32-LS0275\A
HOUSE BILL NO. 37
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-SECOND LEGISLATURE - FIRST SESSION
BY REPRESENTATIVE WOOL
Introduced: 1/8/21
Referred: Prefiled
A BILL
FOR AN ACT ENTITLED
1 "An Act relating to deposits into the dividend fund; relating to income of and
2 appropriations from the earnings reserve account; relating to the taxation of income of
3 individuals, partners, shareholders in S corporations, trusts, and estates; relating to a
4 payment against the individual income tax from the permanent fund dividend
5 disbursement; repealing tax credits applied against the tax on individuals under the
6 Alaska Net Income Tax Act; and providing for an effective date."
7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
8 * Section 1. AS 37.05.565(a) is amended to read:
9 (a) There is established in the general fund the Alaska capital income fund
10 consisting of money appropriated [DEPOSITED TO THE FUND UNDER
11 AS 37.13.145(d) AND OF APPROPRIATIONS] to the fund. The fund shall be
12 invested by the Department of Revenue to yield competitive market rates as provided
13 in AS 37.10.071. Income earned on money in the fund may be appropriated to the
HB0037a -1- HB 37
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\A
1 fund.
2 * Sec. 2. AS 37.13.010(a) is amended to read:
3 (a) Under art. IX, sec. 15, of the state constitution, there is established as a
4 separate fund the Alaska permanent fund. The Alaska permanent fund consists of
5 (1) 25 percent of all mineral lease rentals, royalties, royalty sale
6 proceeds, bonuses, net profit shares under AS 38.05.180(f) and (g), and federal
7 mineral revenue sharing payments received by the state [FROM MINERAL LEASES
8 ISSUED ON OR BEFORE DECEMBER 1, 1979, AND 25 PERCENT OF ALL
9 BONUSES RECEIVED BY THE STATE FROM MINERAL LEASES ISSUED ON
10 OR BEFORE FEBRUARY 15, 1980;
11 (2) 50 PERCENT OF ALL MINERAL LEASE RENTALS,
12 ROYALTIES, ROYALTY SALE PROCEEDS, NET PROFIT SHARES UNDER
13 AS 38.05.180(f) AND (g), AND FEDERAL MINERAL REVENUE SHARING
14 PAYMENTS RECEIVED BY THE STATE FROM MINERAL LEASES ISSUED
15 AFTER DECEMBER 1, 1979, AND 50 PERCENT OF ALL BONUSES RECEIVED
16 BY THE STATE FROM MINERAL LEASES ISSUED AFTER FEBRUARY 15,
17 1980]; and
18 (2) [(3)] any other money appropriated to or otherwise allocated by
19 law or former law to the Alaska permanent fund.
20 * Sec. 3. AS 37.13.140(b) is amended to read:
21 (b) The corporation shall determine the amount available for appropriation
22 each year. The amount available for appropriation is 5.25 percent of the average
23 market value of the fund for the first five of the preceding six fiscal years, including
24 the fiscal year just ended, computed annually for each fiscal year in accordance with
25 generally accepted accounting principles. In this subsection, "average market value of
26 the fund" includes the balance of the earnings reserve account established under
27 AS 37.13.145. The amount available for appropriation may not exceed the
28 balance in the earnings reserve account described in AS 37.13.145 [, BUT DOES
29 NOT INCLUDE THAT PORTION OF THE PRINCIPAL ATTRIBUTED TO THE
30 SETTLEMENT OF STATE V. AMERADA HESS, ET AL., 1JU-77-847 CIV.
31 (SUPERIOR COURT, FIRST JUDICIAL DISTRICT)].
HB 37 -2- HB0037a
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\A
1 * Sec. 4. AS 37.13.140(b), as amended by sec. 2, ch. 16, SLA 2018, is amended to read:
2 (b) The corporation shall determine the amount available for appropriation
3 each year. The amount available for appropriation is five percent of the average
4 market value of the fund for the first five of the preceding six fiscal years, including
5 the fiscal year just ended, computed annually for each fiscal year in accordance with
6 generally accepted accounting principles. In this subsection, "average market value of
7 the fund" includes the balance of the earnings reserve account established under
8 AS 37.13.145. The amount available for appropriation may not exceed the
9 balance in the earnings reserve account described in AS 37.13.145 [, BUT DOES
10 NOT INCLUDE THAT PORTION OF THE PRINCIPAL ATTRIBUTED TO THE
11 SETTLEMENT OF STATE V. AMERADA HESS, ET AL., 1JU-77-847 CIV.
12 (SUPERIOR COURT, FIRST JUDICIAL DISTRICT)].
