Legislature(2025 - 2026)ADAMS 519
03/25/2026 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB280 | |
| HB21 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 280 | TELECONFERENCED | |
| += | HB 21 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 280
"An Act relating to the Multistate Tax Compact;
relating to apportionment of income to the state;
relating to highly digitized businesses subject to the
Alaska Net Income Tax Act; and providing for an
effective date."
1:40:49 PM
Co-Chair Foster noted that the committee had heard HB 280
six times and had taken invited and public testimony,
reviewed the fiscal note, and received three amendments. He
invited his staff to provide a brief recap of the bill.
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER, stated
that the current bill version before the committee was
version I. He explained that the bill incorporated
recommendations from the Multistate Tax Compact (MTC) and
changed Alaska's corporate tax structure to include market-
based sourcing rather than the existing cost-of-performance
model. He stated that market-based sourcing defined taxable
activity based on sales of tangible property, intangible
property, and services that were purchased by Alaskan
consumers and delivered or used within the state. The bill
included an effective date allowing the Department of
Revenue (DOR) to adopt necessary regulations before
implementation.
1:42:53 PM
Co-Chair Schrage MOVED to ADOPT Amendment 1, 34-LS1349\I.1
(Nauman, 3/24/26) (copy on file):
Page 1, line 2, following "state":
Insert", including the apportionment of income of
financial institutions"
Page 20, following line 26:
Insert a new bill section to read:
"* Sec. 2. AS 43.20 is amended by adding a new
section to article 2 to read:
Sec. 43.20.147. Financial institutions. The
department shall adopt regulations that require a
taxpayer that is a financial institution to
allocate and apportion income in accordance with,
and that define "financial institution" in
accordance with, the
Formula for the Apportionment and Allocation of
Net Income of Financial Institutions, as adopted
by the Multistate Tax Commission on November 17,
1994, and as amended July 29, 2015."
Renumber the following bill sections accordingly.
Page 20, line 29:
Delete "AS 43.19.010, as amended by sec. l of
this Act,"
Insert "This Act"
Co-Chair Foster OBJECTED for discussion.
Co-Chair Schrage explained the amendment. He relayed that
the bill aimed to modernize Alaska's corporate income tax
system by capturing revenue from digital businesses with a
limited physical presence in the state. He thought that the
bill risked negatively affecting businesses that were
already operating in Alaska and subject to the corporate
income tax. He stated that the amendment addressed the
concern by ensuring that certain financial activities, such
as interest and investment income, would be treated
appropriately within the sales factor calculation. He
explained that the amendment directed DOR to adopt
regulatory language consistent with approaches used in more
than 20 other states, which would create a more nuanced
framework for financial institutions. He emphasized that
the amendment would allow the state to capture new revenue
from digital businesses while avoiding unintended impacts
on existing businesses in the state. He added that DOR had
indicated during testimony that such an approach could be
implemented through regulation.
1:45:20 PM
Representative Stapp spoke in support of the amendment and
noted that he was a co-sponsor of the amendment. He relayed
that the amendment aligned the bill with requests from
financial institutions, incorporated definitions from MTC
into statute, and directed DOR to adopt corresponding
regulations.
Representative Galvin stated that she was not opposed to
the amendment but questioned why the language was being
placed in statute rather than left to regulation, given
that the department had indicated it could address the
issue administratively. She noted that the amendment
appeared to have a minimal fiscal impact, reducing
projected revenue by only a small amount, and asked for
clarification on the rationale for codifying the change.
Co-Chair Schrage agreed that DOR said it could accomplish
the changes through regulation but the department needed
guidance in order to do so. The amendment provided the
necessary guidance by directing DOR to use language from
MTC as the basis for regulatory changes. He emphasized that
the amendment aligned with prior testimony and would have
only a minimal impact on projected revenue.
Co-Chair Foster WITHDREW the OBJECTION. There being NO
further OBJECTION, Amendment 1 was ADOPTED.
1:47:41 PM
AT EASE
1:48:00 PM
RECONVENED
Co-Chair Schrage MOVED to ADOPT Amendment 2, 34-LS1349\I.2
(Nauman, 3/23/26) (copy on file):
Page 1, line 2, following "state":
Insert ", including the apportionment of income
of telecommunications service providers"
Page 20, following line 26:
Insert a new bill section to read:
"* Sec. 2. AS 43.20 is amended by adding a new
section to article 2 to read:
Sec. 43.20.147. Telecommunications service
providers. (a) All business 9 income of a
taxpayer that is a telecommunications service
provider shall be apportioned to this state in
accordance with AS 43.19 (Multistate Tax Compact)
as modified by this section.
(b) For the purposes of calculating the
sales factor for a telecommunications service
provider, sales of the telecommunications service
provider, other than sales of tangible personal
property described in art. IV, sec. 16 of AS
43.19 (Multistate Tax Compact), are in this state
if
(1) the income-producing activity is
performed in this state; or
(2) the income-producing activity is
performed both in and outside of 18 this
state and a greater portion of the income-
producing activity is performed in this
state than in any other state based on costs
of performance.
(c) In this section, "telecommunications
service provider" includes a mobile
telecommunications service provider."
Renumber the following bill sections accordingly.
Page 20, line 29:
Delete "AS 43.19.010, as amended by sec. l of
this Act,"
Insert "This Act"
Co-Chair Foster OBJECTED for discussion.
