00 CS FOR SENATE BILL NO. 21(FIN) am(efd fld) 01 "An Act relating to the interest rate applicable to certain amounts due for fees, taxes, 02 and payments made and property delivered to the Department of Revenue; providing a 03 tax credit against the corporation income tax for qualified oil and gas service industry 04 expenditures; relating to the oil and gas production tax rate; relating to gas used in the 05 state; relating to monthly installment payments of the oil and gas production tax; 06 relating to oil and gas production tax credits for certain losses and expenditures; 07 relating to oil and gas production tax credit certificates; relating to nontransferable tax 08 credits based on production; relating to the oil and gas tax credit fund; relating to 09 annual statements by producers and explorers; establishing the Oil and Gas 10 Competitiveness Review Board; and making conforming amendments." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12  * Section 1. AS 05.15.095(c) is amended to read: 01 (c) A delinquent fee bears interest at the rate set by AS 43.05.225(2) 02 [AS 43.05.225]. 03  * Sec. 2. AS 29.60.850(b) is amended to read: 04 (b) Each fiscal year, the legislature may appropriate an amount to the 05 community revenue sharing fund [AN AMOUNT EQUAL TO 20 PERCENT OF 06 THE MONEY RECEIVED BY THE STATE DURING THE PREVIOUS 07 CALENDAR YEAR UNDER AS 43.55.011(g)]. The amount may not exceed 08 (1) $60,000,000; or 09 (2) the amount that, when added to the fund balance on June 30 of the 10 previous fiscal year, equals $180,000,000. 11  * Sec. 3. AS 34.45.470(a) is amended to read: 12 (a) A person who fails to pay or deliver property within the time prescribed by 13 this chapter may be required to pay to the department interest at the annual rate 14 calculated under AS 43.05.225(2) [AS 43.05.225] on the property or the value of it 15 from the date the property should have been paid or delivered. 16  * Sec. 4. AS 43.05.225 is amended to read: 17 Sec. 43.05.225. Interest. Unless otherwise provided, 18 (1) when a tax levied in this title becomes delinquent, it bears interest 19 in a calendar quarter at the rate of three [FIVE] percentage points above the annual 20 rate charged member banks for advances by the 12th Federal Reserve District as of the 21 first day of that calendar quarter [, OR AT THE ANNUAL RATE OF 11 PERCENT, 22 WHICHEVER IS GREATER,] compounded quarterly as of the last day of that 23 quarter; 24 (2) the interest rate is 12 percent a year for 25 (A) delinquent fees payable under AS 05.15.095(c); and 26 (B) unclaimed property that is not timely paid or delivered, as 27 allowed by AS 34.45.470(a). 28  * Sec. 5. AS 43.20.046(i) is amended to read: 29 (i) The issuance of a refund under this section does not limit the department's 30 ability to later audit or adjust the claim if the department determines, as a result of the 31 audit, that the person that claimed the credit was not entitled to the amount of the 01 credit. The tax liability of the person receiving the credit under this chapter is 02 increased by the amount of the credit that exceeds that to which the person was 03 entitled. If the tax liability is increased under this subsection, the increase bears 04 interest under AS 43.05.225(1) [AS 43.05.225] from the date the refund was issued. 05  * Sec. 6. AS 43.20.047(i) is amended to read: 06 (i) The issuance of a refund under this section does not limit the department's 07 ability to later audit or adjust the claim if the department determines, as a result of the 08 audit, that the person that claimed the credit was not entitled to the amount of the 09 credit. The tax liability of the person receiving the credit under this section is 10 increased by the amount of the credit that exceeds that to which the person was 11 entitled. If the tax liability is increased under this subsection, the increase bears 12 interest at the rate set by AS 43.05.225(1) [AS 43.05.225] from the date the refund 13 was issued. 14  * Sec. 7. AS 43.20 is amended by adding a new section to read: 15 Sec. 43.20.049. Qualified oil and gas industry service expenditure credit. 16 (a) For a tax year beginning after the effective date of this section, a taxpayer may 17 apply a credit against the tax due under this chapter for a qualified oil and gas service 18 industry expenditure incurred in the state. The total amount of credit a taxpayer may 19 receive in a tax year may not exceed the lesser of 10 percent of qualified oil and gas 20 industry service expenditures incurred in the state during the tax year or $10,000,000. 21 (b) A taxpayer may not apply more than $10,000,000 in tax credits under this 22 section in a tax year. A tax credit or portion of a tax credit under this section may not 23 be used to reduce the taxpayer's tax liability under this chapter below zero. Any 24 unused tax credit or portion of a tax credit under this section may be applied in later 25 tax years, except that any unused tax credit or portion of a tax credit may not be 26 carried forward for more than five tax years immediately following the tax year in 27 which the qualified oil and gas service industry expenditures were incurred. 28 (c) An expenditure that is the basis of the credit under this section may not be 29 the basis for 30 (1) a deduction against the tax levied under this chapter; 31 (2) a credit or deduction under another provision of this title; or 01 (3) any federal credit claimed under this title. 02 (d) Notwithstanding any contrary provision of AS 40.25.100(a) or 03 AS 43.05.230(e), for a year that three or more taxpayers claim a tax credit under this 04 section, the department may publish the aggregated amount of tax credits claimed 05 under this section and a description of the qualified oil and gas service industry 06 expenditures that were the basis for a tax credit under this section. 07 (e) In this section, 08 (1) "manufacture" means to perform substantial industrial operations in 09 the state to transform raw material into tangible personal property with a useful life of 10 three years or more for use in the exploration, development, or production of oil or gas 11 deposits; 12 (2) "modification" means an adjustment, equipping, or other alteration 13 to existing tangible personal property that has a useful life of three years or more and 14 is for use in the exploration, development, or production of oil or gas deposits; 15 "modification" does not include minor product alterations or inventory activities; 16 (3) "qualified oil and gas service industry expenditure" means an 17 expenditure directly attributable to an in-state manufacture or in-state modification of 18 tangible personal property used in the exploration, development, or production of oil 19 or gas deposits, but does not include components or equipment used for or in the 20 process of that manufacturing or modification. 