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CSHB 115(FIN): "An Act bearing the short title of the 'Education Funding Act'; relating to the taxation of income of individuals, partners, shareholders in S corporations, trusts, and estates; relating to a payment against the individual income tax from the permanent fund dividend disbursement; repealing tax credits applied against the tax on individuals under the Alaska Net Income Tax Act; and providing for an effective date."

00                       CS FOR HOUSE BILL NO. 115(FIN)                                                                    
01 "An Act bearing the short title of the 'Education Funding Act'; relating to the taxation                                
02 of income of individuals, partners, shareholders in S corporations, trusts, and estates;                                
03 relating to a payment against the individual income tax from the permanent fund                                         
04 dividend disbursement; repealing tax credits applied against the tax on individuals                                     
05 under the Alaska Net Income Tax Act; 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 Education Funding Act.                                                  
10    * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to                          
11 read:                                                                                                                   
12       LEGISLATIVE INTENT. It is the intent of the legislature that, under this Act,                                     
13            (1)  income up to $14,300 for an individual, plus income from permanent fund                                 
01 dividends, will not be subject to income tax under AS 43.22;                                                            
02            (2)  income up to $28,600 for two individuals filing jointly who do not have                                 
03 dependents, plus income from permanent fund dividends, will not be subject to the income tax                            
04 under AS 43.22;                                                                                                         
05            (3)  an individual, or two individuals filing jointly, will receive an additional                            
06 $4,000 deduction for each dependent, resulting in an increase in the amounts stated in (1) and                          
07 (2) of this section of $4,000 for each dependent.                                                                       
08    * Sec. 3. AS 43.05.045(a) is amended to read:                                                                      
09            (a)  Except as provided in AS 43.22.075(i), or unless [UNLESS] an                                        
10 exemption is granted under (b) of this section, a taxpayer required to submit a return                                  
11 or report for a tax levied under this title or for any other tax administered by the                                    
12 department shall submit the return or report electronically in a format prescribed by                                   
13 the department. Failure to comply with this section may result in a civil penalty under                                 
14 AS 43.05.220(f). If a law under this title requires a report or return or a portion of a                                
15 report or return to be in writing, an electronically filed report or return satisfies this                              
16 section. A taxpayer shall submit attachments to a report or return required under this                                  
17       title electronically.                                                                                             
18    * Sec. 4. AS 43 is amended by adding a new chapter to read:                                                        
19                     Chapter 22. Individual Income Tax.                                                                
20 Sec. 43.22.010. Income tax on individuals. (a) Each calendar year or fraction                                         
21       of a calendar year, an income tax is imposed on the income of a                                                   
22                 (1)  resident;                                                                                          
23 (2)  nonresident that is derived from or connected with a source in the                                                 
24       state.                                                                                                            
25            (b) The tax under this section for an individual is determined as follows:                                   
26       If the taxable income is        Then the tax is                                                                   
27       Less than $10,300               $0                                                                                
28       $10,300 but less than $50,000   2.5 percent of the amount in                                                      
29                                          excess of $10,300                                                              
30       $50,000 but less than $100,000  $992.50 plus 4 percent of the amount                                              
31                                          in excess of $50,000                                                           
01       $100,000 but less than $200,000 $2,992.50 plus 5 percent of the                                                   
02                                          amount in excess of $100,000                                                   
03       $200,000 but less than $250,000 $7,992.50 plus 6 percent of the                                                   
04                                          amount in excess of $200,000                                                   
05       $250,000 or more                $10,992.50 plus 7 percent of the                                                  
06                                          amount in excess of $250,000.                                                  
07            (c) Except as otherwise provided in this section, the tax under this section for                             
08       two individuals who file a joint federal income tax return is determined as follows:                              
09       If the taxable income is        Then the tax is                                                                   
10       Less than $20,600               $0                                                                                
11       $20,600 but less than $100,000  2.5 percent of the amount in                                                      
12                                          excess of $20,600                                                              
13       $100,000 but less than $200,000 $1,985 plus 4 percent of the amount in                                            
14                                          excess of $100,000                                                             
15       $200,000 but less than $400,000 $5,985 plus 5 percent of the amount in                                            
16                                          excess of $200,000                                                             
17       $400,000 but less than $500,000 $15,985 plus 6 percent of the amount                                              
18                                          in excess of $400,000                                                          
19       $500,000 or more                $21,985 plus 7 percent of the amount                                              
20                                          in excess of $500,000.                                                         
21            (d)  An individual who is eligible to file a joint federal income tax return but                             
22       who files an individual federal income tax return shall determine the tax imposed by                              
23       this chapter under (b) of this section.                                                                           
24            (e)  Two resident individuals who are eligible to file a joint federal income tax                            
25       return but who do not, individually or jointly, file a federal income tax return may                              
26       elect to determine the tax imposed by this chapter either                                                         
27                 (1)  individually under (b) of this section; or                                                         
28                 (2)  jointly under (c) of this section.                                                                 
29            (f)  Two individuals who file a joint federal income tax return one or both of                               
30       whom is not a resident may elect to determine the tax imposed by this chapter either                              
31                 (1)  individually under (b) of this section; or                                                         
01 (2)  jointly under (c) of this section, as if both individuals were                                                     
02 residents; the income of the individuals filing jointly under this paragraph is not                                     
03       subject to the calculation under AS 43.22.015.                                                                    
04 Sec. 43.22.015. Calculation of tax on a nonresident individual. Except as                                             
05 otherwise provided in this chapter, the tax on a nonresident individual is the product of                               
06 the tax determined under AS 43.22.010(b) on the nonresident individual's taxable                                        
07 income computed as if the nonresident individual were a resident individual,                                            
08 multiplied by a fraction, the numerator of which is the nonresident individual's income                                 
09 taxable under AS 43.22.045 and the denominator of which is the nonresident                                              
10 individual's taxable income computed as if the nonresident individual were a resident                                   
11 individual. However, if a nonresident individual's taxable income computed as if the                                    
12 nonresident individual were a resident individual is less than the nonresident                                          
13 individual's income taxable under AS 43.22.045, the tax imposed by this chapter is on                                   
14       the nonresident individual's taxable income.                                                                      
15 Sec. 43.22.020. Tax on trusts and estates. (a) A tax is imposed for each                                              
16 taxable year or portion of a taxable year on the taxable income of a resident or                                        
17 nonresident trust or estate. Except as provided in (b) of this section, the tax under this                              
18       section for a trust or estate is determined as follows:                                                           
19       If the taxable income is        Then the tax is                                                                   
20       Less than $50,000               2.5 percent of the amount in excess of                                            
21                                          $0                                                                             
22  $50,000 but less than $100,000 $1,250 plus 4 percent of the amount in                                                  
23                                          excess of $50,000                                                              
24  $100,000 but less than $200,000 $3,250 plus 5 percent of the amount in                                                 
25                                          excess of $100,000                                                             
26  $200,000 but less than $250,000 $8,250 plus 6 percent of the amount in                                                 
27                                          excess of $200,000                                                             
28       $250,000 or more                $11,250 plus 7 percent of the amount                                              
29                                          in excess of $250,000.                                                         
30 (b) A tax of 2.5 percent is imposed on the taxable income of a resident or                                              
31 nonresident Alaska Native Settlement Trust that has elected for alternative federal tax                                 
01       treatment under 26 U.S.C. 646 (Internal Revenue Code).                                                            
02            (c) In this section, the taxable income of a nonresident trust or estate is the                              
03       income of the trust or estate that is derived from or connected with a source in the                              
04       state.                                                                                                            
05            (d)  A trust is not subject to tax under this chapter if                                                     
06                 (1)  all of the trustees of the trust are nonresidents;                                                 
07                 (2)  the entire corpus of the trust, including real, tangible, and                                      
08       intangible property, is located outside the state; and                                                            
09                 (3)  no income or gains of the trust are derived from or connected with                                 
10       a source in the state.                                                                                            
11 (e)  For purposes of (d)(1) of this section, a trustee that is a nonresident                                            
12 banking corporation at the time the banking corporation becomes a trustee is a                                          
13 nonresident trustee even if the banking corporation later becomes a resident trustee                                    
14       because it is acquired by or becomes an office or branch of a resident trustee.                                   
