read: 26 (12) "individual" means a natural person, married or unmarried, adult 27 or minor, subject to payment of income tax under 26 U.S.C. (Internal Revenue Code); 28 (13) "nonresident" means an individual who is not a resident or part- 29 year resident; 30 (14) "resident" means an individual who, for the entire taxable year, 31 was domiciled in the state or resided in the state.
01 * Sec. 8. AS 43.05.085; AS 43.20.012, and 43.20.013 are repealed. 02 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 SEVERABILITY. Under AS 01.10.030, if any provision of this Act, or the 05 application of a provision of this Act to any person or circumstance is held invalid, the 06 remainder of this Act and the application to other persons is not affected. 07 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 RETROACTIVE APPLICATION. Sections 1 - 5, 7, and 8 of this Act are retroactive 10 to January 1, 2002.