SB113 — APPORTION TAXABLE INCOME;DIGITAL BUSINESS

34-LS0564\ALAWS SENATEOF BILLALASKA NO.Source Chapter No.

SB 113 IN_______ THEAN LEGISLATUREACT OFRelating THEto STATEthe OFMultistate ALASKATax THIRTY-FOURTHCompact; LEGISLATURE - FIRST SESSION BY THE SENATE RULES COMMITTEE Introduced:

2/26/25 Referred:

Finance A BILL FOR AN ACT ENTITLED "An Act relating to the Multistate Tax Compact;

and providing for an effective date."date. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:

*_______________ SectionBE 1.IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:

THE ACT FOLLOWS ON PAGE 1 Enrolled SB 113 AN ACT Relating to the Multistate Tax Compact;

relating to apportionment of income to the state;

relating to highly digitized businesses subject to the Alaska Net Income Tax Act;

and providing for an effective date.

_______________ * Section 1.

SB0113A -1- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A 2.

Enrolled SB 113 -2- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A 8.

Each party state or any subdivision thereof which imposes an income tax SB0113A -3- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A shall provide by law that any taxpayer required to file a return, whose only activities within the taxing jurisdiction consist of sales and do not include owning or renting real estate or tangible personal property, and whose dollar volume of gross sales made during the tax year within the state or subdivision, as the case may be, is not in excess of $100,000 may elect to report and pay any tax due on the basis of a percentage of such volume, and shall adopt rates which shall produce a tax which reasonably approximates the tax otherwise due.

and (ii) any income that would be allocable to this state under the Constitution of the United States, but that is apportioned rather than allocated Enrolled SB 113 -4- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A pursuant to the laws of this state [OPERATIONS].

Any taxpayer having income from business activity which is taxable both within and outside this state, other than activity as a financial organization or public SB0113A -5- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A utility or the rendering of purely personal services by an individual, shall allocate and apportion net income as provided in this Article.

6.(a) Capital gains and losses from sales of real property located in this state Enrolled SB 113 -6- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A are allocable to this state.

The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period and the denominator of which is the average value of all the taxpayer's real and tangible personal property owned or rented and used during SB0113A -7- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A the tax period.

or (b) the property is shipped from an office, store, warehouse, factory, or other place of storage in this state and (1) the purchaser is the United States Government or Enrolled SB 113 -8- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A (2) the taxpayer is not taxable in the state of the purchaser.

SB0113A -9- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A (c) If the taxpayer is not taxable in a state to which a sale is assigned under subsection (a) or (b), or if the state of assignment cannot be determined under subsection (a) or reasonably approximated under subsection (b), such a sale shall be excluded from the denominator of the sales factor.

Whenever a vendor receives and accepts in good faith from a purchaser a Enrolled SB 113 -10- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A resale or other exemption certificate or other written evidence of exemption authorized by the appropriate state or subdivision taxing authority, the vendor shall be relieved of liability for a sales or use tax with respect to the transaction.

SB0113A -11- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A (f) The commission shall elect annually, from among its members, a chairman, a vice-chairman and a treasurer.

2.(a) To assist in the conduct of its business when the fulmmissionfmmission is not Enrolled SB 113 -12- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A meeting, the commission shall have an executive committee of seven members, including the chairman, vice-chairman, treasurer and four other members elected annually by the commission.

(b) Each of the commission's budgets of estimated expenditures shall contain specific recommendations of the amounts to be appropriated by each of the party SB0113A -13- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A states.

Enrolled SB 113 -14- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A 1.

The commission shall make charges, to be paid by the state or local government or governments for which it performs the service, for any audits performed by it in order to reimburse itself for the SB0113A -15- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A actual costs incurred in making the audit.

Availability of information shall be in accordance with the laws of the states or subdivisions on whose account the commission performs the audit, and Enrolled SB 113 -16- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A only through the appropriate agencies or officers of such states or subdivisions.

The arbitration board shall be composed of one person selected by the taxpayer, one by the agency or agencies involved, and one member of the SB0113A -17- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A commission's arbitration panel.

No officer or employee of a state or local government who serves as a member of a board shall be Enrolled SB 113 -18- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A entitled to compensation therefor unless the member is required on account of the service as a board member to forego the regular compensation attaching to the public employment, but any such board member shall be entitled to expenses.

No proceeding commenced before an arbitration board prior to the withdrawal of a state and to which the withdrawing state or any subdivision thereof is a party shall be discontinued or terminated by the withdrawal, nor shall the board thereby lose jurisdiction over any of the parties to the proceeding necessary to make a SB0113A -19- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A binding determination therein.

Enrolled SB 113 -20- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A (1) the numerator of the property factor is the sum of the value for property in a fixed location, including buildings and land used in the business, and intrastate equipment and personal property determined according to AS 43.19 (Multistate Tax Compact), and the value of interstate mobile property determined on a days-spent-in-ports basis as provided in (4) of this subsection;

(b) A taxpayer's apportionable [BUSINESS] income to be apportioned under this section to the state shall be the federal taxable income f othe taxpayer's SB0113A -21- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A consolidated business for the tax period, except that (1) taxes based on or measured by net income that are deducted in the determination of the federal taxable income shall be added back;

(3) the apportionment factor of a taxpayer engaged both in the Enrolled SB 113 -22- SB0113A New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A production of oil or gas from a lease or property in this state and in the pipeline transportation of oil or gas in this state during the tax period is a fraction, the numerator of which is the sum of the sales factor under (d) of this section, the property factor under (e) of this section, and the extraction factor under (f) of this section for the taxpayer for the tax period, and the denominator of which is three.

or (4) tangible personal property delivered in this state from Internet SB0113A -23- Enrolled SB 113 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0564\A sales, if the Internet is the primary mode of customer access in this state.

Enrolled SB 113 -24- SB0113A New Text Underlined [DELETED TEXT BRACKETED]