HB 189: "An Act imposing an education tax on net earnings from self-employment and wages; relating to the administration and enforcement of the education tax; and providing for an effective date."
00 HOUSE BILL NO. 189 01 "An Act imposing an education tax on net earnings from self-employment and wages; 02 relating to the administration and enforcement of the education tax; and providing for 03 an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 43.45 is amended by adding new sections to read: 06 Chapter 45. Education Tax. 07 Sec. 43.45.011. Tax imposed. (a) A tax is imposed on wages and on net 08 earnings from self-employment of every 09 (1) resident individual; and 10 (2) nonresident and part-year resident individual with income from a 11 source in the state. 12 (b) For an individual whose wages from self-employment, net earnings from 13 self-employment, or combined wages and net earnings from self-employment are 14 (1) less than $20,000, the tax is $50 a year;
01 (2) $20,000 or more, but less than $50,000, the tax is $100 a year; 02 (3) $50,000 or more, but less than $100,000, the tax is $200 a year; 03 (4) $100,000 or more, but less than $500,000, the tax is $300 a year; 04 (5) $500,000 or more, the tax is $500 a year. 05 (c) For purposes of (b) of this section, the wages and the net earnings from 06 self-employment of a 07 (1) resident are the total annual wages and the net earnings from self- 08 employment of the resident; 09 (2) nonresident or part-year resident are the annual wages and the net 10 earnings from self-employment of the nonresident or part-year resident that are 11 attributable to a source in the state. 12 Sec. 43.45.021. Collection of tax by employer. (a) An employer shall deduct 13 and withhold one-half of the estimated taxes due under AS 43.45.011 from an 14 employee's wages subject to withholding under 26 U.S.C. 3401 - 3406 from each of 15 the first two regular payrolls of the calendar year. If the employee's first two payrolls 16 are insufficient to cover the estimated tax due, the employer shall continue to deduct 17 and withhold from subsequent payrolls until the tax due under this chapter is fully 18 withheld. The employer shall withhold any outstanding amount of tax due under 19 AS 43.45.011 from the final regular payroll of the calendar year. 20 (b) An employer is liable for the tax required to be withheld from an employee 21 unless the employer can demonstrate that the employer relied on proof provided by the 22 employee that the total tax for the calendar year imposed under AS 43.45.011 had 23 already been withheld under this section or paid under AS 43.45.031. A deduction of 24 the tax may not be made from the wages of an individual who provides proof to the 25 employer that the entire tax imposed under AS 43.45.011 on that individual for the 26 calendar year has already been withheld or paid under AS 43.45.031. The department 27 may impose a civil penalty on an employer in an amount up to five times the amount 28 of tax due from employees but not remitted to the department. The penalty shall be 29 imposed in the manner provided by AS 43.05.245. 30 (c) Tax withheld by an employer becomes due and shall be paid by an 31 employer to the department in accordance with regulations adopted by the department.
01 (d) An employer shall maintain a record of the amount deducted from the 02 wages of each employee and shall furnish an annual statement of the deductions to 03 each employee and to the department in accordance with regulations adopted by the 04 department. 05 (e) The department shall, if it will result in cost savings for the state in the 06 administration of the tax, for employers in the administration of the tax, or for both, 07 coordinate collection and reporting of the tax imposed in this chapter with the 08 collection and reporting of employment security contributions by the Department of 09 Labor and Workforce Development, including permitting the Department of Labor 10 and Workforce Development to collect the tax payments and remit them to the 11 department. 12 Sec. 43.45.031. Payment of tax by self-employed individual. A self- 13 employed individual shall remit to the department the tax due under AS 43.45.011 in 14 accordance with regulations adopted by the department until the entire tax has been 15 paid. 16 Sec. 43.45.041. Refund of overpayments. (a) If an individual pays to the 17 department, directly or through withholding by an employer, an amount exceeding the 18 total tax imposed under this chapter during a calendar year and the individual applies 19 for a refund in accordance with regulations adopted by the department, the department 20 shall refund the overpayment to the individual. 21 (b) Interest on an overpayment may not be allowed under AS 43.05.280 if the 22 department refunds the overpayment within 90 days after the date the individual 23 correctly files the refund claim. 24 (c) The Department of Revenue may adopt regulations to coordinate refunds 25 of overpayments under this section with refunds of employment security contributions 26 under AS 23.20.165. 27 (d) An individual may apply for a refund under this section only during the 28 calendar year immediately following the calendar year in which the excess was paid. 29 Sec. 43.45.051. Report of payments to self-employed individuals. A person 30 required to report a payment to a self-employed individual to the federal government 31 under 26 U.S.C. shall also report that payment to the department in accordance with
01 regulations adopted by the department. 02 Sec. 43.45.061. Disposition of tax proceeds. (a) The tax and penalties 03 collected by the department under this chapter shall be deposited into the general fund 04 and accounted for separately. 05 (b) The legislature may appropriate the estimated amounts to be collected and 06 separately accounted for under (a) of this section to the public education fund under 07 AS 14.17.300. Nothing in this section creates a dedicated fund. 08 Sec. 43.45.099. Definitions. In this chapter, 09 (1) "employee" has the meaning given in 26 U.S.C. 3401; 10 (2) "employer" has the meaning given in 26 U.S.C. 3401; 11 (3) "net earnings from self-employment" has the meaning given in 26 12 U.S.C. 1402; 13 (4) "wages" has the meaning given in 26 U.S.C. 3401. 14 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 REGULATIONS. The Department of Revenue may adopt regulations to implement 17 sec. 1 of this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), 18 but not before the effective date of sec. 1 of this Act. 19 * Sec. 3. Section 2 of this Act takes effect immediately under AS 01.10.070(c). 20 * Sec. 4. Except as provided in sec. 3 of this Act, this Act takes effect January 1, 2022.