21  * Sec. 8. AS 43.50.570 is amended to read: 22 Sec. 43.50.570. Interest. A licensee who fails to pay an amount due for the 23 purchase of stamps within the time required 24 (1) is considered to have failed to pay the cigarette taxes due under this 25 chapter; and 26 (2) shall pay interest at the rate established under AS 43.05.225(1) 27 [AS 43.05.225] from the date on which the amount became due until the date of 28 payment. 29  * Sec. 9. AS 43.55.011(e) is amended to read: 30 (e) There is levied on the producer of oil or gas a tax for all oil and gas 31 produced each calendar year from each lease or property in the state, less any oil and 01 gas the ownership or right to which is exempt from taxation or constitutes a 02 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), (o), and 03 (p) of this section, the tax is equal to [THE SUM OF 04 (1)] the annual production tax value of the taxable oil and gas as 05 calculated under AS 43.55.160(a) [AS 43.55.160(a)(1)] multiplied by 35 [25] percent 06 [; AND 07 (2) THE SUM, OVER ALL MONTHS OF THE CALENDAR YEAR, 08 OF THE TAX AMOUNTS DETERMINED UNDER (g) OF THIS SECTION]. 09  * Sec. 10. AS 43.55.011(o) is amended to read: 10 (o) Notwithstanding other provisions of this section, for a calendar year before 11 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas 12 produced from a lease or property outside the Cook Inlet sedimentary basin and used 13 in the state, other than gas subject to (p) of this section, may not exceed the amount 14 of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this section. 15  * Sec. 11. AS 43.55.020(a) is amended to read: 16 (a) For a calendar year, a producer subject to tax under AS 43.55.011 17 [AS 43.55.011(e) - (i) OR (p)] shall pay the tax as follows: 18 (1) an installment payment of the estimated tax levied by 19 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 20 month of the calendar year on the last day of the following month; except as otherwise 21 provided under (2) of this subsection, the amount of the installment payment is the 22 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 23 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 24 of the installment payment may not be less than zero: 25 (A) for oil and gas not subject to AS 43.55.011(o) or (p)  26 produced from leases or properties in the state outside the Cook Inlet 27 sedimentary basin [BUT NOT SUBJECT TO AS 43.55.011(o) OR (p)], other 28 than leases or properties subject to AS 43.55.011(f), the greater of 29 (i) zero; or 30 (ii) the sum of 25 percent and the tax rate calculated for 31 the month under AS 43.55.011(g) multiplied by the remainder obtained 01 by subtracting 1/12 of the producer's adjusted lease expenditures for the 02 calendar year of production under AS 43.55.165 and 43.55.170 that are 03 deductible for the oil and gas [LEASES OR PROPERTIES] under 04 AS 43.55.160 from the gross value at the point of production of the oil 05 and gas produced from the leases or properties during the month for 06 which the installment payment is calculated; 07 (B) for oil and gas produced from leases or properties subject 08 to AS 43.55.011(f), the greatest of 09 (i) zero; 10 (ii) zero percent, one percent, two percent, three 11 percent, or four percent, as applicable, of the gross value at the point of 12 production of the oil and gas produced from the [ALL] leases or 13 properties during the month for which the installment payment is 14 calculated; or 15 (iii) the sum of 25 percent and the tax rate calculated for 16 the month under AS 43.55.011(g) multiplied by the remainder obtained 17 by subtracting 1/12 of the producer's adjusted lease expenditures for the 18 calendar year of production under AS 43.55.165 and 43.55.170 that are 19 deductible for the oil and gas [THOSE LEASES OR PROPERTIES] 20 under AS 43.55.160 from the gross value at the point of production of 21 the oil and gas produced from those leases or properties during the 22 month for which the installment payment is calculated; 23 (C) for oil or [AND] gas [PRODUCED FROM EACH LEASE 24 OR PROPERTY] subject to AS 43.55.011(j), (k), or (o) [, OR (p)], for each  25 lease or property, the greater of 26 (i) zero; or 27 (ii) the sum of 25 percent and the tax rate calculated for 28 the month under AS 43.55.011(g) multiplied by the remainder obtained 29 by subtracting 1/12 of the producer's adjusted lease expenditures for the 30 calendar year of production under AS 43.55.165 and 43.55.170 that are 31 deductible under AS 43.55.160 for the oil or gas, respectively, 01 produced from the lease or property from the gross value at the point of 02 production of the oil or gas, respectively, produced from the lease or 03 property during the month for which the installment payment is 04 calculated; 05 (D) for oil and gas subject to AS 43.55.011(p), the lesser of  06 (i) the sum of 25 percent and the tax rate calculated  07 for the month under AS 43.55.011(g) multiplied by the remainder  08 obtained by subtracting 1/12 of the producer's adjusted lease  09 expenditures for the calendar year of production under  10 AS 43.55.165 and 43.55.170 that are deductible for the oil and gas  11 under AS 43.55.160 from the gross value at the point of production  12 of the oil and gas produced from the leases or properties during the  13 month for which the installment payment is calculated, but not less  14 than zero; or  15 (ii) four percent of the gross value at the point of  16 production of the oil and gas produced from the leases or  17 properties during the month, but not less than zero;  18 (2) an amount calculated under (1)(C) of this subsection for oil or gas 19 [PRODUCED FROM A LEASE OR PROPERTY 20 (A)] subject to AS 43.55.011(j), (k), or (o) may not exceed the 21 product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) 22 or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) 23 or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) 24 or 43.55.011(o), as applicable, the amount of taxable gas produced during the 25 month for the amount of taxable gas produced during the calendar year and 26 substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of 27 taxable oil produced during the month for the amount of taxable oil produced 