SCS CSHB 197(FIN): "An Act providing for exploration incentive credits for activities involving locatable and leasable mineral and coal deposits on certain land in the state; and providing for an effective date."
00SENATE CS FOR CS FOR HOUSE BILL NO. 197(FIN) 01 "An Act providing for exploration incentive credits for activities involving locatable 02 and leasable mineral 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 person described in (d) of this section an 09 exploration incentive credit for the eligible costs of each of the following exploration 10 activities that are performed on or for the benefit of land in the state for the purpose of 11 determining the existence, location, extent, or quality of a locatable or leasable mineral 12 or coal deposit, regardless of whether the land is state-owned land: 13 (1) surveying by geophysical or geochemical methods; 14 (2) drilling exploration holes;
01 (3) conducting underground exploration; 02 (4) surface trenching and bulk sampling; or 03 (5) performing other exploratory work, including aerial photographs, 04 geological and geophysical logging, sample analysis, and metallurgical testing. 05 (b) Except as provided in (c) of this section, an exploration incentive credit may 06 not be granted under (a) of this section for exploration activity described in that 07 subsection that occurs after the mine construction commencement date of a new mine. 08 In this subsection, "mine construction commencement date of a new mine" means the 09 date no later than which all of the following have occurred: 10 (1) there has been issued to the owner or an agent of the owner permits, 11 leases, and title and other rights in land, and other approvals, permits, licenses, and 12 certificates, by federal, state, and local agencies that a reasonable and prudent person 13 would consider adequate to commence construction of a mine in the expectation that all 14 other approvals, permits, licenses, and certificates necessary for the completion of the 15 facilities will be obtained; 16 (2) all approvals, permits, licenses, and certificates are in full force and 17 effect, unrevoked and without any modification that might jeopardize the completion or 18 continued construction of the mine; and 19 (3) an order, judgment, decree, determination, or award of a court or 20 administrative or regulatory agency enjoining, either temporarily or permanently, the 21 construction or the continuation of construction of the mine is not in effect. 22 (c) In addition to the grant of an exploration incentive credit for a new mine 23 under (b) of this section, an exploration incentive credit may be granted under (a) of this 24 section for exploration activity described in that subsection for a mine that had 25 previously operated, has ceased to operate, and for which all previous mining approvals, 26 permits, licenses, and certificates that allowed the previous operation are no longer in 27 effect. However, under this subsection, an exploration incentive credit may not be 28 granted under (a) of this section for exploration activity that occurs after the mine 29 reopening date. In this subsection, "mine reopening date" means the date not later than 30 which all of the following have occurred: 31 (1) there has been issued to the owner or an agent of the owner permits,
01 leases, and title and other rights in land, and other approvals, permits, licenses, and 02 certificates, by federal, state, and local agencies that a reasonable and prudent person 03 would consider adequate to commence operation of the former mine in the expectation 04 that all other approvals, permits, licenses, and certificates necessary for the completion 05 of the facilities will be obtained; 06 (2) all approvals, permits, licenses, and certificates for the reopened mine 07 are in full force and effect, unrevoked, and without any modification that might 08 jeopardize the reopening of the former mine; and 09 (3) an order, judgment, decree, determination, or award of a court or 10 administrative or regulatory agency enjoining, either temporarily or permanently, the 11 reopening of the former mine is not in effect. 12 (d) An exploration incentive credit may be granted under this chapter only to 13 (1) a natural person who is at least 18 years of age; 14 (2) a partnership qualified to do business in the state; 15 (3) a corporation qualified to do business in the state; 16 (4) a limited liability company qualified to do business in the state; 17 (5) a legal guardian or trustee of a qualified natural person described in 18 (1) of this subsection; or 19 (6) any association of persons listed in (1) - (5) of this subsection. 