Alaska 2023-2024 Regular Session

Alaska House Bill HB156 Compare Versions

Only one version of the bill is available at this time.

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2	2	HB0156a -1- HB 156
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11	11	HOUSE BILL NO. 156
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13	13	IN THE LEGISLATURE OF THE STATE OF ALASKA
14	14
15	15	THIRTY-THIRD LEGISLATURE - FIRST SESSION
16	16
17	17	BY REPRESENTATIVES GALVIN, Groh
18	18
19	19	Introduced: 4/10/23
20	20	Referred: House Special Committee on Ways and Means, Finance
21	21
22	22
23	23	A BILL
24	24
25	25	FOR AN ACT ENTITLED
26	26
27	27	"An Act relating to the taxation of income of individuals, partners, shareholders in S 1
28	28	corporations, trusts, and estates; repealing tax credits applied against the tax on 2
29	29	individuals under the Alaska Net Income Tax Act; and providing for an effective date." 3
30	30	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
31	31	* Section 1. AS 43.05.045(a) is amended to read: 5
32	32	(a) Except as provided in AS 43.22.075(h), or unless [UNLESS] an
33	33	6
34	34	exemption is granted under (b) of this section, a taxpayer required to submit a return 7
35	35	or report for a tax levied under this title or for any other tax administered by the 8
36	36	department shall submit the return or report electronically in a format prescribed by 9
37	37	the department. Failure to comply with this section may result in a civil penalty under 10
38	38	AS 43.05.220(f). If a law under this title requires a report or return or a portion of a 11
39	39	report or return to be in writing, an electronically filed report or return satisfies this 12
40	40	section. A taxpayer shall submit attachments to a report or return required under this 13
41	41	title electronically. 14 33-LS0699\A
42	42	HB 156 -2- HB0156a
43	43	New Text Underlined [DELETED TEXT BRACKETED]
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45	45	* Sec. 2. AS 43 is amended by adding a new chapter to read: 1
46	46	Chapter 22. Income Tax. 2
47	47	Sec. 43.22.010. Income tax on individuals. (a) Each calendar year or fraction 3
48	48	of a calendar year, an income tax is imposed on the income of a 4
49	49	(1) resident individual, trust, or estate; 5
50	50	(2) nonresident individual, trust, or estate that is derived from or 6
51	51	connected with a source in the state. 7
52	52	(b) The tax under this section for an individual or individuals filing jointly is 8
53	53	two percent of taxable income over $200,000. 9
54	54	(c) Two resident individuals who file a joint federal income tax return may 10
55	55	determine the tax imposed by this chapter jointly under this section. 11
56	56	(d) Two individuals who file a joint federal income tax return both or one of 12
57	57	whom is not a resident may elect to determine the tax imposed by this chapter either 13
58	58	(1) individually; or 14
59	59	(2) jointly as if both individuals were residents; the income of the 15
60	60	individuals filing jointly under this paragraph is not subject to the calculation under 16
61	61	AS 43.22.015. 17
62	62	(e) In addition to the tax under (a) - (d) of this section, each individual who 18
63	63	has wages, net earnings from self-employment, or combined wages and net earnings 19
64	64	from self-employment in the state shall pay an annual tax of $20. In this subsection, 20
65	65	"net earnings from self-employment" has the meaning given in 26 U.S.C. 1402. 21
66	66	Sec. 43.22.015. Calculation of tax on a nonresident individual. (a) Except as 22
67	67	otherwise provided in (b) of this section, the tax on a nonresident individual is the 23
68	68	product of 24
69	69	(1) the tax determined under AS 43.22.010(b) on the nonresident 25
70	70	individual's taxable income computed as if the nonresident individual were a resident 26
71	71	individual but taking a deduction under AS 43.22.030(b)(2); and 27
72	72	(2) a fraction, the 28
73	73	(A) numerator of which is the nonresident individual's income 29
74	74	taxable under AS 43.22.045; and 30
75	75	(B) denominator of which is the nonresident individual's 31 33-LS0699\A
76	76	HB0156a -3- HB 156
77	77	New Text Underlined [DELETED TEXT BRACKETED]
78	78
79	79	taxable income computed as if the nonresident individual were a resident 1
80	80	individual. 2
81	81	(b) If a nonresident individual's taxable income computed under (a)(2)(B) of 3
82	82	this section is less than the nonresident individual's income taxable under (a)(2)(A) of 4
83	83	this section, the tax imposed by this chapter is on the nonresident individual's taxable 5
84	84	income as computed under AS 43.22.045. 6
85	85	Sec. 43.22.020. Tax on trusts and estates. (a) A tax is imposed for each 7
86	86	taxable year or portion of a taxable year on the taxable income of a resident or 8
87	87	nonresident trust or estate. The tax under this section for a trust or estate is $20 plus 9
88	88	two percent of taxable income over $200,000. 10
89	89	(b) In this section, the taxable income of a nonresident trust or estate is the 11
90	90	income of the trust or estate that is derived from or connected with a source in the 12
91	91	state. 13
92	92	(c) A trust is not subject to tax under this chapter if 14
93	93	(1) all of the trustees of the trust are nonresidents; 15
94	94	(2) the entire corpus of the trust, including real, tangible, and 16
95	95	intangible property, is located outside the state; and 17
96	96	(3) no income or gains of the trust are derived from or connected with 18
97	97	a source in the state. 19
98	98	(d) For purposes of (c)(1) of this section, a trustee that is a nonresident 20
99	99	banking corporation at the time the banking corporation becomes a trustee is a 21
100	100	nonresident trustee even if the banking corporation later becomes a resident trustee 22
101	101	because it is acquired by or becomes an office or branch of a resident trustee. 23
102	102	(e) A trust that is exempt from federal income tax because of its purpose or 24
103	103	activities is not subject to tax under this chapter. 25
104	104	(f) A special needs trust or other trust established to provide solely for the 26
105	105	housing, living expenses, or medical care of a disabled beneficiary is not subject to tax 27
106	106	under this chapter. In this subsection, 28
107	107	(1) "disabled beneficiary" means an individual who has 29
108	108	(A) a physical or mental impairment that substantially limits 30
109	109	one or more major life activities; or 31 33-LS0699\A
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113	113	(B) a condition that may require the use of a prosthesis, special 1
114	114	equipment for mobility, or a service animal; 2
115	115	(2) "special needs trust" has the meaning given in AS 13.36.215(b). 3
116	116	Sec. 43.22.025. Credit for income taxes imposed by other jurisdictions. (a) 4
117	117	A resident individual, trust, or estate or part-year resident individual, trust, or estate is 5
118	118	allowed a credit against the tax due under this chapter for an income tax that was 6
119	119	imposed on the resident or part-year resident for the taxable year by another state or 7
120	120	the political subdivision of another state on income derived from or connected with 8
121	121	that state or political subdivision. 9
122	122	(b) A credit allowed under (a) of this section 10
123	123	(1) for a resident individual, trust, or estate may not exceed the 11
124	124	individual's, trust's, or estate's tax due under this chapter before credits are applied, 12
125	125	multiplied by a fraction, the numerator of which is the portion of the individual's, 13
