00 HOUSE BILL NO. 326 01 "An Act bearing the short title of the 'Fair Oil Share and Heavy Oil Production 02 Incentive Act'; relating to the oil and gas production tax; relating to an adjustment to 03 the calculation of the gross value at the point of production; relating to minimum 04 production taxes for oil and gas; relating to a limitation on the use of certain tax credits; 05 relating to the calculation of installment payments of the oil and gas production tax; 06 creating a heavy oil production enhancement credit; and providing for an effective 07 date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09  * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 10 to read: 11 SHORT TITLE. This Act may be known as the Fair Oil Share and Heavy Oil 12 Production Incentive Act. 13  * Sec. 2. AS 43.55.011(f) is amended to read: 01 (f) Except as provided in AS 43.55.160(f) and (g), the [THE] levy of tax 02 under (e) of this section for 03 (1) oil and gas produced before January 1, 2017 [JANUARY 1, 04 2022], from leases or properties that include land north of 68 degrees North latitude, 05 other than gas subject to (o) of this section, may not be less than 06 (A) four percent of the gross value at the point of production 07 when the average price per barrel for Alaska North Slope crude oil for sale on 08 the United States West Coast during the calendar year for which the tax is due 09 is more than $25; 10 (B) three percent of the gross value at the point of production 11 when the average price per barrel for Alaska North Slope crude oil for sale on 12 the United States West Coast during the calendar year for which the tax is due 13 is over $20 but not over $25; 14 (C) two percent of the gross value at the point of production 15 when the average price per barrel for Alaska North Slope crude oil for sale on 16 the United States West Coast during the calendar year for which the tax is due 17 is over $17.50 but not over $20; 18 (D) one percent of the gross value at the point of production 19 when the average price per barrel for Alaska North Slope crude oil for sale on 20 the United States West Coast during the calendar year for which the tax is due 21 is over $15 but not over $17.50; or 22 (E) zero percent of the gross value at the point of production 23 when the average price per barrel for Alaska North Slope crude oil for sale on 24 the United States West Coast during the calendar year for which the tax is due 25 is $15 or less; and 26 (2) oil and gas produced on and after January 1, 2022, from leases  27 or properties that include land north of 68 degrees North latitude, may not be  28 less than the greater of the amount calculated in (q) of this section or 29 (A) 10 percent of the gross value at the point of production  30 when the average price per barrel for Alaska North Slope crude oil for  31 sale on the United States West Coast during the calendar year for which  01 the tax is due is more than $65;  02 (B) eight percent of the gross value at the point of  03 production when the average price per barrel for Alaska North Slope  04 crude oil for sale on the United States West Coast during the calendar  05 year for which the tax is due is over $55 but not over $65;  06 (C) six percent of the gross value at the point of production  07 when the average price per barrel for Alaska North Slope crude oil for  08 sale on the United States West Coast during the calendar year for which  09 the tax is due is over $45 but not over $55; or  10 (D) five percent of the gross value at the point of production  11 when the average price per barrel for Alaska North Slope crude oil for  12 sale on the United States West Coast during the calendar year for which  13 the tax is due is $45 or less; and  14 (3) oil produced on and after January 1, 2022, from leases or properties 15 that include land north of 68 degrees North latitude, may not be less than the greater  16 of the amount calculated in (q) of this section or  17 (A) 10 [FOUR] percent of the gross value at the point of 18 production when the average price per barrel for Alaska North Slope crude oil 19 for sale on the United States West Coast during the calendar year for which the 20 tax is due is more than $65 [$25]; 21 (B) eight [THREE] percent of the gross value at the point of 22 production when the average price per barrel for Alaska North Slope crude oil 23 for sale on the United States West Coast during the calendar year for which the 24 tax is due is over $55 [$20] but not over $65 [$25]; 25 (C) Six [TWO] percent of the gross value at the point of 26 production when the average price per barrel for Alaska North Slope crude oil 27 for sale on the United States West Coast during the calendar year for which the 28 tax is due is over $45 [$17.50] but not over $55 [$20]; or  29 (D) five [ONE PERCENT OF THE GROSS VALUE AT THE 30 POINT OF PRODUCTION WHEN THE AVERAGE PRICE PER BARREL 31 FOR ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE UNITED 01 STATES WEST COAST DURING THE CALENDAR YEAR FOR WHICH 02 THE TAX IS DUE IS OVER $15 BUT NOT OVER $17.50; OR 03 (E) ZERO] percent of the gross value at the point of production 04 when the average price per barrel for Alaska North Slope crude oil for sale on 05 the United States West Coast during the calendar year for which the tax is due 06 is $40 [$15] or less. 07  * Sec. 3. AS 43.55.011 is amended by adding a new subsection to read: 08 (q) The levy of tax under (e) of this section for 09 (1) oil and gas produced before January 1, 2022, except as otherwise 10 provided in (f), (j), (k), (o), and (p) of this section, may not be less than the greater of 11 the amount calculated in (f) of this section or the production tax value of oil or gas 12 calculated under AS 43.55.160 multiplied by 13 (A) if the annual average price per barrel for Alaska North 14 Slope crude oil for sale on the United States West Coast during the calendar 15 month is greater than $85, the sum of 20 percent and the product of 0.3 percent 16 multiplied by the number that represents the difference between the annual 17 average price per barrel for Alaska North Slope crude oil for sale on the United 18 States West Coast during the calendar month and $85, except that the sum 19 determined under this subparagraph may not exceed 50 percent; or 20 (B) if the annual average price per barrel for Alaska North 21 Slope crude oil for sale on the United States West Coast during the calendar 22 month is less than or equal to $85, 20 percent; 23 (2) oil produced on and after January 1, 2022, may not be less than the 24 greater of the amount calculated in (f) of this section or the production tax value of oil 25 or gas calculated under AS 43.55.160 multiplied by 26 (A) if the annual average price per barrel for Alaska North 27 Slope crude oil for sale on the United States West Coast during the calendar 28 month is greater than $85, the sum of 20 percent and the product of 0.3 percent 29 multiplied by the number that represents the difference between the annual 30 average price per barrel for Alaska North Slope crude oil for sale on the United 31 States West Coast during the calendar month and $85, except that the sum 01 determined under this subparagraph may not exceed 50 percent; or 02 (B) if the annual average price per barrel for Alaska North 03 Slope crude oil for sale on the United States West Coast during the calendar 04 month is less than or equal to $85, 20 percent. 05  * Sec. 4. AS 43.55.020(a) is amended to read: 06 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 07 the tax as follows: 08 (1) for oil and gas produced before January 1, 2014, an installment 09 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 10 as allowed by law, is due for each month of the calendar year on the last day of the 11 following month; except as otherwise provided under (2) of this subsection, the 12 amount of the installment payment is the sum of the following amounts, less 1/12 of 13 the tax credits that are allowed by law to be applied against the tax levied by 14 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 15 not be less than zero: 16 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 17 produced from leases or properties in the state outside the Cook Inlet 18 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 19 the greater of 20 (i) zero; or 21 (ii) the sum of 25 percent and the tax rate calculated for 22 the month under AS 43.55.011(g) multiplied by the remainder obtained 23 by subtracting 1/12 of the producer's adjusted lease expenditures for the 24 calendar year of production under AS 43.55.165 and 43.55.170 that are 25 deductible for the oil and gas under AS 43.55.160 from the gross value 26 at the point of production of the oil and gas produced from the leases or 27 properties during the month for which the installment payment is 28 calculated; 29 (B) for oil and gas produced from leases or properties subject 30 to AS 43.55.011(f), the greatest of 31 (i) zero; 01 (ii) zero percent, one percent, two percent, three 02 percent, or four percent, as applicable, of the gross value at the point of 03 production of the oil and gas produced from the leases or properties 04 during the month for which the installment payment is calculated; or 05 (iii) the sum of 25 percent and the tax rate calculated for 06 the month under AS 43.55.011(g) multiplied by the remainder obtained 07 by subtracting 1/12 of the producer's adjusted lease expenditures for the 08 calendar year of production under AS 43.55.165 and 43.55.170 that are 09 deductible for the oil and gas under AS 43.55.160 from the gross value 10 at the point of production of the oil and gas produced from those leases 11 or properties during the month for which the installment payment is 12 calculated; 13 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 14 each lease or property, the greater of 15 (i) zero; or 16 (ii) the sum