28 during the calendar year; 29 [(B) SUBJECT TO AS 43.55.011(p) MAY NOT EXCEED 30 FOUR PERCENT OF THE GROSS VALUE AT THE POINT OF 31 PRODUCTION OF THE OIL OR GAS;] 01 (3) an installment payment of the estimated tax levied by 02 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 03 on the last day of the following month; the amount of the installment payment is the 04 sum of 05 (A) the applicable tax rate for oil provided under 06 AS 43.55.011(i), multiplied by the gross value at the point of production of the 07 oil taxable under AS 43.55.011(i) and produced from the lease or property 08 during the month; and 09 (B) the applicable tax rate for gas provided under 10 AS 43.55.011(i), multiplied by the gross value at the point of production of the 11 gas taxable under AS 43.55.011(i) and produced from the lease or property 12 during the month; 13 (4) any amount of tax levied by AS 43.55.011 [AS 43.55.011(e) OR 14 (i)], net of any credits applied as allowed by law, that exceeds the total of the amounts 15 due as installment payments of estimated tax is due on March 31 of the year following 16 the calendar year of production. 17  * Sec. 12. AS 43.55.020(a), as amended by sec. 11 of this Act, is amended to read:  18 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 19 the tax as follows: 20 (1) an installment payment of the estimated tax levied by 21 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 22 month of the calendar year on the last day of the following month; except as otherwise 23 provided under (2) of this subsection, the amount of the installment payment is the 24 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 25 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 26 of the installment payment may not be less than zero: 27 (A) for oil and gas not subject to AS 43.55.011(o) or (p)  28 produced from leases or properties in the state outside the Cook Inlet 29 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 30 the greater of 31 (i) zero; or 01 (ii) 35 percent [THE SUM OF 25 PERCENT AND 02 THE TAX RATE CALCULATED FOR THE MONTH UNDER 03 AS 43.55.011(g] multiplied by the remainder obtained by subtracting 04 1/12 of the producer's adjusted lease expenditures for the calendar year 05 of production under AS 43.55.165 and 43.55.170 that are deductible for 06 the oil and gas under AS 43.55.160 from the gross value at the point of 07 production of the oil and gas produced from the leases or properties 08 during the month for which the installment payment is calculated; 09 (B) for oil and gas produced from leases or properties subject 10 to AS 43.55.011(f), the greatest of 11 (i) zero; 12 (ii) zero percent, one percent, two percent, three 13 percent, or four percent, as applicable, of the gross value at the point of 14 production of the oil and gas produced from the leases or properties 15 during the month for which the installment payment is calculated; or 16 (iii) 35 percent [THE SUM OF 25 PERCENT AND 17 THE TAX RATE CALCULATED FOR THE MONTH UNDER 18 AS 43.55.011(g)] multiplied by the remainder obtained by subtracting 19 1/12 of the producer's adjusted lease expenditures for the calendar year 20 of production under AS 43.55.165 and 43.55.170 that are deductible for 21 the oil and gas under AS 43.55.160 from the gross value at the point of 22 production of the oil and gas produced from those leases or properties 23 during the month for which the installment payment is calculated,  24 except that, for the purposes of this calculation, a 20 percent  25 exclusion from the gross value at the point of production may  26 apply for oil and gas subject to AS 43.55.160(f); 27 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 28 each lease or property, the greater of 29 (i) zero; or 30 (ii) 35 percent [THE SUM OF 25 PERCENT AND 31 THE TAX RATE CALCULATED FOR THE MONTH UNDER 01 AS 43.55.011(g)] multiplied by the remainder obtained by subtracting 02 1/12 of the producer's adjusted lease expenditures for the calendar year 03 of production under AS 43.55.165 and 43.55.170 that are deductible 04 under AS 43.55.160 for the oil or gas, respectively, produced from the 05 lease or property from the gross value at the point of production of the 06 oil or gas, respectively, produced from the lease or property during the 07 month for which the installment payment is calculated; 08 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 09 (i) 35 percent [THE SUM OF 25 PERCENT AND 10 THE TAX RATE CALCULATED FOR THE MONTH UNDER 11 AS 43.55.011(g)] multiplied by the remainder obtained by subtracting 12 1/12 of the producer's adjusted lease expenditures for the calendar year 13 of production under AS 43.55.165 and 43.55.170 that are deductible for 14 the oil and gas under AS 43.55.160 from the gross value at the point of 15 production of the oil and gas produced from the leases or properties 16 during the month for which the installment payment is calculated, but 17 not less than zero; or 18 (ii) four percent of the gross value at the point of 19 production of the oil and gas produced from the leases or properties 20 during the month, but not less than zero; 21 (2) an amount calculated under (1)(C) of this subsection for oil or gas 22 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 23 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 24 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 25 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 26 amount of taxable gas produced during the month for the amount of taxable gas 27 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 28 (2)(A), as applicable, the amount of taxable oil produced during the month for the 29 amount of taxable oil produced during the calendar year; 30 (3) an installment payment of the estimated tax levied by 31 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 01 on the last day of the following month; the amount of the installment payment is the 02 sum of 03 (A) the applicable tax rate for oil provided under 04 AS 43.55.011(i), multiplied by the gross value at the point of production of the 05 oil taxable under AS 43.55.011(i) and produced from the lease or property 06 during the month; and 07 (B) the applicable tax rate for gas provided under 08 AS 43.55.011(i), multiplied by the gross value at the point of production of the 09 gas taxable under AS 43.55.011(i) and produced from the lease or property 10 during the month; 11 (4) any amount of tax levied by AS 43.55.011, net of any credits 12 applied as allowed by law, that exceeds the total of the amounts due as installment 13 payments of estimated tax is due on March 31 of the year following the calendar year 14 of production. 