126	126	trust's, or estate's taxable income that is derived from or connected with a source in 14
127	127	another state or the political subdivision of another state and the denominator of which 15
128	128	is the resident individual's, trust's, or estate's taxable income; 16
129	129	(2) for a part-year resident individual, trust, or estate may not exceed 17
130	130	the individual's, trust's, or estate's tax due for the period of state residency before 18
131	131	credits are applied, multiplied by a fraction, the numerator of which is the individual's, 19
132	132	trust's, or estate's taxable income derived from or connected with a source in another 20
133	133	state or the political subdivision of another state during the period of state residency 21
134	134	and the denominator of which is the part-year resident individual's, trust's, or estate's 22
135	135	taxable income during the period of state residency; 23
136	136	(3) may not reduce the tax due under this chapter to less than the tax 24
137	137	that would have been due if the income derived from or connected with a source in 25
138	138	another state or the political subdivision of another state and subject to taxation by the 26
139	139	other state or political subdivision had been excluded from the resident or part-year 27
140	140	resident individual's, trust's, or estate's taxable income during the calculation of tax 28
141	141	under this chapter before the application of credits. 29
142	142	(c) If the tax administration of another state or a political subdivision of 30
143	143	another state determines that a taxpayer has overpaid tax, affecting the computation of 31 33-LS0699\A
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146	146
147	147	the credit allowed under this section for any taxable year, the taxpayer shall file an 1
148	148	amended return with the department not later than 90 days after the final determination 2
149	149	by the state or political subdivision that the tax was overpaid. The department may 3
150	150	assess a taxpayer additional tax, proportional to the amount overpaid in the other state 4
151	151	or political subdivision. 5
152	152	(d) A taxpayer is not allowed a credit under this section for taxes paid to 6
153	153	another jurisdiction if the taxpayer claims a credit against the income tax imposed by 7
154	154	the other jurisdiction for the tax payable under this chapter. 8
155	155	(e) Income tax imposed on a partner or the shareholder of an S corporation on 9
156	156	the income of the partnership or S corporation, including tax paid by the partnership or 10
157	157	S corporation to satisfy the tax liability of the partner or shareholder, may be included 11
158	158	in the calculation of a credit under this section. Tax imposed on the partnership or S 12
159	159	corporation that is the direct liability of the partnership or S corporation and not that of 13
160	160	the partner or shareholder may not be included in the calculation of a credit under this 14
161	161	section. 15
162	162	Sec. 43.22.030. Taxable income; general rule. (a) In this chapter, taxable 16
163	163	income is the taxpayer's federal adjusted gross income for the taxable year 17
164	164	(1) plus, if not already included in federal adjusted gross income, 18
165	165	(A) interest on obligations of another state, a political 19
166	166	subdivision of another state, the public instrumentality of another state, or the 20
167	167	local authority of another state; 21
168	168	(B) a loss on the sale or exchange of an obligation issued by or 22
169	169	on behalf of 23
170	170	(i) the state; 24
171	171	(ii) a municipality of the state; or 25
172	172	(iii) a public instrumentality, public authority, or public 26
173	173	corporation created under state law; 27
174	174	(C) a loss from the sale or exchange of shares in a unit 28
175	175	investment trust if the loss is attributable to an obligation issued by or on 29
176	176	behalf of 30
177	177	(i) the state; 31 33-LS0699\A
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181	181	(ii) a municipality of the state; or 1
182	182	(iii) a public instrumentality, public authority, or public 2
183	183	corporation created under state law; 3
184	184	(D) interest or dividends on obligations or securities issued by 4
185	185	the United States, or an authority, commission, or instrumentality of the United 5
186	186	States, that the Internal Revenue Code exempts from federal income tax; 6
187	187	(E) income taxes under this chapter; 7
188	188	(F) a gain realized but not recognized under 26 U.S.C. 1031 8
189	189	(Internal Revenue Code); 9
190	190	(G) a deduction allowed in the determination of federal 10
191	191	adjusted gross income that is directly or indirectly related to income that is not 11
192	192	taxable under this chapter; and 12
193	193	(H) income of an incomplete gift nongrantor trust to which a 13
194	194	taxpayer transferred property, less deductions of the trust, if 14
195	195	(i) the income and deductions of the trust would be 15
196	196	taken into account in computing the taxpayer's federal taxable income 16
197	197	if the trust in its entirety was treated as a grantor trust under the Internal 17
198	198	Revenue Code; 18
199	199	(ii) the trust is a resident trust; 19
200	200	(iii) the trust does not qualify as a grantor trust under 26 20
201	201	U.S.C. 671 - 679 (Internal Revenue Code); and 21
202	202	(iv) the grantor's transfer of assets to the trust is treated 22
203	203	as an incomplete gift under 26 U.S.C. 2511 (Internal Revenue Code); 23
204	204	(2) minus, if included in federal adjusted gross income, 24
205	205	(A) interest income or a dividend from an obligation that is 25
206	206	exempt from taxation by a state under federal law; 26
207	207	(B) a refund or credit for the overpayment of an income tax; 27
208	208	(C) an ordinary and necessary expense, including an interest 28
209	209	expense, paid or incurred during the taxable year, that is directly or indirectly 29
210	210	related to income exempt under the Internal Revenue Code but taxable by the 30
211	211	state; 31 33-LS0699\A
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215	215	(D) a gain recognized under 26 U.S.C. 1031 (Internal Revenue 1
216	216	Code) that was included in federal adjusted gross income under (1) of this 2
217	217	subsection; 3
218	218	(E) income exempt under 4 U.S.C. 114; 4
219	219	(F) compensation prohibited from state taxation by 50 U.S.C. 5
220	220	3901 - 4043 (Servicemembers Civil Relief Act); 6
221	221	(G) a gain from the sale or exchange of an obligation issued by 7
222	222	or on behalf of 8
223	223	(i) the state; 9
224	224	(ii) a municipality of the state; or 10
225	225	(iii) a public instrumentality, public authority, or public 11
226	226	corporation created under state law; 12
227	227	(H) a permanent fund dividend received by the taxpayer or the 13
228	228	taxpayer's dependent under AS 43.23. 14
229	229	(b) In addition to the adjustments made to taxable income under (a) of this 15
230	230	section, a taxpayer may receive a standard deduction. Subject to adjustment under (d) 16
231	231	of this section, the deduction under this subsection for 17
232	232	(1) an individual resident taxpayer is $12,950; 18
233	233	(2) an individual resident who files federal income taxes as a head of 19
234	234	household is $19,400; 20
235	235	(3) two resident taxpayers filing jointly is $25,900; 21
236	236	(4) an individual nonresident is the product of $12,950 and a fraction, 22
237	237	the numerator of which is the nonresident individual's income taxable under 23
