SSHB 124: "An Act relating to the taxation of income, permitting the legislature to use certain income tax proceeds to make appropriations for public schools, and providing a credit against the tax for certain property taxes."
00SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 124 01 "An Act relating to the taxation of income, permitting the legislature to use 02 certain income tax proceeds to make appropriations for public schools, and 03 providing a credit against the tax for certain property taxes." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 29.45.020 is amended by adding a new subsection to read: 06 (c) A municipality that levies and collects property taxes shall also notify 07 taxpayers what percentage of each tax dollar is used to fund education, including 08 public schools and the retirement of school construction debt. 09 * Sec. 2. AS 43.20.011 is amended by adding a new subsection to read: 10 (g) For each taxable year or fractional part of a taxable year after 11 December 31, 1999, there is imposed a tax of one-half of one percent on the selected 12 net income of every individual and fiduciary derived from sources in the state, as 13 determined under AS 43.20.040. 14 * Sec. 3. AS 43.20.030(a) is amended to read:
01 (a) A [IF A] corporation, [OR] a partnership that has a corporation as a partner , 02 an individual, or a fiduciary that is required to make a return under the provisions 03 of the Internal Revenue Code [, IT] shall file with the department [, WITHIN 30 04 DAYS AFTER THE FEDERAL RETURN IS REQUIRED TO BE FILED,] a return 05 setting out 06 (1) the amount of tax due under this chapter, less allowable credits and 07 payments claimed against the tax; and 08 (2) other information for the purpose of carrying out the provisions of 09 this chapter that the department requires. 10 * Sec. 4. AS 43.20.030(c) is amended to read: 11 (c) The [NOTWITHSTANDING (a) OF THIS SECTION, THE] total amount 12 of tax imposed by this chapter is due and payable to the department at the same time 13 and in the same manner as the tax payable to the United States Internal Revenue 14 Service. 15 * Sec. 5. AS 43.20.030(d) is amended to read: 16 (d) A taxpayer [, UPON REQUEST BY THE DEPARTMENT,] shall file with 17 the return [FURNISH TO THE DEPARTMENT] a [TRUE AND] correct copy of the 18 taxpayer's tax return [WHICH THE TAXPAYER HAS] filed with the United States 19 Internal Revenue Service for the taxable year . Every taxpayer shall file an amended 20 return with the department and remit any additional tax and interest due 21 [NOTIFY THE DEPARTMENT IN WRITING OF ANY ALTERATION IN, OR 22 MODIFICATION OF, THE TAXPAYER'S FEDERAL INCOME TAX RETURN 23 AND OF A RECOMPUTATION OF TAX OR DETERMINATION OF DEFICIENCY 24 (WHETHER WITH OR WITHOUT ASSESSMENT). A FULL STATEMENT OF 25 THE FACTS SHALL ACCOMPANY THIS NOTICE. THE NOTICE SHALL BE 26 FILED] within 60 days after the final determination of the taxpayer's federal tax 27 liability [MODIFICATION, RECOMPUTATION OR DEFICIENCY, AND THE 28 TAXPAYER SHALL PAY THE ADDITIONAL TAX OR PENALTY UNDER THIS 29 CHAPTER]. For purposes of this section, a final determination means [SHALL 30 MEAN] the time that an amended federal return is filed or the date a federal [A 31 NOTICE OF DEFICIENCY OR AN] assessment is made [MAILED TO THE
01 TAXPAYER BY THE INTERNAL REVENUE SERVICE], except that in no event 02 will there be a final determination for purposes of this section until the taxpayer has 03 exhausted rights of appeal under federal law. 04 * Sec. 6. AS 43.20.030(e) is amended to read: 05 (e) The department may credit or refund overpayments of taxes, taxes 06 erroneously or illegally assessed or collected, penalties collected without authority, and 07 taxes that are found unjustly assessed or excessive in amount, or otherwise wrongfully 08 collected. The department shall set limitations, specify the manner in which claims 09 for credits or refunds are made, and give notice of allowance or disallowance. When 10 a refund is allowed to a taxpayer that is an individual or fiduciary , it shall be paid 11 out of the special account within the general fund for the proceeds of the tax on the 12 selected net income of individuals and fiduciaries imposed under AS 43.20.011(g), 13 on a warrant issued under a voucher approved by the department. Refunds allowed 14 to other taxpayers shall be paid out of the general fund on a warrant issued 15 under a voucher approved by the department. 