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HOUSE BILL NO. 214
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-SECOND LEGISLATURE - FIRST SESSION
BY THE HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
Introduced: 5/18/21
Referred: House Special Committee on Ways and Means, State Affairs, Finance
A BILL
FOR AN ACT ENTITLED
1 "An Act relating to the taxation of income of individuals; repealing tax credits applied
2 against the tax on individuals under the Alaska Net Income Tax Act; and providing for
3 an effective date."
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
5 * Section 1. AS 43.05.045(a) is amended to read:
6 (a) Except as provided in AS 43.22.090(g), or unless [UNLESS] an
7 exemption is granted under (b) of this section, a taxpayer required to submit a return
8 or report for a tax levied under this title or for any other tax administered by the
9 department shall submit the return or report electronically in a format prescribed by
10 the department. Failure to comply with this section may result in a civil penalty under
11 AS 43.05.220(f). If a law under this title requires a report or return or a portion of a
12 report or return to be in writing, an electronically filed report or return satisfies this
13 section. A taxpayer shall submit attachments to a report or return required under this
14 title electronically.
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1 * Sec. 2. AS 43 is amended by adding a new chapter to read:
2 Chapter 22. Income Tax.
3 Sec. 43.22.010. Income tax on individuals. (a) Each calendar year or fraction
4 of a calendar year, an income tax is imposed on the income of a
5 (1) resident individual;
6 (2) nonresident individual that is taxable under AS 43.22.050.
7 (b) The tax under this section for an individual or individuals filing jointly is
8 one percent of taxable income.
9 (c) Two resident individuals who file a joint federal income tax return may
10 determine the tax imposed by this chapter jointly under this section.
11 (d) Two individuals who file a joint federal income tax return both or one of
12 whom is not a resident may elect to determine the tax imposed by this chapter either
13 (1) individually; or
14 (2) jointly as if both individuals were residents; the income of the
15 individuals filing jointly under this paragraph is not subject to the calculation under
16 AS 43.22.020.
17 Sec. 43.22.020. Calculation of tax on a nonresident individual. (a) Except as
18 otherwise provided in (b) of this section, the tax on a nonresident individual is the
19 product of
20 (1) the tax determined under AS 43.22.010(b) on the nonresident
21 individual's taxable income computed as if the nonresident individual were a resident
22 individual; and
23 (2) a fraction, the
24 (A) numerator of which is the nonresident individual's income
25 taxable under AS 43.22.050; and
26 (B) denominator of which is the nonresident individual's
27 taxable income computed as if the nonresident individual were a resident
28 individual.
29 (b) If a nonresident individual's taxable income computed under (a)(2)(B) of
30 this section is less than the nonresident individual's income taxable under (a)(2)(A) of
31 this section, the tax imposed by this chapter is on the nonresident individual's taxable
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1 income under AS 43.22.050.
2 Sec. 43.22.030. Credit for income taxes imposed by other jurisdictions. (a)
3 A resident individual or part-year resident individual is allowed a credit against the tax
4 due under this chapter for an income tax that was imposed on the resident or part-year
5 resident for the taxable year by another state or the political subdivision of another
6 state on income derived from or connected with that state or political subdivision.
7 (b) A credit allowed under (a) of this section
8 (1) for a resident individual may not exceed the individual's tax due
9 under this chapter before credits are applied, multiplied by a fraction, the numerator of
10 which is the portion of the individual's taxable income that is derived from or
11 connected with a source in another state or the political subdivision of another state
12 and the denominator of which is the resident individual's income;
13 (2) for a part-year resident individual may not exceed the individual's
14 tax due for the period of state residency before credits are applied, multiplied by a
15 fraction, the numerator of which is the individual's taxable income derived from or
16 connected with a source in another state or the political subdivision of another state
17 during the period of state residency and the denominator of which is the part-year
18 resident individual's taxable income during the period of state residency;
19 (3) may not reduce the tax due under this chapter to less than the tax
20 that would have been due if the income derived from or connected with a source in
21 another state or the political subdivision of another state and subject to taxation by the
22 other state or political subdivision had been excluded from the resident or part-year
23 resident individual's taxable income during the calculation of tax under this chapter
24 before the application of credits.
