HB 124: "An Act relating to the taxation of income and providing a credit for certain property taxes."
00HOUSE BILL NO. 124 01 "An Act relating to the taxation of income and providing a credit for certain 02 property taxes." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 29.45.020 is amended by adding a new subsection to read: 05 (c) A municipality that levies and collects property taxes shall also notify 06 taxpayers what percentage of each tax dollar is used to fund education, including 07 public schools and the retirement of school construction debt. 08 * Sec. 2. AS 43.20.011 is amended by adding a new subsection to read: 09 (g) For each taxable year or fractional part of a taxable year after 10 December 31, 1999, there is imposed a tax of one-half of one percent on the selected 11 net income of every individual and fiduciary derived from sources in the state, as 12 determined under AS 43.20.040. 13 * Sec. 3. AS 43.20.030(a) is amended to read: 14 (a) A [IF A] corporation, [OR] a partnership that has a corporation as a partner ,
01 an individual, or a fiduciary that is required to make a return under the provisions 02 of the Internal Revenue Code [, IT] shall file with the department [, WITHIN 30 03 DAYS AFTER THE FEDERAL RETURN IS REQUIRED TO BE FILED,] a return 04 setting out 05 (1) the amount of tax due under this chapter, less allowable credits and 06 payments claimed against the tax; and 07 (2) other information for the purpose of carrying out the provisions of 08 this chapter that the department requires. 09 * Sec. 4. AS 43.20.030(c) is amended to read: 10 (c) The [NOTWITHSTANDING (a) OF THIS SECTION, THE] total amount 11 of tax imposed by this chapter is due and payable to the department at the same time 12 and in the same manner as the tax payable to the United States Internal Revenue 13 Service. 14 * Sec. 5. AS 43.20.030(d) is amended to read: 15 (d) A taxpayer [, UPON REQUEST BY THE DEPARTMENT,] shall file with 16 the return [FURNISH TO THE DEPARTMENT] a [TRUE AND] correct copy of the 17 taxpayer's tax return [WHICH THE TAXPAYER HAS] filed with the United States 18 Internal Revenue Service for the taxable year . Every taxpayer shall file an amended 19 return with the department and remit any additional tax and interest due 20 [NOTIFY THE DEPARTMENT IN WRITING OF ANY ALTERATION IN, OR 21 MODIFICATION OF, THE TAXPAYER'S FEDERAL INCOME TAX RETURN 22 AND OF A RECOMPUTATION OF TAX OR DETERMINATION OF DEFICIENCY 23 (WHETHER WITH OR WITHOUT ASSESSMENT). A FULL STATEMENT OF 24 THE FACTS SHALL ACCOMPANY THIS NOTICE. THE NOTICE SHALL BE 25 FILED] within 60 days after the final determination of the taxpayer's federal tax 26 liability [MODIFICATION, RECOMPUTATION OR DEFICIENCY, AND THE 27 TAXPAYER SHALL PAY THE ADDITIONAL TAX OR PENALTY UNDER THIS 28 CHAPTER]. For purposes of this section, a final determination means [SHALL 29 MEAN] the time that an amended federal return is filed or the date a federal [A 30 NOTICE OF DEFICIENCY OR AN] assessment is made [MAILED TO THE 31 TAXPAYER BY THE INTERNAL REVENUE SERVICE], except that in no event
01 will there be a final determination for purposes of this section until the taxpayer has 02 exhausted rights of appeal under federal law. 03 * Sec. 6. AS 43.20.030 is amended by adding a new subsection to read: 04 (h) An individual whose only selected net income is from wages or salaries 05 for which tax has already been deducted and remitted by the individual's employer is 06 not required to file a return but may do so. 07 * Sec. 7. AS 43.20 is amended by adding a new section to read: 08 Sec. 43.20.032. Tax calculation for nonresidents and part-year residents 09 and fiduciaries. In computing the tax under AS 43.20.011(g) of a nonresident or a 10 part-year resident individual or fiduciary, the part of the taxpayer's selected net income 11 attributable to sources in the state is determined under AS 43.20.040. 12 * Sec. 8. AS 43.20.040(b) is amended to read: 13 (b) In this section, income is from a source having a taxable or business situs 14 in the state if it is derived from 15 (1) owning or operating business facilities or property in the state; 16 (2) conducting business, farming, or fishing operations in the state; 17 (3) [REPEALED 18 (4)] a partnership that [WHICH] transacts business in the state; 19 (4) [(5)] a corporation that [WHICH] transacts business in the state 20 and that [WHICH] has elected to file federal returns under 26 U.S.C. 1361 - 1379 21 (Subtitle A, Ch. 1S, Internal Revenue Code) [SUBCHAPTER S OF THE 22 INTERNAL REVENUE CODE]; 23 (5) [(6) REPEALED 24 (7)] engaging in any other activity from which income is received, 25 realized , or derived in the state ; 26 (6) working for salary or wages in the state; 27 (7) an estate or trust deriving income from sources in the state . 28 * Sec. 9. AS 43.20.040 is amended by adding a new subsection to read: 29 (d) With regard to the tax under AS 43.20.011(g), if a business, trade, or 30 profession is carried on partly inside and partly outside the state, the income from 31 sources in the state is determined under AS 43.19 (Multistate Tax Compact).
