03/06/2014 08:30 AM House FINANCE

CS FOR SENATE BILL NO. 71(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the fishery resource landing tax."                                                                     
                                                                                                                                
9:22:35 AM                                                                                                                    
                                                                                                                                
SENATOR  PETER MICCICHE,  testified  in support  of CSSB  71                                                                    
(FIN). He presented a portion of his sponsor statement.                                                                         
                                                                                                                                
     SB  71  is  a  bill  important  to  commercial  fishing                                                                    
     families throughout  Alaska. It has been  introduced to                                                                    
     repair glitches  in the  landing resource  tax statutes                                                                    
     and  regulations that  require  the  payment of  unfair                                                                    
     penalties and  interest by  well-intentioned commercial                                                                    
     fishermen.                                                                                                                 
                                                                                                                                
Senator  Micciche  elaborated  that  the  bill  changed  the                                                                    
current   timing  of   tax  payments   to  align   with  the                                                                    
publication  of  the  corresponding statewide  average  fish                                                                    
report. He stated  that section 1 aligned the  date that the                                                                    
resource  landing  tax  was  due  with  the  date  that  the                                                                    
statewide average  fish price report was  released. He noted                                                                    
that the  report was due  March 31st, but sometimes  was not                                                                    
published  until May.  The mismatch  in  timing resulted  in                                                                    
late  payment   fines  and  interest   for  well-intentioned                                                                    
producers as well as confusion,  frustration and wasted time                                                                    
that could  be better  spent harvesting and  processing fish                                                                    
to increase revenue.                                                                                                            
                                                                                                                                
Senator  Micciche continued  with section  2, which  added a                                                                    
new (e) and (f) in AS  43.77.020 appearing in section 3. The                                                                    
current statute  included provisions  for 4  equal payments,                                                                    
but  with  the  seasonal   nature  of  many  fisheries  with                                                                    
variability  of  harvest,  it was  impossible  for  resource                                                                    
landing taxpayers  to predict their full-year's  harvest for                                                                    
equal  payments. He  noted that  many fishermen  operated in                                                                    
only  one  of four  quarters  per  year. He  explained  that                                                                    
section  3   provided  three   different  methods   to  make                                                                    
estimated quarterly payments. A  new subsection (f) required                                                                    
the taxpayer to notify the  department by March 31st of each                                                                    
year the payment they choose.                                                                                                   
                                                                                                                                
9:25:11 AM                                                                                                                    
                                                                                                                                
Senator Micciche noted  that if a taxpayer  failed to select                                                                    
a payment method,  the department would help  them apply the                                                                    
method with  the lowest  tax liability.  He stated  that the                                                                    
bill provided  a fair and  equitable tax system  by aligning                                                                    
the date  of the  tax with  the report.  He pointed  out the                                                                    
various  supporters   of  the  bill.  The   legislation  was                                                                    
designed  to bring  efficiencies to  both fishermen  and the                                                                    
department.                                                                                                                     
                                                                                                                                
9:26:21 AM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman  asked about  the penalties or  late fees.                                                                    
He  discussed the  tax collected  from factory  trawlers and                                                                    
floating   processors.   He   mentioned   different   issues                                                                    
affecting  the fisheries.  He  was  involved in  discussions                                                                    
with  the  Department  of   Revenue  and  Legislative  Legal                                                                    
regarding the use of penalty fees.                                                                                              
                                                                                                                                
9:27:42 AM                                                                                                                    
                                                                                                                                
Senator  Micciche did  not think  that SB  71 was  the right                                                                    
bill  for  intercept  issues. He  understood  the  need  for                                                                    
fairness. He  was willing to  discuss the issues  with Vice-                                                                    
Chair Neuman.                                                                                                                   
                                                                                                                                
Representative Munoz asked about  the issue of cost recovery                                                                    
comparing a flat rate to a percentage.                                                                                          
                                                                                                                                
Senator  Micciche considered  the  issue  and considered  an                                                                    
amendment. He wished for the  best bill for fishing families                                                                    
in Alaska.                                                                                                                      
                                                                                                                                
9:29:16 AM                                                                                                                    
                                                                                                                                
MS. ANNA  KIM, DEPARTMENT OF REVENUE  TAX DIVISION, believed                                                                    
that the senator captured the  sentiment of the legislation.                                                                    
She   stated   that   the   administration   supported   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
9:30:50 AM                                                                                                                    
                                                                                                                                
JOHANNA BALES, DEPUTY DIRECTOR,  TAX DIVISION, DEPARTMENT OF                                                                    
REVENUE    (via    teleconference),    agreed    that    the                                                                    
administration  supported the  legislation.  She noted  that                                                                    
tax  returns  were  due  on  April  1st  of  each  year  and                                                                    
taxpayers were required  to calculate the tax  owed based on                                                                    
statewide  average prices  published  by  the Department  of                                                                    
Fish  and Game  and the  Department of  Revenue. She  stated                                                                    
that it  was impossible for  fishermen to calculate  the tax                                                                    
by April 1st.                                                                                                                   
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
SB  71  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.