HB 245-DIR DEPOSIT PFD IN INVESTMENT ACCT  3:26:16 PM CHAIR SHAW announced that the next order of business would be HOUSE BILL NO. 245, "An Act relating to depositing permanent fund dividends into investment accounts; and providing for an effective date." 3:26:31 PM REPRESENTATIVE CARRICK moved to adopt Amendment 1 to HB 245, labeled 33-LS1136\A.1, Nauman, 3/1/24, which read: Page 1, line 13, following "section.": Insert "The application form must notify the applicant that the applicant assumes the risk of investments made under this section." 3:26:33 PM REPRESENTATIVE WRIGHT objected for the purpose of discussion. 3:26:37 PM REPRESENTATIVE CARRICK explained that Amendment 1 attempts to preserve the state from liability or risk if permanent fund dividend (PFD) applicants choose bad investments. The amendment includes a disclosure that the applicant assumes the responsibility of the investment selections they make. 3:28:44 PM REPRESENTATIVE WRIGHT asked to hear from the bill sponsor. 3:28:52 PM REPRESENTATIVE DAN SADDLER, Alaska State Legislature, stated his support of Amendment 1 as a "friendly" amendment. He explained that anyone with an investment account needs to understand that investing carries some risk. By making abundantly clear through a disclosure that the recipients of PFDs who elect to deposit PFD money into a personal investment account assume responsibility for the risk, the state is not responsible for any lost money. This amendment would not incur any additional expense. 3:30:12 PM REPRESENTATIVE ALLARD asked if Amendment 1 to HB 245 would have any unintended consequences. GENEVIEVE WOJTUSIK, Director, Central Office, Permanent Fund Dividend Division, Department of Revenue, answered that the division is neutral on the amendment. It would not create any fiscal impact. The amendment would create a pop-up box that informs the applicant that risk is assumed by the applicant if they choose to invest their PFD. 3:31:09 PM REPRESENTATIVE STORY asked about tax and deferred compensation and asked if an amendment to the amendment would be necessary to include information about how investment accounts are taxed. 3:31:44 PM REPRESENTATIVE SADDLER stated it is not his intent to interpose the state into an individual's tax obligations. MS. WOJTUSIK added that the division is mandated by statute to provide a 1099 by January 31 of each year for PFD tax implications. 3:32:56 PM REPRESENTATIVE C. JOHNSON asked about failing to provide a social security number resulting in taxes being withheld from an applicant's PFD. MS. WOJTUSIK informed the committee that there is a 24 percent withholding fee for incorrect social security numbers inputted in the PFD application. The division sends warning letters to applicants about the fee. The fee is withdrawn when the correct social security number is provided up to the payout date. After the payout date, if the applicant wishes to amend their social security number on their application, the internal revenue service (IRS) must be consulted. REPRESENTATIVE C. JOHNSON asked when if an applicant chose to deposit their PFD into a tax-free entity such as a municipal bond would the tax be withheld and if there may be a possibility of double-taxing. MS. WOJTUSIK responded that Representative C. Johnson's question should be asked to the IRS or a tax professional. She clarified that the bill only creates an additional box for an applicant to select for an investment account. The applicant can work with their own tax professional. REPRESENTATIVE C. JOHNSON commented that he didn't want Alaskans to pay a double tax. He sought clarification about tax situations. 3:35:06 PM REPRESENTATIVE SADDLER stated it is not his intention to expose Alaskans to double taxation on the PFD. 3:35:24 PM REPRESENTATIVE WRIGHT removed his objection. There being no further objection, Amendment 1 to HB 245 was adopted. 3:35:36 PM CHAIR SHAW opened public testimony on HB 245. After ascertaining that no one wished to testify, he closed public testimony. 3:35:53 PM REPRESENTATIVE SADDLER provided wrap-up comments and requested a conceptual amendment. He explained that the current program system the department utilizes for PFDs would require an additional $100,000 to divide an applicant's PFD between accounts, and he suggested language to omit the possibility of partial PFD deposits into different accounts, thus resulting in the preferred zero fiscal note. 3:37:33 PM The committee took an at-ease from 3:37 p.m. to 3:41 p.m. 3:41:12 PM REPRESENTATIVE CARPENTER moved to adopt Conceptual Amendment 1 to HB 245 on page 1, line 7, to delete "all or part of the amount of". He authorized Legislative Legal Affairs to make any conforming changes necessary. There being no objection, Conceptual Amendment 1 to HB 245 was adopted. 3:41:59 PM The committee took a brief at-ease. 3:42:28 PM CHAIR SHAW opened public testimony on HB 245. After ascertaining there was no one who wished to testify, he closed public testimony. 3:42:39 PM REPRESENTATIVE SADDLER thanked the committee for adopting the amendments, which will improve the bill. 3:42:43 PM REPRESENTATIVE WRIGHT moved to report HB 245, as amended, from House State Affairs Standing Committee with individual recommendations and attached zero fiscal notes. There being no objection CSHB (STA) moved from committee.