15  * Sec. 13. AS 43.55.020(d) is amended to read: 16 (d) In making settlement with the royalty owner for oil and gas that is taxable 17 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 18 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 19 time the tax becomes due to the amount of the tax paid. If the total deductions of 20 installment payments of estimated tax for a calendar year exceed the actual tax for that 21 calendar year, the producer shall, before April 1 of the following year, refund the 22 excess to the royalty owner. Unless otherwise agreed between the producer and the 23 royalty owner, the amount of the tax paid under AS 43.55.011(e) [AS 43.55.011(e) - 24 (g)] on taxable royalty oil and gas for a calendar year, other than oil and gas the 25 ownership or right to which constitutes a landowner's royalty interest, is considered to 26 be the gross value at the point of production of the taxable royalty oil and gas 27 produced during the calendar year multiplied by a figure that is a quotient, in which 28 (1) the numerator is the producer's total tax liability under 29 AS 43.55.011(e) [AS 43.55.011(e) - (g)] for the calendar year of production; and 30 (2) the denominator is the total gross value at the point of production 31 of the oil and gas taxable under AS 43.55.011(e) [AS 43.55.011(e) - (g)] produced by 01 the producer from all leases and properties in the state during the calendar year. 02  * Sec. 14. AS 43.55.020(g) is amended to read: 03 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 04 amount of an installment payment required under (a)(1) - (3) of this section that is not 05 paid when due bears interest (1) at the rate provided for an underpayment under 26 06 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date 07 the installment payment is due until March 31 following the calendar year of 08 production, and (2) as provided for a delinquent tax under AS 43.05.225(1) 09 [AS 43.05.225] after that March 31. Interest accrued under (1) of this subsection that 10 remains unpaid after that March 31 is treated as an addition to tax that bears interest 11 under (2) of this subsection. An unpaid amount of tax due under (a)(4) of this section 12 that is not paid when due bears interest as provided for a delinquent tax under 13 AS 43.05.225(1) [AS 43.05.225]. 14  * Sec. 15. AS 43.55.023(a) is amended to read: 15 (a) A producer or explorer may take a tax credit for a qualified capital 16 expenditure as follows: 17 (1) notwithstanding that a qualified capital expenditure may be a 18 deductible lease expenditure for purposes of calculating the production tax value of oil 19 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 20 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 21 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 22 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 23 expenditure; [HOWEVER, NOT MORE THAN HALF OF THE TAX CREDIT MAY 24 BE APPLIED FOR A SINGLE CALENDAR YEAR;] 25 (2) a producer or explorer may take a credit for a qualified capital 26 expenditure incurred in connection with geological or geophysical exploration or in 27 connection with an exploration well only if the producer or explorer 28 (A) agrees, in writing, to the applicable provisions of 29 AS 43.55.025(f)(2); and 30 (B) submits to the Department of Natural Resources all data 31 that would be required to be submitted under AS 43.55.025(f)(2);  01 (3) a credit for a qualified capital expenditure incurred to explore  02 for, develop, or produce oil or gas deposits located north of 68 degrees North  03 latitude may be taken only if the expenditure is incurred before January 1, 2014. 04  * Sec. 16. AS 43.55.023(b) is amended to read: 05 (b) A producer or explorer may elect to take a tax credit in the amount of 25 06 percent of a carried-forward annual loss for lease expenditures incurred to explore  07 for, develop, or produce oil or gas deposits located south of 68 degrees North  08 latitude, and 35 percent of a carried-forward annual loss based on lease  09 expenditures incurred after December 31, 2013, to explore for, develop, or  10 produce oil or gas deposits located north of 68 degrees North latitude. A credit 11 under this subsection may be applied against a tax levied by AS 43.55.011(e). For 12 purposes of this subsection, a carried-forward annual loss is the amount of a producer's 13 or explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a 14 previous calendar year that was not deductible in calculating production tax values for 15 that calendar year under AS 43.55.160. 16  * Sec. 17. AS 43.55.023(d) is amended to read: 17 (d) Except as limited by (i) of this section, a person that is entitled to take a tax 18 credit under this section that wishes to transfer the unused credit to another person or 19 obtain a cash payment under AS 43.55.028 may apply to the department for a 20 transferable tax credit certificate [CERTIFICATES]. An application under this 21 subsection must be in a form prescribed by the department and must include 22 supporting information and documentation that the department reasonably requires. 23 The department shall grant or deny an application, or grant an application as to a lesser 24 amount than that claimed and deny it as to the excess, not later than 120 days after the 25 latest of (1) March 31 of the year following the calendar year in which the qualified 26 capital expenditure or carried-forward annual loss for which the credit is claimed was 27 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 28 the calendar year in which the qualified capital expenditure or carried-forward annual 29 loss for which the credit is claimed was incurred; or (3) the date the application was 30 received by the department. If, based on the information then available to it, the 31 department is reasonably satisfied that the applicant is entitled to a credit, the 01 department shall issue the applicant a [TWO] transferable tax credit certificate for 02 [CERTIFICATES, EACH FOR HALF OF] the amount of the credit. [THE CREDIT 03 SHOWN ON ONE OF THE TWO CERTIFICATES IS AVAILABLE FOR 04 IMMEDIATE USE. THE CREDIT SHOWN ON THE SECOND OF THE TWO 05 CERTIFICATES MAY NOT BE APPLIED AGAINST A TAX FOR A CALENDAR 06 YEAR EARLIER THAN THE CALENDAR YEAR FOLLOWING THE 07 CALENDAR YEAR IN WHICH THE CERTIFICATE IS ISSUED, AND THE 08 CERTIFICATE MUST CONTAIN A CONSPICUOUS STATEMENT TO THAT 09 EFFECT.] A certificate issued under this subsection does not expire. 