238	238	AS 43.22.045, computed without the deduction under this subsection, and the 24
239	239	denominator of which is the nonresident individual's taxable income computed as if 25
240	240	the nonresident individual were a resident individual and without the deduction under 26
241	241	this subsection; the deduction under this paragraph may not exceed $12,950 for each 27
242	242	exemption claimed; 28
243	243	(5) an individual nonresident who files federal income taxes as a head 29
244	244	of household is the product of $19,400 and a fraction, the numerator of which is the 30
245	245	nonresident individual's income taxable under AS 43.22.045, computed without the 31 33-LS0699\A
246	246	HB 156 -8- HB0156a
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249	249	deduction under this subsection, and the denominator of which is the nonresident 1
250	250	individual's taxable income computed as if the nonresident individual were a resident 2
251	251	individual and without the deduction under this subsection; the deduction under this 3
252	252	paragraph may not exceed $19,400 for each exemption claimed; 4
253	253	(6) two nonresident individuals filing jointly is the product of $25,900 5
254	254	and a fraction, the numerator of which is the nonresident individuals' income taxable 6
255	255	under AS 43.22.045, computed without the deduction under this subsection, and the 7
256	256	denominator of which is the nonresident individuals' taxable income computed as if 8
257	257	the nonresident individuals were resident individuals and without the deduction under 9
258	258	this subsection; the deduction under this paragraph may not exceed $25,900 for each 10
259	259	exemption claimed. 11
260	260	(c) The deduction under (b) of this section may not 12
261	261	(1) be claimed by a trust; 13
262	262	(2) reduce a taxpayer's tax liability under this chapter to below zero. 14
263	263	(d) Each year, the department shall adjust the amounts of the standard 15
264	264	deduction under (b) of this section for inflation. The adjustment for inflation is equal 16
265	265	to the adjustment for inflation calculated for the standard deduction against the federal 17
266	266	income tax as set out in 26 U.S.C. 63. 18
267	267	(e) When calculating taxable income, a taxpayer 19
268	268	(1) may not carry back a net operating loss under 26 U.S.C. 20
269	269	172(b)(1)(A)(i) (Internal Revenue Code); 21
270	270	(2) may carry over a net operating loss under 26 U.S.C. 22
271	271	172(b)(1)(A)(ii) (Internal Revenue Code), except that a loss may not be carried over 23
272	272	for more than five years; for a taxpayer subject to AS 43.19 (Multistate Tax Compact), 24
273	273	the amount of a net operating loss allowed to be carried over is limited to the amount 25
274	274	apportioned to the state in the taxable year in which the loss was generated under 26
275	275	AS 43.19 (Multistate Tax Compact); 27
276	276	(3) shall include the modifications required by AS 43.20.144(b)(2), 28
277	277	concerning intangible drilling and development costs, AS 43.20.144(b)(3), concerning 29
278	278	percentage depletion, and AS 43.20.144(b)(4), concerning depreciation. 30
279	279	Sec. 43.22.035. Taxable income from partnerships and S corporations. (a) 31 33-LS0699\A
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283	283	A partner or shareholder shall make an adjustment described in AS 43.22.030 to 1
284	284	income or a gain, loss, or deduction from a partnership or S corporation in proportion 2
285	285	to a partner's distributive share of a partnership or a shareholder's pro rata share of an 3
286	286	S corporation. If a partner's distributive share or a shareholder's pro rata share of an 4
287	287	adjustment is not required to be accounted for separately for federal income tax 5
288	288	purposes, the partner's or shareholder's share of the adjustment must be determined in 6
289	289	proportion to the partner's or shareholder's share of partnership or S corporation 7
290	290	income or losses for federal income tax purposes. 8
291	291	(b) In determining taxable income, a partner or shareholder shall treat income 9
292	292	or a gain, loss, or deduction from a partnership or S corporation as if it has the same 10
293	293	character as it does for federal income tax purposes. If income or a gain, loss, or 11
294	294	deduction from a partnership or S corporation is not accounted for separately for 12
295	295	federal income tax purposes, a partner or shareholder shall treat the income, gain, loss, 13
296	296	or deduction as if it were realized directly from the source from which it was realized 14
297	297	by the partnership or S corporation or incurred in the same manner it was incurred by 15
298	298	the partnership or S corporation. 16
299	299	(c) If the principal purpose of a special allocation of partnership income or a 17
300	300	gain, loss, or deduction is the evasion of tax under this chapter, the partner's 18
301	301	distributive share is determined as if the partnership agreement did not have the 19
302	302	special allocation. In this subsection, "special allocation" means an allocation of the 20
303	303	distributive share of partnership income or a gain, loss, or deduction made under the 21
304	304	partnership agreement to a partner in a proportion different than the partner's 22
305	305	partnership interest. 23
306	306	Sec. 43.22.040. Taxable income of an estate, trust, or beneficiary. (a) The 24
307	307	taxable income of an estate or trust is determined as if the estate or trust were an 25
308	308	individual and is subject to adjustments under AS 43.22.030 and reduction under 26 26
309	309	U.S.C. 661 (Internal Revenue Code). The department may establish in regulation the 27
310	310	method for determining the taxable income of an estate or trust, including the manner 28
311	311	in which the adjustments under AS 43.22.030 will be allocated between the estate's or 29
312	312	trust's taxable share and a beneficiary's distributive share. U
313	313	nless otherwise provided 30
314	314	by the department in regulation, an allocation must be made in proportion to the 31 33-LS0699\A
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317	317
318	318	estate's or trust's taxable share or the beneficiary's distributive share of the trust or 1
319	319	estate for federal income tax purposes. 2
320	320	(b) If the principal purpose of a provision of an instrument directing the 3
321	321	distribution of income or a gain, loss, or deduction of an estate or trust is the evasion 4
322	322	of tax under this chapter, the taxable income of the estate, trust, or beneficiary will be 5
323	323	determined as if the instrument did not contain the provision. 6
324	324	Sec. 43.22.045. Nonresident individuals; income derived from or 7
325	325	connected with a source in the state. (a) The taxable income of a nonresident 8
326	326	individual is the nonresident individual's income derived from or connected with a 9
327	327	source in the state, as adjusted under AS 43.22.030. The taxable income of a 10
328	328	nonresident individual includes 11
329	329	(1) a partner's distributive share of income or a gain, loss, or deduction 12
330	330	of the partnership, as determined under AS 43.22.050; 13
331	331	(2) a shareholder's pro rata share of an S corporation's income or loss, 14
332	332	increased by the reductions for taxes described in 26 U.S.C. 1366(f)(2) and (3) 15
333	333	(Internal Revenue Code), as determined under AS 43.22.050; 16
334	334	(3) income or loss of a business conducted by a nonresident individual, 17