15 (f)  A trust that is exempt from federal income tax because of its purpose or                                           
16       activities is not subject to tax under this chapter.                                                              
17 (g)  A special needs trust or other trust established to provide solely for the                                         
18 housing, living expenses, or medical care of a disabled beneficiary is not subject to tax                               
19       under this chapter. In this subsection,                                                                           
20                 (1)  "disabled beneficiary" means an individual who has                                                 
21 (A)  a physical or mental impairment that substantially limits                                                          
22            one or more major life activities; or                                                                        
23 (B)  a condition that may require the use of a prosthesis, special                                                      
24            equipment for mobility, or a service animal;                                                                 
25                 (2)  "special needs trust" has the meaning given in AS 13.36.215(b).                                    
26 Sec. 43.22.025. Credit for income taxes imposed by other jurisdictions. (a)                                           
27 A resident individual, trust, or estate or part-year resident individual, trust, or estate of                           
28 the state is allowed a credit against the tax due under this chapter for an income tax                                  
29 that was imposed on the resident or part-year resident for the taxable year by another                                  
30 state or the political subdivision of another state on income derived from or connected                                 
31       with that state or political subdivision.                                                                         
01            (b)  A credit allowed under (a) of this section                                                              
02 (1)  for a resident individual, trust, or estate may not exceed the                                                     
03 individual's, trust's, or estate's tax due under this chapter before credits are applied,                               
04 multiplied by a ratio, the numerator of which is the portion of the individual's, trust's,                              
05 or estate's taxable income that is derived from or connected with a source in another                                   
06 state or the political subdivision of another state and the denominator of which is the                                 
07       resident individual's, trust's, or estate's taxable income;                                                       
08 (2)  for a part-year resident individual, trust, or estate may not exceed                                               
09 the individual's, trust's, or estate's tax due for the period of state residency before                                 
10 credits are applied, multiplied by a ratio, the numerator of which is the individual's,                                 
11 trust's, or estate's taxable income derived from or connected with a source in another                                  
12 state or the political subdivision of another state during the period of state residency                                
13 and the denominator of which is the part-year resident individual's, trust's, or estate's                               
14       taxable income during the period of state residency;                                                              
15 (3)  may not reduce the tax due under this chapter to less than the tax                                                 
16 that would have been due if the income derived from or connected with a source in                                       
17 another state or the political subdivision of another state and subject to taxation by the                              
18 other state or political subdivision had been excluded from the resident or part-year                                   
19 resident individual's, trust's, or estate's taxable income during the calculation of tax                                
20       under this chapter before the application of credits.                                                             
21 (c)  If the tax administration of another state or a political subdivision of                                           
22 another state determines that a taxpayer has overpaid tax, affecting the computation of                                 
23 the credit allowed under this section for any taxable year, the taxpayer shall file an                                  
24 amended return with the department not later than 90 days after the final determination                                 
25 by the state or political subdivision that the tax was overpaid. The department may                                     
26 assess a taxpayer additional tax, proportional to the amount overpaid in the other state                                
27       or political subdivision.                                                                                         
28 (d)  A taxpayer is not allowed a credit under this section for taxes paid to                                            
29 another jurisdiction if the taxpayer has or will claim a credit against the income tax                                  
30       imposed by the other jurisdiction for the tax paid or payable under this chapter.                                 
