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HB 4004: "An Act establishing an individual income tax; and providing for an effective date."

00                             HOUSE BILL NO. 4004                                                                         
01 "An Act establishing an individual income tax; and providing for an effective date."                                    
02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
03    * Section 1. AS 43 is amended by adding a new chapter to read:                                                   
04                     Chapter 22. Individual Income Tax.                                                                
05            Sec. 43.22.010. Tax on individuals. (a) A tax is imposed for each calendar                                 
06       year or fraction of a calendar year on every                                                                      
07                 (1)  resident individual; and                                                                           
08                 (2)  nonresident individual with income from a source in the state.                                     
09            (b)  The tax under this section is equal to                                                                  
10                 (1)  for a resident individual, six percent of the taxpayer's total federal                             
11       income tax;                                                                                                       
12                 (2)  for a nonresident individual, six percent of the taxpayer's total                                  
13       federal income tax payable on the amount of the taxpayer's income that is from a                                  
14       source in the state.                                                                                              
15            (c)  In this section, "federal income tax" means the total tax payable to the                                
01       federal government, as reported by the taxpayer on a federal individual income tax                                
02       return, including alternate minimum tax and other taxes imposed by the Internal                                   
03       Revenue Code, net of nonrefundable credits allowed against a liability and net of                                 
04       federal tax attributable to income from stocks and obligations of the United States                               
05       government exempt from taxation by the state under 31 U.S.C. 3124.                                                
06            Sec. 43.22.020. Credit for taxes paid. (a) A resident is entitled to a credit                              
07       against the tax liability under this chapter for the amount of tax paid to other states,                          
08       territories, or possessions of the United States on income derived from sources in                                
09       those jurisdictions that is also subject to tax in this chapter.                                                  
10            (b)  The claim for credit under (a) of this section may include tax paid by an S                             
11       corporation or partnership on behalf of the individual, based on that individual's share                          
12       of income derived in the other jurisdiction; in this subsection, "S corporation" has the                          
13       meaning given in 26 U.S.C. 1361.                                                                                  
14            (c)  The credit allowed under this section may not exceed an amount equal to                                 
15       the tax imposed under this chapter multiplied by a ratio equal to federal adjusted gross                          
16       income derived from sources in the other jurisdiction divided by total federal adjusted                           
17       gross income.                                                                                                     
18            (d)  The application of the tax credit provided under this section may not                                   
19       operate to reduce the tax payable under this chapter to an amount less than would have                            
20       been payable if the income from the other state was disregarded.                                                
21            Sec. 43.22.030. Returns and payment of taxes. (a) An individual required to                                
22       make a return under the provisions of the Internal Revenue Code shall file with the                               
23       department a return setting out                                                                                   
24                 (1)  the amount of tax due under this chapter; and                                                      
25                 (2)  other information for the purpose of carrying out the provisions of                                
26       this chapter that the department requires.                                                                        
27            (b)  The return must either be on oath or contain a written declaration that it is                           
28       made under penalty of perjury, and the department shall prescribe forms accordingly.                              
29            (c)  The total amount of tax imposed by this chapter is due and payable to the                               
30       department at the same time and in the same manner as the tax payable to the United                               
31       States Internal Revenue Service.                                                                                  
01            (d)  A taxpayer, upon request by the department, shall furnish to the                                        
02       department a true and correct copy of the tax return that the taxpayer has filed with the                         
03       United States Internal Revenue Service. Every taxpayer shall notify the department in                             
04       writing of an alteration in, or modification of, the taxpayer's federal income tax return                         
05       and of a recomputation of tax or determination of deficiency, whether with or without                             
06       assessment. A full statement of the facts must accompany this notice. The taxpayer                                
07       shall file the notice within 60 days after the final determination of the alteration,                             
08       modification, recomputation, or deficiency, and the taxpayer shall pay any additional                             
09       tax due under this chapter at that time. For purposes of this subsection, a final                                 
10       determination means the time that an amended federal return is filed or a notice of                               
11       deficiency or an assessment is mailed to the taxpayer by the Internal Revenue Service,                            
12       and the taxpayer has exhausted rights of appeal under federal law.                                                
13            (e)  The department may credit or refund overpayments of taxes, taxes                                        
14       erroneously or illegally assessed or collected, penalties collected without authority,                            
15       and taxes that are found unjustly assessed or excessive in amount, or otherwise                                   
16       wrongfully collected. The department shall set limitations, specify the manner in                                 
17       which claims for credits or refunds are made, and give notice of allowance or                                     
18       disallowance. When a refund is allowed to a taxpayer, it may be paid out of the                                   
19       general fund on a warrant issued under a voucher approved by the department.                                      
