SSHB 36: "An Act bearing the short title of the 'Fair Contribution by High Profit Businesses Act'; requiring certain persons in the business of oil and gas production or transportation to pay income tax; establishing a tax on the income of a sole proprietorship, partnership, limited liability company, or an S corporation; relating to exemptions from the tax on corporations; and providing for an effective date."
00 SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 36 01 "An Act bearing the short title of the 'Fair Contribution by High Profit Businesses Act'; 02 requiring certain persons in the business of oil and gas production or transportation to 03 pay income tax; establishing a tax on the income of a sole proprietorship, partnership, 04 limited liability company, or an S corporation; relating to exemptions from the tax on 05 corporations; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 SHORT TITLE. This Act may be known as the Fair Contribution by High Profit 10 Businesses Act. 11 * Sec. 2. AS 43.20.011(e) is amended to read: 12 (e) There is imposed for each taxable year upon the entire taxable income of 13 every corporation or person engaged in the production of oil or gas from a lease or
01 property in this state or engaged in the transportation of oil or gas by pipeline in 02 this state derived from sources within the state a tax computed as follows: 03 If the taxable income is Then the tax is: 04 Less than $25,000 zero 05 $25,000 but less than $49,000 2 percent of the taxable income over 06 $25,000 07 $49,000 but less than $74,000 $480 plus 3 percent of the taxable 08 income over $49,000 09 $74,000 but less than $99,000 $1,230 plus 4 percent of the taxable 10 income over $74,000 11 $99,000 but less than $124,000 $2,230 plus 5 percent of the taxable 12 income over $99,000 13 $124,000 but less than $148,000 $3,480 plus 6 percent of the taxable 14 income over $124,000 15 $148,000 but less than $173,000 $4,920 plus 7 percent of the taxable 16 income over $148,000 17 $173,000 but less than $198,000 $6,670 plus 8 percent of the taxable 18 income over $173,000 19 $198,000 but less than $222,000 $8,670 plus 9 percent of the taxable 20 income over $198,000 21 $222,000 or more $10,830 plus 9.4 percent of the 22 taxable income over $222,000. 23 * Sec. 3. AS 43.20.012(a) is amended to read: 24 (a) The tax imposed by this chapter does not apply to 25 (1) [APPLY TO] an individual; or 26 (2) a public corporation, as defined in AS 45.77.020 [APPLY TO A 27 FIDUCIARY; 28 (3) FOR A TAX YEAR BEGINNING AFTER DECEMBER 31, 2012, 29 APPLY TO AN ALASKA CORPORATION THAT IS A QUALIFIED SMALL 30 BUSINESS AND THAT MEETS THE ACTIVE BUSINESS REQUIREMENT IN 26 31 U.S.C. 1202(e) AS THAT SUBSECTION READ ON JANUARY 1, 2012; OR
01 (4) FOR A TAX YEAR BEGINNING AFTER JUNE 30, 2007, 02 APPLY TO THE INCOME RECEIVED BY A REGIONAL ASSOCIATION 03 QUALIFIED UNDER AS 16.10.380 OR NONPROFIT CORPORATION HOLDING 04 A HATCHERY PERMIT UNDER AS 16.10.400 FROM THE SALE OF SALMON 05 OR SALMON EGGS UNDER AS 16.10.450 OR FROM A COST RECOVERY 06 FISHERY UNDER AS 16.10.455]. 07 * Sec. 4. AS 43.20 is amended by adding a new section to read: 08 Sec. 43.20.019. Tax on a qualified entity. (a) For each calendar year, a 09 qualified entity shall pay a tax on the qualified entity's net income derived from 10 sources within the state, as follows: 11 If the taxable income is Then the tax is: 12 Less than $250,000 zero 13 $250,000 but less than $500,000 5 percent of the taxable income over 14 $250,000 15 $500,000 but less than $1,000,000 $12,500 plus 7.5 percent of the taxable 16 income over $500,000 17 $1,000,000 or more $50,000 plus 9.4 percent of the taxable 18 income over $1,000,000. 19 (b) The net income of an entity established under 43 U.S.C. 1601 et seq. 20 (Alaska Native Claims Settlement Act) is exempt from the tax imposed under this 21 section. 22 (c) The department shall adopt regulations to implement this section. 23 (d) When calculating net income subject to tax under this section, a taxpayer 24 may deduct a tax paid under this title. 25 (e) Income on which tax is paid under this section shall be excluded from 26 income for purposes of an individual income tax, if an individual income tax is 27 imposed under state law. 28 (f) In this section, "qualified entity" means a sole proprietorship, partnership, 29 limited liability company, or entity that has elected to file federal returns under 26 30 U.S.C. 1361 - 1379 (Internal Revenue Code) but does not include an entity engaged in 31 the production of oil or gas from a lease or property in the state or engaged in the
01 transportation of oil or gas by pipeline in the state. 02 * Sec. 5. AS 43.20.012(c) and 43.20.012(d) are repealed. 03 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 APPLICABILITY. (a) AS 43.20.011(e), as amended by sec. 2 of this Act, applies to a 06 corporation or person engaged in the production of oil or gas from a lease or property in the 07 state, or engaged in the transportation of oil or gas by pipeline in the state, filing a return for 08 taxable year commencing after the effective date of sec. 2 of this Act. 09 (b) AS 43.20.019, added by sec. 4 of this Act, applies to a qualified entity filing a 10 return for a taxable year commencing after the effective date of sec. 4 of this Act. In this 11 section, "qualified entity" has the meaning given in AS 43.20.019. 12 * Sec. 7. This Act takes effect December 31, 2018.