31 (e)  Income tax imposed on a partner or the shareholder of an S corporation on                                          
01 the income of the partnership or S corporation, including tax paid by the partnership or                                
02 S corporation to satisfy the tax liability of the partner or shareholder, may be included                               
03 in the calculation of a credit under this section. Tax imposed on the partnership or S                                  
04 corporation that is the direct liability of the partnership or S corporation and not that of                            
05 the partner or shareholder may not be included in the calculation of a credit under this                                
06       section.                                                                                                          
07            Sec. 43.22.030. Taxable income; general rule. (a) In this chapter, taxable                                 
08       income is the taxpayer's federal adjusted gross income for the taxable year                                       
09                 (1)  plus, if not already included in federal adjusted gross income,                                    
10 (A)  interest on obligations of another state, a political                                                              
11 subdivision of another state, the public instrumentality of another state, or the                                       
12            local authority of another state;                                                                            
13 (B)  a loss on the sale or exchange of an obligation issued by or                                                       
14            on behalf of                                                                                                 
15                           (i)  the state;                                                                               
16                           (ii)  a municipality of the state; or                                                         
17 (iii)  a public instrumentality, public authority, or public                                                            
18                 corporation created under state law;                                                                    
19 (C)  a loss from the sale or exchange of shares in a unit                                                               
20 investment trust if the loss is attributable to an obligation issued by or on                                           
21            behalf of                                                                                                    
22                           (i)  the state;                                                                               
23                           (ii)  a municipality of the state; or                                                         
24 (iii)  a public instrumentality, public authority, or public                                                            
25                 corporation created under state law;                                                                    
26 (D)  interest or dividends on obligations or securities issued by                                                       
27 the United States, or an authority, commission, or instrumentality of the United                                        
28 States, that the Internal Revenue Code exempts from federal income tax but                                              
29            does not prevent from including;                                                                             
30                      (E)  income taxes under this chapter;                                                              
31 (F)  a gain realized but not recognized under 26 U.S.C. 1031                                                            
01            (Internal Revenue Code);                                                                                     
02                      (G)  a deduction allowed in the determination of federal                                           
03            adjusted gross income that is directly or indirectly related to income that is not                           
04            taxable under this chapter; and                                                                              
05                      (H)  income of an incomplete gift nongrantor trust to which a                                      
06            taxpayer transferred property, less deductions of the trust, if                                              
07 (i)  the income and deductions of the trust would be                                                                    
08 taken into account in computing the taxpayer's federal taxable income                                                   
09 if the trust in its entirety was treated as a grantor trust under the Internal                                          
10                 Revenue Code;                                                                                           
11                           (ii)  the trust is a resident trust;                                                          
12 (iii)  the trust does not qualify as a grantor trust under 26                                                           
13                 U.S.C. 671 - 679 (Internal Revenue Code); and                                                           
14 (iv)  the grantor's transfer of assets to the trust is treated                                                          
15                 as an incomplete gift under 26 U.S.C. 2511 (Internal Revenue Code);                                     
16                 (2)  minus, if included in federal adjusted gross income,                                               
17 (A)  interest income or a dividend from an obligation that is                                                           
18            exempt from taxation by a state under federal law;                                                           
19                      (B)  a refund or credit for the overpayment of an income tax;                                      
20 (C)  an ordinary and necessary expense, including an interest                                                           
21 expense, paid or incurred during the taxable year that is directly or indirectly                                        
22 related to income exempt under the Internal Revenue Code but taxable by the                                             
23            state;                                                                                                       
24 (D)  a gain recognized under 26 U.S.C. 1031 (Internal Revenue                                                           
25 Code) that was included in federal adjusted gross income under (1) of this                                              
26            subsection;                                                                                                  
27                      (E) income exempt under 4 U.S.C. 114;                                                              
28 (F) compensation prohibited from state taxation by 50 U.S.C.                                                            
29            3901 - 4043 (Servicemembers Civil Relief Act);                                                               
30 (G)  a gain from the sale or exchange of an obligation issued by                                                        
31            or on behalf of                                                                                              
01                           (i)  the state;                                                                               
02                           (ii)  a municipality of the state; or                                                         
03                           (iii)  a public instrumentality, public authority, or public                                  
04                 corporation created under state law; and                                                                
05                      (H)  a permanent fund dividend received under AS 43.23;                                            
06 (I)  $4,000 for each exemption claimed on the taxpayer's federal                                                        
07 income tax return for the individual, an individual filing jointly with the                                             
08 individual, or a dependent of the individual; a reduction under this                                                    
09            subparagraph may not                                                                                         
10                           (i)  be claimed by a trust;                                                                   
11 (ii)  reduce a taxpayer's tax liability under this chapter to                                                           
12                 below zero.                                                                                             
13            (b)  When calculating taxable income, a taxpayer                                                             
14 (1)  may not carry back a net operating loss under 26 U.S.C.                                                            
15       172(b)(1)(A)(i) (Internal Revenue Code);                                                                          
16 (2)  may carry over a net operating loss under 26 U.S.C.                                                                
17 172(b)(1)(A)(ii) (Internal Revenue Code), except that a loss may not be carried over                                    
18 for more than five years; for a taxpayer subject to AS 43.19 (Multistate Tax Compact),                                  
19 the amount of a net operating loss allowed to be carried over is limited to the amount                                  
20 apportioned to the state in the taxable year in which the loss was generated under                                      
21       AS 43.19 (Multistate Tax Compact);                                                                                
22 (3)  shall include the modifications required by AS 43.20.144(b)(2),                                                    
23 concerning intangible drilling and development costs, AS 43.20.144(b)(3), concerning                                    
24       percentage depletion, and AS 43.20.144(b)(3), concerning depreciation.                                            
25 Sec. 43.22.035. Taxable income from partnerships and S corporations. (a)                                              
26 A partner or shareholder shall make an adjustment described in AS 43.22.030 to an                                       
27 item of income, gain, loss, or deduction from a partnership or S corporation in                                         
28 proportion to a partner's distributive share of a partnership or a shareholder's pro rata                               
29 share of an S corporation. If a partner's distributive or a shareholder's pro rata share of                             
30 an adjustment is not required to be accounted for separately for federal income tax                                     
31 purposes, the partner's or shareholder's share of the adjustment must be determined in                                  
01 proportion to the partner's or shareholder's share of partnership or S corporation                                      
02       income or losses for federal income tax purposes.                                                                 
03 (b)  In determining taxable income, a partner or shareholder shall treat an item                                        
04 of income, gain, loss, or deduction from a partnership or S corporation as if it has the                                
05 same character as it does for federal income tax purposes. If an item of income, gain,                                  
06 loss, or deduction from a partnership or S corporation is not accounted for separately                                  
07 for federal income tax purposes, a partner or shareholder shall treat it as if the item of                              
08 income, gain, loss, or deduction was realized directly from the source from which it                                    
09 was realized by the partnership or S corporation or incurred in the same manner in                                      
10       which it was incurred by the partnership or S corporation.                                                        
11 (c)  If the principal purpose of a special allocation of an item of partnership                                         
12 income, gain, loss, or deduction is the avoidance or evasion of tax under this chapter,                                 
13 the partner's distributive share is determined as if the partnership agreement did not                                  
14 contain the special allocation. In this subsection, "special allocation" means an                                       
15 allocation of the distributive share of an item of partnership income, gain, loss,                                      
16 expense, or deduction made under the partnership agreement to a partner in a                                            
17       proportion different than the partner's partnership interest.                                                     
18 Sec. 43.22.040. Taxable income of an estate, trust, or beneficiary. (a) The                                           
19 taxable income of an estate or trust is determined as if the estate or trust were an                                    
20 individual and is subject to adjustments under AS 43.22.030 and reduction under                                         
21 section 26 U.S.C. 661 (Internal Revenue Code). The department may establish in                                          
22 regulation the method for determining the taxable income of an estate or trust,                                         
23 including the manner in which the adjustments under AS 43.22.030 will be allocated                                      
24 between the estate's or trust's taxable share and a beneficiary's distributive share.                                   
25 Unless otherwise provided by the department in regulation, an allocation must be                                        
26 made in proportion to the estate's or trust's taxable share or the beneficiary's                                        
27       distributive share of the trust or estate for federal income tax purposes.                                        
28 (b)  If the principal purpose for a provision of an instrument directing the                                            
29 distribution of an item of income, gain, loss, or deduction of an estate or trust is the                                
30 avoidance or evasion of tax under this chapter, the taxable income of the estate, trust,                                
31       or beneficiary shall be determined as if the instrument did not contain that provision.                           