13 * Sec. 5. AS 37.13.145(b) is amended to read:
14 (b) Each [AT THE END OF EACH] fiscal year, the legislature may make
15 the following appropriations [CORPORATION SHALL TRANSFER] from the
16 earnings reserve account:
17 (1) an amount equal to 20 percent of the amount available for
18 appropriation under AS 37.13.140(b) to the dividend fund established under
19 AS 43.23.045;
20 (2) an amount equal to 80 percent of the amount available for
21 appropriation under AS 37.13.140(b) to the general fund [, 50 PERCENT OF THE
22 INCOME AVAILABLE FOR DISTRIBUTION UNDER AS 37.13.140].
23 * Sec. 6. AS 37.13.145(c) is amended to read:
24 (c) After the appropriations made [TRANSFER] under (b) [AND AN
25 APPROPRIATION UNDER (e)] of this section, the legislature may appropriate
26 [CORPORATION SHALL TRANSFER] from the earnings reserve account to the
27 principal of the fund an amount sufficient to offset the effect of inflation on the
28 principal of the fund during that fiscal year. [HOWEVER, NONE OF THE AMOUNT
29 TRANSFERRED SHALL BE APPLIED TO INCREASE THE VALUE OF THAT
30 PORTION OF THE PRINCIPAL ATTRIBUTED TO THE SETTLEMENT OF
31 STATE V. AMERADA HESS, ET AL., 1JU-77-847 CIV. (SUPERIOR COURT,
HB0037a -3- HB 37
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\A
1 FIRST JUDICIAL DISTRICT) ON JULY 1, 2004.] The corporation shall calculate
2 the amount to appropriate [TRANSFER] to the principal under this subsection by
3 (1) computing the average of the monthly United States Consumer
4 Price Index for all urban consumers for each of the two previous calendar years;
5 (2) computing the percentage change between the first and second
6 calendar year average; and
7 (3) applying that rate to the value of the principal of the fund on the
8 last day of the fiscal year just ended [, INCLUDING THAT PORTION OF THE
9 PRINCIPAL ATTRIBUTED TO THE SETTLEMENT OF STATE V. AMERADA
10 HESS, ET AL., 1JU-77-847 CIV. (SUPERIOR COURT, FIRST JUDICIAL
11 DISTRICT)].
12 * Sec. 7. AS 37.13.150 is amended to read:
13 Sec. 37.13.150. Corporation budget. The revenue generated by the fund's
14 investments must be identified as the source of the operating budget of the corporation
15 in the state's operating budget under AS 37.07 (Executive Budget Act). The
16 unexpended balance of the corporation's annual operating budget does not lapse at the
17 end of the fiscal year but shall be treated as [INCOME AND] part of the market value
18 of the fund under AS 37.13.140.
19 * Sec. 8. AS 37.13.300(c) is amended to read:
20 (c) Net income from the mental health trust fund may not be included in the
21 computation of [NET INCOME OR] market value available for [DISTRIBUTION
22 OR] appropriation under AS 37.13.140.
23 * Sec. 9. AS 43.05.045(a) is amended to read:
24 (a) Except as provided in AS 43.22.075(h), or unless [UNLESS] an
25 exemption is granted under (b) of this section, a taxpayer required to submit a return
26 or report for a tax levied under this title or for any other tax administered by the
27 department shall submit the return or report electronically in a format prescribed by
28 the department. Failure to comply with this section may result in a civil penalty under
29 AS 43.05.220(f). If a law under this title requires a report or return or a portion of a
30 report or return to be in writing, an electronically filed report or return satisfies this
31 section. A taxpayer shall submit attachments to a report or return required under this
HB 37 -4- HB0037a
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\A
1 title electronically.
2 * Sec. 10. AS 43 is amended by adding a new chapter to read:
3 Chapter 22. Income Tax.
4 Sec. 43.22.010. Income tax on individuals. (a) Each calendar year or fraction
5 of a calendar year, an income tax is imposed on the income of a
6 (1) resident individual, trust, or estate;
7 (2) nonresident individual, trust, or estate that is derived from or
8 connected with a source in the state.
9 (b) The tax under this section for an individual or individuals filing jointly is
10 2.5 percent of taxable income.
11 (c) Two resident individuals who file a joint federal income tax return may
12 determine the tax imposed by this chapter jointly under this section.