of 25 percent and the tax rate calculated for 17 the month under AS 43.55.011(g) multiplied by the remainder obtained 18 by subtracting 1/12 of the producer's adjusted lease expenditures for the 19 calendar year of production under AS 43.55.165 and 43.55.170 that are 20 deductible under AS 43.55.160 for the oil or gas, respectively, 21 produced from the lease or property from the gross value at the point of 22 production of the oil or gas, respectively, produced from the lease or 23 property during the month for which the installment payment is 24 calculated; 25 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 26 (i) the sum of 25 percent and the tax rate calculated for 27 the month under AS 43.55.011(g) multiplied by the remainder obtained 28 by subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the oil and gas under AS 43.55.160 from the gross value 31 at the point of production of the oil and gas produced from the leases or 01 properties during the month for which the installment payment is 02 calculated, but not less than zero; or 03 (ii) four percent of the gross value at the point of 04 production of the oil and gas produced from the leases or properties 05 during the month, but not less than zero; 06 (2) an amount calculated under (1)(C) of this subsection for oil or gas 07 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 08 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 09 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 10 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 11 amount of taxable gas produced during the month for the amount of taxable gas 12 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 13 (2)(A), as applicable, the amount of taxable oil produced during the month for the 14 amount of taxable oil produced during the calendar year; 15 (3) an installment payment of the estimated tax levied by 16 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 17 on the last day of the following month; the amount of the installment payment is the 18 sum of 19 (A) the applicable tax rate for oil provided under 20 AS 43.55.011(i), multiplied by the gross value at the point of production of the 21 oil taxable under AS 43.55.011(i) and produced from the lease or property 22 during the month; and 23 (B) the applicable tax rate for gas provided under 24 AS 43.55.011(i), multiplied by the gross value at the point of production of the 25 gas taxable under AS 43.55.011(i) and produced from the lease or property 26 during the month; 27 (4) any amount of tax levied by AS 43.55.011, net of any credits 28 applied as allowed by law, that exceeds the total of the amounts due as installment 29 payments of estimated tax is due on March 31 of the year following the calendar year 30 of production; 31 (5) for oil and gas produced on and after January 1, 2014, and before 01 January 1, 2017 [JANUARY 1, 2022], an installment payment of the estimated tax 02 levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for 03 each month of the calendar year on the last day of the following month; except as 04 otherwise provided under (7) [(6)] of this subsection, the amount of the installment 05 payment is the sum of the following amounts, less 1/12 of the tax credits that are 06 allowed by law to be applied against the tax levied by AS 43.55.011(e) for the 07 calendar year, but the amount of the installment payment may not be less than zero: 08 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 09 produced from leases or properties in the state outside the Cook Inlet 10 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 11 the greater of 12 (i) zero; or 13 (ii) 35 percent multiplied by the remainder obtained by 14 subtracting 1/12 of the producer's adjusted lease expenditures for the 15 calendar year of production under AS 43.55.165 and 43.55.170 that are 16 deductible for the oil and gas under AS 43.55.160 from the gross value 17 at the point of production of the oil and gas produced from the leases or 18 properties during the month for which the installment payment is 19 calculated; 20 (B) for oil and gas produced from leases or properties subject 21 to AS 43.55.011(f), the greatest of 22 (i) zero; 23 (ii) zero percent, one percent, two percent, three 24 percent, or four percent, as applicable, of the gross value at the point of 25 production of the oil and gas produced from the leases or properties 26 during the month for which the installment payment is calculated; or 27 (iii) 35 percent multiplied by the remainder obtained by 28 subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the oil and gas under AS 43.55.160 from the gross value 31 at the point of production of the oil and gas produced from those leases 01 or properties during the month for which the installment payment is 02 calculated, except that, for the purposes of this calculation, a reduction 03 from the gross value at the point of production may apply for oil and 04 gas subject