10 * Sec. 18. AS 43.55.023(d), as amended by sec. 17 of this Act, is amended to read: 11 (d) A [EXCEPT AS LIMITED BY (i) OF THIS SECTION, A] person that is 12 entitled to take a tax credit under this section that wishes to transfer the unused credit 13 to another person or obtain a cash payment under AS 43.55.028 may apply to the 14 department for a transferable tax credit certificate. An application under this 15 subsection must be in a form prescribed by the department and must include 16 supporting information and documentation that the department reasonably requires. 17 The department shall grant or deny an application, or grant an application as to a lesser 18 amount than that claimed and deny it as to the excess, not later than 120 days after the 19 latest of (1) March 31 of the year following the calendar year in which the qualified 20 capital expenditure or carried-forward annual loss for which the credit is claimed was 21 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 22 the calendar year in which the qualified capital expenditure or carried-forward annual 23 loss for which the credit is claimed was incurred; or (3) the date the application was 24 received by the department. If, based on the information then available to it, the 25 department is reasonably satisfied that the applicant is entitled to a credit, the 26 department shall issue the applicant a transferable tax credit certificate for the amount 27 of the credit. A certificate issued under this subsection does not expire. 28  * Sec. 19. AS 43.55.023(g) is amended to read: 29 (g) The issuance of a transferable tax credit certificate under (d) of this  30 section or former (m) of this section or the purchase of a certificate under 31 AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to 01 which the certificate relates or to adjust the claim if the department determines, as a 02 result of the audit, that the applicant was not entitled to the amount of the credit for 03 which the certificate was issued. The tax liability of the applicant under 04 AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit 05 that exceeds that to which the applicant was entitled, or the applicant's available valid 06 outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced 07 by that amount. If the applicant's tax liability is increased under this subsection, the 08 increase bears interest under AS 43.05.225(1) [AS 43.05.225] from the date the 09 transferable tax credit certificate was issued. For purposes of this subsection, an 10 applicant that is an explorer is considered a producer subject to the tax levied by 11 AS 43.55.011(e). 12  * Sec. 20. AS 43.55.023(n) is amended to read: 13 (n) For the purposes of (l) [AND (m)] of this section, a well lease expenditure 14 incurred in the state south of 68 degrees North latitude is a lease expenditure that is 15 (1) directly related to an exploration well, a stratigraphic test well, a 16 producing well, or an injection well other than a disposal well, located in the state 17 south of 68 degrees North latitude, if the expenditure is a qualified capital expenditure 18 and an intangible drilling and development cost authorized under 26 U.S.C. (Internal 19 Revenue Code), as amended, and 26 C.F.R. 1.612-4, regardless of the elections made 20 under 26 U.S.C. 263(c); in this paragraph, an expenditure directly related to a well 21 includes an expenditure for well sidetracking, well deepening, well completion or 22 recompletion, or well workover, regardless of whether the well is or has been a 23 producing well; or 24 (2) an expense for seismic work conducted within the boundaries of a 25 production or exploration unit. 26  * Sec. 21. AS 43.55.024(e) is amended to read: 27 (e) On written application by a producer that includes any information the 28 department may require, the department shall determine whether the producer 29 qualifies for a calendar year under (a) and (c) of this section. To qualify under (a) and  30 (c) of this section, a producer must demonstrate that its operation in the state or its 31 ownership of an interest in a lease or property in the state as a distinct producer would 01 not result in the division among multiple producer entities of any production tax 02 liability under AS 43.55.011(e) that reasonably would be expected to be attributed to a 03 single producer if the tax credit provisions of (a) or (c) of this section did not exist. 04  * Sec. 22. AS 43.55.024 is amended by adding a new subsection to read: 05 (i) A producer may apply a tax credit of $5 for each barrel of oil taxable under 06 AS 43.55.011(e) produced during a calendar year against the producer's tax liability 07 for the calendar year under AS 43.55.011(e). A tax credit authorized by this subsection 08 may not reduce a producer's tax liability for a calendar year under AS 43.55.011(e) to 09 below zero. 10  * Sec. 23. AS 43.55.028(e) is amended to read: 11 (e) The department, on the written application of a person to whom a 12 transferable tax credit certificate has been issued under AS 43.55.023(d) or former  13 AS 43.55.023(m) [(m)] or to whom a production tax credit certificate has been issued 14 under AS 43.55.025(f), may use available money in the oil and gas tax credit fund to 15 purchase, in whole or in part, the certificate if the department finds that 16 (1) the calendar year of the purchase is not earlier than the first 17 calendar year for which the credit shown on the certificate would otherwise be allowed 18 to be applied against a tax; 19 (2) the applicant does not have an outstanding liability to the state for 20 unpaid delinquent taxes under this title; 21 (3) the applicant's total tax liability under AS 43.55.011(e), after 22 application of all available tax credits, for the calendar year in which the application is 23 made is zero; 24 (4) the applicant's average daily production of oil and gas taxable 25 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 26 the application is made was not more than 50,000 BTU equivalent barrels; and 27 (5) the purchase is consistent with this section and regulations adopted 28 under this section. 29  * Sec. 24. AS 43.55.028(g) is amended to read: 30 (g) The department may adopt regulations to carry out the purposes of this 31 section, including standards and procedures to allocate available money among 01 applications for purchases under this chapter and claims for refunds and payments 02 under AS 43.20.046 or 43.20.047 when the total amount of the applications for 03 purchase and claims for refund exceed the amount of available money in the fund. The 04 regulations adopted by the department may not, when allocating available money in 05 the fund under this section, distinguish an application for the purchase of a credit 06 certificate issued under former AS 43.55.023(m) or a claim for a refund or payment 07 under AS 43.20.046 or 43.20.047. 