335	335	nonresident estate, or nonresident trust, other than income or loss from a partnership or 18
336	336	S corporation, as determined under AS 43.22.050; 19
337	337	(4) estate or trust income or a gain, loss, or deduction of the estate or 20
338	338	trust, as determined under AS 43.22.055; 21
339	339	(5) income or a gain, loss, or deduction from the sale or assignment of 22
340	340	a beneficial interest, or other disposition of an interest in tangible personal property in 23
341	341	the state, or rental income or loss from the use of tangible personal property in the 24
342	342	state; if the income, gain, loss, or deduction is from tangible personal property used or 25
343	343	employed both in and outside the state, the amount included in taxable income is 26
344	344	determined by multiplying the income, gain, loss, or deduction by a fraction, the 27
345	345	numerator of which is the number of days during which the property was used or 28
346	346	employed to earn, accrue, or incur the income, gain, loss, or deduction in the state and 29
347	347	the denominator of which is the total number of days during the taxable year that the 30
348	348	property was used or employed to earn, accrue, or incur the income, gain, loss, or 31 33-LS0699\A
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352	352	deduction; 1
353	353	(6) income or a gain, loss, or deduction from the sale, assignment, or 2
354	354	other disposition of an interest in real property in the state, or rental income or loss 3
355	355	from the use of real property in the state, including the percentage of ordinary and 4
356	356	capital gains received from a real estate investment trust, as defined in 26 U.S.C. 856 5
357	357	(Internal Revenue Code), that is attributable to rents from or sale or other disposition 6
358	358	of real property located in the state; in this paragraph, income or a gain, loss, or 7
359	359	deduction from the sale, assignment of a beneficial interest, or other disposition of real 8
360	360	property in the state includes income or a gain, loss, or deduction derived from the sale 9
361	361	or assignment of a beneficial interest in a partnership, S corporation, nonpublicly 10
362	362	traded C corporation with 100 or fewer shareholders, estate, or trust, if the entity owns 11
363	363	real property in the state that has a fair market value equal to or exceeding 50 percent 12
364	364	of all assets of the entity on the date of sale, assignment, or other disposition of the 13
365	365	taxpayer's interest in the entity; for purposes of this paragraph, 14
366	366	(A) only assets owned for at least two years before the date of 15
367	367	the sale, assignment, or other disposition of an interest in the entity shall be 16
368	368	used to determine the fair market value of all of the assets of the entity on the 17
369	369	date of sale, assignment, or other disposition; and 18
370	370	(B) the amount of income or a gain, loss, or deduction derived 19
371	371	from or connected with a source in the state from the sale, assignment, or other 20
372	372	disposition of an interest in an entity that is subject to the provisions of this 21
373	373	paragraph is the amount recognized for federal income tax purposes related to 22
374	374	the sale, assignment, or disposition, multiplied by a fraction, the numerator of 23
375	375	which is the fair market value of the real property located in the state on the 24
376	376	date of sale, assignment, or disposition and the denominator of which is the fair 25
377	377	market value of all of the assets of the entity on the date of the sale, 26
378	378	assignment, or disposition; 27
379	379	(7) compensation, salary, or wages for personal services rendered or 28
380	380	performed in the state that are derived from a business, trade, profession, occupation, 29
381	381	or employment carried on in the state; for purposes of this paragraph, personal 30
382	382	services
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387	387	(A) except as otherwise provided in (B) of this paragraph, 1
388	388	include services performed 2
389	389	(i) in connection with presenting or receiving 3
390	390	employment-related training or education in the state; 4
391	391	(ii) in connection with a site inspection, review, 5
392	392	analysis, or management or any other supervision of a facility located 6
393	393	in the state; 7
394	394	(iii) in connection with research and development at a 8
395	395	facility located in the state or in connection with the installation of new 9
396	396	or upgraded equipment or systems at that facility; 10
397	397	(iv) as part of a project team working on the attraction 11
398	398	or implementation of new investment in a facility located or planned to 12
399	399	be located in the state; 13
400	400	(v) in connection with fishing, farming, or agriculture in 14
401	401	the state; or 15
402	402	(vi) for the federal government; 16
403	403	(B) do not include services that are casual, isolated, 17
404	404	inconsequential, or ancillary to out-of-state services; 18
405	405	(8) income derived from a business, trade, profession, occupation, or 19
406	406	employment carried on in the state, including income 20
407	407	(A) received under a covenant not to compete, a severance 21
408	408	agreement, a termination agreement, or unemployment compensation 22
409	409	insurance attributable to a business, trade, profession, occupation, or 23
410	410	employment previously carried on in the state, regardless of when received; 24
411	411	(B) derived from a business, trade, profession, occupation, or 25
412	412	employment carried on in the state by an individual who maintains or operates 26
413	413	an office, shop, store, warehouse, boat, plane, factory, agency, or other place 27
414	414	where the individual's affairs are systematically and regularly carried on, 28
415	415	regardless of other transactions carried on outside the state; this subparagraph 29
416	416	does not include income from an activity of an individual whose presence in 30
417	417	the state is casual, isolated, inconsequential, or ancillary to out-of-state 31 33-LS0699\A
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421	421	activities, except that, if a business, trade, profession, occupation, or 1
422	422	employment is carried on partly in and partly outside the state, other than for 2
423	423	the rendering of purely personal services by the individual, the taxable income 3
424	424	derived from or connected with a source in the state is determined under 4
425	425	AS 43.19 (Multistate Tax Compact) and AS 43.22.030; 5
426	426	(9) income from the management or investment function or activities 6
427	427	conducted in the state from intangible property; 7
428	428	(10) dividends, interest, payments received under an annuity, gains, or 8
429	429	other intangible income received from, or attributable to, intangible personal property, 9
430	430	including stock, bonds, notes, bank deposits, or annuities, if the intangible personal 10
431	431	property is employed in a business, trade, profession, occupation, or employment 11
432	432	carried on in the state; 12
433	433	(11) a gain derived from a statutory stock option, restricted stock, 13
434	434	nonstatutory stock option, or stock appreciation right by a nonresident individual who, 14
435	435	at the time the gain is received, performs services in the state for or is employed in the 15
436	436	state by the corporation granting the option, stock, or right, as determined in 16
437	437	regulations adopted by the department; 17