25 (c) If the tax administration of another state or a political subdivision of
26 another state determines that a taxpayer has overpaid tax, affecting the computation of
27 the credit allowed under this section for any taxable year, the taxpayer shall file an
28 amended return with the department not later than 90 days after the final determination
29 by the state or political subdivision that the tax was overpaid. The department may
30 assess a taxpayer additional tax, proportional to the amount overpaid in the other state
31 or political subdivision.
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1 (d) A taxpayer is not allowed a credit under this section for taxes paid to
2 another jurisdiction if the taxpayer claims a credit against the income tax imposed by
3 the other jurisdiction for the tax payable under this chapter.
4 Sec. 43.22.040. Taxable income; general rule. (a) In this chapter, taxable
5 income is the taxpayer's federal adjusted gross income for the taxable year minus, if
6 included in federal adjusted gross income,
7 (1) income that is exempt from taxation by a state under federal law;
8 and
9 (2) a permanent fund dividend received by the taxpayer or the
10 taxpayer's dependent under AS 43.23.
11 (b) In addition to the adjustments made to taxable income under (a) of this
12 section, a taxpayer may receive a reduction from federal adjusted gross income. The
13 reduction under this subsection for
14 (1) an individual resident taxpayer is $15,000;
15 (2) two resident taxpayers filing jointly is $30,000;
16 (3) an individual nonresident is the product of $15,000 and a fraction,
17 the numerator of which is the nonresident individual's income taxable under
18 AS 43.22.050, computed without the reduction under this subsection, and the
19 denominator of which is the nonresident individual's taxable income computed as if
20 the nonresident individual were a resident individual and without the reduction under
21 this subsection; the reduction under this paragraph may not exceed $15,000 for each
22 exemption claimed;
23 (4) two nonresident individuals filing jointly is the product of $30,000
24 and a fraction, the numerator of which is the nonresident individuals' income taxable
25 under AS 43.22.050, computed without the reduction under this subsection, and the
26 denominator of which is the nonresident individuals' taxable income computed as if
27 the nonresident individuals were resident individuals and without the reduction under
28 this subsection; the reduction under this paragraph may not exceed $30,000 for each
29 exemption claimed.
30 Sec. 43.22.050. Nonresident individuals; taxable income. The taxable
31 income of a nonresident individual is the nonresident individual's income derived from
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1 or connected with a source in the state.
2 Sec. 43.22.060. Business conducted by a nonresident individual; taxable
3 income. (a) The department shall adopt regulations governing the amount of income
4 or the amount of a gain, loss, or deduction from a business conducted by a nonresident
5 individual that is derived from or connected with a source in the state for purposes of
6 determining taxable income. Regulations adopted under this subsection must be
7 consistent with AS 43.19 (Multistate Tax Compact).
8 (b) The department may by regulation require a taxpayer to allocate rather
9 than apportion income or a gain, loss, or deduction under this section.
10 Sec. 43.22.070. Part-year resident individual; taxable income. (a) Except as
11 otherwise provided in this section, the taxable income of a part-year resident
12 individual is the sum of
13 (1) the taxable income of the part-year resident individual during the
14 period of residency; and
15 (2) the taxable income derived from or connected with a source in the
16 state for the period of nonresidency of the individual.
17 (b) The department shall adopt regulations to determine the taxable income of
18 a part-year resident taxpayer.
19 Sec. 43.22.080. Determination of taxable year and method of accounting.
20 (a) For purposes of the tax imposed under this chapter, a taxpayer's
21 (1) taxable year is the same as the taxpayer's taxable year for federal
22 income tax purposes; and
23 (2) method of accounting is the same as the taxpayer's method of
24 accounting for federal income tax purposes.
