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CSHB 236(FIN): "An Act imposing a limited tax on wages and on net earnings from self-employment; relating to the administration and enforcement of that tax; and providing for an effective date."

00                       CS FOR HOUSE BILL NO. 236(FIN)                                                                    
01 "An Act imposing a limited tax on wages and on net earnings from self-employment;                                       
02 relating to the administration and enforcement of that tax; and providing for an                                        
03 effective date."                                                                                                        
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1.  The uncodified law of the State of Alaska is amended by adding a new section                         
06 to read:                                                                                                                
07       SHORT TITLE.  This Act may be known as the Alaska Education Tax Act.                                              
08    * Sec. 2.  AS 43.10.042(a) is amended to read:                                                                     
09            (a)  A lien imposed under AS 43.10.010 - 43.10.060 is not valid as against a                                 
10       mortgagee or other lien holder, pledgee, purchaser, or judgment creditor until notice of                          
11       it is recorded in the records of the recording district where the property subject to the                         
12       lien is situated.  However, regardless of the date the liens are recorded, a lien arising                         
13       out of a tax due under AS 43.45, AS 43.56, and AS 43.75 [AS 43.56 AND 43.75],                                 
14       including the penalties and interest on the tax, is a lien prior, paramount, and superior                         
01       to all other liens, mortgages, hypothecations, conveyances, and assignments, upon all                             
02       the real and personal property of the person liable for the tax, and upon all the real and                        
03       personal property used with the permission of the owner to carry on the business that                             
04       is subject to the tax.                                                                                            
05    * Sec. 3.  AS 43 is amended by adding a new chapter to read:                                                       
06                        Chapter 45.  Education Tax.                                                                    
07            Sec. 43.45.011.  Tax imposed.  (a)  There is imposed a tax, not to exceed a                              
08       combined total of $100 a calendar year, on wages and net earnings from self-                                      
09       employment in excess of $600.                                                                                     
10            (b)  The rate of the tax is 10 percent.                                                                      
11            (c)  The tax imposed under this section does not apply to wages and net                                      
12       earnings exempt from the tax under federal law.                                                                   
13            Sec. 43.45.021.  Collection of tax by employer.  (a)  An employer shall                                    
14       deduct and withhold 10 percent of an employee's wages subject to withholding under                                
15       26 U.S.C. 3401 - 3406 on the first regular payroll of the calendar year and from                                  
16       subsequent payrolls until the tax due under this chapter is fully withheld.                                       
17            (b)  An employer is liable for the tax required to be withheld from an employee                              
18       unless the employer can demonstrate that the employer relied on proof provided by the                             
19       employee that the total tax for the calendar year imposed under AS 43.45.011 had                                  
20       already been withheld under this section or paid under AS 43.45.031.  A deduction of                              
21       the tax may not be made from the wages of an individual who provides proof to the                                 
22       employer that the entire tax imposed under AS 43.45.011 on that individual for the                                
23       calendar year has already been withheld or paid under AS 43.45.031.                                               
24            (c)  Tax withheld by an employer becomes due and shall be paid by an                                         
25       employer to the department in accordance with regulations adopted by the department.                              
26            (d)  An employer shall maintain a record of the amount deducted from the                                     
27       wages of each employee and shall furnish an annual statement of the deductions to                                 
28       each employee and to the department in accordance with regulations adopted by the                                 
29       department.                                                                                                       
30            (e)  The Department of Revenue may, if it will result in cost savings for the                                
31       state in the administration of the tax, for employers in the administration of the tax, or                        
01       for both, to the extent practicable, coordinate collection and reporting of the tax                               
02       imposed in this chapter with the collection and reporting of employment security                                  
03       contributions by the Department of Labor and Workforce Development, including                                     
04       permitting the Department of Labor and Workforce Development to collect the tax                                   
05       payments and remit them to the Department of Revenue.                                                             
06            (f)  The department may by regulation provide for an incentive to an employer                                
07       or a self-employed individual for electronically filing returns and making payments or                            
08       for other use of technology or filing methodologies to improve the efficiency of tax                              
09       administration.  Regulations adopted under this subsection must                                                   
10                 (1)  establish the duration, level, nature, and value of the incentive; the                             
11       value of an incentive established under this subsection may not exceed $300 for each                              
12       return, application, filing, or payment; and                                                                      
13                 (2)  require that the incentive be available only if the return,                                        
14       application, filing, or payment is filed timely with the department under this chapter.                           
15            Sec. 43.45.026.  Employer security.  (a)  If the department determines that an                             
16       employer has been delinquent in remitting the tax imposed under AS 43.45.011 in                                   
17       accordance with regulations adopted by the department, the department may require                                 
18       the employer to deposit and keep on deposit with the department a sum equal to the                                
19       tax required to be withheld by the employer during the 12 months immediately                                      
20       preceding the determination of delinquency under this subsection by the department.                               