438	438	(12) income from nonqualified deferred compensation plans 18
439	439	attributable to services performed in the state, including compensation included in 19
440	440	federal gross income under 26 U.S.C. 457A (Internal Revenue Code); 20
441	441	(13) proceeds from a gambling activity conducted in the state or lottery 21
442	442	tickets purchased in the state, including payments received from a third party for the 22
443	443	transfer of the rights to future proceeds related to a gambling activity in the state or 23
444	444	lottery tickets purchased in the state; 24
445	445	(14) for an S corporation that terminates its taxable status in the state 25
446	446	during the tax year, income or a gain recognized on the receipt of payments from an 26
447	447	installment sale contract entered into at the time the S corporation was subject to tax in 27
448	448	the state, allocated in a manner consistent with the applicable methods and rules under 28
449	449	this chapter; 29
450	450	(15) royalties or other compensation received for the use of a patent, 30
451	451	copyright, secret process or formula, good will, mark, trade brand, franchise, or other 31 33-LS0699\A
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455	455	property having a taxable or business situs in the state; 1
456	456	(16) royalties or other compensation received for the use of a patent if 2
457	457	the patent is employed in production, fabrication, manufacturing, or other process in 3
458	458	the state; 4
459	459	(17) income or a gain from the disposition of an asset if the 5
460	460	acquisition, management, or disposition of the asset constitutes an integral part of the 6
461	461	nonresident individual's regular trade or business operation; 7
462	462	(18) income from the transmission, broadcast, distribution, or 8
463	463	dissemination of a service directly or indirectly attributable to the performance in the 9
464	464	state of an athlete, entertainer, singer, musician, dancer, comedian, magician, 10
465	465	performing artist, actor, actress, or similar person, including syndication fees. 11
466	466	(b) A deduction included in taxable income that results from a capital loss, 12
467	467	passive activity loss, or net operating loss must be based solely on income or a gain, 13
468	468	loss, or deduction derived from or connected with a source in the state. A nonresident 14
469	469	individual shall treat a deduction under this subsection in the same manner as the 15
470	470	corresponding federal deduction, unless the department requires otherwise in 16
471	471	regulation. 17
472	472	Sec. 43.22.050. Business conducted by a nonresident individual, trust, or 18
473	473	estate; income derived from or connected with a source in the state. (a) The 19
474	474	department shall adopt regulations governing the amount of income or the amount of a 20
475	475	gain, loss, or deduction from a business conducted by a nonresident individual, trust, 21
476	476	or estate that is derived from or connected with a source in the state for purposes of 22
477	477	determining taxable income. Regulations adopted under this subsection must be 23
478	478	consistent with AS 43.19 (Multistate Tax Compact) and AS 43.22.045 and include 24
479	479	adjustments under AS 43.22.030. 25
480	480	(b) The department shall adopt regulations governing the amount of income or 26
481	481	the amount of a gain, loss, or deduction that is derived from or connected with a 27
482	482	source in the state and is included in a nonresident 28
483	483	(1) partner's distributive share for purposes of taxation under this 29
484	484	chapter; 30
485	485	(2) shareholder's pro-rata share of an S corporation for purposes of
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490	490	taxation under this chapter. 1
491	491	(c) The department may by regulation require a taxpayer to allocate rather 2
492	492	than apportion income or a gain, loss, or deduction under this section. 3
493	493	Sec. 43.22.055. Nonresident trust, estate, or beneficiary; income derived 4
494	494	from or connected with a source in the state. (a) The department shall adopt 5
495	495	regulations governing whether income or a gain, loss, or deduction of a nonresident 6
496	496	estate or nonresident trust is included in taxable income derived from or connected 7
497	497	with a source in the state. Regulations adopted under this subsection must be 8
498	498	consistent with the remainder of this section and AS 43.22.045. 9
499	499	(b) A nonresident beneficiary shall include in taxable income derived from or 10
500	500	connected with a source in the state a distribution from an estate or trust as if the 11
501	501	nonresident beneficiary earned or incurred the income or a gain, loss, or deduction 12
502	502	attributable to the distribution directly from the source. For purposes of this 13
503	503	subsection, the department may establish one or more methods for a nonresident 14
504	504	beneficiary to determine whether income or a gain, loss, or deduction is attributable to 15
505	505	a distribution. The department shall consistently apply a method from year to year and 16
506	506	apply the same method to other nonresident beneficiaries of the same trust or estate. 17
507	507	Nothing in this subsection requires the department to give effect to a provision of an 18
508	508	instrument creating an estate or trust if the department reasonably believes that the 19
509	509	principal purpose of the provision is to evade the tax imposed under this chapter. 20
510	510	Sec. 43.22.060. Part-year resident individual, trust, or estate; residency 21
511	511	income; income derived from or connected with a source in the state. (a) Except as 22
512	512	otherwise provided in this section, the taxable income of a part-year resident 23
513	513	individual, trust, or estate is the sum of 24
514	514	(1) the taxable income of the part-year resident individual, trust, or 25
515	515	estate during the period of residency; and 26
516	516	(2) the taxable income derived from or connected with a source in the 27
517	517	state for the period of nonresidency of the individual, trust, or estate. 28
518	518	(b) The department shall adopt regulations to determine the ta
519	519	xable income of 29
520	520	a part-year resident taxpayer who is granted a statutory stock option, restricted stock, 30
521	521	nonstatutory stock option, or a stock appreciation right and who, during the grant 31 33-LS0699\A
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525	525	period, performs services in the state for, or is employed in the state by, the 1
526	526	corporation granting the option, stock, or right. 2
527	527	Sec. 43.22.065. Personal service corporations and S corporations formed 3
528	528	or used to evade income tax. (a) The department may allocate all income, 4
529	529	deductions, credits, exclusions, and other allowances between a personal service 5
530	530	corporation or S corporation and its employee-owners if the 6
531	531	(1) personal service corporation or S corporation performs 7
532	532	substantially all of its services for or on behalf of another corporation, partnership, or 8
533	533	other entity and the effect is the evasion of income tax; and 9
534	534	(2) allocation is necessary to reflect the source and amount of the 10
535	535	income, regardless of whether the corporation is otherwise taxable. 11
536	536	(b) For purposes of this section, evasion of income tax occurs when a personal 12
537	537	service corporation or S corporation is used to 13
538	538	(1) reduce the taxable income of a resident or the taxable income of a 14