16 * Sec. 7. AS 43.20.030 is amended by adding a new subsection to read: 17 (h) An individual whose only selected net income is from wages or salaries 18 for which tax has already been deducted and remitted by the individual's employer is 19 not required to file a return but may do so. 20 * Sec. 8. AS 43.20 is amended by adding a new section to read: 21 Sec. 43.20.032. Tax calculation for nonresidents and part-year residents 22 and fiduciaries. In computing the tax under AS 43.20.011(g) of a nonresident or a 23 part-year resident individual or fiduciary, the part of the taxpayer's selected net income 24 attributable to sources in the state is determined under AS 43.20.040. 25 * Sec. 9. AS 43.20.040(b) is amended to read: 26 (b) In this section, income is from a source having a taxable or business situs 27 in the state if it is derived from 28 (1) owning or operating business facilities or property in the state; 29 (2) conducting business, farming, or fishing operations in the state; 30 (3) [REPEALED 31 (4)] a partnership that [WHICH] transacts business in the state;
01 (4) [(5)] a corporation that [WHICH] transacts business in the state 02 and that [WHICH] has elected to file federal returns under 26 U.S.C. 1361 - 1379 03 (Subtitle A, Ch. 1S, Internal Revenue Code) [SUBCHAPTER S OF THE 04 INTERNAL REVENUE CODE]; 05 (5) [(6) REPEALED 06 (7)] engaging in any other activity from which income is received, 07 realized , or derived in the state ; 08 (6) working for salary or wages in the state; 09 (7) an estate or trust deriving income from sources in the state . 10 * Sec. 10. AS 43.20.040 is amended by adding a new subsection to read: 11 (d) With regard to the tax under AS 43.20.011(g), if a business, trade, or 12 profession is carried on partly inside and partly outside the state, the income from 13 sources in the state is determined under AS 43.19 (Multistate Tax Compact). 14 * Sec. 11. AS 43.20 is amended by adding a new section to read: 15 Sec. 43.20.062. Credits against tax. (a) The amounts deducted and withheld 16 as taxes under this chapter during a calendar year are allowed as credits to the taxpayer 17 against the tax imposed by this chapter. 18 (b) An individual or fiduciary is allowed as a credit against the tax otherwise 19 due under this chapter the amount of any real property taxes paid by the individual or 20 the fiduciary to a municipality in this state under AS 29.45 and used by the 21 municipality to fund education, including public schools and the retirement of school 22 construction debt. This credit may not exceed the amount of tax due. 23 * Sec. 12. AS 43.20.065 is amended to read: 24 Sec. 43.20.065. Allocation and apportionment. A corporate taxpayer who 25 has income from business activity that [WHICH] is taxable both inside and outside 26 the state or income from other sources both inside and outside the state shall allocate 27 and apportion net income under AS 43.19 (Multistate Tax Compact), or as provided 28 by this chapter. 29 * Sec. 13. AS 43.20.160(d) is amended to read: 30 (d) All money collected by the department under this chapter shall be 31 deposited in the general fund of the state. The proceeds from the tax on the selected
01 net income of individuals and fiduciaries imposed under AS 43.20.011(g) shall be 02 deposited in a special account within the general fund. The legislature may make 03 appropriations from this account for the system of public schools established 04 under art. VII, sec. 1, Constitution of the State of Alaska. 05 * Sec. 14. AS 43.20 is amended by adding a new section to read: 06 Sec. 43.20.171. Collection of income at source. (a) Every employer making 07 payment of wages or salaries after December 31, 1999, shall deduct and withhold an 08 amount of tax computed in a manner to approximate the amount of tax due on those 09 wages or salaries under this chapter for that year. The employer shall remit withheld 10 taxes to the department, together with a return or report prescribed by the department, 11 at the time or times required by the department by regulation. The department shall 12 publish the rate of withholding required by this section. Every employer making a 13 deduction and a withholding shall furnish to the employee no later than January 31 of 14 the succeeding year, or within 30 days after termination of employment, whichever is 15 earlier, a written statement on a form prescribed by the department showing 16 (1) the name and taxpayer identification number of the employer; 17 (2) the name and social security number of the employee; 18 (3) the total amount of wages and other compensation; and 19 (4) the total amount deducted and withheld as tax. 20 (b) Every employer making payments of wages or salaries earned in the state, 21 regardless of the place where the payment is made, 22 (1) is liable for the payment of the tax required to be deducted and 23 withheld under this section and is not liable to an individual for the amount of the 24 payment; and 25 (2) shall make return of and pay to the department the amount of tax 26 levied that the employer is required to deduct and withhold under this chapter. 27 (c) An employer who fails to comply with this section is subject to the 28 penalties set out in AS 43.05.220(d). 29 (d) If the employer is the United States or the state or a political subdivision 30 of the state, or an agency or instrumentality of one or more of those entities, the return 31 of the amount deducted and withheld on wages or salaries may be made by an officer
