HB 262: "An Act relating to the taxation of income."
00 HOUSE BILL NO. 262 01 "An Act relating to the taxation of income." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 43.20.011 is amended by adding new subsections to read: 04 (g) For each taxable year or fractional part of a taxable year after 05 December 31, 2005, there is imposed a tax upon the taxable income of every resident, 06 nonresident, and part-year resident individual and fiduciary of the state. The tax 07 imposed by this subsection is determined as a percentage of the taxpayer's entire 08 federal income tax liability, except that the tax on a nonresident or part-year resident 09 individual or fiduciary is the tax determined as a percentage of the taxpayer's entire 10 federal income tax liability multiplied by a fraction the numerator of which is the 11 taxpayer's taxable income from sources in the state and the denominator of which is 12 the taxpayer's taxable income from all sources. The department shall annually 13 determine the rate of the tax according to the following schedule, and shall notify the 14 legislature and the governor within 60 days. If, on June 30 of the preceding year, 15 (1) state expenditures for the fiscal year did not exceed revenues for
01 the fiscal year, the rate of the tax is zero; 02 (2) state expenditures for the fiscal year exceeded revenues by $20 03 million or less, the rate of the tax is one-half of one percent; 04 (3) state expenditures for the fiscal year exceeded revenues by more 05 than $20 million, but not more than $80 million, the rate of the tax is one percent; 06 (4) state expenditures for the fiscal year exceeded revenues by more 07 than $80 million, but not more than $100 million, the rate of the tax is two percent; 08 (5) state expenditures for the fiscal year exceeded revenues by more 09 than $100 million, but not more than $300 million, the rate of the tax is three percent; 10 (6) state expenditures for the fiscal year exceeded revenues by more 11 than $300 million, but not more than $600 million, the rate of the tax is five percent; 12 (7) state expenditures for the fiscal year exceeded revenues by more 13 than $600 million, but not more than $800 million, the rate of the tax is eight percent; 14 (8) state expenditures for the fiscal year exceeded revenues by more 15 than $800 million, the rate of the tax is ten percent. 16 (h) An individual shall determine the tax under (g) of this section using the 17 same filing status as used on the individual's federal return. 18 * Sec. 2. AS 43.20.030(a) is amended to read: 19 (a) An individual, fiduciary, [IF A] corporation, or [A] partnership that has a 20 corporation as a partner, that is subject to the tax imposed in AS 43.20.011 and is 21 required to make a return under the provisions of 26 U.S.C. ( [THE] Internal Revenue 22 Code), [IT] shall file with the department [, WITHIN 30 DAYS AFTER THE 23 FEDERAL RETURN IS REQUIRED TO BE FILED,] a return setting out 24 (1) the amount of tax due under this chapter, less allowable credits 25 and payments claimed against the tax; and 26 (2) other information for the purpose of carrying out the provisions of 27 this chapter that the department requires. 28 * Sec. 3. AS 43.20.030(c) is amended to read: 29 (c) The [NOTWITHSTANDING (a) OF THIS SECTION, THE] total amount 30 of tax imposed by this chapter is due and payable to the department at the same time 31 and in the same manner as the tax payable to the United States Internal Revenue
01 Service. 02 * Sec. 4. AS 43.20.030(d) is amended to read: 03 (d) A taxpayer [, UPON REQUEST BY THE DEPARTMENT,] shall file 04 with the return [FURNISH TO THE DEPARTMENT] a [TRUE AND] correct copy 05 of the taxpayer's tax return [WHICH THE TAXPAYER HAS] filed with the United 06 States Internal Revenue Service for the taxable year. Every taxpayer shall file an 07 amended return with the department and remit any additional tax and interest 08 due [NOTIFY THE DEPARTMENT IN WRITING OF ANY ALTERATION IN, OR 09 MODIFICATION OF, THE TAXPAYER'S FEDERAL INCOME TAX RETURN 10 AND OF A RECOMPUTATION OF TAX OR DETERMINATION OF 11 DEFICIENCY, WHETHER WITH OR WITHOUT ASSESSMENT. A FULL 12 STATEMENT OF THE FACTS MUST ACCOMPANY THIS NOTICE. THE 13 NOTICE SHALL BE FILED] within 60 days after the final determination of the 14 taxpayer's federal tax liability [MODIFICATION, RECOMPUTATION OR 15 DEFICIENCY, AND THE TAXPAYER SHALL PAY THE ADDITIONAL TAX OR 16 PENALTY UNDER THIS CHAPTER]. For purposes of this section, a final 17 determination means [SHALL MEAN] the time that an amended federal return is 18 filed or the date a federal [A NOTICE OF DEFICIENCY OR AN] assessment is 19 made [MAILED TO THE TAXPAYER BY THE INTERNAL REVENUE 20 SERVICE, EXCEPT THAT IN NO EVENT WILL THERE BE A FINAL 21 DETERMINATION FOR PURPOSES OF THIS SECTION UNTIL THE 22 TAXPAYER HAS EXHAUSTED RIGHTS OF APPEAL UNDER FEDERAL 23 LAW]. 