Co-Chair Schrage explained that Amendment 2 addressed
similar concerns as Amendment 1 but focused on the
telecommunications industry. He noted that
telecommunications companies currently operating in Alaska
relied on the cost-of-performance method under the existing
tax structure. He stated that the shift to market-based
sourcing could have unintended negative impacts on
companies. He explained that Amendment 2 also directed DOR
to adopt regulatory language based on MTC to facilitate a
more tailored and appropriate treatment of
telecommunications activities. He emphasized that the goal
was to avoid unintended consequences while still
modernizing the tax system.
Representative Stapp spoke in support of the amendment and
noted that it aligned telecommunications definitions with
MTC in a streamlined manner. He added that he had also co-
sponsored Amendment 2.
Co-Chair Foster WITHDREW the OBJECTION. There being NO
further OBJECTION, Amendment 2 was ADOPTED.
1:50:12 PM
Representative Hannan MOVED to ADOPT Amendment 3, 34-
LS1349\I.3 (Nauman, 3/24/26) (copy on file):
Page 1, line 2, following "state":
Insert ", including the apportionment of income of
broadcasters"
Page 20, following line 26:
Insert a new bill section to read:
"* Sec. 2. AS 43.20 is amended by adding a new
section to article 2 to read:
Sec. 43 .20.147. Broadcasters. (a) All
business income of a taxpayer that is a
broadcaster shall be apportioned to this state in
accordance with AS 43.19 (Multistate Tax Compact)
as modified by this section.
(b) For the purposes of calculating the
sales factor for a broadcaster, income from the
sale of advertising or licensing fees that arises
from the broadcast or distribution of film
programming are in this state if the domicile of
the broadcast customer is in the state. The
domicile of a commercial broadcast customer is
the principal place from which the trade or
business of the customer is directed or managed.
The domicile of a noncommercial broadcast
customer is the address of the customer listed in
the records of the broadcaster.
(c) In this section,
(1) "broadcaster" means a taxpayer that
is a television broadcast network, a cable
program network, or a platform distribution
company;
(2) "income from the sale of
adve1iising" means income resulting from the
sale of advertising content in the film
programming of the broadcaster."
Renumber the following bill sections accordingly.
Page 20, line 29:
Delete "AS 43.19.010, as amended by sec. 1 of
this Act,"
Insert "This Act"
Co-Chair Foster OBJECTED for discussion.
Representative Hannan explained that Amendment 3 addressed
the broadcasting industry and was similar in intent to the
previous amendments. She stated that the amendment aimed to
prevent unintended impacts on existing taxpayers while
aligning with MTC principles. She relayed that current law
used an audience-based method to apportion income for
broadcasters. The amendment would transition to a customer
location method, which would produce more accurate
information. She outlined three types of customers in the
broadcasting industry: direct-to-consumer subscribers,
third-party distributors licensing content, and advertisers
purchasing commercial space. The customer location method
would provide a more precise basis for taxation. She noted
that 14 other states had already adopted similar
approaches. She added that the change would also improve
auditability for DOR and make it easier for the tax
division to conduct audits.
Co-Chair Foster WITHDREW the OBJECTION.
1:52:20 PM
Representative Stapp OBJECTED. He was not swayed by the
previous testimony by the broadcasters and he did not fully
understand the issue related to location. He questioned why
market-based sourcing would not already address concerns
regarding audience and advertising definitions. He remarked
that when he did not understand an issue, his default
position was to oppose it, although he indicated he would
not be concerned if the amendment ultimately passed.
Co-Chair Foster asked whether there was further discussion.
Representative Allard stated that she would wait to comment
until after Representative Stapp withdrew his objection.
Co-Chair Foster indicated that he did not think
Representative Stapp intended to withdraw his objection.
Representative Stapp MAINTAINED the OBJECTION.
1:53:20 PM
A roll call vote was taken on the motion.
IN FAVOR: Galvin, Moore, Hannan, Jimmie, Josephson, Foster
OPPOSED: Allard, Stapp, Bynum, Tomaszewski, Schrage
The MOTION PASSED (6/5). There being NO OBJECTION,
Amendment 3 was ADOPTED.
1:54:17 PM
Co-Chair Schrage MOVED to REPORT CSHB 280(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
Representative Allard OBJECTED.
1:54:55 PM
A roll call vote was taken on the motion.
IN FAVOR: Jimmie, Galvin, Hannan, Bynum, Josephson,
Schrage, Foster
OPPOSED: Allard, Stapp, Moore, Tomaszewski
The MOTION PASSED (7/4).
There being NO further OBJECTION, CSHB 280(FIN) was
REPORTED out of committee with five "do pass"
recommendations, one "do not pass" recommendation, two "no
recommendation" recommendations, and three "amend"
recommendations, and with one new fiscal impact note from
the Department of Revenue.
1:56:06 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 21 Public Testimony Rec'd by 032426_R.pdf |
HFIN 3/25/2026 1:30:00 PM |
HB 21 |
| HB 280 Amendments 1-3 032326.pdf |
HFIN 3/25/2026 1:30:00 PM |
HB 280 |
| HB 280 Amendments 1-3 with ACTIONS 032326.pdf |
HFIN 3/25/2026 1:30:00 PM |
HB 280 |