20 Sec. 27.30.020. PROCEDURE FOR REQUESTING AND TAKING THE 21 CREDIT. To obtain the credit authorized by this chapter, 22 (1) a person shall submit a request for the credit as follows: 23 (A) the person shall submit a request and a statement of 24 expenditures for the previous calendar year not later than 60 days after the close 25 of that calendar year; 26 (B) the request must 27 (i) describe the work accomplished during the previous 28 year, the number of employees, and the names and number of 29 consultants; and 30 (ii) provide a detailed list or ledger of expenditures of the 31 accomplishments described in (i) of this subparagraph and a list of
01 exploration activity data that in the future will be made available to the 02 commissioner under (2)(A) of this section; 03 (C) the person submitting the request is not required to transmit 04 copies of receipts with the request, but the statement of expenditures is subject 05 to audit in the discretion of the commissioner; 06 (D) if the commissioner determines to audit the statement of 07 expenditures, the commissioner may require the person submitting the request to 08 justify claims of expenditures with receipts and other reliable information; 09 (E) the commissioner shall respond to the request by 10 September 30 by certifying or not certifying the person's expenditures; if the 11 commissioner 12 (i) does not certify expenditures, the commissioner shall 13 state the reasons for denial of certification and give the person making the 14 request an opportunity to correct any problems or to provide additional 15 information; 16 (ii) certifies expenditures, the commissioner shall specify 17 the exploration activity data requirements for that year that must be 18 presented to the department at the time of the taking of the credit; 19 (F) if the commissioner neither certifies nor denies certification 20 of expenditures by September 30, the expenditures are certified as submitted; 21 (2) the person whose expenditures have been certified under (1) of this 22 subsection may thereafter request the taking of the credit for the certified expenditures 23 as follows: 24 (A) the person shall deliver to the commissioner the exploration 25 activity data identified by the commissioner under (1)(E)(ii) of this section, and 26 shall request the commissioner's approval of the taking of the credit; 27 (B) the commissioner shall approve or disapprove the taking of 28 the credit within six months after receipt of the request for taking of the credit; 29 if the 30 (i) exploration activity data complies with the 31 requirements identified by the commissioner under (1)(E)(ii) of this
01 section, the commissioner shall approve the taking of the credit; 02 (ii) request is disapproved, the commissioner shall state 03 the reasons for disapproval and offer the person seeking to take the credit 04 an opportunity to correct any problems or to provide additional 05 exploration activity data or other information; 06 (C) if the commissioner neither approves nor disapproves the 07 request to take the credit within six months after submission of the request, the 08 taking of the credit is approved. 09 Sec. 27.30.030. APPLICATION OF THE CREDIT. (a) In a tax year or royalty 10 payment period, subject to (c) of this section and the respective limitations of this 11 subsection, the person may apply the credit, the taking of which was approved under 12 AS 27.30.020(2), against 13 (1) taxes payable by the person 14 (A) under AS 43.65; application of the credit under this 15 subparagraph may not exceed the lesser of 16 (i) 50 percent of the person's tax liability under AS 43.65 17 for the tax year that is related to production from the mining operation at 18 which the exploration activities occurred, as shown under (b) of this 19 section; or 20 (ii) 50 percent of the person's total tax liability under 21 AS 43.65 for the tax year; 22 (B) under AS 43.20; application of the credit under this 23 subparagraph may not exceed the lesser of 24 (i) an amount equal to the amount determined under 25 (A)(i) of this paragraph; or 26 (ii) 50 percent of the person's total tax liability under 27 AS 43.20 for the tax year; and 28 (2) mineral production royalty payments payable by the person under 29 AS 38.05.135 - 38.05.175 and 38.05.212 for production from the mining operation at 30 which the exploration activities occurred; application of the credit under this paragraph 31 may not exceed 50 percent of the person's mineral production royalty payment liability
