05/07/2025 01:30 PM House FINANCE

HOUSE BILL NO. 123                                                                                                            
                                                                                                                                
     "An Act relating to vehicle rental taxes; relating to                                                                      
     the issuance of subpoenas related to tax records; and                                                                      
     providing for an effective date."                                                                                          
                                                                                                                                
1:45:24 PM                                                                                                                    
                                                                                                                                
Representative Bynum MOVED to ADOPT Amendment 1, 34-                                                                            
LS0551\I.5 (Nauman, 5/2/25) (copy on file):                                                                                     
                                                                                                                                
     Page 3, line 15:                                                                                                           
     Delete "immediately under AS 01.10.070(c)"                                                                                 
     Insert "July 1, 2025"                                                                                                      
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative  Bynum  explained  that the  amendment  would                                                                    
change the  effective date from  immediate to July  1, 2025.                                                                    
He furthered  that it  would align  the effective  date with                                                                    
the beginning of the fiscal year and tax quarter.                                                                               
                                                                                                                                
REPRESENTATIVE KEVIN  MCCABE, SPONSOR, viewed  the amendment                                                                    
as friendly.                                                                                                                    
                                                                                                                                
Representative Galvin asked if  the sponsor of the amendment                                                                    
had checked  with the department  to make sure the  date was                                                                    
sufficient. Representative Bynum responded affirmatively.                                                                       
                                                                                                                                
Representative Hannan  relayed that  when she read  the bill                                                                    
with the  immediate effective date,  she deduced  it allowed                                                                    
the Department  of Revenue (DOR)  time to set things  up for                                                                    
collecting  the  tax. She  wondered  if  it would  forestall                                                                    
collecting revenue  on July  1, 2025.  She offered  that the                                                                    
fiscal  note was  predicated on  an entire  year's worth  of                                                                    
revenue, and she favored the  collection of revenue from the                                                                    
full fiscal year without delay.                                                                                                 
                                                                                                                                
1:48:35 PM                                                                                                                    
                                                                                                                                
Representative McCabe  thought that  the change was  a wash.                                                                    
He did not  have an opinion one way or  another. He surmised                                                                    
that  the amendment  was good  for DOR  and probably  not so                                                                    
good for the lost revenue.                                                                                                      
                                                                                                                                
Representative  Bynum  voiced  that the  provision  was  not                                                                    
offered  to  protect  the  department  but  to  protect  the                                                                    
entities that  would collect  the tax.  He wanted  to ensure                                                                    
industry had  enough time to  set up  collection procedures.                                                                    
The  amendment allowed  businesses a  6-week window  to make                                                                    
the necessary adjustments before the bill went into effect.                                                                     
                                                                                                                                
Co-Chair Foster asked the department to comment.                                                                                
                                                                                                                                
DUSTIN HENTZELMAN,  MANAGER, EXCISE AUDIT  GROUP, DEPARTMENT                                                                    
OF   REVENUE   (via   teleconference),  relayed   that   the                                                                    
department did not have an opinion on the amendment.                                                                            
                                                                                                                                
Representative   Hannan   asked    what   the   department's                                                                    
anticipated time frame was for  set up and collection of the                                                                    
tax.  Mr.   Hentzelman  replied  that  the   department  was                                                                    
prepared to  implement the bill  immediately, but  a delayed                                                                    
effective  date  would  be  helpful   for  DOR's  effort  to                                                                    
disseminate information regarding the  tax. He added that it                                                                    
would be easier if there was a delay in implementation.                                                                         
                                                                                                                                
1:51:45 PM                                                                                                                    
                                                                                                                                
Representative  Galvin  understood  the reasoning  from  the                                                                    
maker of the amendment. She  shared that previously, she had                                                                    
operated an  Airbnb and when she  had learned of a  tax rate                                                                    
increase it  was too late  too late  to change her  rates to                                                                    
cover the additional tax.                                                                                                       
                                                                                                                                
Co-Chair Foster WITHDREW the OBJECTION.                                                                                         
                                                                                                                                
There being NO further OBJECTION, Amendment 1 was ADOPTED.                                                                      
                                                                                                                                
Representative  Galvin supported  moving  the bill  forward.                                                                    
However, she believed that in  the future the law might need                                                                    
amending.                                                                                                                       
                                                                                                                                
Co-Chair Josephson MOVED  to REPORT HB 123  out of committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note(s).                                                                                                                        
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSHB 123(FIN) was  REPORTED out of committee  with seven "do                                                                    
pass"     recommendations,    two     "no    recommendation"                                                                    
recommendations,  and two  "amend" recommendations  and with                                                                    
one previously published indeterminate  fiscal note from the                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
Representative McCabe thanked the committee.