Legislature(2001 - 2002)
2002-03-27 House Journal
Full Journal pdf2002-03-27 House Journal Page 2705 HB 303 Amendment No. 2 was offered by Representatives Davies and Hudson: Page 1, lines 1 - 2 (title amendment): Delete all material. Insert ""An Act relating to taxation of income; and providing for an effective date."" Page 1, line 4, through page 9, line 25: Delete all material and insert new bill sections to read: "* Section 1. AS 43.20 is amended by adding a new section to read: Sec. 43.20.009. Tax on individuals. (a) There is imposed for each taxable year an income tax on the taxable income of every (1) resident individual; and (2) nonresident and part-year resident individual with income from sources in the state. 2002-03-27 House Journal Page 2706 (b) As soon as practicable after September 30 of each year, the department shall publish the applicable tax rate under this subsection for the following calendar year. The applicable tax rate is: (1) four percent if, on September 30 of that year, the unaudited balance in the budget reserve fund created by art. IX, sec. 17, Constitution of the State of Alaska, was equal to or less than $2,000,000,000; (2) two percent if, on September 30 of that year, the unaudited balance in the budget reserve fund created by art. IX, sec. 17, Constitution of the State of Alaska, was more than $2,000,000,000 but not more than $2,500,000,000; or (3) one percent if, on September 30 of that year, the unaudited balance in the budget reserve fund created by art. IX, sec. 17, Constitution of the State of Alaska, was more than $2,500,000,000. (c) For a resident individual, the tax under this section is the sum of the taxpayer's taxable income multiplied by the tax rate described in (b) of this section. (d) For a part-year resident individual or a nonresident individual, the tax under this section shall be computed by applying the rate described in (b) of this section to the individual's taxable income, and multiplying the result by a fraction, the numerator of which is taxable income from all sources in the state and the denominator of which is taxable income from all sources. (e) The minimum tax under this section is $25. (f) In this section, "taxable income" has the meaning given in 26 U.S.C. 63 (Internal Revenue Code). * Sec. 2. AS 43.20.030(a) is amended to read: (a) If an individual, a corporation, or a partnership that has a corporation as a partner, is required to make a return of income under the provisions of the Internal Revenue Code, the individual, corporation, or partnership [IT] shall file with the department, within 30 days after the federal return is required to be filed, a return setting out (1) the amount of tax due under this chapter, less allowable credits and payments claimed against the tax, and (2) other information that the department requires for the purpose of carrying out the provisions of this chapter [THAT THE DEPARTMENT REQUIRES]. 2002-03-27 House Journal Page 2707 * Sec. 3. AS 43.20.030(d) is amended to read: (d) A taxpayer, upon request by the department, shall file with the taxpayer's state return [FURNISH TO THE DEPARTMENT] a true [AND CORRECT] copy of the tax return [WHICH THE TAXPAYER HAS] filed with the United States Internal Revenue Service. Every taxpayer shall file an amended return with [NOTIFY] the department, and remit any additional tax and interest due, within [IN WRITING OF ANY ALTERATION IN, OR MODIFICATION OF, THE TAXPAYER'S FEDERAL INCOME TAX RETURN AND OF A RECOMPUTATION OF TAX OR DETERMINATION OF DEFICIENCY, WHETHER WITH OR WITHOUT ASSESSMENT. A FULL STATEMENT OF THE FACTS MUST ACCOMPANY THIS NOTICE. THE NOTICE SHALL BE FILED WITHIN] 60 days after a [THE] final determination of the taxpayer's federal tax liability [MODIFICATION, RECOMPUTATION OR DEFICIENCY, AND THE TAXPAYER SHALL PAY THE ADDITIONAL TAX OR PENALTY UNDER THIS CHAPTER]. For purposes of this subsection [SECTION], a final determination means [SHALL MEAN] the date [TIME] that an amended federal return is filed, the date a federal [OR A NOTICE OF DEFICIENCY OR AN] assessment is made, or the date the restrictions on assessment are waived by [MAILED TO] the taxpayer [BY THE INTERNAL REVENUE SERVICE, EXCEPT THAT IN NO EVENT WILL THERE BE A FINAL DETERMINATION