08  * Sec. 25. AS 43.55.030(e) is amended to read: 09 (e) An explorer or producer that incurs a lease expenditure under 10 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 11 year but does not produce oil or gas from a lease or property in the state during the 12 calendar year shall file with the department, on March 31 of the following year, a 13 statement, under oath, in a form prescribed by the department, giving, with other 14 information required, the following: 15 (1) the explorer's or producer's qualified capital expenditures, as 16 defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and 17 adjustments or other payments or credits under AS 43.55.170; and 18 (2) if the explorer or producer receives a payment or credit under 19 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 20 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 21  * Sec. 26. AS 43.55.160(a) is amended to read: 22 (a) Except as provided in (b) of this section, for the purposes of 23 (1) AS 43.55.011(e), the annual production tax value of the taxable oil, 24 gas, or oil and gas subject to this paragraph produced during a calendar year is the 25 gross value at the point of production of the oil, gas, or oil and gas taxable under 26 AS 43.55.011(e), less the producer's lease expenditures under AS 43.55.165 for the 27 calendar year applicable to the oil, gas, or oil and gas, as applicable, produced by the 28 producer from leases or properties, as adjusted under AS 43.55.170; this paragraph 29 applies to 30 (A) oil and gas produced from leases or properties in the state 31 that include land north of 68 degrees North latitude, other than gas produced 01 before 2022 and used in the state; 02 (B) oil and gas produced from leases or properties in the state 03 outside the Cook Inlet sedimentary basin, no part of which is north of 68 04 degrees North latitude; this subparagraph does not apply to [GAS] 05 (i) gas produced before 2022 and used in the state; or 06 (ii) oil and gas subject to AS 43.55.011(p); 07 (C) oil produced before 2022 from each [A] lease or property 08 in the Cook Inlet sedimentary basin; 09 (D) gas produced before 2022 from each [A] lease or property 10 in the Cook Inlet sedimentary basin; 11 (E) gas produced before 2022 from each [A] lease or property 12 in the state outside the Cook Inlet sedimentary basin and used in the state,  13 other than gas subject to AS 43.55.011(p); 14 (F) oil and gas subject to AS 43.55.011(p) produced from 15 leases or properties in the state; 16 (G) oil and gas produced from leases or properties in the  17 state [A LEASE OR PROPERTY] no part of which is north of 68 degrees 18 North latitude, other than oil or gas described in (B), (C), (D), (E), or (F) of 19 this paragraph; 20 (2) AS 43.55.011(g), the monthly production tax value of the taxable 21 (A) oil and gas produced during a month from leases or 22 properties in the state that include land north of 68 degrees North latitude is the 23 gross value at the point of production of the oil and gas taxable under 24 AS 43.55.011(e) and produced by the producer from those leases or properties, 25 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 26 calendar year applicable to the oil and gas produced by the producer from 27 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 28 does not apply to gas subject to AS 43.55.011(o); 29 (B) oil and gas produced during a month from leases or 30 properties in the state outside the Cook Inlet sedimentary basin, no part of 31 which is north of 68 degrees North latitude, is the gross value at the point of 01 production of the oil and gas taxable under AS 43.55.011(e) and produced by 02 the producer from those leases or properties, less 1/12 of the producer's lease 03 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 04 gas produced by the producer from those leases or properties, as adjusted under 05 AS 43.55.170; this subparagraph does not apply to gas subject to 06 AS 43.55.011(o); 07 (C) oil produced during a month from a lease or property in the 08 Cook Inlet sedimentary basin is the gross value at the point of production of 09 the oil taxable under AS 43.55.011(e) and produced by the producer from that 10 lease or property, less 1/12 of the producer's lease expenditures under 11 AS 43.55.165 for the calendar year applicable to the oil produced by the 12 producer from that lease or property, as adjusted under AS 43.55.170; 13 (D) gas produced during a month from a lease or property in 14 the Cook Inlet sedimentary basin is the gross value at the point of production 15 of the gas taxable under AS 43.55.011(e) and produced by the producer from 16 that lease or property, less 1/12 of the producer's lease expenditures under 17 AS 43.55.165 for the calendar year applicable to the gas produced by the 18 producer from that lease or property, as adjusted under AS 43.55.170; 19 (E) gas produced during a month from a lease or property 20 outside the Cook Inlet sedimentary basin and used in the state is the gross 21 value at the point of production of that gas taxable under AS 43.55.011(e) and 22 produced by the producer from that lease or property, less 1/12 of the 23 producer's lease expenditures under AS 43.55.165 for the calendar year 24 applicable to that gas produced by the producer from that lease or property, as 25 adjusted under AS 43.55.170. 