Legislature(2007 - 2008)
03/25/2008 02:40 PM House FIN
Audio | Topic |
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Start | |
HB418 | |
HB336 | |
HB49 | |
SB249 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 49 An Act relating to credit memos, gift certificates, and gift cards, and to unclaimed property; and making a violation of certain gift card prohibitions an unlawful trade practice. [RECORDING EQUIPMENT FAILURE MUCH OF RECORDING IS INAUDIBLE] Vice-Chair Stoltze MOVED to ADOPT work draft 25-LS0263\L, Bannister, 3/19/08, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. REPRESENTATIVE CARL GATTO, SPONSOR, pointed out that retailers and banks have been offering electronic "gift cards" in response to growing consumer demand for easier and more convenient gift options. He added that 27% of those receiving gift cards never use them. The question is what happens to those un-used gift cards & HB 49 addresses that question. He provided an overview of each section: • Section 1, amends AS 34.45.240 to replace the original reference to "gift certificate" with "gift card" and provides conforming amendments to the original statutes structure based on the change. • Section 2, amends AS 34.45.760(8) to provide a definitional reference for the new definition of "gift card" as found in AS 45.45.940. • Section 3, amends AS 34.45.760(11) to add "gift cards" as "intangible property" and provides the statutory definitional reference for gift cards. • Section 4, creates a new subsection under AS 45.45 to properly define "gift cards" and the new definition covers previous references to "gift certificate". The new section also identifies exclusions to the applicability of the new gift card provisions. • Section 5, adds a reference to "gift cards" to unlawful acts and practices under AS 45.50.471. 3:23:20 PM Vice-Chair Stoltze noted last year's movement on the bill and questioned if the slow-down resulted from associated legal issues. Representative Gatto replied it became a political rather than legal issue. He had personally requested that the bill be held. 3:24:12 PM Representative Gatto introduced his staff, Sandra Wilson. Vice-Chair Stoltze mentioned a concern indicated in his district with small business people that donate cards and not differentiating those from the ones they sell. He wanted to guarantee the unused donations could be removed from their books after a couple years. He did not want any small business penalized because they do not have a sophisticated accounting system. Representative Gatto advised that often there are expiration dates added to the donation cards. There are exceptions. 3:25:57 PM Vice-Chair Stoltze reiterated that some smaller business provide the same type of card that they also sell as gift certificates. He reiterated the concern that they not be penalized. He did not want to discourage donations to the charities. Representative Gatto recommended they enter an expiration date on the card if they want to donate without risk. Vice-Chair Stoltze assessed that would create extra work for the small business person; he worried about the consumer issues and thought that they might not want to go through the extra step. He did not want to see the bill discouraging charitable donations. Representative Gatto pointed out that each business creates their own cards and he imagined it would not be that big of a step to add an expiration date to those cards. In response to Representative Gara, Representative Gatto clarified that most gift cards expire, especially if a promotional item. [Inaudible] Representative Gara commented on the non profit status of the donation. 3:29:51 PM RACHEL LEWIS, PROJECT COORDINATOR, UNCLAIMED PROPERTY SECTION, TAX DIVISION, DEPARTMENT OF REVENUE, offered to answer questions of the Committee. In response to queries from Representative Stoltze, regarding organizations that donate for charities, the gift cards do not have to be recorded and are a one time property. Expiration dates are not required and that most business owners each day indicate more items gone than dollars collected. Often, they have a reconciliation donation indication section. The State of Alaska does not spend time monitoring how individual business keeps their books. Ms. Lewis pointed out that gift cards do not have specific correct accounting procedures. She mentioned the designation of when a gift card is donated & how to determine if it had matured. She suggested many options such as adding stickers or highlighting them with a magic marker. Most businesses want the information regarding what comes back to them as a result of a charitable donation. Questions and concerns can be addressed by the Tax Division at the Department of Revenue. 3:32:25 PM Co-Chair Chenault referenced tax deductable donation received from a hotel to a non profit, and asked about taking that tax deduction. [Inaudible] Ms. Lewis responded that when a gift certificate is purchased, there usually is an expiration date; the business of the hotel has the gift certificate on their books including the date. Most companies do not fluctuate on that policy. With the example submitted by Co-Chair Chenault, the hotel not including an expiration date, would most likely honor it indefinitely. Usually, there is a three year deadline, unless otherwise disclosed by the seller. Co-Chair Chenault assumed that the hotel, being a non- profit, would understand the rules. He assumed that before a purchase is made, it should be determined how long it would be good for. He asked about deducting the tax for gift certificates. He thought that there was no recourse if the gift cards were not used except in a tax deduction. Ms. Lewis commented she was not that familiar with tax law. 3:37:17 PM Vice-Chair Stoltze reiterated concerns for the charity gift cards. He asked if there was an out-reach in place to let small business know that they have protection, noting that gift cards are such a common donation mechanism and he wanted to make sure that the accounting system was understandable. Ms. Lewis pointed out that the Division does have a bill for unclaimed property, which clarifies that every gift card has to be used within three years. The proposed bill better defines current statute. She did not imagine this would hugely impact any business. 3:41:54 PM PUBLIC TESTIMONY CLOSED AT EASE: 3:42:23 PM RECONVENE: 3:45:40 PM 3:45:51 PM Vice-Chair Stoltze MOVED to REPORT CS HB 49 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS HB 49 (FIN) was reported out of Committee with a "no recommendation" and with new zero notes by the Department of Revenue and the Department of Law.
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