539	539	nonresident derived from or connected with a source in the state; or 15
540	540	(2) secure the benefit of an expense, deduction, credit, exclusion, or 16
541	541	other allowance for any employee-owner that would not otherwise apply under this 17
542	542	chapter. 18
543	543	(c) The constructive ownership of stock rules under 26 U.S.C. 318 (Internal 19
544	544	Revenue Code) apply to this section, except that "5 percent" shall be substituted for 20
545	545	"50 percent" in 26 U.S.C. 318(a)(2)(C) (Internal Revenue Code). 21
546	546	(d) In this section, all persons specified in 26 U.S.C. 267(b) (Internal Revenue 22
547	547	Code) shall be treated as one entity. 23
548	548	(e) In this section, 24
549	549	(1) "employee-owner" means any employee who owns, on any day 25
550	550	during the taxable year, more than 10 percent of the outstanding stock of a personal 26
551	551	service corporation or S corporation; 27
552	552	(2) "personal service corporation" means a corporation whose principal 28
553	553	activity is the performance of personal services that are substantially performed by the 29
554	554	employee-owners of the corporation. 30
555	555	Sec. 43.22.070. Determination of taxable year and method of acc
556	556	ounting. 31 33-LS0699\A
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560	560	(a) For purposes of the tax imposed under this chapter, a taxpayer's 1
561	561	(1) taxable year is the same as the taxpayer's taxable year for federal 2
562	562	income tax purposes; and 3
563	563	(2) method of accounting is the same as the taxpayer's method of 4
564	564	accounting for federal income tax purposes. 5
565	565	(b) The department shall adopt regulations to determine the taxable income of 6
566	566	a taxpayer whose method of accounting changes during a taxable year or between 7
567	567	taxable years. 8
568	568	Sec. 43.22.075. Returns and payment of taxes. (a) A taxpayer shall file with 9
569	569	the department a return setting out 10
570	570	(1) the amount of tax due under this chapter; and 11
571	571	(2) other information necessary to carry out this chapter, as required by 12
572	572	the department in regulation. 13
573	573	(b) A person required to file a return under this chapter shall file the return on 14
574	574	a form or in a format prescribed by the department. The return is due to the department 15
575	575	at the same time and in the same manner, including extensions, as the taxpayer's 16
576	576	federal income tax return to the United States Internal Revenue Service. A return filed 17
577	577	under this chapter must be made under oath and on penalty of perjury. 18
578	578	(c) The total amount of tax imposed by this chapter is due and payable to the 19
579	579	department at the same time and in the same manner as the federal individual income 20
580	580	tax payable to the United States Internal Revenue Service. 21
581	581	(d) A taxpayer, upon request by the department, shall furnish to the 22
582	582	department a true and correct copy of a return that the taxpayer has filed with the 23
583	583	United States Internal Revenue Service. 24
584	584	(e) A taxpayer shall notify the department in writing of an alteration in, or 25
585	585	modification of, the taxpayer's federal income tax return and of a recomputation of tax 26
586	586	or determination of deficiency, whether with or without assessment. A full statement 27
587	587	of the facts must accompany the notice. A taxpayer shall file the notice not later than 28
588	588	60 days after the final determination of the alteration, modification, recomputation, or 29
589	589	deficiency and shall pay any additional tax due under this chapter at that time. In this 30
590	590	subsection, "final determination" means the time that an amended federal return is 31 33-LS0699\A
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594	594	filed, a notice of deficiency or an assessment is mailed to the taxpayer by the Internal 1
595	595	Revenue Service, and the taxpayer has exhausted rights of appeal under federal law. 2
596	596	(f) The department may credit or refund overpayments of taxes, taxes 3
597	597	erroneously or illegally assessed or collected, penalties collected without authority, 4
598	598	and taxes that are found unjustly assessed or excessive in amount, or otherwise 5
599	599	wrongfully collected. The department shall, in regulation, set limitations, specify the 6
600	600	manner in which claims for credits or refunds are made, and give notice of allowance 7
601	601	or disallowance. When a refund is allowed to a taxpayer, the refund may be paid out 8
602	602	of the general fund on a warrant issued under a voucher approved by the department. 9
603	603	(g) A partnership, S corporation, estate, or trust shall provide to its partners, 10
604	604	beneficiaries, or shareholders, and to the department, all information necessary for its 11
605	605	partners, beneficiaries, and shareholders to comply with this chapter. 12
606	606	(h) An individual is not required to file a return under this section 13
607	607	electronically, but a person employed to prepare and file an income tax return for an 14
608	608	individual shall file the return for that individual electronically. 15
609	609	(i) The department shall adopt regulations that set out requirements for a 16
610	610	spouse, upon request, to be partially or fully relieved from joint and several liability 17
611	611	resulting from the joint filing of a tax return. 18
612	612	Sec. 43.22.080. Tax withholding on wages of individuals. (a) Every 19
613	613	employer making payment of wages or salaries 20
614	614	(1) shall, except as provided in (c) of this section, deduct and withhold 21
615	615	an amount of tax computed in a manner to approximate the amount of tax due on those 22
616	616	wages and salaries under this chapter for that taxable year; 23
617	617	(2) shall remit the tax withheld to the department accompanied by a 24
618	618	return on a form prescribed by the department at the times required by the department 25
619	619	by regulation; 26
620	620	(3) is liable for the payment of the tax required to be deducted and 27
621	621	withheld under this section but is not liable to any individual for the amount of the 28
622	622	payment; and 29
623	623	(4) shall furnish to an employee on or before January 31 of the 30
624	624	succeeding year, or within 30 days after a request by the employee after an employee's 31 33-LS0699\A
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628	628	or individual's termination if the 30-day period ends before January 31, a written 1
629	629	statement on a form prescribed by the department showing 2
630	630	(A) the name and taxpayer identification number of the 3
631	631	employer; 4
632	632	(B) the name and social security number of the employee; 5
633	633	(C) the total amount of wages and salary for the taxable year; 6
634	634	and 7
635	635	(D) the total amount deducted and withheld as tax under this 8
636	636	chapter for the taxable year. 9
637	637	(b) The department shall publish the rate of withholding required by this 10
638	638	section. 11
639	639	(c) An employer shall deduct and withhold the tax due under AS 43.22.010(e) 12
640	640	from an employee's wages subject to withholding from the first regular payroll of the 13
641	641	calendar year. If the employee's first payroll is insufficient to cover the estimated tax 14
642	642	due, the employer shall continue to deduct and withhold from subsequent payrolls 15
643	643	until the tax due under this subsection is fully withheld. A self-employed individual 16