FOR PURPOSES OF THIS SECTION UNTIL THE TAXPAYER HAS EXHAUSTED RIGHTS OF APPEAL UNDER FEDERAL LAW]. * Sec. 4. AS 43.20.031(c) is amended to read: (c) In computing the tax under this chapter, a corporation [THE TAXPAYER] is not entitled to deduct any taxes based on or measured by net income. * Sec. 5. AS 43.20.040 is repealed and reenacted to read: Sec. 43.20.040. Income from sources in the state. (a) In this chapter, income from sources in the state includes (1) compensation for personal services rendered in the state; (2) working in the state for salary or wages; 2002-03-27 House Journal Page 2708 (3) income from real or tangible personal property located in the state; (4) income from stocks, bonds, notes, bank deposits, and other intangible personal property having a taxable or business situs in the state; however, the receipt of interest income from intangible property in the state does not alone establish a taxable or business situs in the state; (5) rentals and royalties for the use of or for the privilege of using, in the state, patents, copyrights, secret processes and formulas, good will, marks, trade brands, franchises, and other property having a taxable or business situs in the state; (6) income distributed from a trust established under or governed by the laws of the state; (7) income of whatever nature from a source with a taxable or business situs in the state. (b) Except as provided in (a)(4) of this section, in this section, income is from a source with a taxable or business situs in the state if it is attributed to or derived from (1) business facilities or property in the state; (2) business, farming, or fishing activities in the state; (3) conducting in the state the management or investment function for intangible property; (4) a partnership or limited liability company conducting business activities in the state; (5) a corporation transacting business activities in the state that has elected to file federal returns under subchapter S of the Internal Revenue Code; (6) any other activity from which income is received, realized, or derived in the state. (c) If a business, trade, or profession is carried on partly inside and partly outside the state, other than the rendering of purely personal services by an individual, the income from sources in the state shall be determined as provided in AS 43.19. * Sec. 6. AS 43.20 is amended by adding a new section to article 1 to read: Sec. 43.20.046. Individual income tax credits. (a) For a resident, the income tax imposed on that resident by another state or territory of the United States for the taxable year, on income derived from sources in that state or territory, is allowed as a credit against the tax under this chapter. 2002-03-27 House Journal Page 2709 (b) The credit under (a) of this section is determined by multiplying the tax computed under this chapter by a fraction, the numerator of which is the income derived from sources in the other state or territory and the denominator of which is income derived from all sources. The credit under (a) of this section may not exceed the actual tax paid to the other state or territory. (c) To the extent required by federal law, an individual is allowed as a credit against the tax under this chapter 10.2 percent of interest received by the individual in the taxable year upon obligations unconditionally backed by the full faith and credit of the United States. (d) An individual is allowed only the state credits provided in this section. The total state credit allowed under this section may not exceed the tax liability for the taxable year for the individual. A credit may not be carried, in whole or in part, to a different taxable year. * Sec. 7. AS 43.20 is amended by adding a new section to read: Sec. 43.20.171. Tax withholding on wages of individuals. (a) Every employer making payment of wages, salaries, or crew shares (1) shall deduct and withhold an amount of tax computed in a manner to approximate the amount of tax due on those wages, salaries, or crew shares under this chapter for that taxable year; (2) shall remit the tax withheld to the department accompanied by a return on a form prescribed by the department at the times required by the department by regulation; (3) is liable