Legislature(2015 - 2016)HOUSE FINANCE 519
04/11/2016 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB290 | |
| HB375 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 118 | TELECONFERENCED | |
| + | HB 243 | TELECONFERENCED | |
| + | HB 315 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 290 | TELECONFERENCED | |
| += | HB 375 | TELECONFERENCED | |
HOUSE BILL NO. 375
"An Act requiring the electronic submission of a tax
return or report with the Department of Revenue; and
providing for an effective date."
2:48:30 PM
KONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON,
introduced the bill that required the electronic submission
of a tax return or report with the Department of Revenue
(DOR). He noted that the governor introduced six tax bills
that all included provisions for electronic submissions of
tax returns and reports. He stated that electronic
submission of documents had become commonplace and was a
time saving and cost cutting measure for both the taxpayer
and the state. He furthered that there were only two
sections that made substantive changes to current statute;
the first authorized electronic filing and the second
assessed a civil penalty for failing to file
electronically.
Co-Chair Thompson observed that Section 1 of the bill
allowed for a waiver if a taxpayer did not have access to
computers. Mr. Jackson deferred the question to the
department. Co-Chair Thompson wondered how the taxpayer
would apply for a waiver. Mr. Jackson deferred the question
to the department.
Representative Munoz asked how the waiver process would
work. She favored the benefits of electronic filing but was
concerned about the segment of the population that was
"disadvantaged" by the requirement.
Vice-Chair Saddler wondered what electronic meant. He asked
whether the method included a fillable form or an
electronic PDF format. Mr. Jackson responded that the basic
language in the bill referred to a form prescribed by the
department.
2:53:40 PM
JERRY BURNETT, DEPUTY COMMISSIONER, TREASURY DIVISION,
DEPARTMENT OF REVENUE, responded that the department
envisioned the waiver process to include a paper form the
taxpayer filled out to request a waiver. He reported that
currently all tax payers were businesses or corporations.
The department expected a very small number of waiver
requests.
Representative Munoz asked whether the bill included
employment security taxes. Ms. Burnett responded that
employment security taxes were filed through the Department
of Labor and Workforce Development (DOLWD). Representative
Munoz wondered what percentage of current tax payers used
paper filing. Ms. Burnett replied that the department only
recently introduced electronic filing for businesses and
corporate filing had already mandated electronic filing.
Representative Kawasaki asked what the percentage of filers
that filed by paper was. Mr. Burnett responded that the
department was transitioning out of paper filing. He did
not have statistics and expected that very few taxpayers
would choose paper filing due to the convenience of
electronic filing. Representative Kawasaki asked about the
satisfactory evidence requirement in the bill in order to
receive a waiver. Mr. Burnett responded that satisfactory
evidence would entail not having the ability or
practicality to access the internet.
2:58:06 PM
Representative Kawasaki referred to Section 7 that
contained the transitional provisions. He recounted that
DOR will adopt regulations for implementation of electronic
filing. He wondered how long the time was between the
passage of the bill and when electronic filling would be
implemented. Mr. Burnett expected the regulations would be
quickly implemented but was not sure of the specifics.
Representative Kawasaki wanted to ensure that the
transition time was sufficient and allowed tax payers' time
to adjust and prepare for the change. Mr. Burnett commented
that the regulation process would implement a time period.
He explained that the state did not have a large number of
tax payers in any area other than corporate tax payers. He
ensured the committee that the department would engage in
some kind of outreach. He did not anticipate any issues in
the transition. Representative Kawasaki mentioned that the
waiver system included a civil penalty and wondered whether
the bill contained "typical language" when dealing with tax
filing. He preferred that penalties would be deferred until
after the first set of electronic filing was due. Mr.
Burnett relayed that "it was typical for a taxing agency to
have mandatory language." Representative Kawasaki wondered
about the zero fiscal note. He was under the impression
that electronic filing saved time and money and did not see
savings reflected in the fiscal note. Mr. Burnett answered
that most taxpayers were already filing electronically. He
noted that over the past several years the department
"ramped down" staffing levels as the electronic system came
online. He indicated that the effect on budgetary savings
was gradual and were currently difficult to define. He
offered that when the Permanent Fund Division instituted
electronic filing staffing decreased from over 100 to over
70 employees.
Vice-Chair Saddler wondered whether the bill was necessary.
Mr. Burnett responded that legislation was necessary
because some taxpayers were just not willing to file
electronically. He voiced that "there was no business
reason" for a taxpayer not to file electronically and the
few paper filers affected efficiency. Vice-Chair Saddler
asked about the digitization of forms and asked if the
taxpayer's information was sent directly into the
department's database. Mr. Burnett replied in the
affirmative. He expounded that the department had a web
portal and information went directly into the system.
