SB 122 Summary

• Enacts the Multistate Tax Compact into Alaska law to establish uniform rules for determining state income tax liability of multistate taxpayers and facilitate equitable apportionment of tax bases.

• Replaces terminology of "business income" with "apportionable income" throughout the compact and updates income apportionment formulas to distinguish between income that is apportionable under the U.S. Constitution versus allocated income.

• Creates a new "highly digitized business" tax classification for taxpayers where 50 percent or more of in-state sales consist of intangible property, electronically-transmitted services, computer-related services, or Internet-based tangible property sales, applying a sales-factor-only apportionment method to these businesses.

• Modifies existing Alaska tax code sections to reflect changes in terminology and defines "highly digitized business" to include digital goods, streaming services, licenses, remote access software, and Internet sales when the Internet is the primary customer access mode.

• Takes effect January 1, 2024 for tax years beginning on or after that date; applies the highly digitized business provisions prospectively to returns filed for tax years beginning on or after January 1, 2024.