HB 250: "An Act relating to the taxation of income of individuals; repealing tax credits applied against the tax on individuals under the Alaska Net Income Tax Act; and providing for an effective date."
00 HOUSE BILL NO. 250 01 "An Act relating to the taxation of income of individuals; repealing tax credits applied 02 against the tax on individuals under the Alaska Net Income Tax Act; and providing for 03 an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 43 is amended by adding a new chapter to read: 06 Chapter 22. Individual Income Tax. 07 Sec. 43.22.010. Tax on individuals. (a) A tax is imposed for each calendar 08 year or fraction of a calendar year on every 09 (1) resident individual; and 10 (2) nonresident individual with income from a source in the state. 11 (b) The tax under this section is equal to 12 (1) for a resident individual, six percent of the taxpayer's total federal 13 income tax; 14 (2) for a nonresident individual, six percent of the taxpayer's total
01 federal income tax payable on the amount of the taxpayer's income that is from a 02 source in the state. 03 (c) In this section, "federal income tax" means the total tax payable to the 04 federal government, as reported by the taxpayer on a federal individual income tax 05 return, including alternate minimum tax and other taxes imposed by the Internal 06 Revenue Code, net of nonrefundable credits allowed against a liability. 07 Sec. 43.22.020. Credit for taxes paid. (a) A resident is entitled to a credit 08 against the tax liability under this chapter for the amount of tax paid to other states, 09 territories, or possessions of the United States on income derived from sources in 10 those jurisdictions that is also subject to tax in this chapter. 11 (b) The claim for credit under (a) of this section may include tax paid by an S 12 corporation or partnership on behalf of the individual, based on that individual's share 13 of income derived in the other jurisdiction; in this subsection, "S corporation" has the 14 meaning given in 26 U.S.C. 1361. 15 (c) The credit allowed under this section may not exceed an amount equal to 16 the tax imposed under this chapter multiplied by a ratio equal to federal adjusted gross 17 income derived from sources in the other jurisdiction divided by total federal adjusted 18 gross income. 19 (d) The application of the tax credit provided under this section may not 20 operate to reduce the tax payable under this chapter to an amount less than would have 21 been payable if the income from the other state was disregarded. 22 Sec. 43.22.030. Returns and payment of taxes. (a) An individual required to 23 make a return under the provisions of the Internal Revenue Code shall file with the 24 department a return setting out 25 (1) the amount of tax due under this chapter; and 26 (2) other information for the purpose of carrying out the provisions of 27 this chapter that the department requires. 28 (b) The return must either be on oath or contain a written declaration that it is 29 made under penalty of perjury, and the department shall prescribe forms accordingly. 30 (c) The total amount of tax imposed by this chapter is due and payable to the 31 department at the same time and in the same manner as the tax payable to the United
01 States Internal Revenue Service. 02 (d) A taxpayer, upon request by the department, shall furnish to the 03 department a true and correct copy of the tax return that the taxpayer has filed with the 04 United States Internal Revenue Service. Every taxpayer shall notify the department in 05 writing of an alteration in, or modification of, the taxpayer's federal income tax return 06 and of a recomputation of tax or determination of deficiency, whether with or without 07 assessment. A full statement of the facts must accompany this notice. The taxpayer 08 shall file the notice within 60 days after the final determination of the alteration, 09 modification, recomputation, or deficiency, and the taxpayer shall pay any additional 10 tax due under this chapter at that time. For purposes of this subsection, a final 11 determination means the time that an amended federal return is filed or a notice of 12 deficiency or an assessment is mailed to the taxpayer by the Internal Revenue Service, 13 and the taxpayer has exhausted rights of appeal under federal law. 14 (e) The department may credit or refund overpayments of taxes, taxes 15 erroneously or illegally assessed or collected, penalties collected without authority, 16 and taxes that are found unjustly assessed or excessive in amount, or otherwise 17 wrongfully collected. The department shall set limitations, specify the manner in 18 which claims for credits or refunds are made, and give notice of allowance or 19 disallowance. When a refund is allowed to a taxpayer, it may be paid out of the 20 general fund on a warrant issued under a voucher approved by the department. 21 Sec. 43.22.040. Income from sources in the state. (a) For purposes of 22 AS 43.22.010(a), income from a source in the state includes 23 (1) compensation for personal services rendered in the state; 24 (2) salary or wages earned in the state; 25 (3) income from real or tangible personal property located in the state; 26 (4) income from stocks, bonds, notes, bank deposits, and other 27 intangible personal property having a taxable or business situs in the state; however, 28 the receipt of interest income from intangible property in the state does not alone 29 establish a taxable or business situs in the state; 30 (5) rentals and royalties for the use of or for the privilege of using, in 31 the state, patents, copyrights, secret processes and formulas, good will, marks, trade
