"An Act requiring an employing unit with a change in ownership, management, or control or similar change to notify the Department of Labor and Workforce Development of the change; relating to the unemployment contribution rate of an employing unit; defining 'business' for purposes of statutes setting unemployment contribution rates; establishing the crime of obtaining an unemployment rate by deception; and providing for an effective date. "
"SB 306 is a crucial piece of legislation that is mandated by a federal law."
- Sen. Bunde
Senate Bill 306 addresses the issue of unemployment tax avoidance schemes by unscrupulous employers. This type of activity typically occurs when one business buys out another with a lower unemployment insurance tax rate, or when one business is transferred or taken over by another, solely to obtain a lower tax rate.
SB 306 is a crucial piece of legislation that is mandated by a federal law, the SUTA Dumping Prevention Act, which was passed in 2004. This Act amended the Social Security Act and established a nationwide minimum standard for curbing certain unemployment insurance tax avoidance activities by employers. Failure to pass this bill would result in the de-certification of the Alaska UI program and employers in this state would lose their federal offset credit of 5.4%, resulting in $103.9 million in additional taxes to the employer. The state would lose $30.8 million for administrative and operational funding for UI programs.
Tax avoidance schemes are damaging to Alaskans, inflate tax rates and unjustly shift the burden of unemployment insurance to other, law-abiding businesses. Passage of SB 306 would impose meaningful penalties on fraudulent businesses, and would maintain unemployment insurance taxes equally among Alaska businesses and would align our state with current, federally mandated law.