01 Sec. 43.22.045. Nonresident individuals; income derived from or                                                       
02 connected with a source in the state. (a) The taxable income of a nonresident                                         
03 individual is the nonresident individual's income that is derived from or connected                                     
04 with a source in the state, as adjusted under AS 43.22.030. Taxable income of a                                         
05       nonresident individual includes                                                                                   
06 (1)  a partner's distributive share of an item of income, gain, loss, or                                                
07       deduction of a partnership as determined under AS 43.22.050;                                                      
08 (2)  a shareholder's pro rata share of an S corporation's income or loss,                                               
09 increased by the reductions for taxes described in 26 U.S.C. 1366(f)(2) and (3)                                         
10       (Internal Revenue Code), as determined under AS 43.22.050;                                                        
11 (3)  income or loss of a business conducted by a nonresident individual,                                                
12 nonresident estate, or nonresident trust, other than income or loss from a partnership or                               
13       S corporation, as determined under AS 43.22.050;                                                                  
14 (4)  the share of estate or trust income, gain, loss, or deduction                                                      
15       determined under AS 43.22.055;                                                                                    
16 (5)  an item of income, gain, loss, or deduction from the sale or                                                       
17 assignment of a beneficial interest, or other disposition of an interest in tangible                                    
18 personal property in the state, or rental income or loss from the use of tangible                                       
19 personal property in the state; if the item of income, gain, loss, or deduction is from                                 
20 tangible personal property used or employed both in and outside the state, the amount                                   
21 included in taxable income is determined by multiplying the item of income, gain,                                       
22 loss, or deduction by a fraction, the denominator of which is the total number of days                                  
23 during the taxable year that the property was used or employed to earn, accrue, or                                      
24 incur the item of income, gain, loss, or deduction and the numerator of which is the                                    
25 number of the days during which the property was used or employed to earn, accrue,                                      
26       or incur the item of income, gain, loss, or deduction in the state;                                               
27 (6)  an item of income, gain, loss, or deduction from the sale or                                                       
28 assignment of a beneficial interest, or other disposition of an interest in real property                               
29 in the state, or rental income or loss from the use of real property in the state,                                      
30 including the percentage of ordinary and capital gains received from a real estate                                      
31 investment trust, as defined in 26 U.S.C. 856 (Internal Revenue Code), that is                                          
01 attributable to rents from or sale or other disposition of real property located in the                                 
02 state; in this paragraph, an item of income, gain, loss, or deduction from the sale,                                    
03 assignment of a beneficial interest, or other disposition of real property in the state                                 
04 includes an item of income, gain, loss, or deduction derived from the sale or                                           
05 assignment of a beneficial interest in a partnership, S corporation, nonpublicly traded                                 
06 C corporation with 100 or fewer shareholders, estate, or trust, if the entity owns real                                 
07 property in the state that has a fair market value equal to or exceeding 50 percent of all                              
08 assets of the entity on the date of sale, assignment, or other disposition of the                                       
09       taxpayer's interest in the entity; for purposes of this paragraph,                                                
10 (A)  only assets owned for at least two years before the date of                                                        
11 the sale, assignment, or other disposition of an interest in the entity shall be                                        
12 used to determine the fair market value of all of the assets of the entity on the                                       
13            date of sale, assignment, or other disposition; and                                                          
14 (B)  the amount of an item of income, gain, loss, or deduction                                                          
15 derived from or connected with a source in the state from the sale, assignment,                                         
16 or other disposition of an interest in an entity that is subject to the provisions of                                   
17 this paragraph is the amount recognized for federal income tax purposes                                                 
18 related to the sale, assignment, or disposition, multiplied by a fraction, the                                          
19 numerator of which is the fair market value of the real property located in the                                         
20 state on the date of sale, assignment, or disposition and the denominator of                                            
21 which is the fair market value of all of the assets of the entity on the date of the                                    
22            sale, assignment, or disposition;                                                                            
23 (7)  compensation, salary, or wages for personal services rendered or                                                   
24 performed in the state that are derived from a business, trade, profession, occupation,                                 
25 or employment carried on in the state; for purposes of this paragraph, personal                                         
26       services                                                                                                          
27 (A)  except as otherwise provided in (B) of this paragraph,                                                             
28            include services performed                                                                                   
29 (i)  in connection with presenting or receiving                                                                         
30                 employment-related training or education in the state;                                                  
31 (ii)  in connection with a site inspection, review,                                                                     
01                 analysis, or management or any other supervision of a facility located                                  
02                 in the state;                                                                                           
03                           (iii)  in connection with research and development at a                                       
04                 facility located in the state or in connection with the installation of new                             
05                 or upgraded equipment or systems at that facility;                                                      
06                           (iv)  as part of a project team working on the attraction                                     
07                 or implementation of new investment in a facility located or planned to                                 
08                 be located in the state;                                                                                
09                           (v)  in connection with fishing, farming, or agriculture in                                   
10                 the state; or                                                                                           
11                           (vi)  for the federal government;                                                             
12 (B)  do not include services that are causal, isolated,                                                                 
13            inconsequential, or ancillary to out-of-state services;                                                      
14 (8)  income derived from a business, trade, profession, occupation, or                                                  
15       employment carried on in the state, including income                                                              
16 (A)  received under a covenant not to compete, a severance                                                              
17 agreement, a termination agreement, or unemployment compensation                                                        
18 insurance attributable to a business, trade, profession, occupation, or                                                 
19            employment previously carried on in the state, regardless of when received;                                  
20 (B)  derived from a business, trade, profession, occupation, or                                                         
21 employment carried on in the state by an individual who maintains or operates                                           
22 an office, shop, store, warehouse, boat, plane, factory, agency, or other place                                         
23 where the individual's affairs are systematically and regularly carried on,                                             
24 regardless of other transactions carried on outside the state; this subparagraph                                        
25 does not include income from an activity of an individual whose presence in                                             
26 the state is casual, isolated, inconsequential, or ancillary to out-of-state                                            
27 activities, except that, if a business, trade, profession, occupation, or                                               
28 employment is carried on partly in and partly outside the state, other than for                                         
29 the rendering of purely personal services by the individual, the taxable income                                         
30 derived from or connected with a source in the state is determined under                                                
31            AS 43.19 (Multistate Tax Compact) and AS 43.22.030;                                                          
01 (9)  income from the management or investment function or activities                                                    
02       conducted in the state from intangible property;                                                                  
03 (10)  dividends, interest, payments received under an annuity, gains, or                                                
04 other intangible income received from, or attributable to, intangible personal property,                                
05 including stock, bonds, notes, bank deposits, or annuities, if the intangible personal                                  
06 property is employed in a business, trade, profession, occupation, or employment                                        
07       carried on in the state;                                                                                          
08 (11)  a gain derived by a nonresident individual from a statutory stock                                                 
09 option, restricted stock, nonstatutory stock option, or stock appreciation right, who, at                               
10 the time the gain is received, performs services in the state for or is employed in the                                 
11 state by the corporation granting the option, stock, or right, as determined in                                         
12       regulations adopted by the department;                                                                            
13 (12)  income from nonqualified deferred compensation plans                                                              
14 attributable to services performed in the state, including compensation included in                                     
15       federal gross income under 26 U.S.C. 457A (Internal Revenue Code);                                                
16 (13)  proceeds from a gambling activity conducted in the state or lottery                                               
17 tickets purchased in the state, including payments received from a third party for the                                  
18 transfer of the rights to future proceeds related to a gambling activity in the state or                                
19       lottery tickets purchased in the state;                                                                           
20 (14)  for an S corporation that terminates its taxable status in the state                                              
21 during the tax year, income or a gain recognized on the receipt of payments from an                                     
22 installment sale contract entered into at the time the S corporation was subject to tax in                              
23       the state, allocated consistent with the applicable methods and rules under this chapter;                         
24 (15)  royalties or other compensation received for the use of a patent,                                                 
25 copyright, secret process or formula, good will, mark, trade brand, franchise, or other                                 
26       property having a taxable or business situs in the state;                                                         
27 (16)  royalties or other compensation received for the use of a patent if                                               
28 the patent is employed in production, fabrication, manufacturing, or other process in                                   
29       the state;                                                                                                        
30 (17)  income or a gain from the disposition of an asset if the                                                          
31 acquisition, management, or disposition of the asset constitutes an integral part of the                                
01       nonresident individual's regular trade or business operation;                                                     
02 (18)  income from the transmission, broadcast, distribution, or                                                         
03 dissemination of a service directly or indirectly attributable to the performance in the                                
04 state of an athlete, entertainer, singer, musician, dancer, comedian, magician,                                         
05       performing artist, actor, actress, or similar person, including syndication fees.                                 