01 from the mining operation at which the exploration activities occurred. 02 (b) If the person applies the credit against the person's tax liability under 03 (a)(1)(A)(i) or (a)(1)(B)(i) of this section, the commissioner of revenue shall disallow 04 application of the credit under that provision unless the person files with the person's tax 05 return an accounting of the person's mining operation activities for each mining operation 06 that is included in the tax return and as to which the credit is being applied. The 07 accounting of mining operation activities required by this subsection shall be made 08 (1) on a form prescribed by the Department of Revenue; on the form, the 09 person shall 10 (A) identify the mining operations for which the credit is claimed; 11 and 12 (B) set out the gross income attributable to the mining operations 13 and other information about the mining operations that the Department of 14 Revenue may require; 15 (2) without regard to an exemption to which the person may be entitled 16 under AS 43.65.010(a). 17 (c) The person may not apply the credit under this section if the application, 18 when added to credits previously applied under this section, would exceed the total 19 amount of the credits approved under AS 27.30.020(2). 20 Sec. 27.30.040. CREDIT MAY BE CARRIED FORWARD. Except as its 21 application is limited by AS 27.30.030 and 27.30.050, a portion of a credit that is not 22 applied under AS 27.30.030 during a tax year or royalty payment period may be carried 23 forward to and applied during a subsequent tax year or royalty payment period. 24 Sec. 27.30.050. LIMIT ON APPLICATION OF CREDIT. An exploration 25 incentive credit for a mining operation may not exceed $20,000,000 and must be applied 26 within 15 tax years or royalty payment periods after the taking of the credit is approved 27 under AS 27.30.020(2), but the tax years or royalty payment periods in which the credit 28 is applied need not be 29 (1) the tax year or royalty payment period in which the person first incurs 30 liability for payment of tax or royalty based on the person's activity that is the basis of 31 the claim of the exploration incentive credit; or
01 (2) consecutive periods. 02 Sec. 27.30.060. ASSIGNMENT OF CREDIT. A person may assign an 03 exploration incentive credit to the person's successor in interest for the mining operation 04 at which the exploration activities occur, but only if the successor in interest is a person 05 qualified to obtain the credit under AS 27.30.010(d). An exploration incentive credit 06 may not be assigned except as permitted in this section. 07 Sec. 27.30.070. RESPONSIBILITY FOR RECORD OF USE OF CREDIT. For 08 each mining operation, the commissioner may require each person who proposes to take 09 the credit under AS 27.30.020(2) to provide with the request to take the credit a record 10 of 11 (1) the person's past use of credits taken under AS 27.30.020(2) and 12 27.30.030; and 13 (2) other information that the commissioner requires to determine if 14 approval of the taking of the credit by the person would exceed the limits on use of the 15 credit under this chapter. 16 Sec. 27.30.080. RELATIONSHIP TO OTHER FUNDS. Amounts due the 17 permanent fund under AS 37.13.010 shall be calculated before the application of a credit 18 extended under this chapter. 19 Sec. 27.30.090. CONFIDENTIALITY OF DATA. (a) The commissioner shall 20 keep the exploration activity data provided under AS 27.30.020 confidential for 36 21 months after receipt by the department. 22 (b) The department is liable in damages to a person who provided the 23 exploration activity data under AS 27.30.020 if the data is disclosed in violation of (a) 24 of this section. 25 Sec. 27.30.099. DEFINITIONS. In this chapter, 26 (1) "credit" means the exploration incentive credit for activities involving 27 locatable and leasable mineral and coal deposits authorized by this chapter; 28 (2) "eligible costs" mean the costs incurred for activities in direct support 29 of exploration activity conducted at the mining operation of the exploration activity for 30 the purpose of determining the existence, location, extent, or quality of a mineral or coal 31 deposit; the term