for the payment of the tax required to be deducted and withheld under this section but is not liable to any individual for the amount of the payment; and (4) shall furnish to the employee on or before January 31 of the succeeding year, or within 30 days after a request by the employee after the employee's termination if the 30-day period ends before January 31, a written statement on a form prescribed by the department showing (A) the name and taxpayer identification number of the employer; (B) the name and social security number of the employee; 2002-03-27 House Journal Page 2710 (C) the total amount of wages, salary, or crew shares for the taxable year; and (D) the total amount deducted and withheld as tax for the taxable year. (b) The department shall publish the rate of withholding required by this section. (c) In this section, (1) "employee" includes an individual who receives compensation on a crew share basis in connection with a commercial fishing activity; (2) "employer" includes a person who pays compensation to an individual on a crew share basis in connection with a commercial fishing activity. * Sec. 8. AS 43.20.200(b) is amended to read: (b) The same period of limitation upon the assessment and collection of taxes imposed under this chapter and the same exceptions to it shall apply as provided in 26 U.S.C. 6501 - 6503 (Internal Revenue Code). In the case of additional tax due by reason of a modification, recomputation, or determination of deficiency in a taxpayer's federal income tax return, the period of limitation on assessment commences from the date that the amended return [NOTICE] required in AS 43.20.030(d) is filed, and if no amended return [NOTICE] is filed the tax may be assessed at any time. * Sec. 9. AS 43.20.340 is amended by adding new paragraphs to read: (12) "individual" means a natural person, married or unmarried, adult or minor, subject to payment of income tax under 26 U.S.C. (Internal Revenue Code); (13) "nonresident" means an individual who is not a resident or part-year resident; (14) "resident" means an individual who, for the entire taxable year, was domiciled in the state or resided in the state. * Sec. 10. AS 43.05.085; AS 43.20.012, 43.20.013, and 43.20.072(d) are repealed. * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to read: INDIVIDUAL INCOME TAX RATE FOR 2003. The tax rate for 2003 under AS 43.20.009, added by sec. 1 of this Act, is four percent. 2002-03-27 House Journal Page 2711 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION: REGULATIONS. The Department of Revenue may proceed to adopt regulations necessary to implement the provisions of this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the effective date of the provision being implemented. * Sec. 13. Section 12 of this Act takes effect immediately under AS 01.10.070(c). * Sec. 14. Except as provided in sec. 13 of this Act, this Act takes effect January 1, 2003." Representative Davies moved and asked unanimous consent that Amendment No. 2 be adopted. Objection was heard. Amendment No. 1 to Amendment No. 2 was offered by Representative Davies: Under Section 1(b)(1): Delete "four" Insert "2.6" Representative Davies moved and asked unanimous consent that Amendment No. 1 to Amendment No. 2 be adopted. There being no objection, it was so ordered. Amendment No. 2 to Amendment No. 2 as amended was offered by Representatives Rokeberg, Dyson, and Moses: Under Section 6 add a new subsection to read: "(d) An individual is allowed a credit equal to the amount of property taxes paid to a municipality in Alaska for a single parcel of real property located in Alaska that the individual owns." Renumber the following subsection accordingly. 2002-03-27 House Journal Page 2712 Representative Rokeberg moved and asked unanimous consent that Amendment No. 2 to Amendment No. 2 as amended be adopted. Objection was heard. The question being: "Shall Amendment No. 2 to Amendment No. 2 as amended be adopted?" The roll was taken with the following result: CSHB 303(FIN) Second Reading Amendment No. 2 to Amendment No. 2 as amended YEAS: 17 NAYS: 22 EXCUSED: 1 ABSENT: 0 Yeas: Coghill, Dyson, Guess, Harris, Hayes, Kohring, Kott, Masek, McGuire, Meyer, Moses, Mulder, Murkowski, Rokeberg, Stevens, Williams, Wilson Nays: Berkowitz, Bunde, Chenault, Cissna, Crawford, Croft, Davies, Fate, Foster, Green, Halcro, Hudson, James, Joule, Kapsner, Kerttula, Kookesh, Lancaster, Morgan, Porter, Scalzi, Whitaker Excused: Ogan And so, Amendment No. 2 to Amendment No. 2 as amended was not adopted. Amendment No. 3 to Amendment No. 2 as amended was offered by Representative Berkowitz: Insert a new bill section to read: "* Section. 