01 of the employer having control of the payment of the wages or salaries or who is 02 appropriately designated for that purpose. 03 (e) In this section, "employee," "employer," and "wages" have the meanings 04 given to them under 26 U.S.C. (Internal Revenue Code). 05 * Sec. 15. AS 43.20.270(o) is amended to read: 06 (o) The department may be made a party defendant in an action by a person 07 aggrieved by the unlawful seizure or sale of the person's property, but only the state 08 is responsible for a final money judgment secured against the department, and the 09 judgment shall be satisfied out of the special account within the general fund of the 10 state treasury for the proceeds of the tax on the selected net income of individuals 11 and fiduciaries imposed under AS 43.20.011(g). Judgments to be paid to other 12 taxpayers shall be satisfied out of the general fund . 13 * Sec. 16. AS 43.20.340 is amended to read: 14 Sec. 43.20.340. Definitions. In this chapter , 15 (1) "bank" means a financial institution , including a national banking 16 association; 17 (2) "corporation" includes an association, joint-stock company, and an 18 insurance company; 19 (3) "fiduciary" means an estate, a trust, a guardian, trustee, 20 executor, administrator, receiver, conservator, or a person acting in a fiduciary 21 capacity for another or for the estate of a deceased person; [REPEALED,] 22 (4) "fiscal year" means an accounting period of 12 months ending on 23 the last day of a month other than December; 24 (5) "individual" means a natural person, married or unmarried, 25 adult or minor, who is subject to the obligation to pay an income tax under 26 26 U.S.C. (Internal Revenue Code) ["INCLUDES" AND "INCLUDING" WHEN USED 27 IN A DEFINITION DO NOT EXCLUDE OTHER THINGS OTHERWISE WITHIN 28 THE MEANING OF THE WORD DEFINED]; 29 (6) "Internal Revenue Code" means the Internal Revenue Code of the 30 United States (26 U.S.C.) as the code exists now or as hereafter amended, as the code 31 and amendments apply to the normal taxes and surtax on net incomes, which
01 amendments are operative for the purposes of this chapter as of the time they became 02 operative or will become operative under federal law; 03 (7) "nonresident" means an individual who is not a resident or 04 part-year resident; 05 (8) "part-year resident" means an individual who becomes a resident 06 or loses the status of a resident [ENTERS OR LEAVES THE STATE] during the 07 taxable year [AND WHO HAS RESIDED OR WAS DOMICILED IN THE STATE 08 FOR A PERIOD OF LESS THAN 12 MONTHS DURING THE TAXABLE YEAR]; 09 (9) [(8)] "person" means an individual, a trust , an [OR] estate, a [OR] 10 partnership, or a corporation; 11 (10) "resident" has the meaning given to the term "state resident" 12 in AS 43.23.095; 13 (11) "selected net income" means income for the taxable year from 14 the following sources as reported by the taxpayer to the United States Internal 15 Revenue Service: 16 (A) wages, salaries, tips, and other earned income as 17 reported on Form W-2; 18 (B) business income as reported on Schedule C or Schedule 19 C-EZ; 20 (C) income from rental estate, royalties, partnerships, S 21 corporations, trusts, and other sources as reported on Schedule E; and 22 (D) farm income as reported on Schedule F; 23 (12) [(9)] "taxable year" means the calendar year or the fiscal year 24 ending during the calendar year upon the basis of which the net income is computed 25 under this chapter; "taxable year" includes, in the case of a return made for a fractional 26 part of a year under this chapter, the period for which the return is made; 27 (13) [(10)] "taxpayer" means a person subject to a tax imposed by this 28 chapter; 29 (14) [(11)] "trade or business" includes the engaging in or carrying on 30 of a trade, business, profession, vocation, employment, and rendition of services or 31 commercial activity and includes the performance of the function of a public office.
01 * Sec. 17. AS 43.05.085, AS 43.20.012, and 43.20.013 are repealed.