Legislature(2007 - 2008)
03/25/2008 02:40 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| HB418 | |
| HB336 | |
| HB49 | |
| SB249 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 49
An Act relating to credit memos, gift certificates,
and gift cards, and to unclaimed property; and making
a violation of certain gift card prohibitions an
unlawful trade practice.
[RECORDING EQUIPMENT FAILURE MUCH OF RECORDING IS
INAUDIBLE]
Vice-Chair Stoltze MOVED to ADOPT work draft 25-LS0263\L,
Bannister, 3/19/08, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
REPRESENTATIVE CARL GATTO, SPONSOR, pointed out that
retailers and banks have been offering electronic "gift
cards" in response to growing consumer demand for easier
and more convenient gift options. He added that 27% of
those receiving gift cards never use them. The question is
what happens to those un-used gift cards & HB 49 addresses
that question. He provided an overview of each section:
• Section 1, amends AS 34.45.240 to replace the
original reference to "gift certificate" with "gift
card" and provides conforming amendments to the
original statutes structure based on the change.
• Section 2, amends AS 34.45.760(8) to provide a
definitional reference for the new definition of
"gift card" as found in AS 45.45.940.
• Section 3, amends AS 34.45.760(11) to add "gift
cards" as "intangible property" and provides the
statutory definitional reference for gift cards.
• Section 4, creates a new subsection under AS 45.45
to properly define "gift cards" and the new
definition covers previous references to "gift
certificate". The new section also identifies
exclusions to the applicability of the new gift card
provisions.
• Section 5, adds a reference to "gift cards" to
unlawful acts and practices under AS 45.50.471.
3:23:20 PM
Vice-Chair Stoltze noted last year's movement on the bill
and questioned if the slow-down resulted from associated
legal issues. Representative Gatto replied it became a
political rather than legal issue. He had personally
requested that the bill be held.
3:24:12 PM
Representative Gatto introduced his staff, Sandra Wilson.
Vice-Chair Stoltze mentioned a concern indicated in his
district with small business people that donate cards and
not differentiating those from the ones they sell. He
wanted to guarantee the unused donations could be removed
from their books after a couple years. He did not want any
small business penalized because they do not have a
sophisticated accounting system.
Representative Gatto advised that often there are
expiration dates added to the donation cards. There are
exceptions.
3:25:57 PM
Vice-Chair Stoltze reiterated that some smaller business
provide the same type of card that they also sell as gift
certificates. He reiterated the concern that they not be
penalized. He did not want to discourage donations to the
charities. Representative Gatto recommended they enter an
expiration date on the card if they want to donate without
risk.
Vice-Chair Stoltze assessed that would create extra work
for the small business person; he worried about the
consumer issues and thought that they might not want to go
through the extra step. He did not want to see the bill
discouraging charitable donations. Representative Gatto
pointed out that each business creates their own cards and
he imagined it would not be that big of a step to add an
expiration date to those cards.
In response to Representative Gara, Representative Gatto
clarified that most gift cards expire, especially if a
promotional item. [Inaudible]
Representative Gara commented on the non profit status of
the donation.
3:29:51 PM
RACHEL LEWIS, PROJECT COORDINATOR, UNCLAIMED PROPERTY
SECTION, TAX DIVISION, DEPARTMENT OF REVENUE, offered to
answer questions of the Committee. In response to queries
from Representative Stoltze, regarding organizations that
donate for charities, the gift cards do not have to be
recorded and are a one time property. Expiration dates are
not required and that most business owners each day
indicate more items gone than dollars collected. Often,
they have a reconciliation donation indication section.
The State of Alaska does not spend time monitoring how
individual business keeps their books.
Ms. Lewis pointed out that gift cards do not have specific
correct accounting procedures. She mentioned the
designation of when a gift card is donated & how to
determine if it had matured. She suggested many options
such as adding stickers or highlighting them with a magic
marker. Most businesses want the information regarding
what comes back to them as a result of a charitable
donation. Questions and concerns can be addressed by the
Tax Division at the Department of Revenue.
3:32:25 PM
Co-Chair Chenault referenced tax deductable donation
received from a hotel to a non profit, and asked about
taking that tax deduction. [Inaudible]
Ms. Lewis responded that when a gift certificate is
purchased, there usually is an expiration date; the
business of the hotel has the gift certificate on their
books including the date. Most companies do not fluctuate
on that policy. With the example submitted by Co-Chair
Chenault, the hotel not including an expiration date, would
most likely honor it indefinitely. Usually, there is a
three year deadline, unless otherwise disclosed by the
seller.
Co-Chair Chenault assumed that the hotel, being a non-
profit, would understand the rules. He assumed that before
a purchase is made, it should be determined how long it
would be good for. He asked about deducting the tax for
gift certificates. He thought that there was no recourse
if the gift cards were not used except in a tax deduction.
Ms. Lewis commented she was not that familiar with tax law.
3:37:17 PM
Vice-Chair Stoltze reiterated concerns for the charity gift
cards. He asked if there was an out-reach in place to let
small business know that they have protection, noting that
gift cards are such a common donation mechanism and he
wanted to make sure that the accounting system was
understandable.
Ms. Lewis pointed out that the Division does have a bill
for unclaimed property, which clarifies that every gift
card has to be used within three years. The proposed bill
better defines current statute. She did not imagine this
would hugely impact any business.
3:41:54 PM
PUBLIC TESTIMONY CLOSED
AT EASE: 3:42:23 PM
RECONVENE: 3:45:40 PM
3:45:51 PM
Vice-Chair Stoltze MOVED to REPORT CS HB 49 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
CS HB 49 (FIN) was reported out of Committee with a "no
recommendation" and with new zero notes by the Department
of Revenue and the Department of Law.
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