Legislature(2015 - 2016)BARNES 124
03/28/2016 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB373 | |
| HB253 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 373 | TELECONFERENCED | |
| += | HB 253 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 253-ELCTRNC TAX RETURN;MINING LIC. TAX & FEES
2:01:05 PM
CO-CHAIR TALERICO announced that the final order of business is
HOUSE BILL NO. 253, "An Act requiring the electronic filing of a
tax return or report with the Department of Revenue;
establishing a civil penalty for failure to electronically file
a return or report; relating to exemptions from the mining
license tax; relating to the mining license tax rate; relating
to mining license application, renewal, and fees; and providing
for an effective date."
CO-CHAIR NAGEAK moved to adopt the proposed committee substitute
for HB 253, Version 29-GH2924\N, Nauman, 3/17/16, as the working
document.
REPRESENTATIVE HERRON objected for discussion.
2:01:50 PM
JULIE MORRIS, Staff, Representative David Talerico, Alaska State
Legislature, reviewed the changes that would be made to the
original bill by the proposed committee substitute (CS). Under
Version N: Section 1 is deleted, thereby eliminating the
penalty if a taxpayer fails to electronically submit a return;
Section 2 is deleted, thereby eliminating the requirement that
taxpayer returns be submitted electronically; Section 3 is
amended to leave a three year exemption rather than a three and
one-half year exemption; Section 4 is amended by changing the 9
to 8 of the excess net income over $100,000; Section 5 is not
changed; Section 6 is not changed; Section 7 repeals the
deletion to the exemption as related to the bill for the period
of exemption in Section 3; Section 8 is amended to reflect the
exemption being retained; Section 9 is deleted because the
period of exemption from tax is retained; and Sections 10, 11,
and 12 are not changed and provide for transition language and
effective dates.
2:03:20 PM
REPRESENTATIVE SEATON pointed out that his sectional only goes
through Section 8.
MS. MORRIS offered to read the sectional that she has.
REPRESENTATIVE TARR noted that the actual bill of Version N only
goes to Section 8.
MS. MORRIS explained that she put the actual bill into the
sectional analysis, the changes are meant to reflect what
happened. The sectional analysis is for Version N.
REPRESENTATIVE CHENAULT asked what version the committee is on.
MS. MORRIS responded that the committee is on the sectional
analysis for Version N.
REPRESENTATIVE CHENAULT observed that Version A [the original
bill], goes to Section 12 and Version N only goes to Section 8.
MS. MORRIS answered correct.
REPRESENTATIVE TARR noted Sections 9, 10, and 11 were deleted.
MS. MORRIS replied correct.
CO-CHAIR TALERICO pointed out that there are only eight sections
in Version N.
2:05:37 PM
REPRESENTATIVE SEATON referred to Version N, page 2, lines 17-
18, Applicability, and asked whether [AS 43.65.010(a)] only
applies to those that begin production on or after that date and
therefore if a mining operation was in operation before that it
would not ever have to get a mining license.
MS. MORRIS responded that the uncodified law in Section 5 would
add an applicability to that section that relates to the
exemption period under [AS 43.65.101(a)]; [AS 43.65.010(c)]
would be applicable to the net income of the taxpayer from the
property in the state during the taxable year that begins on or
after the effective date in Section 2.
REPRESENTATIVE SEATON referred to subsection (b) [page 2, lines
19-21], and agreed that it begins on or after the effective
date, which is every taxable year. He asked whether the
applicability of "section (a)" applies only to the three and
one-half years or does it apply to the mining license
requirement, which is "section (a)."
CO-CHAIR TALERICO requested Mr. Jerry Burnett to answer the
question.
JERRY BURNETT, Deputy Commissioner, Office of the Commissioner,
Department of Revenue (DOR), stated DOR is reading this as being
clear that the intent of Section 5 is to apply to the three and
one-half year tax holiday on new production, which is changed to
a three year holiday [in Version N], and the license applies to
each year thereafter. He advised the department will review
this carefully given DOR just saw it this morning.