to AS 43.55.160(f) or (g); 05 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 06 each lease or property, the greater of 07 (i) zero; or 08 (ii) 35 percent multiplied by the remainder obtained by 09 subtracting 1/12 of the producer's adjusted lease expenditures for the 10 calendar year of production under AS 43.55.165 and 43.55.170 that are 11 deductible under AS 43.55.160 for the oil or gas, respectively, 12 produced from the lease or property from the gross value at the point of 13 production of the oil or gas, respectively, produced from the lease or 14 property during the month for which the installment payment is 15 calculated; 16 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 17 (i) 35 percent multiplied by the remainder obtained by 18 subtracting 1/12 of the producer's adjusted lease expenditures for the 19 calendar year of production under AS 43.55.165 and 43.55.170 that are 20 deductible for the oil and gas under AS 43.55.160 from the gross value 21 at the point of production of the oil and gas produced from the leases or 22 properties during the month for which the installment payment is 23 calculated, but not less than zero; or 24 (ii) four percent of the gross value at the point of 25 production of the oil and gas produced from the leases or properties 26 during the month, but not less than zero; 27 (6) for oil and gas produced on and after January 1, 2017, and  28 before January 1, 2022, an installment payment of the estimated tax levied by  29 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each  30 month of the calendar year on the last day of the following month; except as  31 otherwise provided under (7) of this subsection, the amount of the installment  01 payment is the sum of the following amounts, less 1/12 of the tax credits that are  02 allowed by law to be applied against the tax levied by AS 43.55.011(e) for the  03 calendar year, but the amount of the installment payment may not be less than  04 zero:  05 (A) for oil and gas not subject to AS 43.55.011(o) or (p)  06 produced from leases or properties in the state outside the Cook Inlet  07 sedimentary basin, other than leases or properties subject to  08 AS 43.55.011(f), the greater of  09 (i) zero; or  10 (ii) 35 percent multiplied by the remainder obtained  11 by subtracting 1/12 of the producer's adjusted lease expenditures  12 for the calendar year of production under AS 43.55.165 and  13 43.55.170 that are deductible for the oil and gas under  14 AS 43.55.160 from the gross value at the point of production of the  15 oil and gas produced from the leases or properties during the  16 month for which the installment payment is calculated;  17 (B) for oil and gas produced from leases or properties  18 subject to AS 43.55.011(f) or (q), the greatest of  19 (i) zero;  20 (ii) the amount applicable under AS 43.55.011(f) or  21 (q) during the month for which the installment payment is  22 calculated; or  23 (iii) 35 percent multiplied by the remainder obtained  24 by subtracting 1/12 of the producer's adjusted lease expenditures  25 for the calendar year of production under AS 43.55.165 and  26 43.55.170 that are deductible for the oil and gas under  27 AS 43.55.160 from the gross value at the point of production of the  28 oil and gas produced from those leases or properties during the  29 month for which the installment payment is calculated, except that,  30 for the purposes of this calculation, a reduction from the gross  31 value at the point of production may apply for oil and gas subject  01 to AS 43.55.160(f) or (g);  02 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for  03 each lease or property, the greater of  04 (i) zero; or  05 (ii) 35 percent multiplied by the remainder obtained  06 by subtracting 1/12 of the producer's adjusted lease expenditures  07 for the calendar year of production under AS 43.55.165 and  08 43.55.170 that are deductible under AS 43.55.160 for the oil or gas,  09 respectively, produced from the lease or property from the gross  10 value at the point of production of the oil or gas, respectively,  11 produced from the lease or property during the month for which  12 the installment payment is calculated;  13 (D) for oil and gas subject to AS 43.55.011(p), the lesser of  14 (i) 35 percent multiplied by the remainder obtained  15 by subtracting 1/12 of the producer's adjusted lease expenditures  16 for the calendar year of production under AS 43.55.165 and  17 43.55.170 that are deductible for the oil and gas under  18 AS 43.55.160 from the gross value at the point of production of the  19 oil and gas produced from the leases or properties during the  20 month for which the installment payment is calculated, but not less  21 than zero; or  22 (ii) four percent of the gross value at the point of  23 production of the oil and gas produced from the leases or  24 properties during the month, but not less than zero;  25 (7) an amount calculated