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SB 12: "An Act imposing a limited educational facilities, maintenance, and construction tax on net earnings from self-employment and wages; relating to the administration and enforcement of the educational facilities, maintenance, and construction tax; and providing for an effective date."

00                             SENATE BILL NO. 12                                                                          
01 "An Act imposing a limited educational facilities, maintenance, and construction tax on                                 
02 net earnings from self-employment and wages; relating to the administration and                                         
03 enforcement of the educational facilities, maintenance, and construction tax; and                                       
04 providing for an effective date."                                                                                       
05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
06    * Section 1. AS 43.45 is amended by adding new sections to read:                                                   
07        Chapter 45. Educational Facilities, Maintenance, and Construction Tax.                                         
08            Sec. 43.45.011. Tax imposed. (a) A tax is imposed on wages and on net                                      
09       earnings from self-employment of every                                                                            
10                 (1)  resident individual; and                                                                           
11                 (2)  nonresident and part-year resident individual with income from a                                   
12       source in the state.                                                                                              
13            (b)  For an individual whose wages from self-employment, net earnings from                                   
14       self-employment, or combined wages and net earnings from self-employment are                                      
01                 (1)  less than $20,000, the tax is $50 a year;                                                          
02                 (2)  $20,000 or more, but less than $50,000, the tax is $100 a year;                                    
03                 (3)  $50,000 or more, but less than $100,000, the tax is $200 a year;                                   
04                 (4)  $100,000 or more, but less than $500,000, the tax is $300 a year;                                  
05                 (5)  $500,000 or more, the tax is $500 a year.                                                          
06            (c)  For purposes of (b) of this section, the wages and the net earnings from                                
07       self-employment of a                                                                                              
08                 (1)  resident are the total annual wages and the net earnings from self-                                
09       employment of the resident;                                                                                       
10 (2)  nonresident or part-year resident are the annual wages and the net                                                 
11 earnings from self-employment of the nonresident or part-year resident that are                                         
12       attributable to a source in the state.                                                                            
13 Sec. 43.45.021. Collection of tax by employer. (a) An employer shall deduct                                           
14 and withhold one half of the estimated taxes due under AS 43.45.011 from an                                             
15 employee's wages subject to withholding under 26 U.S.C. 3401 - 3406 from each of                                        
16 the first two regular payrolls of the calendar year. If the employee's first two payrolls                               
17 are insufficient to cover the estimated tax due, the employer shall continue to deduct                                  
18 and withhold from subsequent payrolls until the tax due under this chapter is fully                                     
19 withheld. The employer shall withhold any outstanding amount of tax due under                                           
20       AS 43.45.011 from the final regular payroll of the calendar year.                                                 
21 (b)  An employer is liable for the tax required to be withheld from an employee                                         
22 unless the employer can demonstrate that the employer relied on proof provided by the                                   
23 employee that the total tax for the calendar year imposed under AS 43.45.011 had                                        
24 already been withheld under this section or paid under AS 43.45.031. A deduction of                                     
25 the tax may not be made from the wages of an individual who provides proof to the                                       
26 employer that the entire tax imposed under AS 43.45.011 on that individual for the                                      
27 calendar year has already been withheld or paid under AS 43.45.031. The department                                      
28 may impose a civil penalty on an employer in an amount up to five times the amount                                      
29 of tax due from employees but not remitted to the department. The penalty shall be                                      
30       imposed in the manner provided by AS 43.05.245.                                                                   
31 (c)  Tax withheld by an employer becomes due and shall be paid by an                                                    
01 employer to the department in accordance with regulations adopted by the department.                                    
02 (d)  An employer shall maintain a record of the amount deducted from the                                                
03 wages of each employee and shall furnish an annual statement of the deductions to                                       
04 each employee and to the department in accordance with regulations adopted by the                                       
05       department.                                                                                                       
06 (e)  The department shall, if it will result in cost savings for the state in the                                       
07 administration of the tax, for employers in the administration of the tax, or both,                                     
08 coordinate collection and reporting of the tax imposed in this chapter with the                                         
09 collection and reporting of employment security contributions by the Department of                                      
10 Labor and Workforce Development, including permitting the Department of Labor                                           
11 and Workforce Development to collect the tax payments and remit them to the                                             
12       department.                                                                                                       
13 Sec. 43.45.031. Payment of tax by self-employed individual. A self-                                                   
14 employed individual shall remit to the department the tax due under AS 43.45.011 in                                     
15 accordance with regulations adopted by the department until the entire tax has been                                     
16       paid.                                                                                                             
17 Sec. 43.45.041. Refund of overpayments. (a) If an individual pays to the                                            
18 department, directly or through withholding by an employer, an amount exceeding the                                     
19 total tax imposed under this chapter during a calendar year and the individual applies                                  
20 for a refund in accordance with regulations adopted by the department, the department                                   
21       shall refund the overpayment to the individual.                                                                   
22 (b)  Interest on an overpayment may not be allowed under AS 43.05.280 if the                                            
23 department refunds the overpayment within 90 days after the date the individual                                         
24       correctly files the refund claim.                                                                                 
25 (c)  The Department of Revenue may adopt regulations to coordinate refunds                                              
26 of overpayments under this section with refunds of employment security contributions                                    
27       under AS 23.20.165.                                                                                               
28 (d)  An individual may apply for a refund under this section only during the                                            
29       calendar year immediately following the calendar year in which the excess was paid.                               
30 Sec. 43.45.051. Report of payments to self-employed individuals. A person                                             
31 required to report a payment to a self-employed individual to the federal government                                    
01       under 26 U.S.C. shall also report that payment to the department in accordance with                               
02       regulations adopted by the department.                                                                            
03            Sec. 43.45.061. Disposition of tax proceeds. (a) The tax and penalties                                     
04       collected by the department under this chapter shall be deposited into the general fund                           
05       and accounted for separately.                                                                                     
06 (b)  The legislature may appropriate the estimated amounts to be collected and                                          
07 separately accounted for under (a) of this section into the educational facilities,                                     
08 maintenance, and construction fund established under AS 37.05.560. Nothing in this                                      
09       section creates a dedicated fund.                                                                                 
10            Sec. 43.45.099. Definitions. In this chapter,                                                              
11                 (1)  "employee" has the meaning given in 26 U.S.C. 3401;                                                
12                 (2)  "employer" has the meaning given in 26 U.S.C. 3401;                                                
13                 (3)  "net earnings from self-employment" has the meaning given in 26                                    
14       U.S.C. 1402;                                                                                                      
15                 (4)  "wages" has the meaning given in 26 U.S.C. 3401.                                                   
16    * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to                          
17 read:                                                                                                                   
18       REGULATIONS. The Department of Revenue may adopt regulations to implement                                         
19 sec. 1 of this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act),                          
20 but not before the effective date of sec. 1 of this Act.                                                                
21    * Sec. 3. Section 2 of this Act takes effect immediately under AS 01.10.070(c).                                    
22    * Sec. 4. Except as provided in sec. 3 of this Act, this Act takes effect January 1, 2017.