01 * Sec. 10. AS 43.20 is amended by adding a new section to read: 02 Sec. 43.20.062. Credits against tax. (a) The amounts deducted and withheld 03 as taxes under this chapter during a calendar year are allowed as credits to the taxpayer 04 against the tax imposed by this chapter. 05 (b) An individual or fiduciary is allowed as a credit against the tax otherwise 06 due under this chapter the amount of any real property taxes paid by the individual or 07 the fiduciary to a municipality in this state under AS 29.45 and used by the 08 municipality to fund education, including public schools and the retirement of school 09 construction debt. This credit may not exceed the amount of tax due. 10 * Sec. 11. AS 43.20.065 is amended to read: 11 Sec. 43.20.065. Allocation and apportionment. A corporate taxpayer who 12 has income from business activity that [WHICH] is taxable both inside and outside 13 the state or income from other sources both inside and outside the state shall allocate 14 and apportion net income under AS 43.19 (Multistate Tax Compact), or as provided 15 by this chapter. 16 * Sec. 12. AS 43.20 is amended by adding a new section to read: 17 Sec. 43.20.171. Collection of income at source. (a) Every employer making 18 payment of wages or salaries after December 31, 1999, shall deduct and withhold an 19 amount of tax computed in a manner to approximate the amount of tax due on those 20 wages or salaries under this chapter for that year. The employer shall remit withheld 21 taxes to the department, together with a return or report prescribed by the department, 22 at the time or times required by the department by regulation. The department shall 23 publish the rate of withholding required by this section. Every employer making a 24 deduction and a withholding shall furnish to the employee no later than January 31 of 25 the succeeding year, or within 30 days after termination of employment, whichever is 26 earlier, a written statement on a form prescribed by the department showing 27 (1) the name and taxpayer identification number of the employer; 28 (2) the name and social security number of the employee; 29 (3) the total amount of wages and other compensation; and 30 (4) the total amount deducted and withheld as tax. 31 (b) Every employer making payments of wages or salaries earned in the state,
01 regardless of the place where the payment is made, 02 (1) is liable for the payment of the tax required to be deducted and 03 withheld under this section and is not liable to an individual for the amount of the 04 payment; and 05 (2) shall make return of and pay to the department the amount of tax 06 levied that the employer is required to deduct and withhold under this chapter. 07 (c) An employer who fails to comply with this section is subject to the 08 penalties set out in AS 43.05.220(d). 09 (d) If the employer is the United States or the state or a political subdivision 10 of the state, or an agency or instrumentality of one or more of those entities, the return 11 of the amount deducted and withheld on wages or salaries may be made by an officer 12 of the employer having control of the payment of the wages or salaries or who is 13 appropriately designated for that purpose. 14 (e) In this section, "employee," "employer," and "wages" have the meanings 15 given to them under 26 U.S.C. (Internal Revenue Code). 16 * Sec. 13. AS 43.20.340 is amended to read: 17 Sec. 43.20.340. Definitions. In this chapter , 18 (1) "bank" means a financial institution , including a national banking 19 association; 20 (2) "corporation" includes an association, joint-stock company, and an 21 insurance company; 22 (3) "fiduciary" means an estate, a trust, a guardian, trustee, 23 executor, administrator, receiver, conservator, or a person acting in a fiduciary 24 capacity for another or for the estate of a deceased person; [REPEALED,] 25 (4) "fiscal year" means an accounting period of 12 months ending on 26 the last day of a month other than December; 27 (5) "individual" means a natural person, married or unmarried, 28 adult or minor, who is subject to the obligation to pay an income tax under 26 29 U.S.C. (Internal Revenue Code) ["INCLUDES" AND "INCLUDING" WHEN USED 30 IN A DEFINITION DO NOT EXCLUDE OTHER THINGS OTHERWISE WITHIN 31 THE MEANING OF THE WORD DEFINED];
01 (6) "Internal Revenue Code" means the Internal Revenue Code of the 02 United States (26 U.S.C.) as the code exists now or as hereafter amended, as the code 03 and amendments apply to the normal taxes and surtax on net incomes, which 04 amendments are operative for the purposes of this chapter as of the time they became 05 operative or will become operative under federal law; 06 (7) "nonresident" means an individual who is not a resident or 07 part-year resident; 08 (8) "part-year resident" means an individual who becomes a resident 09 or loses the status of a resident [ENTERS OR LEAVES THE STATE] during the 10 taxable year [AND WHO HAS RESIDED OR WAS DOMICILED IN THE STATE 11 FOR A PERIOD OF LESS THAN 12 MONTHS DURING THE TAXABLE YEAR]; 12 (9) [(8)] "person" means an individual, a trust , an [OR] estate, a [OR] 13 partnership, or a corporation; 14 (10) "resident" has the meaning given to the term "state resident" 15 in AS 43.23.095; 16 (11) "selected net income" means income for the taxable year from 17 the following sources as reported by the taxpayer to the United States Internal 18 Revenue Service: 19 (A) wages, salaries, tips, and other earned income as 20 reported on Form W-2; 21 (B) business income as reported on Schedule C or Schedule 22 C-EZ; 23 (C) income from rental estate, royalties, partnerships, S 24 corporations, trusts, and other sources as reported on Schedule E; and 25 (D) farm income as reported on Schedule F; 26 (12) [(9)] "taxable year" means the calendar year or the fiscal year 27 ending during the calendar year upon the basis of which the net income is computed 28 under this chapter; "taxable year" includes, in the case of a return made for a fractional 29 part of a year under this chapter, the period for which the return is made; 30 (13) [(10)] "taxpayer" means a person subject to a tax imposed by this 31 chapter;
01 (14) [(11)] "trade or business" includes the engaging in or carrying on 02 of a trade, business, profession, vocation, employment, and rendition of services or 03 commercial activity and includes the performance of the function of a public office. 04 * Sec. 14. AS 43.05.085, AS 43.20.012, and 43.20.013 are repealed.