06 (b)  A deduction included in taxable income that results from a capital loss,                                           
07 passive activity loss, or net operating loss must be based solely on income, a gain, a                                  
08 loss, or a deduction derived from or connected with a source in the state. A                                            
09 nonresident individual shall treat a deduction under this subsection in the same manner                                 
10 as the corresponding federal deduction, unless the department requires otherwise in                                     
11       regulation.                                                                                                       
12 Sec. 43.22.050. Business conducted by a nonresident individual, trust, or                                             
13 estate; income derived from or connected with a source in the state. (a) The                                          
14 department shall adopt regulations governing the amount of an item of income, gain,                                     
15 loss, or deduction from a business conducted by a nonresident individual, trust, or                                     
16 estate that is derived from or connected with a source in the state for purposes of                                     
17 determining taxable income. Regulations adopted under this subsection must be                                           
18 consistent with AS 43.19 (Multistate Tax Compact) and AS 43.22.045 and include                                          
19       adjustments under AS 43.22.030.                                                                                   
20 (b)  The department shall adopt regulations governing the amount of an item of                                          
21 income, gain, loss, or deduction that is derived from or connected with a source in the                                 
22       state and is included in a nonresident                                                                            
23 (1) partner's distributive share for purposes of taxation under this                                                    
24       chapter;                                                                                                          
25 (2) shareholder's pro-rata share of an S corporation for purposes of                                                    
26       taxation under this chapter.                                                                                      
27 (c)  The department may by regulation require a taxpayer to allocate rather                                             
28       than apportion an item of income, gain, loss, or deduction under this section.                                    
29 Sec. 43.22.055. Nonresident trust, estate, or beneficiary; income derived                                             
30 from or connected with a source in the state. (a) The department shall adopt                                          
31 regulations governing whether an item of income, gain, loss, or deduction of a                                          
01 nonresident estate or nonresident trust is included in taxable income derived from or                                   
02 connected with a source in the state. Regulations adopted under this subsection must                                    
03       be consistent with the remainder of this section and AS 43.22.045.                                                
04 (b)  A nonresident beneficiary shall include in taxable income derived from or                                          
05 connected with a source in the state a distribution from an estate or trust as if the                                   
06 nonresident beneficiary earned or incurred the item of income, gain, loss, or deduction                                 
07 attributable to the distribution directly from the source. For purposes of this                                         
08 subsection, the department may establish one or more methods for a nonresident                                          
09 beneficiary to determine whether an item of income, gain, loss, or deduction is                                         
10 attributable to a distribution. The department shall consistently apply a method from                                   
11 year to year and apply the same method to other nonresident beneficiaries of the same                                   
12 trust or estate. Nothing in this subsection requires the department to give effect to a                                 
13 provision of an instrument creating an estate or trust if the department reasonably                                     
14 believes that the principal purpose of the provision is to avoid or evade the tax                                       
15       imposed under this chapter.                                                                                       
16 Sec. 43.22.060. Part-year resident individual, trust, or estate; residency                                            
17 income; income derived from or connected with a source in the state. (a) Except as                                    
18 otherwise provided in this section, the taxable income of a part-year resident                                          
19       individual, trust, or estate is the sum of                                                                        
20 (1)  the taxable income of the part-year resident individual, trust, or                                                 
21       estate during the period of residency; and                                                                        
22 (2)  the taxable income derived from or connected with a source in the                                                  
23       state for the period of nonresidency of the individual, trust, or estate.                                         
24 (b)  The department shall adopt regulations to determine the taxable income of                                          
25 a part-year resident taxpayer who is granted a statutory stock option, restricted stock,                                
26 nonstatutory stock option, or a stock appreciation right and who, during the grant                                      
27 period, performs services in the state for, or is employed in the state by, the                                         
28       corporation granting the option, stock, or right.                                                                 
29 Sec. 43.22.065. Personal service and S corporations formed or used to                                                 
30 avoid or evade income tax. (a) The department may allocate all income, deductions,                                    
31 credits, exclusions, and other allowances between a personal service or S corporation                                   
01       and its employee-owners if the                                                                                    
02                 (1)  personal service or S corporation performs substantially all of its                                
03       services for or on behalf of another corporation, partnership, or other entity and the                            
04       effect is the avoidance or evasion of income tax; and                                                             
05                 (2)  allocation is necessary to reflect the source and amount of the                                    
06       income, regardless of whether the corporation is otherwise taxable.                                               
07            (b)  For purposes of this section, avoidance or evasion of income tax occurs                                 
08       when a personal service or S corporation is used to                                                               
09                 (1)  reduce the taxable income of a resident or the taxable income of a                                 
10       nonresident derived from or connected with a source in the state; or                                              
11 (2)  secure the benefit of an expense, deduction, credit, exclusion, or                                                 
12 other allowance for any employee-owner that would not otherwise apply under this                                        
13       chapter.                                                                                                          
14 (c)  The constructive ownership of stock rules under 26 U.S.C. 318 (Internal                                            
15 Revenue Code) apply to this section, except that "5 percent" shall be substituted for                                   
16       "50 percent" in 26 U.S.C. 318(a)(2)(C) (Internal Revenue Code).                                                   
17 (d)  In this section, all persons specified in 26 U.S.C. 267(b) (Internal Revenue                                       
18       Code) shall be treated as one entity.                                                                             
19            (e)  In this section,                                                                                        
20 (1)  "employee-owner" means any employee who owns, on any day                                                           
21 during the taxable year, more than 10 percent of the outstanding stock of the personal                                  
22       service or S corporation;                                                                                         
23 (2)  "personal service" means a corporation whose principal activity is                                                 
24 the performance of personal services that are substantially performed by the                                            
25       employee-owners of the corporation.                                                                             
26 Sec. 43.22.070. Determination of taxable year and method of accounting.                                               
27       (a) For purposes of the tax imposed under this chapter, a taxpayer's                                              
28 (1)  taxable year is the same as the taxpayer's taxable year for federal                                                
29       income tax purposes; and                                                                                          
30 (2)  method of accounting is the same as the taxpayer's method of                                                       
31       accounting for federal income tax purposes.                                                                       
01            (b)  The department shall adopt regulations to determine the taxable income of                               
02       a taxpayer whose method of accounting changes during a taxable year or between                                    
03       taxable years.                                                                                                    
04            Sec. 43.22.075. Returns and payment of taxes. (a) A taxpayer shall file with                               
05       the department a return setting out                                                                               
