01/30/2020 01:30 PM Senate LABOR & COMMERCE

         SB 50-EMPLOYMENT TAX FOR EDUCATION FACILITIES                                                                      
                                                                                                                                
1:32:07 PM                                                                                                                    
CHAIR BISHOP announced  the consideration of SENATE  BILL NO. 50,                                                               
"An  Act imposing  an annual  educational facilities  maintenance                                                               
and  construction tax  on net  earnings from  self-employment and                                                               
wages;  relating to  the administration  and  enforcement of  the                                                               
educational  facilities  maintenance  and construction  tax;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
He  stated that  this  is the  third hearing  for  SB 50,  public                                                               
testimony was  taken during the  last hearing [and  the committee                                                               
adopted a  committee substitute  (CS) for SB  50, Version  S]. He                                                               
noted that Mr. Spanos was  online to respond to questions Senator                                                               
Stevens posed during the last hearing.                                                                                          
                                                                                                                                
SENATOR STEVENS asked  how the fees would be  collected for self-                                                               
employed individuals.                                                                                                           
                                                                                                                                
1:33:25 PM                                                                                                                    
BRANDON  SPANOS, Deputy  Director,  Tax  Division, Department  of                                                               
Revenue (DOR), Anchorage, Alaska, said  the Department of Labor &                                                               
Workforce Development  currently collects  unemployment insurance                                                               
from employers and employees. SB 50  would implement a tax of $30                                                               
for each  individual. The DOR's  fiscal note  reflects collecting                                                               
from  employers and  self-employed  individuals, so  it would  do                                                               
both. He  envisioned that self-employed individuals  would submit                                                               
some type of  a return. Currently, the  administrative section in                                                               
AS 43 requires an electronic filing  of any tax return or report.                                                               
Unless the bill adds a paper  option, filing for the $30 head tax                                                               
would  require an  electronic  filing. A  provision  in the  bill                                                               
would allow individuals who cannot  file electronically to obtain                                                               
a  waiver. He  anticipated  that  most self-employed  individuals                                                               
would file  their return through  DOR's online system to  pay the                                                               
$30 tax.  The portal already  exists for this  secure submission,                                                               
he said.                                                                                                                        
                                                                                                                                
SENATOR STEVENS  asked how DOR  will ensure this happens  and how                                                               
fishermen will  know they must  pay this tax,  particularly those                                                               
from out of state.                                                                                                              
                                                                                                                                
MR. SPANOS  said the  information would  likely be  included when                                                               
fishermen  obtain their  licenses. He  explained that  to collect                                                               
taxes from  marijuana-grower taxpayers,  the division  works with                                                               
the Department  of Commerce,  Community and  Economic Development                                                               
(DCCED) since  these individuals  obtain licenses.  He envisioned                                                               
the process to collect the annual $30 tax would be similar.                                                                     
                                                                                                                                
SENATOR STEVENS  commented that everyone  on commercial  boats is                                                               
required  to  have  a  license,  so  notices  would  be  sent  to                                                               
everyone.  He  asked  whether  DOR  would  be  able  to  withhold                                                               
licenses if fishermen did not pay.                                                                                              
                                                                                                                                
MR.  SPANOS replied  the  department has  the  ability to  assess                                                               
taxpayers who are not paying  their taxes. He envisioned that DOR                                                               
would likely  do a cost-benefit  analysis to determine if  it was                                                               
in the  state's best interest  to try to collect.  He anticipated                                                               
that the collection  efforts would likely cost more  than the $30                                                               
tax.                                                                                                                            
                                                                                                                                
SENATOR STEVENS commente that if word  got out that the DOR would                                                               
not pursue collections, no one would pay their taxes.                                                                           
                                                                                                                                
MR.  SPANOS responded  that the  department might  consider other                                                               
options. One option would be for  payors to withhold the tax. The                                                               
tax code states  that professional licenses in the  state will be                                                               
suspended for those  in arrears. The DOR  notifies the Department                                                               
of  Commerce, Community  and  Economic  Development (DCCED)  when                                                               
corporate  taxpayers are  in arrears  and subsequently  DCCED has                                                               
suspended  their  licenses. It  certainly  would  be possible  to                                                               
suspend fishermen's licenses, he said.                                                                                          
                                                                                                                                
SENATOR STEVENS  said he  was comfortable  with the  answers, but                                                               
the Senate  Finance Committee may  want to consider  this further                                                               
to ensure that licenses are suspended for nonpayment.                                                                           
                                                                                                                                
CHAIR BISHOP  agreed. He commented  that possible  tax collection                                                               
mechanisms exist,  because the education  head tax  was collected                                                               
from 1959-1980.                                                                                                                 
                                                                                                                                
SENATOR GRAY-JACKSON  mentioned that during the  last hearing she                                                               
indicated she would contact the  Anchorage School Board to submit                                                               
comments on  the bill.  She related that  she had  a conversation                                                               
with the board chair who will look into the matter.                                                                             
                                                                                                                                
CHAIR  BISHOP  said  he  heard   that  ASD  would  be  submitting                                                               
testimony in response to her query.                                                                                             
                                                                                                                                
1:41:11 PM                                                                                                                    
CHAIR  BISHOP   found  no  further  comments   or  questions  and                                                               
solicited a motion.                                                                                                             
                                                                                                                                
1:41:17 PM                                                                                                                    
SENATOR STEVENS moved to report  CSSB 50, work order 31-LS0383\S,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
1:41:28 PM                                                                                                                    
CHAIR BISHOP  found no  objection and  CSSB 50(L&C)  was reported                                                               
from the Senate Labor and Commerce Standing Committee.