26 * Sec. 27. AS 43.55.160(a) is repealed and reenacted to read: 27 (a) Except as provided in (b) and (f) of this section, for the purposes of 28 AS 43.55.011(e), the annual production tax value of taxable oil, gas, or oil and gas 29 produced by a producer during a calendar year in a specific category for which a 30 separate production tax value is required to be calculated under this subsection is equal 31 to the gross value at the point of production of that oil, gas, or oil and gas, 01 respectively, taxable under AS 43.55.011(e), less the producer's lease expenditures 02 under AS 43.55.165 for the calendar year that are applicable to the oil, gas, or oil and 03 gas, respectively, in that category produced by the producer during the calendar year, 04 as adjusted under AS 43.55.170. A separate annual production tax value must be 05 calculated for 06 (1) oil and gas produced from leases or properties in the state that 07 include land north of 68 degrees North latitude, other than gas produced before 2022 08 and used in the state; 09 (2) oil and gas produced from leases or properties in the state outside 10 the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North 11 latitude, during a calendar year before or during the last calendar year under 12 AS 43.55.024(b) for which the producer could take a tax credit under 13 AS 43.55.024(a); this paragraph does not apply to 14 (A) gas produced before 2022 and used in the state; or 15 (B) oil and gas subject to AS 43.55.011(p); 16 (3) oil produced before 2022 from each lease or property in the Cook 17 Inlet sedimentary basin; 18 (4) gas produced before 2022 from each lease or property in the Cook 19 Inlet sedimentary basin; 20 (5) gas produced before 2022 from each lease or property in the state 21 outside the Cook Inlet sedimentary basin and used in the state, other than gas subject 22 to AS 43.55.011(p); 23 (6) oil and gas subject to AS 43.55.011(p) produced from leases or 24 properties in the state; 25 (7) oil and gas produced from leases or properties in the state no part 26 of which is north of 68 degrees North latitude, other than oil or gas described in (2), 27 (3), (4), (5), or (6) of this subsection. 28  * Sec. 28. AS 43.55.160(e) is amended to read: 29 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 30 would otherwise be deductible by a producer in a calendar year but whose deduction 31 would cause an annual production tax value calculated under (a) [(a)(1)] of this 01 section of taxable oil or gas produced during the calendar year to be less than zero 02 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 03 However, the department shall provide by regulation a method to ensure that, for a 04 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 05 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 06 otherwise be deductible by a producer for that period but whose deduction would 07 cause a production tax value calculated under (a)(3), (4), (5), or (6) [(a)(1)(C), (D), 08 (E), OR (F)] of this section to be less than zero are accounted for as though the 09 adjusted lease expenditures had first been used as deductions in calculating the 10 production tax values of oil or gas subject to any of the limitations under 11 AS 43.55.011(j), (k), (o), or (p) that have positive production tax values so as to 12 reduce the tax liability calculated without regard to the limitation to the maximum 13 amount provided for under the applicable provision of AS 43.55.011(j), (k), (o), or (p). 14 Only the amount of those adjusted lease expenditures remaining after the accounting 15 provided for under this subsection may be used to establish a carried-forward annual 16 loss under AS 43.55.023(b). In this subsection, "producer" includes "explorer." 17 * Sec. 29. AS 43.55.160 is amended by adding a new subsection to read: 18 (f) In the calculation of an annual production tax value of a producer under 19 (a)(1) of this section, the gross value at the point of production of oil or gas meeting 20 one or more of the following criteria is reduced by 20 percent: (1) the oil or gas is 21 produced from a lease or property that does not contain a lease that was within a unit 22 on January 1, 2003; (2) the oil or gas is produced from a participating area established 23 after December 31, 2011, that is within a unit formed under AS 38.05.180(p) before 24 January 1, 2003, if the participating area does not contain a reservoir that had 25 previously been in a participating area established before December 31, 2011; (3) the 26 oil or gas is produced from a well that has been accurately metered and measured by 27 the operator to the satisfaction of the commissioner, and the producer demonstrates to 28 the department that the metered well drains a reservoir or portion of a reservoir that 29 the Department of Natural Resources has certified was not contributing to production 30 before January 1, 2013, and the producer demonstrates to the department that the 31 volume of oil or gas produced from the well was subject to certification by the 01 Department of Natural Resources. An exclusion under this section may not reduce the 02 gross value at the point of production below zero. In this subsection, "participating 03 area" means a reservoir or portion of a reservoir producing or contributing to 04 production as approved by the Department of Natural Resources. 05  * Sec. 30. AS 43.56.160 is amended to read: 06 Sec. 43.56.160. Interest and penalty. When the tax levied by AS 43.56.010(a) 07 becomes delinquent, a penalty of 10 percent shall be added. Interest on the delinquent 08 taxes, exclusive of penalty, shall be assessed at the rate specified in AS 43.05.225(1) 09 [A RATE OF EIGHT PERCENT A YEAR]. 10  * Sec. 31. AS 43.77.020(d) is amended to read: 11 (d) A person subject to the tax under this chapter shall make quarterly 12 payments of the tax estimated to be due for the year, as required under regulations 13 adopted by the department. A taxpayer will be subject to an estimated tax penalty, 14 determined by applying the interest rate specified in AS 43.05.225(1) [AS 43.05.225] 15 to the underpayment for each quarter, unless the taxpayer makes estimated tax 16 payments in equal installments that total either 17 (1) at least 90 percent of the taxpayer's tax liability under this chapter 18 for the tax year; or 19 (2) at least 100 percent of the taxpayer's tax liability under this chapter 20 for the prior tax year. 21  * Sec. 32. AS 43.90.430 is amended to read: 22 Sec. 43.90.430. Interest. When a payment due to the state under this chapter 23 becomes delinquent, the payment bears interest at the rate applicable to a delinquent 24 tax under AS 43.05.225(1) [AS 43.05.225]. 25  * Sec. 33. AS 43.98 is amended by adding new sections to read: 26 Article 2. Oil and Gas Competitiveness Review Board. 27 Sec. 43.98.040. Oil and Gas Competitiveness Review Board. (a) The Oil and 28 Gas Competitiveness Review Board is established in the department. 29 (b) The board shall consist of nine members as follows: 30 (1) two members nominated by the two leading nonprofit trade 31 associations representing the oil and gas industry in the state and appointed by the 01 governor, with one member nominated by each association; 02 (2) the chair of the Alaska Oil and Gas Conservation Commission or 03 the chair's designee; 04 (3) three members of the public appointed by the governor, including 05 one member who is a petroleum engineer, one member who is a geologist, and one 06 member who is an economist; 07 (4) the commissioner of environmental conservation or the 08 commissioner's designee; 09 (5) the commissioner of natural resources or the commissioner's 10 designee; and 11 (6) the commissioner of revenue or the commissioner's designee. 