under (5)(C) or (6)(C) of this subsection for 26 oil or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained 27 by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 28 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 29 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 30 amount of taxable gas produced during the month for the amount of taxable gas 31 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 01 (2)(A), as applicable, the amount of taxable oil produced during the month for the 02 amount of taxable oil produced during the calendar year; 03 (8) [(7)] for oil and gas produced on or after January 1, 2022, an 04 installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax 05 credits applied as allowed by law, is due for each month of the calendar year on the 06 last day of the following month; the amount of the installment payment is the sum of 07 the following amounts, less 1/12 of the tax credits that are allowed by law to be 08 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 09 of the installment payment may not be less than zero: 10 (A) for oil produced from leases or properties that include land 11 north of 68 degrees North latitude, the greatest of 12 (i) zero; 13 (ii) the amount [ZERO PERCENT, ONE PERCENT, 14 TWO PERCENT, THREE PERCENT, OR FOUR PERCENT, AS] 15 applicable under AS 43.55.011(f) or (q) [, OF THE GROSS VALUE 16 AT THE POINT OF PRODUCTION OF THE OIL PRODUCED 17 FROM THE LEASES OR PROPERTIES] during the month for which 18 the installment payment is calculated; or 19 (iii) 35 percent multiplied by the remainder obtained by 20 subtracting 1/12 of the producer's adjusted lease expenditures for the 21 calendar year of production under AS 43.55.165 and 43.55.170 that are 22 deductible for the oil under AS 43.55.160(h)(1) from the gross value at 23 the point of production of the oil produced from those leases or 24 properties during the month for which the installment payment is 25 calculated, except that, for the purposes of this calculation, a reduction 26 from the gross value at the point of production may apply for oil 27 subject to AS 43.55.160(f) or 43.55.160(f) and (g); 28 (B) for oil produced before or during the last calendar year 29 under AS 43.55.024(b) for which the producer could take a tax credit under 30 AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet 31 sedimentary basin, no part of which is north of 68 degrees North latitude, other 01 than leases or properties subject to AS 43.55.011(p), the greater of 02 (i) zero; or 03 (ii) 35 percent multiplied by the remainder obtained by 04 subtracting 1/12 of the producer's adjusted lease expenditures for the 05 calendar year of production under AS 43.55.165 and 43.55.170 that are 06 deductible for the oil under AS 43.55.160(h)(2) from the gross value at 07 the point of production of the oil produced from the leases or properties 08 during the month for which the installment payment is calculated; 09 (C) for oil and gas produced from leases or properties subject 10 to AS 43.55.011(p), except as otherwise provided under (8) of this subsection, 11 the sum of 12 (i) 35 percent multiplied by the remainder obtained by 13 subtracting 1/12 of the producer's adjusted lease expenditures for the 14 calendar year of production under AS 43.55.165 and 43.55.170 that are 15 deductible for the oil under AS 43.55.160(h)(3) from the gross value at 16 the point of production of the oil produced from the leases or properties 17 during the month for which the installment payment is calculated, but 18 not less than zero; and 19 (ii) 13 percent of the gross value at the point of 20 production of the gas produced from the leases or properties during the 21 month, but not less than zero; 22 (D) for oil produced from leases or properties in the state, no 23 part of which is north of 68 degrees North latitude, other than leases or 24 properties subject to (B) or (C) of this paragraph, the greater of 25 (i) zero; or 26 (ii) 35 percent multiplied by the remainder obtained by 27 subtracting 1/12 of the producer's adjusted lease expenditures for the 28 calendar year of production under AS 43.55.165 and 43.55.170 that are 29 deductible for the oil under AS 43.55.160(h)(4) from the gross value at 30 the point of production of the oil produced from the leases or properties 31 during the month for which the installment payment is calculated; 01 (E) for gas produced from each lease or property in the state, 02 other than a lease or property subject to AS 43.55.011(p), 13 percent of the 03 gross value at the point of production of the gas produced from the lease or 04 property during the month for which the installment payment is calculated, but 05 not less than zero; 06 (9) [(8)] an amount calculated under (8)(C) [(7)(C)] of this subsection 07 may not exceed four percent of the gross value at the point of production of the oil and 08 gas produced from leases or properties subject to AS 43.55.011(p) during