06                 (1)  the amount of tax due under this chapter; and                                                      
07                 (2)  other information necessary to carry out this chapter, as required by                              
08       the department in regulation.                                                                                     
09            (b)  The department shall determine and publish the federal adjusted gross                                   
10 income below which an individual is not required to file a tax return under this                                        
11       section.                                                                                                          
12 (c)  A person required to file a return under this chapter shall file the return on                                     
13 a form or in a format prescribed by the department. The return is due to the department                                 
14 at the same time and in the same manner, including extensions, as the taxpayer's                                        
15 federal income tax return to the United States Internal Revenue Service. A return filed                                 
16       under this chapter must be made under oath and on penalty of perjury.                                             
17 (d)  The total amount of tax imposed by this chapter is due and payable to the                                          
18 department at the same time and in the same manner as the federal individual income                                     
19       tax payable to the United States Internal Revenue Service.                                                        
20 (e)  A taxpayer, upon request by the department, shall furnish to the                                                   
21 department a true and correct copy of a return that the taxpayer has filed with the                                     
22       United States Internal Revenue Service.                                                                           
23 (f)  A taxpayer shall notify the department in writing of an alteration in, or                                          
24 modification of, the taxpayer's federal income tax return and of a recomputation of tax                                 
25 or determination of deficiency, whether with or without assessment. A full statement                                    
26 of the facts must accompany the notice. A taxpayer shall file the notice not later than                                 
27 60 days after the final determination of the alteration, modification, recomputation, or                                
28 deficiency and shall pay any additional tax due under this chapter at that time. In this                                
29 subsection, "final determination" means the time that an amended federal return is                                      
30 filed, a notice of deficiency or an assessment is mailed to the taxpayer by the Internal                                
31       Revenue Service, and the taxpayer has exhausted rights of appeal under federal law.                               
01 (g)  The department may credit or refund overpayments of taxes, taxes                                                   
02 erroneously or illegally assessed or collected, penalties collected without authority,                                  
03 and taxes that are found unjustly assessed or excessive in amount, or otherwise                                         
04 wrongfully collected. The department shall, in regulation, set limitations, specify the                                 
05 manner in which claims for credits or refunds are made, and give notice of allowance                                    
06 or disallowance. When a refund is allowed to a taxpayer, the refund may be paid out                                     
07       of the general fund on a warrant issued under a voucher approved by the department.                               
08 (h)  A partnership, S corporation, estate, or trust shall provide to its partners,                                      
09 beneficiaries, or shareholders, and to the department, all information necessary for its                                
10       partners, beneficiaries, and shareholders to comply with this chapter.                                            
11 (i)  An individual is not required to file a return under this section                                                  
12 electronically, but a person employed to prepare and file income tax returns shall file                                 
13       the returns for those individuals electronically.                                                                 
14 (j)  The department shall adopt regulations that set out requirements for a                                             
15 spouse, upon request, to be partially or fully relieved from joint and several liability                                
16       resulting from the joint filing of a tax return.                                                                  
17 Sec. 43.22.080. Tax withholding on wages of individuals. (a) Every                                                    
18       employer making payment of wages or salaries                                                                      
19 (1)  shall deduct and withhold an amount of tax computed in a manner                                                    
20 to approximate the amount of tax due on those wages and salaries under this chapter                                     
21       for that taxable year;                                                                                            
22 (2)  shall remit the tax withheld to the department accompanied by a                                                    
23 return on a form prescribed by the department at the times required by the department                                   
24       by regulation;                                                                                                    
25 (3)  is liable for the payment of the tax required to be deducted and                                                   
26 withheld under this section but is not liable to any individual for the amount of the                                   
27       payment; and                                                                                                      
28 (4)  shall furnish to the employee on or before January 31 of the                                                       
29 succeeding year, or within 30 days after a request by the employee after the                                            
30 employee's or individual's termination if the 30-day period ends before January 31, a                                   
31       written statement on a form prescribed by the department showing                                                  
01                      (A)  the name and taxpayer identification number of the                                            
02            employer;                                                                                                    
03                      (B)  the name and social security number of the employee;                                          
04                      (C)  the total amount of wages and salary for the taxable year;                                    
05            and                                                                                                          
06                      (D)  the total amount deducted and withheld as tax under this                                      
07            chapter for the taxable year.                                                                                
08            (b)  The department shall publish the rate of withholding required by this                                   
09       section.                                                                                                          
10 Sec. 43.22.085. Withholding on nonresident partners; composite returns.                                               
11 (a) Unless otherwise provided by this section, a partnership that is required to file an                                
12 annual information return under subchapter K of the Internal Revenue Code (26                                           
13 U.S.C. 701 - 777) shall file a partnership return as prescribed by the department and                                   
14 shall report any items of income, gain, loss, or deduction that are derived from or                                     
15       connected with a source in the state, as determined under this chapter.                                           
16 (b)  A partnership that is required to file a return under (a) of this section shall                                    
17 withhold income tax from a nonresident partner's distributive share of the partnership's                                
18 items of income, gain, loss, or deduction derived from or connected with a source in                                    
19 the state at the highest marginal income tax rate applicable to individuals for the                                     
20       taxable year.                                                                                                     
21            (c)  Withholding under this section is not required by a partnership that                                    
22 (1)  is a publicly traded partnership, as defined in 26 U.S.C. 7704(b)                                                  
23       (Internal Revenue Code); and                                                                                      
24 (2)  files with the department an annual information return reporting the                                               
25 name, address, taxpayer identification number, and other information requested by the                                   
26 department concerning each unitholder whose distributive share of partnership                                           
27       income, regardless of source, is more than $1,000.                                                                
28 (d)  The department shall adopt regulations that allow a partnership subject to                                         
29       withholding under this section to file a composite return.                                                        
30 Sec. 43.22.090. Permanent fund tax payment. The department shall adopt                                                
31 regulations establishing procedures for an individual eligible for a dividend under                                     
01 AS 43.23.005 to direct the department to hold all or a part of the amount of the                                        
02 dividend to pay the tax due under this chapter. The amount held under this section                                      
03 may not exceed the dividend amount after contributions, garnishments, levies, fees,                                     
04 attachments, assignments, or other reductions or donations allowed under AS 43.23.                                      