01 brands, franchises, and other property having a taxable or business situs in the state; 02 (6) income distributed from a trust established under or governed by 03 the laws of the state; 04 (7) income from a source with a taxable or business situs in the state of 05 (A) a trust not established under or governed by the laws of the 06 state; or 07 (B) the estate of a decedent who on the date of death was not 08 domiciled in the state; 09 (8) income of whatever nature from a source with a taxable or business 10 situs in the state. 11 (b) In (a) of this section, income is from a source with a taxable or business 12 situs in the state if it is attributed to or derived from 13 (1) business facilities or property in the state; 14 (2) business, farming, or fishing activities in the state; 15 (3) conducting in the state the management or investment function for 16 intangible property; 17 (4) a partnership, limited liability company, estate, or trust conducting 18 business activities in the state; 19 (5) a corporation transacting business activities in the state that has 20 elected to file federal returns as a subchapter under 26 U.S.C. 1362 (Internal Revenue 21 Code); 22 (6) any other activity from which income is received, realized, or 23 derived in the state. 24 (c) For purposes of (a) of this section, if a business, trade, or profession is 25 carried on partly inside and partly outside the state, other than the rendering of purely 26 personal services by an individual, the income from sources in the state shall be 27 determined as provided in AS 43.19. 28 Sec. 43.22.050. Tax withholding on wages of individuals. (a) Every 29 employer making payment of wages, salaries, or crew shares 30 (1) shall deduct and withhold an amount of tax computed in a manner 31 to approximate the amount of tax due on those wages, salaries, or crew shares under
01 this chapter for that calendar year; 02 (2) shall remit the tax withheld to the department accompanied by a 03 return on a form prescribed by the department at the times required by the department 04 by regulation; 05 (3) is liable for the payment of the tax required to be deducted and 06 withheld under this section but is not liable to any individual for the amount of the 07 payment; and 08 (4) shall furnish to the employee on or before January 31 of the 09 succeeding year, or not later than 30 days after a request by the employee after the 10 employee's termination if the 30-day period ends before January 31, a written 11 statement on a form prescribed by the department showing the 12 (A) name and taxpayer identification number of the employer; 13 (B) name and social security number of the employee; 14 (C) total amount of wages, salary, or crew shares for the 15 calendar year; and 16 (D) total amount deducted and withheld as tax under this 17 chapter for the calendar 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. 43.22.060. Administration. The department shall prescribe all necessary 26 forms and adopt regulations to implement and interpret this chapter, including 27 regulations for the online filing and payment of tax due under this chapter. The 28 department may incorporate into the regulations provisions of the Internal Revenue 29 Code that are necessary or useful to the administration of this chapter. 30 Sec. 43.22.190. Definitions. In this chapter, 31 (1) "domiciled" means established in a true principal permanent home
01 to which the individual has the intention of returning whenever absent; 02 (2) "individual" means a natural person, married or unmarried, adult or 03 minor, subject to payment of income tax under 26 U.S.C. (Internal Revenue Code); 04 (3) "Internal Revenue Code" means the Internal Revenue Code of the 05 United States (26 U.S.C.) as the code exists now or as hereafter amended, as the code 06 and amendments apply to the normal taxes and surtax on net incomes, which 07 amendments are operative for the purposes of this chapter as of the time they became 08 operative or will become operative under federal law; 09 (4) "nonresident" means an individual who is not a resident; 10 (5) "resident" means an individual who 11 (A) was domiciled in the state or resided in the state for the 12 entire calendar year; 13 (B) claims to be a resident of the state on the individual's 14 federal tax forms; 15 (C) receives a permanent fund dividend under AS 43.23; 16 (D) is registered to vote under AS 15; or 17 (E) received a resident fishing, hunting, or trapping license 18 during the calendar year under AS 16; 19 (6) "taxpayer" means a person subject to a tax imposed by this chapter. 20 * Sec. 2. AS 43.05.085; AS 43.20.012(b), and 43.20.013 are repealed. 21 * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 APPLICABILITY. This Act applies to income received on or after the effective date 24 of this Act. 25 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 TRANSITIONAL PROVISION: REGULATIONS. The Department of Revenue may 28 adopt regulations necessary to implement the changes made by this act. The regulations take 29 effect under AS 44.62 (Administrative Procedure Act), but not before January 1, 2017. 30 * Sec. 5. Section 4 of this Act takes effect immediately under AS 01.10.070(c). 31 * Sec. 6. Except as provided in sec. 5 of this Act, this Act takes effect January 1, 2017.