24 * Sec. 5. AS 43.20 is amended by adding a new section to read: 25 Sec. 43.20.032. Tax calculation for nonresidents and part-year residents 26 and fiduciaries. (a) In computing the tax under AS 43.20.011(g) of a nonresident or 27 a part-year resident individual, or a fiduciary, the part of the taxpayer's taxable income 28 attributable to sources in the state is determined under AS 43.20.040. 29 (b) In computing the taxpayer's taxable income attributable to sources in the 30 state for a nonresident or a part-year resident individual, or a fiduciary, deductions and 31 adjustments are allowed only to the extent that they are connected with income that
01 arises from sources in the state or property having a situs for taxation in the state. 02 * Sec. 6. AS 43.20.040(b) is amended to read: 03 (b) In this section, income is from a source having a taxable or business situs 04 in the state if it is derived from 05 (1) owning or operating business facilities or property in the state; 06 (2) conducting business, farming, or fishing operations in the state; 07 (3) [REPEALED 08 (4)] a partnership that [WHICH] transacts business in the state; 09 (4) [(5)] a corporation that [WHICH] transacts business in the state 10 and that [WHICH] has elected to file federal returns under 26 U.S.C. 1361 - 1379 11 (Subtitle A, Ch. 1S, Internal Revenue Code) [SUBCHAPTER S OF THE 12 INTERNAL REVENUE CODE]; 13 (5) [(6) REPEALED 14 (7)] engaging in any other activity from which income is received, 15 realized, or derived in the state; 16 (6) working for salary or wages in the state; 17 (7) an estate or trust deriving income from sources in the state. 18 * Sec. 7. AS 43.20.040 is amended by adding a new subsection to read: 19 (d) With regard to the tax under AS 43.20.011(g), if a business, trade, or 20 profession, other than the rendering of purely personal services, is carried on partly 21 inside and partly outside the state, the income from sources in the state is determined 22 under AS 43.19 (Multistate Tax Compact). 23 * Sec. 8. AS 43.20 is amended by adding a new section to read: 24 Sec. 43.20.062. Credits against tax. (a) The amounts deducted and withheld 25 as taxes under this chapter during a calendar year are allowed as credits to the taxpayer 26 against the tax imposed by this chapter. 27 (b) A resident or part-year resident is allowed as a credit against the tax 28 otherwise due under this chapter the amount of income tax imposed on the taxpayer 29 for the taxable year by another state or territory of the United States on income derived 30 from sources in the other state or territory that is also subject to tax under this chapter. 31 However, the credit allowed in this subsection is limited to that proportion of the tax
01 computed under this chapter that the taxable income from the other state or territory 02 bears to total taxable income, and the credit may not exceed the actual tax paid to the 03 other state or territory. 04 (c) An individual or fiduciary is allowed as a credit against the tax otherwise 05 due under this chapter the amount of any real and personal property taxes paid by the 06 individual or the fiduciary to a municipality in this state under AS 29.45. 07 * Sec. 9. AS 43.20.065 is amended to read: 08 Sec. 43.20.065. Allocation and apportionment. A corporate taxpayer who 09 has income from business activity that is taxable both inside and outside the state or 10 income from other sources both inside and outside the state shall allocate and 11 apportion net income as provided in AS 43.19 (Multistate Tax Compact), or as 12 provided by this chapter. 13 * Sec. 10. AS 43.20 is amended by adding a new section to read: 14 Sec. 43.20.171. Collection of income at source. (a) Every employer making 15 payment of wages or salaries after December 31, 2005, shall deduct and withhold an 16 amount of tax computed in a manner to approximate the amount of tax due on those 17 wages under this chapter for that year. The employer shall remit withheld taxes to the 18 department, together with a return or report prescribed by the department, at the time 19 or times required by the department by regulation. The department shall publish the 20 rate of withholding required by this section. Every employer making a deduction and 21 a withholding shall furnish to the employee not later than January 31 of the succeeding 22 year, or within 30 days after termination of employment, whichever is earlier, a 23 written statement on a form prescribed by the department showing 24 (1) the name and taxpayer identification number of the employer; 25 (2) the name and social security number of the employee; 26 (3) the total amount of wages and other compensation; and 27 (4) the total amount deducted and withheld as tax. 28 (b) Every employer making payments of wages or salaries earned in the state, 29 regardless of the place where the payment is made, 30 (1) is liable for the payment of the tax required to be deducted and 31 withheld under this section and is not liable to an individual for the amount of the