21       If the employer was not required to withhold tax during the full 12 months                                        
22       immediately preceding the determination of delinquency, the department may require                                
23       a deposit equal to the employer's estimated liability for a 12-month period based on                              
24       the actual liability for the period during which the employer was required to withhold                            
25       tax.                                                                                                              
26            (b)  The department may accept a bond or other security equal in value to the                                
27       deposit required under (a) of this section in lieu of the deposit required under (a) of                           
28       this section.                                                                                                     
29            (c)  The provision of a deposit, bond, or other security under this section does                             
30       not relieve the employer from any other obligation under this title.                                              
31            (d)  The department may apply all or part of the deposit, bond, or other security                            
01       to payment of the tax imposed under AS 43.45.011, and to any interest and penalties                               
02       imposed under AS 43.45.021.                                                                                       
03            (e)  The deposit, bond, or other security provided under this section is exempt                              
04       from process, attachment, garnishment, or execution unless otherwise provided by                                  
05       law.                                                                                                              
06            (f)  The department shall return the deposit, bond, or other security to the                                 
07       employer if the employer is timely in filing and remitting the tax under AS 43.45.021                             
08       for a period of 24 consecutive months.                                                                            
09            (g)  If an employer ceases to be subject to AS 43.45.021, the department shall,                              
10       after 12 months have elapsed and all liabilities of the employer to the department                                
11       under this chapter have been satisfied, refund to the employer any remaining deposit,                             
12       and cancel any bond or other security accepted by the department under this section.                              
13            Sec. 43.45.031.  Payment of tax by self-employed individual.  A self-                                      
14       employed individual shall remit to the department 10 percent of the individual's net                              
15       earnings from self-employment in accordance with regulations adopted by the                                       
16       department until the entire tax has been paid.                                                                    
17            Sec. 43.45.041.  Refund of overpayments.  (a)  If an individual pays to the                              
18       department, directly or through withholding, an amount exceeding the total tax                                    
19       imposed under this chapter during a calendar year and the individual applies for a                                
20       refund in accordance with regulations adopted by the department, the department shall                             
21       refund the overpayment to the individual.                                                                         
22            (b)  Interest on an overpayment may not be allowed under AS 43.05.280 if the                                 
23       department refunds the overpayment within 90 days after the date the individual                                   
24       correctly files the refund claim.                                                                                 
25            (c)  The Department of Revenue may adopt regulations to coordinate refunds                                   
26       of overpayments under this section with refunds of employment security contributions                              
27       under AS 23.20.165.                                                                                               
28            (d)  An individual may apply for a refund under this section only during the                                 
29       calendar year immediately following the calendar year in which the excess was paid.                               
30            Sec. 43.45.051.  Report of payments to self-employed individuals.  A person                                
31       required to report a payment to a self-employed individual to the federal government                              
01       under 26 U.S.C. shall also report that payment to the department in accordance with                               
02       regulations adopted by the department.                                                                            
03            Sec. 43.45.061.  Disposition of tax proceeds.  (a)  The tax collected by the                               
04       department under AS 43.45.021 shall be deposited into the general fund and accounted                              
05       for separately.                                                                                                   
06            (b)  The legislature may appropriate the estimated amounts to be collected and                               
07       separately accounted for under (a) of this section for education.                                                 
08            (c)  The deposit required and appropriation authorized by this section are not                               
09       intended to create a dedication in violation of art. IX, sec. 7, Constitution of the State                        
10       of Alaska.                                                                                                        
11            Sec. 43.45.099.  Definitions.  In this chapter,                                                            
12                 (1)  "employee" has the meaning given in 26 U.S.C. 3401;                                                
13                 (2)  "employer" has the meaning given in 26 U.S.C. 3401;                                                
14                 (3)  "net earnings from self-employment" has the meaning given in 26                                    
15       U.S.C. 1402;                                                                                                      
16                 (4)  "wages" has the meaning given in 26 U.S.C. 3401.                                                   
17    * Sec. 4.  The uncodified law of the State of Alaska is amended by adding a new section to                         
18 read:                                                                                                                   
19       REGULATIONS.  Notwithstanding sec. 6 of this Act, the Department of Revenue                                       
20 may proceed to adopt regulations to implement sec. 3 of this Act.  The regulations take effect                          
21 under AS 44.62 (Administrative Procedure Act), but not before the effective date of sec. 3 of                           
22 this Act.                                                                                                               
23    * Sec. 5.  Section 4 of this Act takes effect immediately under AS 01.10.070(c).                                   
24    * Sec. 6.  Except as provided in sec. 5 of this Act, this Act takes effect January 1, 2005.