01 (A) includes 02 (i) the costs of obtaining the approvals, permits, licenses, 03 and certificates for an exploration activity set out in AS 27.30.010(a)(1) - 04 (5); 05 (ii) direct labor costs and the cost of benefits for 06 employees directly associated with work described in AS 27.30.010(a)(1) 07 - (5); 08 (iii) the cost of renting or leasing equipment from parties 09 not affiliated with the person requesting and taking the credit; 10 (iv) the reasonable costs of owning, maintaining, and 11 operating equipment; 12 (v) insurance and bond premiums associated with the 13 activities set out in (i) - (iv) of this subparagraph; 14 (vi) payments to consultants and independent contractors; 15 and 16 (vii) the general expense of operating the person's 17 business, including the costs of materials and supplies, if those expenses 18 and costs are directly attributable to the work described in 19 AS 27.30.010(a)(1) - (5); 20 (B) does not include return on investment, insurance or bond 21 premiums not covered under (A)(v) of this paragraph, or any other expense that 22 the person has not incurred to complete work described in AS 27.30.010(a)(1) - 23 (5); 24 (3) "exploration activity data" includes, as applicable, 25 (A) a representative skeleton core for each hole cored or a 26 representative set of cuttings for each hole rotary drilled; 27 (B) chemical analytical data and noninterpretive geophysical data; 28 (C) aerial photographs or a topographic or geologic map showing 29 the location of the drill holes, sample locations, or the other exploration activities 30 undertaken; 31 (4) "geochemical methods" means soil, rock, water, air, vegetation, and
01 similar samples collected and their chemical analyses; 02 (5) "geophysical methods" means all geophysical data gathering methods 03 used in mineral or coal exploration, including seismic, gravity, magnetic, radiometric, 04 radar, and electromagnetic and other remote sensing measurements; 05 (6) "mining operation" includes all operating and nonoperating activities 06 related to a mineral deposit interest, and may be comprised of one or more mining 07 properties; in determining whether mining properties are part of the same mining 08 operation, the commissioner may consider whether the operation, in conducting mining 09 activities on several mining properties, uses common personnel, supply, and maintenance 10 facilities, mining-related treatment processes, storage facilities, roads, pipelines and 11 transportation equipment, and mining techniques and technology, and may also consider 12 the extent to which the mineral deposit interest comprises a common mining property; 13 (7) "person" means only those persons listed in AS 27.30.010(d). 14 * Sec. 2. AS 38.05.212(b) is amended to read: 15 (b) The production royalty 16 (1) is three percent of net income as determined under AS 43.65; and 17 (2) is subject to the exploration incentive credit authorized by 18 AS 27.30. 19 * Sec. 3. AS 43.20 is amended by adding a new section to read: 20 Sec. 43.20.044. EXPLORATION INCENTIVE CREDIT. (a) A taxpayer may 21 apply as a credit against the tax levied under this chapter the exploration incentive credit 22 authorized by AS 27.30. 23 (b) In a tax year in which a taxpayer applies against the tax levied under this 24 chapter the exploration incentive credit authorized by AS 27.30, the commissioner shall 25 require the taxpayer to submit the accounting of mining operation activities form required 26 by AS 27.30.030(b). 27 * Sec. 4. AS 43.65.020(a) is amended to read: 28 (a) A person subject to tax under this chapter shall make a return stating 29 specifically the items of gross income from the property, including royalty received and 30 the deductions and credits allowed by this chapter and the exploration incentive credit 31 authorized by AS 27.30, and other information for carrying out this chapter that the
01 department prescribes. The return must show the mining license number and must be 02 signed by the taxpayer or an authorized agent of the taxpayer, under penalty of unsworn 03 falsification. If receivers, trustees, or assigns are operating the property or business, they 04 shall make returns for the person engaged in mining, or the recipient of royalty in 05 connection with mining property. The tax due on the basis of the returns shall be 06 collected in the same manner as if collected from the person of whose business they have 07 custody and control. In a tax year in which a taxpayer applies against the tax levied 08 under this chapter the exploration incentive credit authorized by AS 27.30, the 09 commissioner shall require the taxpayer to submit the accounting of mining 10 operation activities form required by AS 27.30.030(b). 11 * Sec. 5. This Act is retroactive to January 1, 1995, and applies to activities that qualify for 12 the exploration incentive credit authorized by AS 27.30 that are undertaken after May 15, 1995. 13 * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).