644	644	shall remit to the department the tax due under this subsection in accordance with 17
645	645	regulations adopted by the department. 18
646	646	Sec. 43.22.085. Withholding on nonresident partners; composite returns. 19
647	647	(a) Unless otherwise provided by this section, a partnership that is required to file an 20
648	648	annual information return under subchapter K of the Internal Revenue Code (26 21
649	649	U.S.C. 701 - 761) shall file a partnership return as prescribed by the department and 22
650	650	shall report any income, gains, losses, or deductions that are derived from or 23
651	651	connected with a source in the state, as determined under this chapter. 24
652	652	(b) A partnership that is required to file a return under (a) of this section shall 25
653	653	withhold income tax from a nonresident partner's distributive share of the partnership's 26
654	654	income or a gain, loss, or deduction derived from or connected with a source in the 27
655	655	state at the highest marginal income tax rate applicable to individuals for the taxable 28
656	656	year. 29
657	657	(c) Withholding under this section is not required by a partnership that 30
658	658	(1) is a publicly traded partnership, as defined in 26 U.S.C. 7704(b)
659	659	31 33-LS0699\A
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663	663	(Internal Revenue Code); and 1
664	664	(2) files with the department an annual information return reporting the 2
665	665	name, address, taxpayer identification number, and other information requested by the 3
666	666	department concerning each unitholder whose distributive share of partnership 4
667	667	income, regardless of source, is more than $1,000. 5
668	668	(d) The department shall adopt regulations that allow a partnership subject to 6
669	669	withholding under this section to file a composite return. 7
670	670	Sec. 43.22.090. Permanent fund tax payment. The department shall adopt 8
671	671	regulations establishing procedures for an individual eligible for a dividend under 9
672	672	AS 43.23.005 to direct the department to hold all or a part of the amount of the 10
673	673	dividend to pay the tax due under this chapter. The amount held under this section 11
674	674	may not exceed the dividend amount after contributions, garnishments, levies, fees, 12
675	675	attachments, assignments, or other reductions or donations allowed under AS 43.23. 13
676	676	The department shall apply the amount held under this section to tax owed in the 14
677	677	taxable year in which the taxpayer applies for the dividend. The department shall 15
678	678	refund the amount of the dividend not applied against taxes under this section to the 16
679	679	individual who appears on the application for the dividend. 17
680	680	Sec. 43.22.095. Administration. (a) The department shall adopt necessary 18
681	681	regulations and forms to implement and interpret this chapter, including regulations 19
682	682	and forms for the electronic filing and payment of tax due under this chapter. Federal 20
683	683	regulations issued under the Internal Revenue Code shall be considered persuasive 21
684	684	authority in interpreting any provision of the Internal Revenue Code on which the tax 22
685	685	imposed by this chapter relies, whether or not a federal regulation has been 23
686	686	specifically incorporated into a department regulation, unless the federal regulation 24
687	687	(1) conflicts with a provision of this chapter; 25
688	688	(2) conflicts with a regulation adopted by the department; or 26
689	689	(3) is inconsistent with the purposes of this chapter. 27
690	690	(b) A transaction or payment between related persons must have economic 28
691	691	substance, must serve a bona fide business purpose, and must not have occurred for 29
692	692	the primary purpose of lowering the tax due under this chapter. The department, after
693	693	30
694	694	review or audit of a taxpayer's return, may determine whether there is sufficient 31 33-LS0699\A
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697	697
698	698	documentation or whether a transaction or payment meets the requirements of this 1
699	699	subsection. If the department determines that the documentation, transaction, or 2
700	700	payment fails to meet the requirements of this subsection, the department may adjust 3
701	701	the amount of a payment or transaction, disregard the payment or transaction, or make 4
702	702	another adjustment necessary for determining the tax under this chapter. If a payment 5
703	703	in an amount greater than $500,000 is made or required to be made from one person to 6
704	704	a related person, the related persons shall submit documentation substantiating that the 7
705	705	amount of the payment is consistent with 26 U.S.C. 482 (Internal Revenue Code). 8
706	706	Payments subject to this subsection include payments for interest, royalties, 9
707	707	management fees, services, inventory, tangible personal property, intangible property, 10
708	708	and real property. 11
709	709	(c) A tax deficiency assessed by the department under this section is assumed 12
710	710	to be correct. A taxpayer has the burden of proving that the tax deficiency is 13
711	711	erroneous. 14
712	712	(d) The department shall adjust the amount of the exemption under 15
713	713	AS 43.22.030(b) annually for inflation. Adjustments must be consistent with inflation 16
714	714	adjustments made by the Internal Revenue Service to the federal individual income tax 17
715	715	standard deduction. The department shall round amounts under this subsection to the 18
716	716	nearest $100 and publish the adjusted amounts. 19
717	717	(e) The tax collected by the department under this chapter shall be deposited 20
718	718	into the general fund and accounted for separately. 21
719	719	Sec. 43.22.100. References to Internal Revenue Code. (a) Sections 26 U.S.C. 22
720	720	6654, 6662, 6664, 6694, 6695, 6700 - 6702, 6707, 6713, 7201, 7202, 7206, 7207, 23
721	721	7216, 7407, and 7408 (Internal Revenue Code), as those sections read on January 1, 24
722	722	2023, are incorporated by reference as a part of this chapter and, if conflicting, 25
723	723	supersede provisions in AS 43.05 and AS 43.10. 26
724	724	(b) When provisions of the Internal Revenue Code incorporated by reference 27
725	725	under (a) of this section refer to rules and regulations adopted by the United States 28
726	726	Commissioner of Internal Revenue, they are regarded as regulations adopted by the 29
727	727	department under this chapter, unless the department adopts specific regulations in 30
728	728	their place. 31 33-LS0699\A
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732	732	Sec. 43.22.105. Information released to a banking institution. 1
733	733	Notwithstanding AS 43.05.230, information on an individual income tax return may 2
734	734	be released to a banking institution to verify the direct deposit of an income tax refund 3
735	735	or correct an error in that deposit. 4
736	736	Sec. 43.22.150. Definitions. In this chapter, 5
737	737	(1) "domicile" means an individual's true, fixed, principal, and 6
738	738	permanent home, to which the individual intends to return even if currently living 7
739	739	elsewhere; if an individual has two or more homes, "domicile" means the home that 8
740	740	the individual regards and uses as the individual's more permanent home; once 9
741	741	established, a domicile remains the individual's domicile until the individual 10
742	742	demonstrates a real change of intent and moves to a new domicile; indications of 11