05 The department shall apply the amount held under this section to tax owed in the                                        
06 taxable year in which the taxpayer applies for the dividend. The department shall                                       
07 refund the amount of the dividend not applied against taxes under this section to the                                   
08       individual who appears on the application for the dividend.                                                     
09 Sec. 43.22.095. Administration. (a) The department shall adopt necessary                                              
10 regulations and forms to implement and interpret this chapter, including regulations                                    
11 and forms for the electronic filing and payment of tax due under this chapter. Federal                                  
12 regulations issued under the Internal Revenue Code shall be considered persuasive                                       
13 authority in interpreting any provision of the Internal Revenue Code on which the tax                                   
14 imposed by this chapter relies, whether or not a federal regulation has been                                            
15       specifically incorporated into a department regulation, unless the federal regulation                             
16                 (1)  conflicts with a provision of this chapter;                                                        
17                 (2)  conflicts with a regulation adopted by the department; or                                          
18                 (3)  is inconsistent with the purposes of this chapter.                                                 
19 (b)  A transaction or payment between related parties must have economic                                                
20 substance, must serve a bona fide business purpose, and must not have occurred for                                      
21 the primary purpose of lowering the tax due under this chapter. The department, upon                                    
22 review or audit of a taxpayer's return, may determine whether there is sufficient                                       
23 documentation or whether a transaction or payment meets the requirements of this                                        
24 subsection. If the department determines that the documentation or the transaction or                                   
25 payment fail to meet the requirements of this subsection, the department may adjust                                     
26 the amount of a payment or transaction, disregard the payment or transaction, or make                                   
27 another adjustment necessary for determining the tax under this chapter. If a payment                                   
28 in an amount greater than $500,000 is made, or is required to be made, from one party                                   
29 to a related party, the parties shall submit documentation substantiating that the                                      
30 amount of the payment is consistent with 26 U.S.C. 482 (Internal Revenue Code).                                         
31 Payments subject to this subsection include payments for interest, royalties,                                           
01 management fees, services, inventory, tangible personal property, intangible property,                                  
02       and real property.                                                                                                
03 (c)  A tax deficiency assessed by the department under this section is assumed                                          
04 to be correct, and a taxpayer has the burden of proving that the tax deficiency is                                      
05       erroneous.                                                                                                        
06 (d)  The department shall adjust the income bracket amounts in                                                          
07 AS 43.22.010(b) and (c) and the amount of the exemption under AS 43.22.030(a)(2)(I)                                     
08 biennially for inflation from calendar year 2018 using the Consumer Price Index for                                     
09 all urban consumers for Anchorage prepared by the Bureau of Labor Statistics, United                                    
10 States Department of Labor. The department shall round amounts under this                                               
11       subsection to the nearest $100 and publish the adjusted amounts.                                                  
12 (e)  The tax collected by the department under this chapter shall be deposited                                          
13 into the general fund and accounted for separately. The legislature may appropriate the                                 
14 estimated amounts separately accounted for under this subsection into the public                                        
15 education fund established in AS 14.17.300. Nothing in this subsection creates a                                        
16       dedicated fund.                                                                                                   
17 Sec. 43.22.100. References to Internal Revenue Code. (a) Unless the                                                   
18 provision is inconsistent with this chapter or a regulation adopted under this chapter,                                 
19 the provisions of the Internal Revenue Code as now in effect or hereafter amended that                                  
20 are mentioned in this chapter are incorporated in this chapter by reference and have                                    
21       effect as though fully set out in this chapter.                                                                   
22  (b)  Sections 26 U.S.C. 6654, 6662, 6664, 6694, 6695, 6700 - 6702, 6707,                                               
23 6713, 7201, 7202, 7206, 7207, 7216, 7407, and 7408 (Internal Revenue Code), as                                          
24 those sections read on January 1, 2017, are adopted by reference as a part of this                                      
25       chapter.                                                                                                          
26 (c)  When provisions of the Internal Revenue Code incorporated by reference                                             
27 as provided in (a) and (b) of this section refer to rules and regulations adopted by the                                
28 United States Commissioner of Internal Revenue, or hereafter adopted, they are                                          
29 regarded as regulations adopted by the department under and in accordance with the                                      
30 provisions of this chapter, unless and until the department adopts specific regulations                                 
31       in their place conformable with this chapter.                                                                     
01 Sec. 43.22.110. Information released to a banking institution.                                                      
02 Notwithstanding AS 43.05.230, information on an individual income tax return may                                        
03 be released to a banking institution to verify the direct deposit of an income tax refund                               
04       or correct an error in that deposit.                                                                              
05            Sec. 43.22.150. Definitions. In this chapter,                                                              
06 (1)  "domicile" means an individual's true, fixed, principal, and                                                       
07 permanent home, to which the individual intends to return even though currently                                         
08 living elsewhere; if an individual has two or more homes, "domicile" means the one                                      
09 that the individual regards and uses as the individual's more permanent home; once                                      
10 established, a domicile remains as such until an individual demonstrates a real change                                  
11       of intent and moves to a new domicile; indications of domicile include the                                        
12                      (A)  location of the place of employment of the individual;                                        
13                      (B)  location of real property owned by the individual;                                            
14 (C)  registration and physical location of motor vehicles, planes,                                                      
15            boats, and snow machines owned by the individual;                                                            
16 (D)  location of a bank account or active checking account of                                                           
17            the individual;                                                                                              
18                      (E)  address where the individual receives mail;                                                   
19 (F)  location of a school where the individual or a member of                                                           
20            the individual's immediate family                                                                            
21                           (i)  attends; or                                                                              
22                           (ii)  receives resident tuition;                                                              
23 (G)  location of an organization of which the individual is a                                                           
24            member;                                                                                                      
25                      (H)  location of a parent, child, grandchild, or great grandchild;                                 
26 (I)  location of dental and medical personnel that provide                                                              
27            services to the individual on a regular or consistent basis;                                                 
28 (J)  filing of a prior year tax return by the individual as a                                                           
29            resident or nonresident;                                                                                     
30                      (K)  location where an individual is registered to vote;                                           
31 (L)  location where an individual holds a resident fishing,                                                             
01            hunting, or trapping license;                                                                                