3:05:03 PM
Representative Edgmon related that broad based taxes were
on the horizon and asked whether there would be any need to
provide some exceptions for rural communities without
access to reliable internet. Mr. Burnett answered that how
DOR handled individual taxes would be examined as a
separate issue. Representative Edgmon indicated that if the
state implemented an income tax electronic filing would
certainly aid the department especially with non-residents
filing. He thought an exemption for smaller rural
communities should be an option. Mr. Burnett replied that
the legislation allowed for a regulatory process as a means
for the department to deal with the issue of income taxes.
Representative Guttenberg was happy to see the state move
forward electronically. However, he was concerned with
internet accessibility. He remarked that if he personally
had to go through a portal to complete his filing he would
unlikely not be able to complete it. He felt that the state
was "not up to speed" in terms of having sufficient
internet service in Alaska; much of the state had
inadequate or dysfunctional internet service.
Representative Munoz remarked that she was old fashion and
still filed paper federal tax returns. She thought a longer
exemption period might be better. She suggested a 3 or 5
year tome period for exemptions.
3:12:05 PM
Representative Gara thought an option to file by paper
should remain due to the fact that in some places the
capability to file online did not exist. Mr. Burnett agreed
that a business might be located in a place without
adequate internet service and reported that an exemption
provision existed in the legislation.
Representative Pruitt asked whether business licenses were
required to be filed online. Mr. Burnett was uncertain
whether it was mandated. Representative Pruitt supported
the legislation as a step in the right direction and
believed electronic filing for many state purposes was the
preferred method that increased efficiency and lowered
costs. He wondered whether any of the state's online filing
was required.
Representative Wilson asked whether the Department of Labor
and Workforce Development could benefit from the same kind
of bill.
Representative Gara thought that applying for a waiver was
a cumbersome process and thought that the response might be
slow and cause late filing. He wondered whether a taxpayer
could just call and request a paper file. Co-Chair Thompson
ascertained that the waiver process would be handled in
regulations.
Mr. Burnett indicated that the bill authorized the
department to design the regulations for the exemption
process and could be handled as suggested by Representative
Gara. Representative Gara interpreted Section 1 as
prohibiting sending the form upon request without proving
necessity. He believed that the department's administrative
costs would be lowered if a paper copy would be provided
upon request without employing staff time reviewing waiver
criteria. He thought the process was "cumbersome."
Representative Gattis agreed with Representative Gara. She
relayed from personal experience that sometimes paper
filing was necessary or preferred. She wanted to ensure the
waiver process was much easier until the online process was
in more universal use in the state.
Co-Chair Thompson supported the legislation. He offered
that electronic filing had already resulted in efficiency
and cost savings for the department and HB 375 contained a
provision to obtain a waiver when necessary.
3:20:25 PM
Co-Chair Thompson OPENED public testimony.
3:20:34 PM
Co-Chair Thompson CLOSED public testimony.
Representative Munoz MOVED Conceptual Amendment 1.
Representative Munoz moved conceptual amendment 1 related
to page 2, line 4 extending the exemption period from two
years to five years.
Representative Wilson OBJECTED for discussion.
Representative Munoz thought 2 years was onerous for some
who needed to file via paper and would have to reapply for
the waiver after only two years.
Representative Wilson WITHDREW her objection.
Representative Kawasaki shared Representative Munoz's
concern. He was unsure whether the amendment was up to 5
years or extended for a full five years.
Representative Munoz WITHDREW Conceptual Amendment 1
Representative Munoz MOVED Conceptual Amendment 2 that
applied to page 2, line 4 of the bill removing "2" and
replacing it with "5". She clarified that the amendment
extended the exemption period to 5 years.
Representative Kawasaki OBJECTED for discussion.
Representative Kawasaki related that the department had
already experienced a savings with electronic filing and
that it would take time for the exemption regulations to be
written. He recognized the need to file paper returns but
felt that 5 years was "too long a time period" to allow
compliance. He opposed the amendment.
Representative Gara did not believe people were reading the
statute correctly. He deduced that the exemption was only
granted if a taxpayer was unable to file electronically and
not because the taxpayer merely resisted change. He
supported conceptual amendment 2.
Representative Wilson supported the amendment.
Vice-Chair Saddler indicated he favored the amendment.
A roll call vote was taken on the motion.
IN FAVOR: Guttenberg, Munoz, Saddler, Wilson, Edgmon, Gara,
Gattis
OPPOSED: Kawasaki, Pruitt, Thompson
The MOTION PASSED (7/3).
Representative Neuman was absent from voting.
3:26:40 PM
Vice-Chair Saddler reviewed the zero fiscal impact note
from DOR.
3:26:59 PM
Vice-Chair Saddler MOVED to REPORT HB 375 as amended out of
committee with individual recommendations and the
accompanying fiscal note(s). There being NO OBJECTION, it
was so ordered.
CSHB 375 (FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new accompanying zero
fiscal impact note by the Department of Revenue.
Co-Chair Thompson reviewed the agenda for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 118 AEA Graphic.pdf |
HFIN 4/11/2016 1:30:00 PM |
HB 118 |