20            Sec. 43.22.040. Income from sources in the state. (a) For purposes of                                      
21       AS 43.22.010(a), income from a source in the state includes                                                       
22                 (1)  compensation for personal services rendered in the state;                                          
23                 (2)  salary or wages earned in the state;                                                               
24                 (3)  income from real or tangible personal property located in the state;                               
25                 (4)  income from stocks, bonds, notes, bank deposits, and other                                         
26       intangible personal property having a taxable or business situs in the state; however,                            
27       the receipt of interest income from intangible property in the state does not alone                               
28       establish a taxable or business situs in the state;                                                               
29                 (5)  rentals and royalties for the use of or for the privilege of using, in                             
30       the state, patents, copyrights, secret processes and formulas, good will, marks, trade                            
31       brands, franchises, and other property having a taxable or business situs in the state;                           
01                 (6)  income of whatever nature from a source with a taxable or business                                 
02       situs in the state.                                                                                               
03            (b)  In (a) of this section, income is from a source with a taxable or business                              
04       situs in the state if it is attributed to or derived from                                                         
05                 (1)  business facilities or property in the state;                                                      
06                 (2)  business, farming, or fishing activities in the state;                                             
07                 (3)  conducting in the state the management or investment function for                                  
08       intangible property;                                                                                              
09                 (4)  a partnership, limited liability company, estate, or trust conducting                              
10       business activities in the state;                                                                                 
11                 (5)  a corporation transacting business activities in the state that has                                
12       elected to file federal returns as a subchapter under 26 U.S.C. 1362 (Internal Revenue                            
13       Code);                                                                                                            
14                 (6)  any other activity from which income is received, realized, or                                     
15       derived in the state.                                                                                             
16            (c)  For purposes of (a) of this section, if a business, trade, or profession is                             
17       carried on partly inside and partly outside the state, other than the rendering of purely                         
18       personal services by an individual, the income from sources in the state shall be                                 
19       determined as provided in AS 43.19.                                                                               
20            Sec. 43.22.050. Tax withholding on wages of individuals. (a) Every                                         
21       employer making payment of wages or salaries                                                                      
22                 (1)  shall deduct and withhold an amount of tax computed in a manner                                    
23       to approximate the amount of tax due on those wages or salaries under this chapter for                            
24       that calendar year;                                                                                               
25                 (2)  shall remit the tax withheld to the department accompanied by a                                    
26       return on a form prescribed by the department at the times required by the department                             
27       by regulation;                                                                                                    
28                 (3)  is liable for the payment of the tax required to be deducted and                                   
29       withheld under this section but is not liable to any individual for the amount of the                             
30       payment; and                                                                                                      
31                 (4)  shall furnish to the employee on or before January 31 of the                                       
01       succeeding year, or not later than 30 days after a request by the employee after the                              
02       employee's termination if the 30-day period ends before January 31, a written                                     
03       statement on a form prescribed by the department showing the                                                      
04                      (A)  name and taxpayer identification number of the employer;                                      
05                      (B)  name and social security number of the employee;                                              
06                      (C)  total amount of wages or salary for the calendar year; and                                    
07                      (D)  total amount deducted and withheld as tax under this                                          
08            chapter for the calendar year.                                                                               
09            (b)  The department shall publish the rate of withholding required by this                                   
10       section.                                                                                                          
11            Sec. 43.22.060. Administration. The department shall prescribe all necessary                               
12       forms and adopt regulations to implement and interpret this chapter, including                                    
13       regulations for the online filing and payment of tax due under this chapter. The                                  
14       department may incorporate into the regulations provisions of the Internal Revenue                                
15       Code that are necessary or useful to the administration of this chapter.                                          
16            Sec. 43.22.190. Definitions. In this chapter,                                                              
17                 (1)  "domiciled" means established in a true principal permanent home                                   
18       to which the individual has the intention of returning whenever absent;                                           
19                 (2)  "individual" means a natural person, married or unmarried, adult or                                
20       minor, subject to payment of income tax under 26 U.S.C. (Internal Revenue Code);                                  
21                 (3)  "Internal Revenue Code" means the Internal Revenue Code of the                                     
22       United States (26 U.S.C.) as the code exists now or as hereafter amended, as the code                             
23       and amendments apply to the normal taxes and surtax on net incomes, which                                         
24       amendments are operative for the purposes of this chapter as of the time they became                              
25       operative or will become operative under federal law;                                                             
26                 (4)  "nonresident" means an individual who is not a resident;                                           
27                 (5)  "resident" means an individual who                                                                 
28                      (A)  was domiciled in the state or resided in the state for the                                    
29            entire calendar year;                                                                                        
30                      (B)  claims to be a resident of the state on the individual's                                      
31            federal tax forms;                                                                                           
01                      (C)  receives a permanent fund dividend under AS 43.23;                                            
02                      (D)  is registered to vote under AS 15; or                                                         
03                      (E)  received a resident fishing, hunting, or trapping license                                     
04            during the calendar year under AS 16;                                                                        
05                 (6)  "taxpayer" means a person subject to a tax imposed by this chapter.                                
06    * Sec. 2. AS 43.05.085; AS 43.20.012(b), and 43.20.013 are repealed.                                               
07    * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to                          
08 read:                                                                                                                   
09       APPLICABILITY. AS 43.22.010 - 43.22.190, added by sec.1 of this Act, apply to                                     
10 income received on or after the effective date of sec. 1 of this Act.                                                   
11    * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to                          
12 read:                                                                                                                   
13       TRANSITION: REGULATIONS. Department of Revenue may adopt regulations                                              
14 necessary to implement the changes made by this Act. The regulations take effect under                                  
15 AS 44.62 (Administrative Procedure Act), but not before the effective date of the law                                   
16 implemented by the regulation.                                                                                          
17    * Sec. 5. Section 4 of this Act take effect immediately under AS 01.10.070(c).                                     
18    * Sec. 6. Except as provided in sec. 5 of this Act, this Act takes effect January 1, 2018.