01 payment; and 02 (2) shall make return of and pay to the department the amount of tax 03 levied that the employer is required to deduct and withhold under this chapter. 04 (c) An employer who fails to comply with this section is subject to the 05 penalties set out in AS 43.05.220(d). 06 (d) If the employer is the United States or the state or a political subdivision of 07 the state, or an agency or instrumentality of one or more of those entities, the return of 08 the amount deducted and withheld on wages or salaries may be made by an officer of 09 the employer having control of the payment of the wages or salaries or who is 10 appropriately designated for that purpose. 11 (e) In this section, "employee," "employer," and "wages" have the meanings 12 given to them under 26 U.S.C. (Internal Revenue Code). 13 * Sec. 11. AS 43.20.200(b) is amended to read: 14 (b) The same period of limitation upon the assessment and collection of taxes 15 imposed under this chapter and the same exceptions to it shall apply as provided in 26 16 U.S.C. 6501 - 6503 (Internal Revenue Code). In the case of additional tax due by 17 reason of a modification, recomputation, or determination of deficiency in a taxpayer's 18 federal income tax return, the period of limitation on assessment commences from the 19 date that the amended return [NOTICE] required in AS 43.20.030(d) is filed, and, if 20 no amended return [NOTICE] is filed, the tax may be assessed at any time. 21 * Sec. 12. AS 43.20.340 is amended to read: 22 Sec. 43.20.340. Definitions. In this chapter, 23 (1) "bank" means a financial institution, including a national banking 24 association; 25 (2) "corporation" includes an association, joint-stock company, and an 26 insurance company; 27 (3) [REPEALED 28 (4)] "fiscal year" means an accounting period of 12 months ending on 29 the last day of a month other than December; 30 (4) [(5) "INCLUDES" AND "INCLUDING" WHEN USED IN A 31 DEFINITION DO NOT EXCLUDE OTHER THINGS OTHERWISE WITHIN THE
01 MEANING OF THE WORD DEFINED; 02 (6)] "Internal Revenue Code" means the Internal Revenue Code of the 03 United States (26 U.S.C.) as the code exists now or as hereafter amended, as the code 04 and amendments apply to the normal taxes and surtax on net incomes, which 05 amendments are operative for the purposes of this chapter as of the time they became 06 operative or will become operative under federal law; 07 (5) [(7)] "part-year resident" means an individual who becomes a 08 resident or loses the status of a resident [ENTERS OR LEAVES THE STATE] 09 during the taxable year [AND WHO HAS RESIDED OR WAS DOMICILED IN THE 10 STATE FOR A PERIOD OF LESS THAN 12 MONTHS DURING THE TAXABLE 11 YEAR]; 12 (6) [(8)] "person" means an individual, a trust, an [OR] estate, a [OR] 13 partnership, or a corporation; 14 (7) [(9)] "taxable year" means the calendar year or the fiscal year 15 ending during the calendar year upon the basis of which the net income is computed 16 under this chapter; "taxable year" includes, in the case of a return made for a fractional 17 part of a year under this chapter, the period for which the return is made; 18 (8) [(10)] "taxpayer" means a person subject to a tax imposed by this 19 chapter; 20 (9) [(11)] "trade or business" includes the engaging in or carrying on of 21 a trade, business, profession, vocation, employment, and rendition of services or 22 commercial activity and includes the performance of the function of a public office. 23 * Sec. 13. AS 43.20.340 is amended by adding new paragraphs to read: 24 (10) "fiduciary" means an estate, trust, guardian, trustee, executor, 25 administrator, receiver, conservator, or a person acting in a fiduciary capacity for 26 another or for the estate of a deceased person; 27 (11) "individual" means a natural person, married or unmarried, adult 28 or minor, who is subject to the obligation to pay an income tax under 26 U.S.C. 29 (Internal Revenue Code); 30 (12) "nonresident" means an individual who is not a resident or part- 31 year resident;
01 (13) "resident" has the meaning given to the term "state resident" in 02 AS 43.23.095. 03 * Sec. 14. AS 43.05.085; AS 43.20.012, 43.20.013; and AS 47.45.120(a) are repealed.