Legislature(2017 - 2018)ADAMS ROOM 519
03/28/2018 01:30 PM FINANCE
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HOUSE BILL NO. 219 "An Act relating to background investigation requirements for state employees whose job duties require access to certain federal tax information; relating to persons under contract with the state with access to certain federal tax information; establishing state personnel procedures required for employee access to certain federal tax information; and providing for an effective date." 1:33:04 PM BRANDON S. SPANOS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE, introduced the legislation. He read from a sectional analysis (copy on file): Section 1 Amends AS 12.62.400 by adding a new subsection. This will require an agency to submit the fingerprints of current or prospective employees or contractors whose job duties require access to federal tax information (defined in AS 39.55.015(e)(3) and 36.30.960(d)(3)) to the Department of Public Safety for submission to the Federal Bureau of Investigation to obtain a criminal history record. Defines "agency", "employee" and "contractor". Section 2 Amends AS 36.30 by adding a new section. This section establishes state personnel procedures for obtaining and submitting fingerprints for current or prospective contractors if a contract with the state requires access to federal tax information. Defines "agency", "contractor" and "federal tax information". Section 3 Amends AS 39 by adding a new chapter. This new chapter addresses state personnel procedures related to federal tax information. Adds AS 39.55.010 This section explains the purpose of the chapter-- to establish procedures to safeguard federal tax information which will apply to a current or prospective state employee whose job duties require access to federal tax information. Adds AS 39.55.015 This section requires current and prospective state employees whose job duties require access to federal tax information to provide information to an agency for a state and national criminal history record check. Defines "agency", "employee", "federal tax information", "return", and "return information". Section 4 Provides the effective date of July 1, 2018. Representative Wilson stated that she did not understand why the department and agencies were doing the fingerprinting and sending them in; rather than the employee pay for the process. Co-Chair Foster noted the committee had been joined by Representative Pruitt and Vice-Chair Gara. Mr. Spanos noted it was a good point. He felt that it could be another option. Representative Wilson stressed that the state did not have any money, so she did not understand why the budget would be increased. She noted that the fiscal notes showed that the Department of Corrections (DOC) had the program for free. She wondered why DOC was free. Mr. Spanos replied that he understood that DOC did the program themselves, so the Department of Public Safety (DPS) would charge for the cost of the background check. 1:37:19 PM GARY LEE, CRIMINAL JUSTICE PLANNER, DEPARTMENT OF PUBLIC SAFETY (via teleconference), introduced himself. Representative Wilson wondered whether DPS had a cost to the background checks. Mr. Lee replied in the affirmative. He stated that the cost was $47 for a fingerprint-based background check. Representative Wilson wondered whether DPS paid for that cost for those that had been accepted into the department, or whether the employee paid for the cost. Mr. Lee answered that it was generally funded by the requesting agency. He stated that DPS did approximately 40,000 background checks per year for agencies. Representative Tilton noted that there were some agencies within the fiscal note that stated that they could absorb the costs, and other agencies were doing it for free. She wondered why the individual paying for the background check. She understood that the federal government would not allow the documentation to be available to the agencies without the background checks. She queried the agencies' different uses of the background checks. Mr. Spanos answered that the Tax Division used the information to compare corporate tax returns to the federal tax return, and verify that the information was similar. He stated that the IRS would share information about a corporation audit. He stated that Child Support Services used the information to garnish a tax refund. He stated that the Department of Labor and Workforce Development (DOLWD) used the background check to verify wage information for the unemployment insurance tax. Representative Guttenberg noted that the legislation would give the state employees and contractors access to federal tax information. He stressed that the entity paying for the service controlled the service. He wondered whether the federal government had a requirement outlining whether the state or individual paid for the background check, and how it would be processed, paid for, and shared. 