HB 88-FEES FOR TIRES  1:06:58 PM CO-CHAIR HUGHES announced that the first order of business would be HOUSE BILL NO. 88, "An Act relating to remittance of tire fees; and providing for an effective date." 1:07:57 PM ANNA KIM, Chief of Revenue Operations, Juneau Office, Department of Revenue (DOR), on behalf of the administration, stated that HB 88 proposes to change the deadline for vendors to report and pay collected tire fees to the last day of the month. She explained that tire fees and payments are due 30 days following the last day of the calendar quarter. Thus for three of the calendar quarters the filing and payment are due prior to the last day of the month. This has caused taxpayer confusion about filing dates and resulted in inadvertent late filings, as well as penalties and interest on late filings. This bill would provide a remedy. 1:09:06 PM MS. KIM stated that Section 1 changes the return and tax payment due date from 30 days following the last day of the calendar quarter to the last day of the calendar month. She said this means the due dates change from the original due dates of the 30th of July, October, and January to the 31st. MS. KIM stated that Section 2 will align the payment and date used to determine a timely paid credit with the adjusted due dates listed in Section 1. She relayed that the timely paid credit is intended to compensate taxpayers for collecting taxes from customers and remitting fees to the state. She explained that the timely paid credit allows vendors to retain five percent of the amount of the tax collected not to exceed $900 per quarter, to cover expenses associated with collecting and remitting the fees. 1:09:55 PM MS. KIM stated that Section 3 will apply the due date changes to the first calendar quarter after the effective date of the act and Section 4 will add an immediate effective date. She reported that the department's fiscal note is zero and the department is not aware of any opposition to the bill. 1:10:41 PM CO-CHAIR HUGHES asked whether the schedule for vendors who sell tires will also match the schedule for those remitting motor fuel taxes. MS. KIM deferred to Mr. Spanos to respond. 1:11:17 PM BRANDON SPANOS, Deputy Director, Tax Division, Anchorage Office, Department of Revenue (DOR), stated that he was not aware of any tire fee taxpayers who are also collecting motor fuel taxes; however, if this did occur, the two separate returns would line up. He explained that motor fuel taxes are filed monthly, but taxpayer returns would line up since the due dates fall at the end of the month. In addition, under the bill all of the quarterly returns will fall at the end of the month rather than the 30th day of the month. 1:12:13 PM CO-CHAIR HUGHES asked for further clarification on the reduction in revenue of $30,000. MR. SPANOS answered that the figure may be estimated higher, since the division has not yet analyzed how many taxpayers actually pay one day late, but the figure is based on estimated penalty and interest payments for a number of late filings. The reduction in revenue reflects the loss of interest, penalties, and taxpayer credits, he said. He explained that taxpayers paying one day late incur a late filing penalty of 5 percent plus 3.75 percent interest, as well as a timely filing credit of up to $900. 1:13:17 PM REPRESENTATIVE ORTIZ asked for the genesis of the bill and if it came from the vendors. MS. KIM answered that taxpayers have raised the issue of inconsistencies in the due dates. 1:13:50 PM REPRESENTATIVE CLAMAN related his understanding that this bill would reduce the burden for businesses who sell tires since they will have a clear schedule for remitting tax collections and the loss of revenue reflects the division will not be collecting penalties and interest for vendors with late filings. MS. KIM answered that is correct. 1:14:14 PM REPRESENTATIVE CLAMAN asked for further clarification that the division will still collect late fees, but the expectation is that since the deadline would be clearer, the department will collect less penalties and interest. MS. KIM answered that is also correct. 1:14:41 PM CO-CHAIR FOSTER asked the department to elaborate on the tax timely pay credit loss. MS. KIM answered that vendors who pay timely retain 5 percent of the tire fees that the division would normally collect. 1:15:15 PM CO-CHAIR HUGHES asked how businesses will be notified of the proposed change, for example, whether vendors will be notified through the public notice process or if the department will provide individual notices to taxpayers. She further asked for information on the different types of tire fees for commercial, studded, or off road tire fees. MS. KIM explained that the outreach would be done by the excise tax section. She said the division will also need to change its forms. She envisioned that some type of announcement will be posted on the department's website. She deferred to Mr. Spanos to address tire fees. 1:16:29 PM MR. SPANOS answered that two fees are associated with tires, the first is a [$2.50] fee on the sale of all new tires, and the second is a fee of $5 for studded tires; however, customers buying studded tires are required to pay both fees. CO-CHAIR HUGHES asked whether fees are different for large commercial tires as compared to fees for passenger vehicles. MR. SPANOS confirmed the tire fee is $2.50, but there is not any difference in fees based on tire size. He clarified that the stud fees are based on the stud weight so the $5 fee wouldn't apply to a small aluminum stud, but it would apply to steel studs. Further, tires used exclusively for off-road use are exempt from the taxes. 1:18:46 PM CO-CHAIR HUGHES, after first determining no one wished to testify, closed public testimony on HB 88. [HB 88 was held over.] [CO-CHAIR HUGHES passed the gavel to Co-Chair Foster].