2:09:13 PM
REPRESENTATIVE TARR posited it is an issue because Version N
removes the three and one-half year exemption from the original
bill and so it makes that section just about having to obtain a
mining license. In Version N that section is about both
obtaining a license and the three year exemption. She suggested
that it be split into two sections to make it clear that every
mining operation would have to obtain a license versus how long
of an exemption period there would be for taxes. Otherwise, as
questioned by Representative Seaton, it sounds like a mining
operation would not have to get a mining license unless it was
on or after the effective date and therefore there are two
separate things in that one section.
MR. BURNETT answered that AS 43.65.010(c) is the second
applicability, which is the new license fee every year. He
reiterated that the department will have its attorneys look at
this carefully before the next meeting, but in talking with the
sponsor's staff this morning it is clear what the intent is.
REPRESENTATIVE JOSEPHSON stated he has concerns about the timing
and impact, but surmised that Section 8 would make Section 5
applicable July 1, 2016. The question is whether it is existing
mines or the license requirement is for future licensees, but
that the effective date appears to be July 1, 2016.
MR. BURNETT replied yes, that is what it says.
2:11:24 PM
REPRESENTATIVE TARR inquired about any fiscal note changes
between the original bill and Version N. She recalled that the
fiscal note for the original bill was about $6 million. She
asked whether there are any estimates on the change from the 9
in the original bill to the 8 in Version N.
MR. BURNETT responded that in fiscal year (FY) 2018, since this
would not be collected until a year after it starts, it looks
like approximately $3.6 million and then $3.2 million, so it is
about one-half of what it was, because it is now a 1 percent
change instead of a 2 percent change. It varies based on DOR's
current commodity price estimates and production estimates
between $2.8 million and $3.6 million per year over the life of
the fiscal note. The department will provide a new fiscal note
at the next meeting as it was difficult to prepare a new fiscal
note given the CS was only received this morning.
2:12:42 PM
REPRESENTATIVE JOSEPHSON understood that when the Donlin Gold
Mine becomes operational it will become the largest gold mine in
the world. He said he is still looking for comfort that when
the gold is removed and severed from Alaska that Alaskans are
getting their fair share. He asked how he should go about
figuring this out.
MR. BURNETT recounted that DOR earlier provided the committee
with a number of documents about comparative tax rates for
Canada and states in the U.S. He agreed it is a dilemma to
figure out because each mine is clearly unique, and obviously
the governor felt that the 9 percent rate was appropriate.
Donlin Gold Mine is the largest gold mine, Red Dog Mine is
certainly one of the largest zinc mines anywhere, and Greens
Creek Mine is the largest silver producing mine in North
America. The discussion here is not about small mines but about
large amounts of minerals being taken from the state.
2:14:21 PM
REPRESENTATIVE HERRON removed his objection to adopt Version N.
There being no further objection, Version N was before the
committee as its working document.
2:15:14 PM
REPRESENTATIVE TARR observed that Version N would remove the
requirement for electronic submission. She posited that this
requirement did not seem troublesome for large-sized companies.
She recalled that the state previously spent a large amount of
money upgrading and implementing DOR's database to get
everything in one place and understand it better. She asked
what the reasoning was for removing this requirement. She
related she does understand possibly delaying a penalty until a
new program has been implemented and people given an opportunity
to participate, but that [removing the electronic submission
requirement] does not seem to be moving in the direction that
the department wanted to go.
MS. MORRIS explained this provision was taken out of the bill at
the recommendation of Legislative Legal and Research Services,
because Sections 1 and 2 apply to any tax return or report to be
submitted under AS 32, not just returns for mining taxes.
However, the bill only amends filing requirements related to
mining taxes and there are several other sections of the tax law
that should be changed to accommodate the new electronic filing
requirements. So, Legislative Legal and Research Services has
advised that a separate bill is needed to address that issue.
She offered to provide the legal memorandum to the committee.
REPRESENTATIVE OLSON asked whether a separate bill is
forthcoming.
[Response to question unclear on audio.]
CO-CHAIR TALERICO advised that all members will receive a copy
of the legal memorandum.
CO-CHAIR TALERICO held over HB 253.