1. AS 43.20 is amended by adding a new section to read: Sec. 43.20.001. Limitation on individual tax liability. The annual income tax liability of an individual under this chapter may not exceed the total the individual has received in permanent fund dividends under AS 43.23 over a five-year period, the fifth year of which is the tax year for which the tax is due." Renumber the following bill sections accordingly. 2002-03-27 House Journal Page 2713 Representative Berkowitz moved and asked unanimous consent that Amendment No. 3 to Amendment No. 2 as amended be adopted. Objection was heard. A technical amendment to Amendment No. 3 to Amendment No. 2 as amended was offered by Representative Davies: Following "total": Delete "the individual has" Insert "an individual would have" Representative Davies moved and asked unanimous consent that the technical amendment to Amendment No. 3 to Amendment No. 2 as amended be adopted. There being no objection, it was so ordered. A technical amendment to Amendment No. 3 to Amendment No. 2 as amended was offered by Representative Kerttula: Following "exceed the": Delete the remaining sentence. Insert "sum of the previous five permanent fund dividends." Representative Kerttula moved and asked unanimous consent that the technical amendment to Amendment No. 3 to Amendment No. 2 as amended be adopted. Representative Whitaker objected. The question being: "Shall the technical amendment to Amendment No. 3 to Amendment No. 2 as amended be adopted?" The roll was taken with the following result: CSHB 303(FIN) Technical Amendment to Amendment No. 3 to Amendment No. 2 as amended YEAS: 17 NAYS: 22 EXCUSED: 1 ABSENT: 0 2002-03-27 House Journal Page 2714 Yeas: Berkowitz, Cissna, Crawford, Croft, Davies, Dyson, Guess, Hayes, Hudson, Joule, Kapsner, Kerttula, Kookesh, Kott, Masek, Murkowski, Wilson Nays: Bunde, Chenault, Coghill, Fate, Foster, Green, Halcro, Harris, James, Kohring, Lancaster, McGuire, Meyer, Morgan, Moses, Mulder, Porter, Rokeberg, Scalzi, Stevens, Whitaker, Williams Excused: Ogan And so, the technical amendment was not adopted. The question being: "Shall Amendment No. 3 to Amendment No. 2 as amended be adopted?" The roll was taken with the following result: CSHB 303(FIN) Second Reading Amendment No. 3 to Amendment No. 2 as amended YEAS: 15 NAYS: 24 EXCUSED: 1 ABSENT: 0 Yeas: Berkowitz, Cissna, Crawford, Croft, Davies, Guess, Hayes, Hudson, Joule, Kapsner, Kerttula, Kookesh, Moses, Murkowski, Wilson Nays: Bunde, Chenault, Coghill, Dyson, Fate, Foster, Green, Halcro, Harris, James, Kohring, Kott, Lancaster, Masek, McGuire, Meyer, Morgan, Mulder, Porter, Rokeberg, Scalzi, Stevens, Whitaker, Williams Excused: Ogan And so, Amendment No. 3 to Amendment No. 2 as amended was not adopted. Amendment No. 4 to Amendment No. 2 as amended was offered by Representative Croft: Insert a new bill section to read: "* Section 1. AS 43.20 is amended by adding a new section to read: Sec. 43.20.001. Limitation on individual tax liability. The annual income tax liability of an individual under this chapter may not exceed $10,000." 2002-03-27 House Journal Page 2715 Representative Croft moved and asked unanimous consent that Amendment No. 4 to Amendment No. 2 as amended be adopted. Representative Whitaker objected. A technical amendment to Amendment No. 4 to Amendment No. 2 as amended was offered by Representative Rokeberg: Following "individual": Insert "or joint return" Following "individual": Insert "or joint return" Representative Rokeberg moved and asked unanimous consent that the technical amendment to Amendment No. 4 to Amendment No. 2 as amended be adopted Representative James objected. The question being: "Shall the technical amendment to Amendment No. 4 to Amendment No. 2 as amended be adopted?" The roll was taken with the following result: CSHB 303(FIN) Technical Amendment to Amendment No. 4 to Amendment No. 2 as amended YEAS: 23 NAYS: 13 EXCUSED: 1 ABSENT: 3 Yeas: Berkowitz, Bunde, Chenault, Coghill, Crawford, Croft, Davies, Dyson, Guess, Harris, Hayes, Joule, Kapsner, Kerttula, Kookesh, Kott, McGuire, Meyer, Mulder, Porter, Rokeberg, Williams, Wilson Nays: Fate, Foster, Green, James, Kohring, Lancaster, Masek, Morgan, Moses, Murkowski, Scalzi, Stevens, Whitaker Excused: Ogan Absent: Cissna, Halcro, Hudson And so, the technical amendment was adopted. 