Legislature(2017 - 2018)

2017-04-07 Senate Journal

Full Journal pdf

2017-04-07                     Senate Journal                      Page 0827
SB 109                                                                                                                        
SENATE BILL NO. 109 BY THE SENATE RULES COMMITTEE                                                                               
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
          "An Act relating to background investigation                                                                          
          requirements for state employees whose job duties                                                                     
          require access to certain federal tax information;                                                                    
          relating to persons under contract with the state with                                                                
          access to certain federal tax information; establishing                                                               
          state personnel procedures required for employee                                                                      
          access to certain federal tax information; and                                                                        
          providing for an effective date."                                                                                     
was read the first time and referred to the Judiciary and Finance                                                               
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, Department of Revenue                                                                                       
 Fiscal Note No. 2, zero, Department of Public Safety                                                                           
 Fiscal Note No. 3, zero, Department of Labor and                                                                               
  Workforce Development                                                                                                         
 Fiscal Note No. 4, zero, Department of Health and Social Services                                                              
 Fiscal Note No. 5, zero, Department of Corrections                                                                             
Governor's transmittal letter dated April 6:                                                                                    
Dear President Kelly:                                                                                                           
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to personnel and                                                                
procurement procedures, including national criminal history record                                                              
checks, for State employees and contractors accessing certain federal                                                           
tax information.                                                                                                                
The bill would establish procedures to safeguard the confidentiality of                                                         
certain federal tax information in the manner required by the Internal                                                          
Revenue Service (IRS) security and safeguarding requirements in 26                                                              
U.S.C. 6103(p)(4)(C) and Publication 1075 (published by the                                                                     
Department of the Treasury, Internal Revenue Service and updated                                                                
September 30, 2016). The IRS requirements apply to State and local                                                              
agencies that obtain certain federal tax information directly from the                                                          

2017-04-07                     Senate Journal                      Page 0828
IRS, an IRS authorized secondary source such as the Social Security                                                             
Administration, the Federal Office of Child Support Enforcement, the                                                            
Bureau of Fiscal Service, the Centers for Medicare and Medicaid                                                                 
Services, or another entity acting on behalf of the IRS pursuant to an                                                          
agreement under 26 U.S.C. 6103(p)(2)(B). The recently updated IRS                                                               
security guidelines in Publication 1075 require:                                                                                
     · All State employees and contractors with access to certain                                                               
          federal tax information must undergo fingerprinting and a                                                             
          national criminal history record check conducted by the                                                               
          Federal Bureau of Investigation (FBI).                                                                                
     · Agencies must develop a written policy that requires                                                                     
          employees and contractors with access to certain federal tax                                                          
          information to complete a background investigation. The                                                               
          policy must include criteria to define qualifications to access                                                       
          federal tax information.                                                                                              
     · The background investigation for each employee or contractor                                                             
          must be done every ten years.                                                                                         
     · The background investigation also must include a check of                                                                
          local law enforcement agency records for the past five years                                                          
          and validation of the employee's eligibility to legally work in                                                       
          the United States.                                                                                                    
Legislation is necessary to require fingerprinting and an FBI national                                                          
criminal history record check. Under Public Law 92-544, the FBI can                                                             
conduct a national criminal history record check for a noncriminal                                                              
justice purpose if required by a federal law or if a state has enacted a                                                        
statute requiring this record check.                                                                                            
Some State agencies already receive information directly from the                                                               
IRS, or an IRS-authorized source, and this continued access is vital.                                                           
The Department of Revenue, Child Support Services                                                                               
Division (CSSD), uses federal tax information to collect child support                                                          
payments from noncustodial parents. In FY16, CSSD collected over                                                                
$8.6 million in past due child support through the federal tax refund                                                           
offset program. CSSD paid these garnished funds to the custodial                                                                
parent or to the State for reimbursement of Temporary Aid to Needy                                                              
Families benefits provided to the custodial parent. Continued access to                                                         
federal tax information is critical to CSSD's efforts to collect child                                                          
support for Alaskan families.                                                                                                   

2017-04-07                     Senate Journal                      Page 0829
The Department of Revenue uses federal tax information to ensure                                                                
compliance for corporate income tax, motor fuel tax, and mining tax.                                                            
It provides an auditing tool that can confirm that the correct amount of                                                        
tax is paid to the State. The loss of federal tax information could                                                             
impede audits and possibly allow businesses to escape paying the full                                                           
amount of taxes due.                                                                                                            
The Department of Labor and Workforce Development (DOLWD)                                                                       
Unemployment Insurance program is required by federal law to use                                                                
the treasury offset program to recover certain unemployment                                                                     
compensation or risk loss of federal funding - over $22 million.                                                                
AS 23.20.486 authorizes DOLWD to participate in the federal offset                                                              
program, which includes confidential tax information subject to the                                                             
safeguard requirements. DOLWD is currently working on                                                                           
programming and testing and expects to begin participation in the                                                               
program in the spring of 2017. The Alaska unemployment                                                                          
compensation program estimates it will collect an estimated $300,000                                                            
to $400,000 annually through the offset program.                                                                                
To ensure continued access to federal tax information, the bill creates                                                         
a new chapter in AS 39 for establishing State personnel procedures for                                                          
State employees who access certain federal tax information. The bill                                                            
also creates a new section in AS 30.36, establishing similar procedures                                                         
for State contractors who access certain federal tax information. Those                                                         
procedures include fingerprinting and an FBI national criminal history                                                          
record check. Last, the bill amends AS 12.62.400 by adding a new                                                                
subsection authorizing the Department of Public Safety to submit the                                                            
fingerprints to the FBI and obtain a national criminal history record                                                           
I urge your prompt and favorable action on this measure.                                                                        
Bill Walker