1:42:43 PM Mr. Spanos answered that the IRS released a document, "Publication 1075", which detailed the state requirements in order to continue to receive federal tax information. He stated that the state was in compliance with all the requirements, except for the fingerprinting. He announced that there was an implemented policy on background checks, and those checks were conducted up to the level possible. He stressed that the fingerprinting required authority. He stated that the Publication 1075 the IRS did not specify who would pay for the fingerprinting, rather it stated that the states must conduct background checks on their employees. Representative Kawasaki surmised that the issue only applied to state employees or contractors who would access the federal tax information. Mr. Spanos answered in the affirmative. Representative Kawasaki asked how many people would have access. Mr. Spanos answered that there were approximately 105 filled positions in the division that would have access or potential access. He remarked that there were only six employees that actually had the security to go into the system to view the information. He stressed that there was a possibility to view the information on the computer. He stated that, in Child Support Services, the number was 250 people, and deferred to Ms. Beecher for more information. He restated that the number was closer to 200. Representative Kawasaki stated that currently there were no criminal background checks done in the agency. He asked if it was a new requirement. Mr. Spanos answered that the publication was finalized the year prior. He stated that with the updated publication, the Child Support Division and Tax Division created a new policy for background checks. That policy was already implemented. He stressed that they had yet to implement fingerprinting run through the federal database. He explained that it was the final step of the background check. Representative Wilson wondered whether the department would not be doing the fingerprinting. Mr. Spanos replied that fingerprints would be done by the Department of Public Safety (DPS). He deferred to Mr. Gaffney for more information. Representative Wilson questioned the details of the efforts of DPS. ERIC GAFFNEY, RECORDS AND LICENSING, DEPARTMENT OF PUBLIC SAFETY (via teleconference), responded that most fingerprinted in Alaska for civil purposes was done either by private commercial finger printers, employers, or local police agency. He stated that DPS usually did not conduct fingerprinting in larger urban areas, because there were private venders who provided that service. He shared that there was no strict rule on who should roll the fingerprints. He remarked that the fingerprints were conveyed to DPS, were scanned, and then transmitted to the FBI. He remarked that the rolling of the fingerprints was a different issue than processing them for background checks. He stated that there was no specific rule in Alaska, except for concealed handgun permits, on who may or was required to roll those prints. 1:47:38 PM Representative Tilton asked for more information about the federal receipts in the fiscal note. CAROL BEECHER, DIRECTOR, DIVISION CHILD SUPPORT SERVICES, DEPARTMENT OF REVENUE (via teleconference), asked for a restatement of the question. Representative Tilton noted that the fiscal note showed the source of funding from federal receipts. She wondered whether there was a federal grant with a match that would help to pay for the program. Ms. Beecher replied that the Child Support Division was a federally matched program. She explained that the state put forward 34 percent of the budget, and was matched at a 66 percent rate from the federal government. She shared that 66 percent of the cost would be bourn by the federal match money. Representative Wilson noted that the fiscal note specified that currently there was no cost to the DOC to do background checks. She wondered why the background checks were free. APRIL WILKERSON, DIRECTOR, ADMINISTRATIVE SERVICES DIVISION, DEPARTMENT OF CORRECTIONS (via teleconference), stated her understanding of the question. She assumed that the question was asking why DPS did not charge DOC for processing the fingerprints. Representative Wilson stated that the fiscal note showed that the fingerprinting was provided, currently, to the department at no fee. Therefore, she assumed that DOC was not charged either. Ms. Wilkerson replied in the affirmative. She stated that DOC currently processed their own fingerprints, and rolled fingerprints through the machine. It was a cooperative agreement in place within the DOC facilities in support of DPS. She shared that the DOC would resubmit its employee and contractor backgrounds. She stated that DPS did not bill DOC for the processing on the background and criminal checks. Representative Wilson surmised it would be cheaper to go through DOC for everything. Mr. Spanos appreciated receiving the federal tax information. He stated that the information helped with audits and receive revenue. He shared that, over the previous five years, the department had received an average of $2 million per year. Co-Chair Foster OPENED and CLOSED public testimony. HB 219 was HEARD and HELD in committee for further consideration.