the month 09 for which the installment payment is calculated; 10 (10) [(9)] for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), 11 (6)(B)(ii), and (8)(A)(ii) [(7)(A)(ii)] of this subsection, the applicable amount 12 [PERCENTAGE OF THE GROSS VALUE AT THE POINT OF PRODUCTION] is 13 determined under AS 43.55.011(f) [AS 43.55.011(f)(1) OR (2)] but substituting,  14 where applicable, the phrase "month for which the installment payment is calculated" 15 in AS 43.55.011(f) [AS 43.55.011(f)(1) AND (2)] for the phrase "calendar year for 16 which the tax is due." 17  * Sec. 5. AS 43.55.020(g) is amended to read: 18 (g) Notwithstanding any contrary provision of AS 43.05.225, 19 (1) before January 1, 2014, an unpaid amount of an installment 20 payment required under (a)(1) - (3) of this section that is not paid when due bears 21 interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal 22 Revenue Code), as amended, compounded daily, from the date the installment 23 payment is due until March 31 following the calendar year of production, and (B) as 24 provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued 25 under (A) of this paragraph that remains unpaid after that March 31 is treated as an 26 addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax 27 due under (a)(4) of this section that is not paid when due bears interest as provided for 28 a delinquent tax under AS 43.05.225; 29 (2) on and after January 1, 2014, an unpaid amount of an installment 30 payment required under (a)(3), (5), (6), [OR] (7), or (8) of this section that is not paid 31 when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 01 6621 (Internal Revenue Code), as amended, compounded daily, from the date the 02 installment payment is due until March 31 following the calendar year of production, 03 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 04 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 05 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 06 amount of tax due under (a)(4) of this section that is not paid when due bears interest 07 as provided for a delinquent tax under AS 43.05.225. 08  * Sec. 6. AS 43.55 is amended by adding a new section to read: 09 Sec. 43.55.022. Limitations on tax credits. (a) Notwithstanding any contrary 10 provision of this chapter, the application of tax credits under this chapter is subject to 11 the limitations set out in this section. 12 (b) A tax credit or a fraction of a tax credit under AS 43.55.023, 43.55.024, 13 and 43.55.025 may not be subtracted in calculating an installment payment of 14 estimated tax required under AS 43.55.020(a) if the resulting amount of the 15 installment payment would be less than the amount in AS 43.55.020(a)(5)(B)(ii), 16 43.55.020(a)(6)(B)(ii), or 43.55.020(a)(8)(A)(ii), as applicable. 17 (c) The total amount of tax credits under AS 43.55.023, 43.55.024, and 18 43.55.025 that may be applied against a tax levied by AS 43.55.011(e) for a calendar 19 year may not exceed the sum of the amount of the tax credits or fractions of tax credits 20 that are allowed under (b) of this section to be subtracted in calculating the installment 21 payments of estimated tax for each month in the calendar year. 22  * Sec. 7. AS 43.55.023(c) is amended to read: 23 (c) A credit or portion of a credit under this section may not be used to reduce 24 a person's tax liability under AS 43.55.011(e) for any calendar year below the amount  25 calculated under AS 43.55.011(f) [ZERO], and any unused credit or portion of a 26 credit not used under this subsection may be applied in a later calendar year. 27  * Sec. 8. AS 43.55.024(g) is amended to read: 28 (g) A tax credit authorized by (c) of this section may not be applied to reduce 29 a producer's tax liability for any calendar year under AS 43.55.011(e) below the  30 amount calculated under AS 43.55.011(f) [ZERO]. 31  * Sec. 9. AS 43.55.025(i) is amended to read: 01 (i) For a production tax credit under this section, 02 (1) a credit may not be applied to reduce a taxpayer's tax liability under 03 AS 43.55.011(e) below the amount calculated under AS 43.55.011(f) [ZERO] for a 04 calendar year; and 05 (2) an amount of the production tax credit in excess of the amount that 06 may be applied for a calendar year under this subsection may be carried forward and 07 applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later 08 calendar years. 09  * Sec. 10. AS 43.55 is amended by adding a new section to read: 10 Sec. 43.55.026. Heavy oil research or development expenditure credit. (a) 11 A person may apply for a tax credit against the tax due under this chapter in the 12 amount of (1) 25 percent of an expenditure for research or development of a new 13 technology or method solely and directly aimed at producing or enhancing the 14 production of heavy oil in the state; or (2) $2,500,000, whichever is less. A person 15 may not claim a credit under this section for research and development expenditures 16 that were deducted in the calculation of tax liability under AS 43.55.011(e). 