Vetoed HB 280 proposed rules for how some businesses would divide income among states when filing Alaska tax returns starting with tax years beginning in 2027.
Businesses operating in Alaska and elsewhere would divide income using property, payroll, and sales. Sales would generally count in Alaska based on where customers receive goods or services.
Broadcasters would count advertising and certain film-programming license income in Alaska when the customer was based here, using different location rules for business and noncommercial customers.
The Department of Revenue would set rules using a specified multistate formula to determine how financial institutions divide income among states.
Telecommunications providers, including mobile providers, would count certain sales in Alaska when service work happened here or a greater share of its cost happened here than in any other state.
Businesses would divide income among states using property, payroll, and sales, with sales generally assigned to where customers receive goods or services. These rules cover businesses with income taxable both in Alaska and at least one other state. The general rules exclude financial institutions, public utilities, and individuals who provide only personal services; a separate option applies to certain public utilities earning most income from activities covered by these rules. The bill proposed applying these rules to tax returns for tax years beginning on or after January 1, 2027, and set January 1, 2027, as its effective date.
Broadcasters would count certain advertising and film-programming license income in Alaska based on the broadcast customer's location. This covers television broadcast networks, cable program networks, and platform distribution companies. A commercial customer's location is its main place of business; a noncommercial customer's location is the address in the broadcaster's records. The bill proposed applying this rule to tax returns for tax years beginning on or after January 1, 2027, and set January 1, 2027, as its effective date.
The Department of Revenue would adopt rules for how financial institutions divide income among states. The requirement covers taxpayers that qualify as financial institutions under that formula. The rules would use a financial-institution formula adopted by the Multistate Tax Commission in 1994 and amended in 2015. The bill proposed applying this provision to tax returns for tax years beginning on or after January 1, 2027, and set January 1, 2027, as its effective date.
Telecommunications providers would count certain sales in Alaska based on where service work was done or where the greater share of its cost occurred. This covers telecommunications service providers, including mobile providers. For work done in more than one state, Alaska would count the sale only if a greater share of the work's cost occurred here than in any other state. This rule excludes sales of tangible goods covered by a separate rule. The bill proposed applying this rule to tax returns for tax years beginning on or after January 1, 2027, and set January 1, 2027, as its effective date.
No hearings or votes scheduled.