12 (c) The governor shall, every two years, designate one of the members as 13 chair. 14 (d) Members of the board appointed under (b)(1) and (b)(3) of this section 15 serve for six years. An individual who has served on the board may be reappointed. 16 (e) A vacancy on the board shall be filled in the manner of the original 17 appointment. 18 (f) A member of the board may be removed and replaced at the discretion of 19 the governor. 20 (g) The members of the board appointed under (b)(1) and (b)(3) of this section 21 serve without compensation but shall receive per diem and travel expenses authorized 22 for boards and commissions under AS 39.20.180. 23 (h) The board may enter into contracts for professional services and may 24 employ staff for administrative support for the board. 25 (i) The board may not meet more than once in a calendar year. 26 Sec. 43.98.050. Duties. The duties of the board include the following: 27 (1) establish and maintain a salient collection of information related to 28 oil and gas exploration, development, and production in the state and related to tax 29 structures, rates, and credits in other regions with oil and gas resources; 30 (2) evaluate and suggest changes to state laws and regulations 31 governing the oil and gas industry; 01 (3) review historical, current, and potential levels of investment in the 02 state's oil and gas sector; 03 (4) identify factors that affect investment in oil and gas exploration, 04 development, and production in the state, including tax structure, rates, and credits; 05 royalty requirements; infrastructure; workforce availability; and regulatory 06 requirements; 07 (5) review the competitive position of the state to attract and maintain 08 investment in the oil and gas sector in the state as compared to the competitive 09 position of other regions with oil and gas resources; 10 (6) in order to facilitate the work of the board, establish procedures to 11 accept and keep confidential information that is beneficial to the work of the board, 12 including the creation of a secure data room and confidentiality agreements to be 13 signed by individuals having access to confidential information; 14 (7) make written findings and recommendations, together with 15 suggested legislation, to the Alaska State Legislature before December 1 of each year, 16 or as soon thereafter as practicable, regarding 17 (A) changes to the state's regulatory environment that would be 18 conducive to encouraging increased investment while protecting the interests 19 of the people of the state and the environment; 20 (B) changes to the state's fiscal regime that would be conducive 21 to increased and ongoing long-term investment in and development of the 22 state's oil and gas resources; and 23 (C) alternative means for increasing the state's ability to attract 24 and maintain investment in and development of the state's oil and gas 25 resources. 26 Sec. 43.98.060. Information to be provided to board. (a) The commissioner 27 of natural resources, the commissioner of revenue, the commissioner of environmental 28 conservation, and other commissioners and state agencies that have responsibility for 29 and maintain information related to oil and gas investment and activity in the state 30 shall, at the request of the board, provide information required by the board to carry 31 out the duties described in AS 43.98.050. 01 (b) At the request of the board, and except for information that is confidential 02 under AS 40.25.100(a) or AS 43.05.230 and information required to be held 03 confidential by the Alaska Oil and Gas Conservation Commission, a commissioner 04 may disclose to the board information that is otherwise confidential after each member 05 of the board and each staff member for the board with access to the information signs 06 a confidentiality agreement prepared by the commissioner making the disclosure. 07 Information that is confidential under AS 43.05.230 may not be disclosed to the board. 08 Sec. 43.98.070. Definition. In AS 43.98.040 - 43.98.070, "board" means the 09 Oil and Gas Competitiveness Review Board. 10 * Sec. 34. AS 43.55.023(m) is repealed. 11 * Sec. 35. AS 43.55.011(g), 43.55.023(i), and 43.55.160(c) are repealed January 1, 2014. 12  * Sec. 36. AS 43.98.040, 43.98.050, 43.98.060, and 43.98.070 are repealed December 31, 13 2022. 14  * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 APPLICABILITY. (a) Sections 9, 12, 13, and 27 - 29 of this Act apply to oil and gas 17 produced after December 31, 2013. 18 (b) Sections 10 and 26 of this Act apply to oil and gas produced after December 31, 19 2012. 20 (c) Sections 15 and 17 - 20 of this Act and AS 43.55.023(a)(1), as amended by sec. 15 21 of this Act, apply to expenditures incurred after December 31, 2012. 22 (d) Sections 16, 18, and 23 of this Act apply to expenditures incurred after 23 December 31, 2013. 24 * Sec. 38. The uncodified law of the State of Alaska is amending by adding a new section to 25 read: 26 TRANSITION: REGULATIONS. The Department of Revenue may adopt regulations 27 to implement this Act. The regulations take effect under AS 44.62 (Administrative Procedure 28 Act), but not before the effective date of the respective provision of this Act. 29  * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 30 read: 31 TRANSITION: OIL AND GAS COMPETITIVENESS REVIEW BOARD. The 01 governor shall appoint the initial members of the Oil and Gas Competitiveness Review Board, 02 established in sec. 33 of this Act, before January 1, 2014. The initial terms of the members of 03 the board appointed under AS 43.98.040(b)(1) and (b)(3) shall be set by the governor and 04 staggered so that one member serves one year, two members serve four years, and two 05 members serve six years. The first written findings and recommendations, together with 06 suggested legislation, shall be delivered to the Alaska State Legislature on December 1, 2015, 07 or as soon thereafter as practicable. 08  * Sec. 40. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 RETROACTIVITY. Sections 10, 17, 19, 20, 23, 26, and 34 of this Act and 11 AS 43.55.023(a)(1), as amended by sec. 15 of this Act, are retroactive to January 1, 2013.