13 (d) Two individuals who file a joint federal income tax return both or one of
14 whom is not a resident may elect to determine the tax imposed by this chapter either
15 (1) individually; or
16 (2) jointly as if both individuals were residents; the income of the
17 individuals filing jointly under this paragraph is not subject to the calculation under
18 AS 43.22.015.
19 Sec. 43.22.015. Calculation of tax on a nonresident individual. (a) Except as
20 otherwise provided in (b) of this section, the tax on a nonresident individual is the
21 product of
22 (1) the tax determined under AS 43.22.010(b) on the nonresident
23 individual's taxable income computed as if the nonresident individual were a resident
24 individual but taking a reduction under AS 43.22.030(b)(2); and
25 (2) a fraction, the
26 (A) numerator of which is the nonresident individual's income
27 taxable under AS 43.22.045; and
28 (B) denominator of which is the nonresident individual's
29 taxable income computed as if the nonresident individual were a resident
30 individual.
31 (b) If a nonresident individual's taxable income computed under (a)(2)(B) of
HB0037a -5- HB 37
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\A
1 this section is less than the nonresident individual's income taxable under (a)(2)(A) of
2 this section, the tax imposed by this chapter is on the nonresident individual's taxable
3 income as computed under AS 43.22.045.
4 Sec. 43.22.020. Tax on trusts and estates. (a) A tax is imposed for each
5 taxable year or portion of a taxable year on the taxable income of a resident or
6 nonresident trust or estate. The tax under this section for a trust or estate is 2.5 percent
7 of taxable income.
8 (b) In this section, the taxable income of a nonresident trust or estate is the
9 income of the trust or estate that is derived from or connected with a source in the
10 state.
11 (c) A trust is not subject to tax under this chapter if
12 (1) all of the trustees of the trust are nonresidents;
13 (2) the entire corpus of the trust, including real, tangible, and
14 intangible property, is located outside the state; and
15 (3) no income or gains of the trust are derived from or connected with
16 a source in the state.
17 (d) For purposes of (c)(1) of this section, a trustee that is a nonresident
18 banking corporation at the time the banking corporation becomes a trustee is a
19 nonresident trustee even if the banking corporation later becomes a resident trustee
20 because it is acquired by or becomes an office or branch of a resident trustee.
21 (e) A trust that is exempt from federal income tax because of its purpose or
22 activities is not subject to tax under this chapter.
23 (f) A special needs trust or other trust established to provide solely for the
24 housing, living expenses, or medical care of a disabled beneficiary is not subject to tax
25 under this chapter. In this subsection,
26 (1) "disabled beneficiary" means an individual who has
27 (A) a physical or mental impairment that substantially limits
28 one or more major life activities; or
29 (B) a condition that may require the use of a prosthesis, special
30 equipment for mobility, or a service animal;
31 (2) "special needs trust" has the meaning given in AS 13.36.215(b).
HB 37 -6- HB0037a
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\A
1 Sec. 43.22.025. Credit for income taxes imposed by other jurisdictions. (a)
2 A resident individual, trust, or estate or part-year resident individual, trust, or estate is
3 allowed a credit against the tax due under this chapter for an income tax that was
4 imposed on the resident or part-year resident for the taxable year by another state or
5 the political subdivision of another state on income derived from or connected with
6 that state or political subdivision.
7 (b) A credit allowed under (a) of this section
8 (1) for a resident individual, trust, or estate may not exceed the
9 individual's, trust's, or estate's tax due under this chapter before credits are applied,
10 multiplied by a fraction, the numerator of which is the portion of the individual's,
11 trust's, or estate's taxable income that is derived from or connected with a source in
12 another state or the political subdivision of another state and the denominator of which
13 is the resident individual's, trust's, or estate's taxable income;
14 (2) for a part-year resident individual, trust, or estate may not exceed
15 the individual's, trust's, or estate's tax due for the period of state residency before
16 credits are applied, multiplied by a fraction, the numerator of which is the individual's,
17 trust's, or estate's taxable income derived from or connected with a source in another
18 state or the political subdivision of another state during the period of state residency
19 and the denominator of which is the part-year resident individual's, trust's, or estate's
20 taxable income during the period of state residency;
21 (3) may not reduce the tax due under this chapter to less than the tax
22 that would have been due if the income derived from or connected with a source in
23 another state or the political subdivision of another state and subject to taxation by the
24 other state or political subdivision had been excluded from the resident or part-year
25 resident individual's, trust's, or estate's taxable income during the calculation of tax
26 under this chapter before the application of credits.
27 (c) If the tax administration of another state or a political subdivision of
28 another state determines that a taxpayer has overpaid tax, affecting the computation of
29 the credit allowed under this section for any taxable year, the taxpayer shall file an
30 amended return with the department not later than 90 days after the final determination
31 by the state or political subdivision that the tax was overpaid. The department may
HB0037a -7- HB 37
New Text Underlined [DELETED TEXT BRACKETED]
32-LS0275\