00 CS FOR SENATE BILL NO. 344(L&C) 01 "An Act relating to the establishment, collection, and enforcement of a school 02 employment tax; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43 is amended by adding a new chapter to read: 05 CHAPTER 42. SCHOOL EMPLOYMENT TAX. 06 Sec. 43.42.010. TAX IMPOSED. (a) In each calendar year there is levied a 07 school employment tax upon each individual who receives compensation for services 08 performed in this state as an employee, or receives self-employment earnings from 09 business activities conducted in this state. The tax on an individual is 10 percent of 10 the first $1,000 11 (1) of compensation paid to that individual by an employer who has a 12 business situs in this state for services performed in this state in the calendar year as 13 an employee of that employer; 14 (2) of that individual's self-employment earnings from business 01 activities conducted in this state in the calendar year. 02 (b) Under this chapter, the aggregate tax liability of an individual does not 03 exceed $100 in a calendar year even if the individual receives both compensation for 04 services performed as an employee and self-employment earnings in that year. 05 Sec. 43.42.020. DETERMINATION OF BUSINESS SITUS. For purposes of 06 AS 43.42.010, an employer has a business situs in this state if at any time in the 07 calendar year an individual performs services in this state as an employee of that 08 employer. 09 Sec. 43.42.030. COLLECTION, REPORTING, AND REMITTANCE OF TAX 10 ON EMPLOYEE COMPENSATION. (a) An employer making payment of 11 compensation for services performed in this state shall withhold from the payment the 12 tax levied by this chapter. The employer shall withhold 10 percent of each payment 13 for compensation of services until the full amount of the tax is collected, except that 14 the last amount withheld may be less than 10 percent if the lower amount will result 15 in collection of the full amount of the tax. The employer shall file a return and remit 16 the taxes as required by (b) or (c) of this section. 17 (b) Except as provided in (c) of this section, the return required by this section 18 must be filed, and the withheld taxes remitted, by the date the employer's regular 19 quarterly report of employment security contributions under AS 23.20 is required to 20 be filed. The employer shall file a return by reporting amounts withheld under this 21 section during the preceding calendar quarter, and any additional information required 22 by regulation adopted under AS 43.42.040(a), to the Department of Labor, on forms 23 provided by that department, together with the employer's regular quarterly report of 24 employment security contributions under AS 23.20. With each return filed under this 25 subsection, the employer shall remit the taxes required to be withheld under this 26 section during the preceding calendar quarter. 27 (c) An employer who is required to withhold and remit taxes under this section 28 but who is not subject to the reporting requirements of AS 23.20 shall file a return and 29 remit the taxes as required by this subsection. On or before the last day of the month 30 following each calendar quarter in which taxes were withheld under this section, the 31 employer shall file with the department a return, on forms provided by the department, 01 and shall remit the taxes required to be withheld during the preceding calendar quarter. 02 In the return, the employer shall report amounts withheld under this section during the 03 preceding calendar quarter and any additional information required by regulation 04 adopted under AS 43.42.040(a). 05 Sec. 43.42.040. ADMINISTRATION OF TAX ON EMPLOYEE 06 COMPENSATION. (a) After consultation with the Department of Labor, the 07 department shall prescribe, by regulation, any additional information that must be 08 included in a return filed under AS 43.42.030 in order for the department to calculate, 09 determine, collect, or enforce the tax levied by this chapter. The Department of Labor 10 shall include, on forms for reporting under AS 23.20, space designated for reporting 11 amounts withheld under AS 43.42.030 and for providing any additional information 12 required by Department of Revenue regulations. The department shall coordinate with 13 the Department of Labor to maximize the use of existing reports to the department and 14 to the Department of Labor. 15 (b) The Department of Labor shall provide to the Department of Revenue the 16 information collected under AS 43.42.030 that relates to the tax levied by this chapter. 17 (c) The department, by regulation, may establish procedures to authorize an 18 employer to not withhold from payment to an employee the tax levied by this chapter 19 if the employee provides to the employer, and the employer files with the department, 20 proof that the tax already has been withheld by an employer under AS 43.42.030 or 21 paid to the department under AS 43.42.050. 