Legislature(1999 - 2000)
03/22/2000 01:20 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 238 - TAX OBLIGATION LOAN PROGRAM FOR FISHERS Number 0426 CO-CHAIR HUDSON announced that the next order of business would be HOUSE BILL NO. 238, "An Act establishing a federal tax obligation loan program under the commercial fishing loan program." REPRESENTATIVE MARY KAPSNER, Alaska State Legislature, sponsor of HB 238, stated that HB 238 was introduced as an effort to keep Alaskan fishing permits in Alaska, to retain a high value on those fishing permits and to preclude the Internal Revenue Service (IRS) from seizing permits from commercial permit holders who have debt to the IRS. The bill provides low-interest loans to fisherman who owe the IRS money in back taxes; it is a "one time only deal." The bill is intended for people whose fishing permits are the only things of value that they may own. BRUCE TWOMLEY, Chairman, Commercial Fisheries Entry Commission (CFEC), stated that they have, for a long time, dealt with the IRS on this issue. He explained that it is very easy for small- business owners to get into trouble with the IRS. In the case of fishermen, the state has made them especially vulnerable by virtue of the limited entry permits that they need, which also have a monetary value; those are big targets for a tax collector. He explained that the state has also supplied a loan program to help fisherman get access to credit, and HB 238 would allow the program to also loan money so that fisherman could meet their tax obligations. MR. TWOMLEY noted that people doing outreach and helping fisherman come into tax compliance have told them that it is a critical element, because many people they are dealing with live in isolation in Western Alaska and do not have the capacity to respond to a notice from the IRS, especially if they do not have any money and their permit is the only item of cash value. He indicated that the program would give these people hope, and it would not cost anything because the revolving loan fund is already in place. He noted that the loans would be secured. Number 0776 REPRESENTATIVE JOULE asked who the fisherman look to for help when the IRS contacts them. MR. TWOMLEY responded that it could be a very different situation, depending on whether it happens in an urban setting or a rural setting. He pointed out that there is a lot of help available, and there have been some constructive efforts to do outreach. He indicated that they currently have a constructive relationship with the IRS, which has extended itself to try to do outreach. The Alaska Business Development Center has also been working to do that and to help people file taxes. He noted that it is important to have the tool to put together an agreement with the IRS, and an offer in compromise, and that is where the loan program comes in. REPRESENTATIVE KAPSNER said she appreciates Representative Joule's question. She explained that at one point the IRS was looking at people in Western Alaska who were permit holders as easy targets, because the IRS knew that there was not a lot of legal representation in that area and people did not have easy access to it. CO-CHAIR HUDSON indicated he is glad to hear that they have a better relationship with the IRS, because it was not always the case. MR. TWOMLEY pointed out that it is with the help of U.S. Senator Ted Stevens; there are some new procedural protections in place. He noted that the IRS currently is going through quite a bit of turmoil, and it is uncertain what the change in administration in Washington, D.C., will bring. Number 0985 RON BARNES testified via teleconference from Anchorage. A commercial fisherman from Western Alaska who has a commercial fishing entry permit, he wondered if one needs a filed federal income tax [form] or can just provide an income statement for the loan process. GREG WINEGAR, Loan Manager, Division of Investments, Department of Community & Economic Development (DCED), answered that the bill requires that the person has filed all of his/her returns with the IRS; therefore, the Division of Investments would look at those current filings. MR. BARNES commented that based on Article VII, Section 12, of the Constitution of the State of Alaska, he does not believe that the constitutionality of taxing Natives has been settled yet, "under the U.S. Constitution, because we are recognized as foreign territory, and this is based on some research from a 1899 law review and then the recognition in the United Nations under Article 73. And since those are not satisfied, then I think those are questions that need to be dealt with." CO-CHAIR HUDSON asked Mr. Barnes to send in his written testimony. Number 1274 PAUL FROST testified via teleconference from Anchorage. He questioned whether the bill has provisions for borrowing money if one loses one's permit due to a poor fishing season and is forced to sell the permit to satisfy debt. MR. WINEGAR answered that the existing commercial fishing program would allow a person to apply for a loan for a permit. REPRESENTATIVE BARNES explained that HB 238 has to do with IRS foreclosures on permits. REPRESENTATIVE KAPSNER pointed out that HB 238 amends the statute so that a fisherman can repay tax obligations. However, if a person owes money to a bank for a boat, the bill would not address that; it is just for the IRS. MR. FROST questioned the language on page 1, Section 1 of the bill. [The committee explained to Mr. Frost that HB 238 is only amending existing law and that only the underlined language is new.] REPRESENTATIVE JOULE made a motion to move HB 238 from committee with individual recommendations and attached fiscal note; he asked for unanimous consent. There being no objection, HB 238 moved from the House Resources Standing Committee.
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