743	743	domicile include the 12
744	744	(A) location of the place of employment of the individual; 13
745	745	(B) location of real property owned by the individual; 14
746	746	(C) registration and physical location of motor vehicles, planes, 15
747	747	boats, and snow machines owned by the individual; 16
748	748	(D) location of a bank account or active checking account of 17
749	749	the individual; 18
750	750	(E) address where the individual receives mail; 19
751	751	(F) location of a school where the individual or a member of 20
752	752	the individual's immediate family 21
753	753	(i) attends; or 22
754	754	(ii) receives resident tuition; 23
755	755	(G) location of an organization of which the individual is a 24
756	756	member; 25
757	757	(H) location of a parent, child, grandchild, or great-grandchild; 26
758	758	(I) location of dental and medical personnel that provide 27
759	759	services to the individual on a regular or consistent basis; 28
760	760	(J) filing of a prior year tax return by the individual as a 29
761	761	resident or nonresident; 30
762	762	(K) location where an individual is registered to vote; 31 33-LS0699\A
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766	766	(L) location where an individual holds a resident fishing, 1
767	767	hunting, or trapping license; 2
768	768	(2) "employee" has the meaning given in 26 U.S.C. 3401; 3
769	769	(3) "employer" has the meaning given in 26 U.S.C. 3401; 4
770	770	(4) "federal adjusted gross income" has the meaning given to "adjusted 5
771	771	gross income" in 26 U.S.C. 62; 6
772	772	(5) "fiduciary" means a guardian, trustee, executor, administrator, 7
773	773	receiver, or conservator or a person, whether individual or corporate, acting in a 8
774	774	similar position of special confidence toward another; 9
775	775	(6) "head of household" means a single taxpayer, or married taxpayer 10
776	776	where both spouses file separate returns, with a qualified dependent living in the same 11
777	777	home for more than half the taxable year; 12
778	778	(7) "Internal Revenue Code" means the Internal Revenue Code (26 13
779	779	U.S.C. 1 et seq.), as amended; 14
780	780	(8) "irrevocable trust" means a trust or portion of a trust that is not 15
781	781	subject to a power to revest title in a person whose property constitutes the trust or a 16
782	782	portion of the trust; 17
783	783	(9) "nonresident estate" means an estate other than a resident estate or 18
784	784	part-year resident estate; 19
785	785	(10) "nonresident individual" means an individual who is not a resident 20
786	786	of the state for any portion of the taxable year; 21
787	787	(11) "nonresident trust" means a trust other than a resident trust or 22
788	788	part-year resident trust; 23
789	789	(12) "partner" means a partner as defined in 26 U.S.C. 7701(a) 24
790	790	(Internal Revenue Code) and includes a member of a limited liability company or 25
791	791	similar entity that is treated as a partnership for federal income tax purposes; 26
792	792	(13) "partnership" means an entity as defined in 26 U.S.C. 7701(a) 27
793	793	(Internal Revenue Code) and includes a limited liability company and a similar entity 28
794	794	treated as a partnership for federal income tax purposes; 29
795	795	(14) "part-year resident estate" means an estate that is a resident of the 30
796	796	state for a portion of but not the entire taxable year; 31 33-LS0699\A
797	797	HB 156 -24- HB0156a
798	798	New Text Underlined [DELETED TEXT BRACKETED]
799	799
800	800	(15) "part-year resident individual" means an individual who is a 1
801	801	resident of the state for a portion of but not the entire taxable year; 2
802	802	(16) "part-year resident trust" means a trust that is a resident of the 3
803	803	state for a portion of but not the entire taxable year; 4
804	804	(17) "related person" means a person that satisfies the definition of 5
805	805	"related persons" in 26 U.S.C. 144 or 147 or a person in a relationship as described in 6
806	806	26 U.S.C. 267(b) (Internal Revenue Code); 7
807	807	(18) "resident estate" means the estate of a 8
808	808	(A) decedent who at the time of death was a resident of the 9
809	809	state, regardless of the residence of the fiduciary or beneficiary, if the 10
810	810	disposition or administration of the estate is subject to state law; or 11
811	811	(B) person who, at the time of commencement of a bankruptcy 12
812	812	proceeding under Title 11 of the United States Code, was a resident of the 13
813	813	state; 14
814	814	(19) "resident individual" means an individual who 15
815	815	(A) receives a permanent fund dividend under AS 43.23.005; 16
816	816	(B) receives a tax benefit available only to an individual 17
817	817	domiciled in the state; or 18
818	818	(C) is domiciled in the state for the entire taxable year unless 19
819	819	the individual maintains a permanent place of abode outside the state and 20
820	820	spends, in the aggregate, not more than 30 days during the taxable year in the 21
821	821	state; 22
822	822	(20) "resident trust" means a trust or a portion of a trust consisting of 23
823	823	property 24
824	824	(A) transferred by will of a decedent who at the time of death 25
825	825	was a resident of the state if the disposition or administration of the property is 26
826	826	subject to state law; or 27
827	827	(B) of a person who was a resident at the time the property was 28
828	828	transferred to the trust if, at the time of the transfer, the trust was 29
829	829	(i) an irrevocable trust; 30
830	830	(ii) a revocable trust and the trust has not become 31 33-LS0699\A
831	831	HB0156a -25- HB 156
832	832	New Text Underlined [DELETED TEXT BRACKETED]
833	833
834	834	irrevocable; or 1
835	835	(iii) a revocable trust and the trust later became 2
836	836	irrevocable at a time the person transferring property to the trust was a 3
837	837	resident; 4
838	838	(21) "revocable trust" means a trust or portion of a trust that is subject 5
839	839	to a power, exercisable immediately or at a future time, to revest title in a person 6
840	840	whose property constitutes the trust or portion of the trust; 7
841	841	(22) "S corporation" means a corporation that has elected to file a 8
842	842	federal income tax return under 26 U.S.C. 1361 - 1379 (Internal Revenue Code); 9
843	843	(23) "taxable income" means income taxable under this chapter; 10
844	844	(24) "taxable year" means the calendar year or a fiscal year ending 11
845	845	during the calendar year; 12
846	846	(25) "taxpayer" means a person subject to a tax imposed by this 13
847	847	chapter; 14
848	848	(26) "wages" has the meaning given in 26 U.S.C. 3401. 15
849	849	* Sec. 3. AS 43.23 is amended by adding a new section to read: 16
850	850	Sec. 43.23.092. Permanent fund dividend individual income tax payment. 17
851	851	In accordance with AS 43.22.090, the department shall prepare the Alaska permanent 18
852	852	fund dividend application to allow an applicant to direct the department to hold all or 19
853	853	part of the amount of the individual's permanent fund dividend for application against 20
854	854	the individual income tax imposed under AS 43.22. 21
855	855	* Sec. 4. AS 43.05.085; AS 43.20.012(b), and 43.20.013 are repealed January 1, 2025. 22
856	856	* Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 23
857	857	read: 24
858	858	APPLICABILITY. AS 43.22, added by sec. 2 of this Act, applies to income received 25
859	859	on or after the effective date of sec. 2 of this Act. 26
860	860	* Sec. 6. This Act takes effect January 1, 2025. 27