22 (d) The Department of Labor shall report to the Department of Revenue the 23 failure of an employer to timely report or remit the tax levied by this chapter. The 24 Department of Labor may not use the provisions of AS 23.20 to enforce the collection 25 or remittance of the tax levied by this chapter. Reporting forms and other records 26 relating to the tax levied by this chapter that are maintained by the Department of 27 Labor are prima facie evidence of timely reporting and remittance, or failure to timely 28 report or remit, under AS 43.42.030. 29 Sec. 43.42.050. REPORTING AND PAYMENT OF TAX ON SELF-EMPLOYMENT EARNINGS. (a) An 30 individual who is subject to the tax on self-employment earnings levied by this chapter shall file a return with the 31 department, and 01 with the return shall pay the tax, in the manner required by this section. The return 02 must be filed on a form provided by the department. 03 (b) Until the full amount of the tax levied by AS 43.42.010 has been paid, the 04 individual shall file a return for each calendar quarter in which the individual had self-employment earnings, and make 05 a payment of 10 percent of the individual's self-employment earnings in that quarter. 06 (c) Returns must be filed and payments made, as required by (b) of this 07 section, on or before the following dates: 08 (1) April 15, regarding the first calendar quarter of a year; 09 (2) July 15, regarding the second calendar quarter of a year; 10 (3) October 15, regarding the third calendar quarter of a year; 11 (4) January 15 of the following year, regarding the fourth calendar 12 quarter of a year. 13 (d) The department may, by regulation, establish procedures under which an 14 individual who is subject to payment of tax under this section may provide to the 15 department proof that the tax levied by this chapter already has been withheld by an 16 employer under AS 43.42.030. 17 Sec. 43.42.060. PENALTIES AND INTEREST. In addition to other 18 applicable provisions of AS 43.05, provisions regarding civil penalties in 19 AS 43.05.220, interest in AS 43.05.225, and criminal penalties in AS 43.05.290 apply 20 to the failure to timely file a required return or report or to pay or remit taxes due 21 under this chapter. 22 Sec. 43.42.070. ENFORCEMENT OF THE TAX BY STATE AGENCIES. 23 (a) A person may not be issued an initial registration, license, or permit described in 24 (b) of this section, or a renewal of a registration, license, or permit described in (b) of 25 this section, if that person has failed to file a return or pay or remit the tax due under 26 this chapter. If that person has filed an administrative or a judicial appeal regarding 27 the tax levied by this chapter, the registration, license, or permit may be issued or 28 renewed during the pendency of the appeal. 29 (b) The registrations, licenses, and permits that may not be issued or renewed 30 under (a) of this section are 31 (1) a liquor license issued under AS 04; 01 (2) a permit and license under AS 05; 02 (3) a registration, license, and permit issued under AS 08; 03 (4) a commercial fishing license, including a limited entry permit and 04 interim-use permit, required under AS 16.05.480; 05 (5) a business license issued under AS 43.70 or AS 43.75. 06 (c) Notwithstanding any provision of AS 04, AS 08, AS 16.05, AS 43.70, or 07 AS 43.75 to the contrary, a department, board, commission, or other state agency 08 issuing or renewing a registration, license, or permit described in (b) of this section to 09 a person shall require that the person submit proof of payment or remittance of the tax 10 levied by this chapter, or proof that an administrative or judicial appeal is pending, 11 before issuing or renewing that registration, license, or permit. However, if the person 12 submits a sworn affidavit, under penalty of perjury, that the person, at the time of 13 application for the registration, license, or permit, does not have an obligation to have 14 paid or remitted the tax levied by this chapter and is not in arrears in the payment or 15 remittance of the tax, the state agency may issue or renew the registration, license, or 16 permit without proof of payment or remittance. 17 (d) A department, board, commission, or other state agency described in (c) 18 of this section 19 (1) may adopt regulations to interpret or implement its duties under this 20 section; 21 (2) shall provide to the department information the department requests 22 to facilitate that department's determination, collection, and enforcement of the tax 23 levied by this chapter, unless the disclosure would jeopardize the receipt of federal 24 money. 25 Sec. 43.42.080. RECORD OF TAX WITHHELD FROM EMPLOYEES; 26 REFUNDS. (a) An employer who withholds tax under AS 43.42.030 shall furnish to 27 the employee before February 1 of each calendar year a record of the amount of tax 28 withheld from that employee's compensation in the preceding calendar year. The 29 employer shall pay to the department a penalty of $10 for each failure to provide the 30 record required by this subsection. 