1997-01-15                     House Journal                      Page 0070
HB 72                                                                        
HOUSE BILL NO. 72 by the House Rules Committee by request of                   
the Governor, entitled:                                                        
                                                                               
An Act repealing certain filing statements and bonds for                      
enforcement and collection of certain taxes and license fees;                  
relating to service of process on nonresident taxpayers; and                   
providing for an effective date.                                               
                                                                               
was read the first time and referred to the House Special Committee            
on Economic Development, the Labor & Commerce and Finance                      
Committees.                                                                    
                                                                               

1997-01-15                     House Journal                      Page 0071
HB 72                                                                        
The following fiscal notes apply:                                              
                                                                               
Zero fiscal note, Dept. of Commerce & Economic Development,                    
1/15/97                                                                        
Zero fiscal note, Dept. of Revenue, 1/15/97                                    
                                                                               
The Governor's transmittal letter, dated January 15, 1997, appears             
below:                                                                         
                                                                               
Dear Speaker Phillips:                                                         
                                                                               
Much of my effort in advertising Alaska as open and ready for                  
business includes removing unnecessary barriers to doing business in           
our state.  This bill does just that.  It discontinues our requirement that    
nonresident businesses file a bond or other security with the                  
Department of Revenue -- a requirement, I must note, that makes                
Alaska unique among all 50 states.  In this area, Id rather join the           
norm than be different.                                                        
                                                                               
The bonding requirement, with a minimum $1,000 bond, was enacted               
in 1955 to ensure the collection of state taxes and license fees from          
nonresident businesses which have little security or property in the           
state.  It may have made sense back then when it was hard to find              
people if they abruptly closed up shop and left the state with a tax           
debt.  But modern technology has fixed that problem.                           
                                                                               
Many taxpayers now complain the bonding and related filing                     
requirements are excessive considering the amount of business they do          
in the state.  Moreover, no one in the Department of Revenue can               
recall a case where a bond was actually used to pay a delinquent tax           
lien; the department has other means of ensuring that tax payments are         
made.                                                                          
                                                                               
In fiscal year 1995, more than 2,000 corporations had to fill out              
lengthy paperwork and file these bonds.  If the program is eliminated,         
the time the state spends on processing all these forms can be                 
redirected toward expanded tax compliance work which would result              
in increased revenue to the state.                                             
                                                                               
                                                                               

1997-01-15                     House Journal                      Page 0072
HB 72                                                                        
I submitted this same proposal last year to the legislature where it           
received much support.  It passed the Senate as well as every                  
committee of referral in the House of Representatives. The non-                
resident tax bond program serves only to discourage business in                
Alaska.  Its time to take it off the books.                                    
                                                                               
							Sincerely,                                                              
							/s/                                                                     
							Tony Knowles                                                            
							Governor