02                 (2)  "federal adjusted gross income" has the meaning given to "adjusted                                 
03       gross income" in 26 U.S.C. 62;                                                                                    
04                 (3)  "fiduciary" means a guardian, trustee, executor, administrator,                                    
05       receiver, conservator, or a person, whether individual or corporate, acting in a similar                          
06       position of special confidence toward another;                                                                    
07                 (4)  "Internal Revenue Code" means the Internal Revenue Code of 1986                                    
08       (26 U.S.C. 1 et seq.), as amended, and regulations issued thereunder, if the regulations                          
09       are consistent with this chapter;                                                                                 
10 (5)  "irrevocable trust" means a trust or portion of a trust that is not                                                
11 subject to a power to revest title in a person whose property constitutes the trust or a                                
12       portion of the trust;                                                                                             
13 (6)  "nonresident estate" means an estate other than a resident estate or                                               
14       part-year resident estate;                                                                                        
15 (7)  "nonresident individual" means an individual who is not a resident                                                 
16       of the state for any portion of the taxable year;                                                                 
17 (8)  "nonresident S corporation" means an S corporation whose place of                                                  
18       management and control is outside the state;                                                                      
19 (9)  "nonresident trust" means a trust other than a resident trust or a                                                 
20       part-year resident trust;                                                                                         
21 (10)  "partner" means a partner as defined in 26 U.S.C. 7701(a)                                                         
22 (Internal Revenue Code) and includes a member of a limited liability company or                                         
23       similar entity that is treated as a partnership for federal income tax purposes;                                  
24 (11)  "partnership" means an entity as defined in 26 U.S.C. 7701(a)                                                     
25 (Internal Revenue Code) and includes a limited liability company and a similar entity                                   
26       treated as a partnership for federal income tax purposes;                                                         
27 (12)  "part-year resident estate" means an estate that is a resident of the                                             
28       state for a portion of and not the entire taxable year;                                                           
29 (13)  "part-year resident individual" means an individual who is a                                                      
30       resident of the state for a portion of and not the entire taxable year;                                           
31 (14)  "part-year resident trust" means a trust that is a resident of the                                                
01       state for a portion of and not the entire taxable year;                                                           
02                 (15)  "related parties" means any parties that satisfy the definition of a                              
03       related party in 26 U.S.C. 144, 147, or 267 (Internal Revenue Code);                                              
04                 (16)  "resident estate" means the estate of a                                                           
05                      (A)  decedent who at the time of death was a resident of the                                       
06 state, regardless of the residence of the fiduciary or beneficiary, if the                                              
07 disposition or administration of the estate is, or will be, subject to state law; or                                    
08 (B)  person who, at the time of commencement of a bankruptcy                                                            
09 proceeding under Title 11 of the United States Code, was a resident of the                                              
10            state;                                                                                                       
11                 (17)  "resident individual" means an individual who                                                     
12                      (A)  receives a permanent fund dividend under AS 43.23.005;                                        
13 (B)  receives a tax benefit available only to an individual                                                             
14            domiciled in the state; or                                                                                   
15 (C)  is domiciled in the state for the entire taxable year unless                                                       
16 the individual maintains a permanent place of abode outside the state and                                               
17 spends, in the aggregate, not more than 30 days during the taxable year in the                                          
18            state;                                                                                                       
19 (18)  "resident S corporation" means an S corporation whose place of                                                    
20       management and control is in the state;                                                                           
21                 (19)  "resident trust" means                                                                            
22 (A)  a trust, or a portion of a trust, consisting of property                                                           
23 transferred by will of a decedent who at the time of death was a resident of the                                        
24 state if the disposition or administration of the property is, or will be, subject to                                   
25            state law; or                                                                                                
26 (B)  a trust consisting of the property of a person who was a                                                           
27 resident at the time the property was transferred to the trust and, at the time of                                      
28            the transfer, the trust was                                                                                  
29                           (i)  an irrevocable trust;                                                                    
30 (ii)  a revocable trust and the trust has not later become                                                              
31                 irrevocable;                                                                                            
01                           (iii)  a revocable trust and later became irrevocable at a                                    
02                 time the person transferring property to the trust was a resident;                                      
03                 (20)  "revocable trust" means a trust or portion of a trust that is subject                             
04       to a power, exercisable immediately or at a future time, to revest title in a person                              
05       whose property constitutes the trust or portion of the trust;                                                     
06                 (21)  "S corporation" means a corporation that has elected to file a                                    
07       federal income tax return under 26 U.S.C. 1361 - 1379 (Internal Revenue Code);                                    
08                 (22)  "taxable income" means income taxable under this chapter;                                         
09                 (23)  "taxable year" means the calendar year or a fiscal year ending                                    
10       during the calendar year;                                                                                         
11 (24)  "taxpayer" means an individual, trust, or estate subject to a tax                                                 
12       imposed by this chapter.                                                                                          
13    * Sec. 5. AS 43.23 is amended by adding a new section to read:                                                     
14 Sec. 43.23.092. Permanent fund dividend individual income tax payment.                                                
15 In accordance with AS 43.22.090, the department shall prepare the Alaska permanent                                      
16 fund dividend application to allow an applicant to direct the department to hold all or                                 
17 part of the amount of the individual's permanent fund dividend for application against                                  
18       the individual income tax imposed under AS 43.22.                                                                 
19    * Sec. 6. AS 43.05.085; AS 43.20.012(b), and 43.20.013 are repealed January 1, 2019.                               
20    * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to                          
21 read:                                                                                                                   
22 APPLICABILITY. AS 43.22, added by sec. 4 of this Act, applies to income received                                        
23 on or after the effective date of sec. 4 of this Act.                                                                   
24    * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to                          
25 read:                                                                                                                   
26 TRANSITION: REGULATIONS. The Department of Revenue may adopt regulations                                                
27 necessary to implement this Act. The regulations take effect under AS 44.62 (Administrative                             
28 Procedure Act), but not before the effective date of the law implemented by the regulation.                             
29    * Sec. 9. Section 8 of this Act takes effect immediately under AS 01.10.070(c).                                    
30    * Sec. 10. Except as provided in sec. 9 of this Act, this Act takes effect January 1, 2019.