31 (b) On or before April 15 of a calendar year, an individual may file with the 01 department, on forms provided by the department, a claim for the refund of any excess 02 tax withheld or paid for the preceding calendar year. The individual shall attach the 03 records provided by employers or other proof of payment acceptable to the department 04 to support the refund claim. 05 Sec. 43.42.090. REPORTING OF CERTAIN CONTRACTS; NOTICE TO 06 CONTRACTORS AND INDIVIDUALS. (a) Except as provided in (e) of this section, 07 if a service-recipient in this state contracted with a person who does not hold a 08 registration, license, or permit described in AS 43.42.070(b) for services to be 09 performed in this state, and made payment under the contract in a calendar year, the 10 service recipient shall file a report on forms provided by the department and shall 11 provide the following information: 12 (1) the aggregate amount of payments made to the contractor during 13 the calendar year; 14 (2) the name and address of the contractor; and 15 (3) if the contractor is not an individual, the names and addresses of 16 all individuals receiving payment under the contract for services performed in this 17 state. 18 (b) The report required by (a) of this section must be filed with the department 19 before February 1 of the year following the year in which payment was made under 20 the contract for services performed in this state. 21 (c) Notwithstanding (a) of this section, a service-recipient is not required to 22 file a report under this section if the aggregate of payments made to the contractor for 23 services performed in the calendar year in this state total less than $100. 24 (d) At or before the time payment is first made under the contract for services 25 performed in this state, a service-recipient shall furnish to the contractor and, if the 26 contractor is not an individual, to each individual who is to receive payment under the 27 contract for services performed in this state, a written notice of 28 (1) the obligation to pay the tax levied by this chapter; 29 (2) the name and address of the service-recipient; and 30 (3) the address of the department, for obtaining forms and information 31 regarding the tax levied by this chapter. 01 (e) The requirements of this section do not apply to a contract of $25,000 or 02 less. 03 (f) For the purposes of this section, a "service-recipient" is the person who 04 contracted for services performed in this state, and includes state and municipal 05 agencies. 06 Sec. 43.42.800. REGULATIONS. The department may adopt regulations 07 under AS 44.62 (Administrative Procedure Act) to interpret and implement this 08 chapter. 09 Sec. 43.42.900. DEFINITIONS. In this chapter 10 (1) "business activities" means activities or acts of a commercial, 11 occupational, professional, or like nature, that are engaged in or caused to be engaged 12 in with the object of financial or pecuniary gain, profit, or benefit; "business activities" 13 does not include 14 (A) providing services as an employee; 15 (B) furnishing or selling of property, services, substances, or 16 things by a person who does not represent to be regularly engaging in those 17 transactions; 18 (C) an individual's investment or banking activities relating to 19 that individual's personal property; 20 (2) "calendar quarter" means each of the three-month periods ending 21 March 31, June 30, September 30, and December 31; 22 (3) "compensation for services" means gross wages, salaries, tips, and 23 other remuneration paid to an employee by an employer; "compensation for services" 24 does not include 25 (A) remuneration for attendance at events such as tradeshows, 26 conventions, or educational or scientific workshops or seminars; or 27 (B) compensation earned by a prisoner under AS 33 at a rate 28 less than the minimum wage established under AS 23.10; 29 (4) "employer" means a person making payment of compensation for 30 services who is required to deduct and withhold income taxes under provisions of 31 26 U.S.C. (Internal Revenue Code); 01 (5) "individual" means a natural person who was 19 years of age or 02 older on January 1 of a calendar year; 03 (6) "self-employment earnings" means gross receipts from a business 04 activity that are not paid by an employer; 05 (7) "tax" means the school employment tax levied by this chapter. 06 * Sec. 2. REGULATIONS. Notwithstanding sec. 4 of this Act, the Department of Revenue 07 may proceed to adopt regulations to implement or interpret the provisions enacted by this Act. 08 Notwithstanding sec. 4 of this Act, a department, board, commission, or other state agency 09 affected by AS 43.42.070, enacted by sec. 1 of this Act, may proceed to adopt regulations to 10 implement or interpret its duties under that statute. Regulations adopted under this section 11 take effect under AS 44.62 (Administrative Procedure Act), but not before January 1, 1995. 12 * Sec. 3. Section 2 of this Act takes effect immediately under AS 01.10.070(c). 13 * Sec. 4. Section 1 of this Act takes effect January 1, 1995.