25 (b) The department shall adopt regulations to determine the taxable income of
26 a taxpayer whose method of accounting changes during a taxable year or between
27 taxable years.
28 Sec. 43.22.090. Returns and payment of taxes. (a) A taxpayer shall file with
29 the department a return setting out
30 (1) the amount of tax due under this chapter; and
31 (2) other information necessary to carry out this chapter, as required by
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1 the department in regulation.
2 (b) A person required to file a return under this chapter shall file the return on
3 a form or in a format prescribed by the department. The return is due to the department
4 at the same time and in the same manner, including extensions, as the taxpayer's
5 federal income tax return to the United States Internal Revenue Service. A return filed
6 under this chapter must be made under oath and on penalty of perjury.
7 (c) The total amount of tax imposed by this chapter is due and payable to the
8 department at the same time and in the same manner as the federal individual income
9 tax payable to the United States Internal Revenue Service.
10 (d) A taxpayer, upon request by the department, shall furnish to the
11 department a true and correct copy of a return that the taxpayer has filed with the
12 United States Internal Revenue Service.
13 (e) A taxpayer shall notify the department in writing of an alteration in, or
14 modification of, the taxpayer's federal income tax return and of a recomputation of tax
15 or determination of deficiency, whether with or without assessment. A full statement
16 of the facts must accompany the notice. A taxpayer shall file the notice not later than
17 60 days after the final determination of the alteration, modification, recomputation, or
18 deficiency and shall pay any additional tax due under this chapter at that time. In this
19 subsection, "final determination" means the time that an amended federal return is
20 filed, a notice of deficiency or an assessment is mailed to the taxpayer by the United
21 States Internal Revenue Service, and the taxpayer has exhausted rights of appeal under
22 federal law.
23 (f) The department may credit or refund overpayments of taxes, taxes
24 erroneously or illegally assessed or collected, penalties collected without authority,
25 and taxes that are found unjustly assessed or excessive in amount, or otherwise
26 wrongfully collected. The department shall, in regulation, set limitations, specify the
27 manner in which claims for credits or refunds are made, and give notice of allowance
28 or disallowance. When a refund is allowed to a taxpayer, the refund may be paid out
29 of the general fund on a warrant issued under a voucher approved by the department.
30 (g) An individual is not required to file a return under this section
31 electronically, but a person employed to prepare and file an income tax return for an
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1 individual shall file the return for that individual electronically.
2 Sec. 43.22.100. Tax withholding on wages of individuals. (a) Every
3 employer making payment of wages or salaries
4 (1) shall deduct and withhold an amount of tax computed in a manner
5 to approximate the amount of tax due on those wages and salaries under this chapter
6 for that taxable year;
7 (2) shall remit the tax withheld to the department accompanied by a
8 return on a form prescribed by the department at the times required by the department
9 by regulation;
10 (3) is liable for the payment of the tax required to be deducted and
11 withheld under this section but is not liable to any individual for the amount of the
12 payment; and
13 (4) shall furnish to an employee on or before January 31 of the
14 succeeding year, or within 30 days after a request by the employee after an employee's
15 or individual's termination if the 30-day period ends before January 31, a written
16 statement on a form prescribed by the department showing
17 (A) the name and taxpayer identification number of the
18 employer;
19 (B) the name and social security number of the employee;
20 (C) the total amount of wages and salary for the taxable year;
21 and
22 (D) the total amount deducted and withheld as tax under this
23 chapter for the taxable year.
24 (b) The department shall publish the rate of withholding required by this
25 section.
26 Sec. 43.22.110. Administration. (a) The department shall adopt necessary
27 regulations and forms to implement and interpret this chapter, including regulations
28 and forms for the electronic filing and payment of tax due under this chapter. Federal
29 regulations