HB 498: "An Act providing for exploration incentive credits for activities involving locatable and leasable minerals and coal deposits on certain land in the state; and providing for an effective date."
00HOUSE BILL NO. 498 01 "An Act providing for exploration incentive credits for activities involving locatable 02 and leasable minerals and coal deposits on certain land in the state; and 03 providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 27 is amended by adding a new chapter to read: 06 CHAPTER 30. EXPLORATION INCENTIVE CREDITS. 07 Sec. 27.30.010. EXPLORATION INCENTIVE CREDITS AUTHORIZED. 08 (a) The commissioner shall grant to a qualified applicant an exploration incentive 09 credit for each of the following activities performed on or for the benefit of land in the 10 state for the purpose of determining the existence, location, extent, or quality of a 11 locatable or leasable mineral or coal deposit, regardless of whether the land is state-owned land: 12 (1) surveying by geophysical or geochemical methods; 13 (2) drilling exploration holes; 14 (3) conducting underground exploration; or
01 (4) performing other exploratory work, including aerial photographs, 02 geological and geophysical logging, and sample analysis, for the purpose of 03 determining the existence, location, extent, or quality of the deposit. 04 (b) An exploration incentive credit granted under (a) of this section may be 05 (1) applied, at the discretion of the qualified applicant, against 06 (A) taxes payable under AS 43.20 and AS 43.65; and 07 (B) mineral production royalty payments due the state under 08 AS 38.05.135 - 38.05.175; and 09 (2) carried forward to a subsequent tax year or payment period, except 10 as limited by AS 27.30.030. 11 (c) An exploration incentive credit shall be granted under (a) of this section 12 to a qualified applicant if the qualified applicant provides the commissioner satisfactory 13 documentation of exploration activity conducted and of the eligible costs. For 14 purposes of this subsection, "satisfactory documentation of exploration activity" 15 includes, where applicable, 16 (1) a representative skeleton core for each hole cored or a 17 representative set of cuttings for each hole rotary drilled; 18 (2) chemical analytical data and noninterpretive geophysical data; 19 (3) aerial photographs or a topographic or geologic map showing the 20 location of the drill holes, sample locations, or the other exploration activities 21 undertaken; if the locations are shown on a map, the map must have a scale of not less 22 than one inch to the mile showing reference to a recognized coordinate system; and 23 (4) a cost breakdown showing amounts claimed by the applicant as an 24 exploration incentive under this subsection. 25 (d) Data provided to the commissioner under (c)(2) of this section shall be 26 kept confidential for 36 months after receipt by the commissioner. 27 Sec. 27.30.020. LIMIT ON CREDITS. The amount of an exploration 28 incentive credit may not exceed the lesser of 29 (1) the combined amount payable by the qualified applicant as taxes 30 under AS 43.20 and AS 43.65 and as mineral production royalty payments due under 31 AS 38.05.135 - 38.05.175; or
01 (2) 50 percent of eligible costs relating to activities that qualify for the 02 exploration incentive credit. 03 Sec. 27.30.030. USE OF CREDIT. An exploration incentive credit 04 (1) must be used within 15 years after it is extended under 05 AS 27.30.010; and 06 (2) may be assigned by the qualified applicant to another qualified 07 applicant for the purposes described in AS 27.30.010(b). 08 Sec. 27.30.040. RELATIONSHIP TO PERMANENT FUND. Amounts due 09 the permanent fund under AS 37.13.010 shall be calculated before the application of 10 a credit extended under AS 27.30.010. 11 Sec. 27.30.050. REGULATIONS. The commissioner may adopt regulations 12 necessary to implement this chapter. 13 Sec. 27.30.090. DEFINITIONS. In this chapter, 14 (1) "eligible costs" means the costs incurred for activities in support of 15 an exploration program for the purpose of determining the existence, location, extent, 16 or quality of a mineral or coal deposit; 17 (2) "geochemical methods" means ore samples collected and their 18 chemical analyses; 19 (3) "geophysical methods" means all geophysical data gathering 20 methods used in minerals exploration, including seismic, gravity, magnetic, and 21 electromagnetic measurements; 22 (4) "qualified applicant" means 23 (A) a natural person who is at least 18 years of age; 24 (B) a partnership qualified to do business in the state; 25 (C) a corporation qualified to do business in the state; 26 (D) a limited liability company qualified to do business in the 27 state; 28 (E) a legal guardian or trustee of a qualified natural person 29 described in (A) of this paragraph; or 30 (F) any association of persons listed in (A) - (E) of this 31 paragraph.