2002-03-27 House Journal Page 2716 A technical amendment to Amendment No. 4 to Amendment No. 2 as amended was offered by Representative Rokeberg: Delete "$10,000" Insert "$5,000" Representative Rokeberg moved and asked unanimous consent that the technical amendment to Amendment No. 4 to Amendment No. 2 as amended be adopted. Objection was heard. The Speaker ruled the technical amendment substantial and out of order. The question being: "Shall Amendment No. 4 to Amendment No. 2 as amended be adopted?" The roll was taken with the following result: CSHB 303(FIN) Second Reading Amendment No. 4 to Amendment No. 2 as amended YEAS: 15 NAYS: 23 EXCUSED: 1 ABSENT: 1 Yeas: Berkowitz, Cissna, Crawford, Croft, Davies, Dyson, Guess, Hayes, Hudson, Joule, Kapsner, Kerttula, Kookesh, Murkowski, Rokeberg Nays: Bunde, Chenault, Coghill, Fate, Foster, Green, Halcro, Harris, James, Kott, Lancaster, Masek, McGuire, Meyer, Morgan, Moses, Mulder, Porter, Scalzi, Stevens, Whitaker, Williams, Wilson Excused: Ogan Absent: Kohring And so, Amendment No. 4 to Amendment No. 2 as amended was not adopted. Representative Mulder placed a call of the House. The call was satisfied. 2002-03-27 House Journal Page 2717 Representative Croft rose to a point of order stating that a member's reference to the action of the other body was out of order. The Speaker stated that the point was well taken and cautioned that member. The question being: "Shall Amendment No. 2 as amended be adopted?" The roll was taken with the following result: CSHB 303(FIN) Second Reading Amendment No. 2 as amended YEAS: 17 NAYS: 22 EXCUSED: 1 ABSENT: 0 Yeas: Berkowitz, Cissna, Crawford, Croft, Davies, Guess, Hayes, Hudson, Joule, Kapsner, Kerttula, Kookesh, Lancaster, Moses, Murkowski, Scalzi, Wilson Nays: Bunde, Chenault, Coghill, Dyson, Fate, Foster, Green, Halcro, Harris, James, Kohring, Kott, Masek, McGuire, Meyer, Morgan, Mulder, Porter, Rokeberg, Stevens, Whitaker, Williams Excused: Ogan And so, Amendment No. 2 as amended was not adopted. Amendment No. 3 was offered by Representative Masek: Page 9, lines 24 - 25: Delete all material and insert: "* Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to read: CONDITIONAL EFFECT. Sections 1 - 10 of this Act take effect only if a version of SJR 23, proposing amendments to the Constitution of the State of Alaska relating to an appropriation limit and a spending limit, is passed by the legislature and approved by the voters during the 2002 general election. * Sec. 12. If secs. 1 - 9 of this Act take effect under sec. 11 of this Act, they take effect on January 1, 2003. * Sec. 13. If sec. 10 of this Act takes effect under sec. 11 of this Act, it takes effect the day after the certification of the results of the 2002 general election concerning SJR 23. 2002-03-27 House Journal Page 2718 * Sec. 14. Section 11 of this Act takes effect immediately under AS 01.10.070(c)." Representative Masek moved and asked unanimous consent that Amendment No. 3 be adopted. Representative Mulder objected. The question being: "Shall Amendment No. 3 be adopted?" The roll was taken with the following result: CSHB 303(FIN) Second Reading Amendment No. 3 YEAS: 7 NAYS: 31 EXCUSED: 1 ABSENT: 1 Yeas: Chenault, Foster, Kohring, Masek, Meyer, Rokeberg, Wilson Nays: Berkowitz, Bunde, Cissna, Coghill, Crawford, Croft, Davies, Dyson, Fate, Green, Guess, Halcro, Harris, Hayes, Hudson, James, Joule, Kapsner, Kerttula, Kookesh, Kott, Lancaster, McGuire, Morgan, Mulder, Murkowski, Porter, Scalzi, Stevens, Whitaker, Williams Excused: Ogan Absent: Moses And so, Amendment No. 3 was not adopted. The Speaker stated that the House would stand at ease to a call of the Chair for a Majority and a Minority Caucus; and so, the House stood at ease at 4:15 p.m.