17 (b) A taxpayer applying the credit under this section against a liability under 18 this chapter shall claim the credit on the taxpayer's return. A tax credit or portion of a 19 tax credit under this section may not be used to reduce the taxpayer's tax liability 20 under this chapter below zero. 21 (c) An expenditure that is the basis of the credit under this section may not be 22 the basis for 23 (1) a deduction against the tax levied under this chapter; 24 (2) a credit or deduction under another provision of this title; or 25 (3) any federal credit claimed under this title. 26 (d) A person entitled to a tax credit under this section that is greater than the 27 person's tax liability under this chapter may request a refund or payment in the amount 28 of the unused portion of the tax credit. The department may use money available in the 29 oil and gas tax credit fund established in AS 43.55.028 to make a refund or payment 30 under this subsection in whole or in part if the department finds that 31 (1) the claimant does not have an outstanding liability to the state for 01 unpaid delinquent taxes under this title; and 02 (2) after application of all available tax credits, the claimant's total tax 03 liability under this chapter for the calendar year in which the claim is made is zero. 04 (e) A refund under this section does not bear interest. 05 (f) In this section, "heavy oil" means oil with an American Petroleum Institute 06 gravity of less than 18 degrees. 07  * Sec. 11. AS 43.55.028(a) is amended to read: 08 (a) The oil and gas tax credit fund is established as a separate fund of the state. 09 The purpose of the fund is to purchase transferable tax credit certificates issued under 10 AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to 11 pay refunds and payments claimed under AS 43.20.046, 43.20.047, [OR] 43.20.053,  12 or AS 43.55.026. 13  * Sec. 12. AS 43.55.028(g) is amended to read: 14 (g) The department may adopt regulations to carry out the purposes of this 15 section, including standards and procedures to allocate available money among 16 applications for purchases under this chapter and claims for refunds and payments 17 under AS 43.20.046, 43.20.047, [OR] 43.20.053, or AS 43.55.026 when the total 18 amount of the applications for purchase and claims for refund exceed the amount of 19 available money in the fund. The regulations adopted by the department may not, 20 when allocating available money in the fund under this section, distinguish an 21 application for the purchase of a credit certificate issued under former 22 AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046, 43.20.047, 23 [OR] 43.20.053, or AS 43.55.026. 24  * Sec. 13. AS 43.55.160(f) is amended to read: 25 (f) On and after January 1, 2014, in the calculation of an annual production tax 26 value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the 27 point of production of oil or gas produced from a lease or property north of 68 degrees 28 North latitude meeting one or more of the following criteria is reduced by 20 percent: 29 (1) the oil or gas is produced from a lease or property that does not contain a lease that 30 was within a unit on January 1, 2003; (2) the oil or gas is produced from a 31 participating area established after December 31, 2011, that is within a unit formed 01 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 02 contain a reservoir that had previously been in a participating area established before 03 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 04 existing participating area by the Department of Natural Resources on and after 05 January 1, 2014, and the producer demonstrates to the department that the volume of 06 oil or gas produced is from acreage added to an existing participating area. This 07 subsection does not apply to gas produced before 2022 that is used in the state or to 08 gas produced on and after January 1, 2022. For oil or gas produced after January 1,  09 2017, the reduction under this subsection shall apply to oil or gas produced from  10 a lease or property for the first four years after the commencement of production  11 in commercial quantities of oil or gas from that lease or property. For oil or gas  12 produced before January 1, 2017, the reduction under this subsection for a lease  13 or property shall expire January 1, 2021. A reduction under this subsection may not 14 reduce the gross value at the point of production below zero. Oil or gas produced  15 after January 1, 2017, that qualifies for a reduction under this subsection is not  16 subject to the minimum tax under AS 43.55.011(f). In this subsection, "participating 17 area" means a reservoir or portion of a reservoir producing or contributing to 18 production as approved by the Department of Natural Resources. 19  * Sec. 14. This Act takes effect January 1, 2017.