01 * Sec. 2. AS 38.05.135(a) is amended to read: 02 (a) Except as otherwise provided, valuable mineral deposits in land belonging 03 to the state shall be open to exploration, development, and the extraction of minerals. 04 All land, together with tide, submerged, or shoreland, to which the state holds title to 05 or to which the state may become entitled, may be obtained by permit or lease for the 06 purpose of exploration, development, and the extraction of minerals. Except as 07 specifically limited by AS 38.05.135 - 38.05.181, land may be withheld from lease 08 application on a first-come, first-served basis, and offered only on a competitive bid 09 basis when determined by the commissioner to be in the best interests of the state. 10 When authorized by AS 27.30.010, the commissioner shall allow an exploration 11 incentive credit for activities undertaken to determine the existence, location, 12 extent, or quality of a locatable or leasable mineral or coal deposit and in [IN] 13 unproven areas the commissioner may offer additional incentives, including a reduction 14 of royalty to a minimum of five percent in the case of oil and gas, and other terms in 15 and granting permit or lease for exploration and development whenever it appears to 16 be in the best interests of the state to do so. 17 * Sec. 3. AS 38.05.212(b) is amended to read: 18 (b) The production royalty 19 (1) is three percent of net income as determined under AS 43.65; and 20 (2) is subject to the exploration incentive credit authorized by 21 AS 27.30. 22 * Sec. 4. AS 43.20 is amended by adding a new section to read: 23 Sec. 43.20.044. EXPLORATION INCENTIVE CREDIT. A taxpayer may 24 apply as a credit against the tax levied under this chapter the exploration incentive 25 credit for activities relating to locatable or leasable minerals or coal that is authorized 26 by AS 27.30. 27 * Sec. 5. AS 43.65.010(c) is amended to read: 28 (c) The license tax on mining is as follows: upon the net income of the 29 taxpayer from the property in the state, computed with allowable depletion and 30 application of the exploration incentive credit authorized by AS 27.30, plus royalty 31 received in connection with mining property in the state
01 over $40,000 and not over $50,000 . . . . . . . . . . . . . . . . .3 percent 02 over $50,000 and not over $100,000 . . . . . . . . . . . . . . .$1,500 plus 03 5 percent of the excess over $50,000 04 over $100,000 . . . . . . . . . . . . . . . . . . . . . . . . . .$4,000 plus 05 7 percent of the excess over $100,000. 06 * Sec. 6. AS 43.65.020(a) is amended to read: 07 (a) A person subject to tax under this chapter shall make a return stating 08 specifically the items of gross income from the property, including royalty received 09 and the deductions and credits allowed by this chapter and the exploration incentive 10 credit authorized by AS 27.30, and other information for carrying out this chapter 11 that the department prescribes. The return must show the mining license number and 12 must be signed by the taxpayer or an authorized agent of the taxpayer, under penalty 13 of unsworn falsification. If receivers, trustees, or assigns are operating the property 14 or business, they shall make returns for the person engaged in mining, or the recipient 15 of royalty in connection with mining property. The tax due on the basis of the returns 16 shall be collected in the same manner as if collected from the person of whose 17 business they have custody and control. 18 * Sec. 7. This Act is retroactive to January 1, 1994, and apply to activities that qualify for 19 the exploration incentive credit authorized by AS 27.30 that are undertaken after December 31, 20 1993. 21 * Sec. 8. This Act takes effect immediately under AS 01.10.070(c).