HB 17: "An Act relating to the tax on oil and gas production; providing for different tax rates based on the average production tax value of oil and gas produced during a calendar year; relating to the tax credit for a carried forward annual loss applicable to the tax on oil and gas production; and providing for an effective date."
00 HOUSE BILL NO. 17 01 "An Act relating to the tax on oil and gas production; providing for different tax rates 02 based on the average production tax value of oil and gas produced during a calendar 03 year; relating to the tax credit for a carried forward annual loss applicable to the tax on 04 oil and gas production; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 43.55.011(e) is amended to read: 07 (e) There is levied on the producer of oil or gas a tax for all oil and gas 08 produced each calendar year from each lease or property in the state, less any oil and 09 gas the ownership or right to which is exempt from taxation or constitutes a 10 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of 11 this section, the tax is equal to the sum of 12 (1) the annual production tax value of the taxable oil and gas as 13 calculated under AS 43.55.160(a)(1) multiplied by 20 [25] percent; and 14 (2) the sum, over all months of the calendar year, of the tax amounts
01 determined under (g) of this section. 02 * Sec. 2. AS 43.55.011(g) is amended to read: 03 (g) For each month of the calendar year for which the producer's average 04 monthly production tax value under AS 43.55.160(a)(2) per BTU equivalent barrel of 05 the taxable oil and gas is more than $30, the amount of tax for purposes of (e)(2) of 06 this section is determined by multiplying the monthly production tax value of the 07 taxable oil and gas produced during the month by the following tax rates, as 08 applicable [RATE CALCULATED AS FOLLOWS]: 09 (1) if the producer's average monthly production tax value of a [PER] 10 BTU equivalent barrel of the taxable oil and gas for the month is not more than $51.67 11 [$92.50], the tax rate is 4.3 percent of [0.4 PERCENT MULTIPLIED BY THE 12 NUMBER THAT REPRESENTS] the difference between that average monthly 13 production tax value of a [PER] BTU equivalent barrel and $30; [OR] 14 (2) if the producer's average monthly production tax value of a [PER] 15 BTU equivalent barrel of the taxable oil and gas for the month is more than $51.67 16 but not more than $73.34, the tax rates are 17 (A) 4.3 percent on the first $21.67 of monthly production 18 tax value for each BTU equivalent barrel above $30; and 19 (B) 8.6 percent of the monthly production tax value for 20 each BTU equivalent barrel that is greater than $51.67; 21 (3) if the producer's average monthly production tax value of a 22 BTU equivalent barrel of the taxable oil and gas for the month is more than 23 $73.34 but not more than $95.01, the tax rates are 24 (A) 4.3 percent on the first $21.67 of monthly production 25 tax value for each BTU equivalent barrel above $30; 26 (B) 8.6 percent of the next higher $21.67 of monthly 27 production tax value for each BTU equivalent barrel; and 28 (C) 12.9 percent of the monthly production tax value for 29 each BTU equivalent barrel that is greater than $73.34; 30 (4) if the producer's average monthly production tax value of a 31 BTU equivalent barrel of the taxable oil and gas for the month is more than
01 $95.01 but not more than $116.68, the tax rates are 02 (A) 4.3 percent on the first $21.67 of monthly production 03 tax value for each BTU equivalent barrel above $30; 04 (B) 8.6 percent of the next higher $21.67 of monthly 05 production tax value for each BTU equivalent barrel; 06 (C) 12.9 percent of the next higher $21.67 of monthly 07 production tax value for each BTU equivalent barrel; and 08 (D) 17.2 percent of the monthly production tax value for 09 each BTU equivalent barrel that is greater than $95.01; 10 (5) if the producer's average monthly production tax value of a 11 BTU equivalent barrel of the taxable oil and gas for the month is more than 12 $116.68 but not more than $138.35, the tax rates are 13 (A) 4.3 percent on the first $21.67 of monthly production 14 tax value for each BTU equivalent barrel above $30; 15 (B) 8.6 percent of the next higher $21.67 of monthly 16 production tax value for each BTU equivalent barrel; 17 (C) 12.9 percent of the next higher $21.67 of monthly 18 production tax value for each BTU equivalent barrel; 19 (D) 17.2 percent of the next higher $21.67 of monthly 20 production tax value for each BTU equivalent barrel; and 21 (E) 21.5 percent of the monthly production tax value for 22 each BTU equivalent barrel that is greater than $116.68; 23 (6) if the producer's average monthly production tax value of a 24 BTU equivalent barrel of the taxable oil and gas for the month is more than 25 $138.35 but not more than $160, the tax rates are 26 (A) 4.3 percent on the first $21.67 of monthly production 27 tax value for each BTU equivalent barrel above $30; 28 (B) 8.6 percent of the next higher $21.67 of monthly 29 production tax value for each BTU equivalent barrel; 30 (C) 12.9 percent of the next higher $21.67 of monthly 31 production tax value for each BTU equivalent barrel;
01 (D) 17.2 percent of the next higher $21.67 of monthly 02 production tax value for each BTU equivalent barrel; 03 (E) 21.5 percent of the next higher $21.67 of monthly 04 production tax value for each BTU equivalent barrel; and 05 (F) 25.8 percent of the monthly production tax value for 06 each BTU equivalent barrel that is greater than $138.35; or 07 (7) if the producer's average monthly production tax value of a 08 BTU equivalent barrel of the taxable oil and gas for the month is more than $160, 09 the tax rates are 10 (A) 4.3 percent on the first $21.67 of monthly production 11 tax value for each BTU equivalent barrel above $30; 12 (B) 8.6 percent of the next higher $21.67 of monthly 13 production tax value for each BTU equivalent barrel; 14 (C) 12.9 percent of the next higher $21.67 of monthly 15 production tax value for each BTU equivalent barrel; 16 (D) 17.2 percent of the next higher $21.67 of monthly 17 production tax value for each BTU equivalent barrel; 18 (E) 21.5 percent of the next higher $21.67 of monthly 19 production tax value for each BTU equivalent barrel; 20 (F) 25.8 percent of the next higher $21.65 of monthly 21 production tax value for each BTU equivalent barrel; and 22 (G) 30 percent of the monthly production tax value for each 23 BTU equivalent barrel that is greater than $160 [$92.50, THE TAX RATE 24 IS THE SUM OF 25 PERCENT AND THE PRODUCT OF 0.1 PERCENT 25 MULTIPLIED BY THE NUMBER THAT REPRESENTS THE 26 DIFFERENCE BETWEEN THE AVERAGE MONTHLY PRODUCTION 27 TAX VALUE PER BTU EQUIVALENT BARREL AND $92.50, EXCEPT 28 THAT THE SUM DETERMINED UNDER THIS PARAGRAPH MAY NOT 29 EXCEED 50 PERCENT]. 30 * Sec. 3. AS 43.55.011(i) is amended to read: 31 (i) There is levied on the producer of oil or gas a tax for all oil and gas
01 produced each calendar year from each lease or property in the state the ownership or 02 right to which constitutes a landowner's royalty interest, except for oil and gas the 03 ownership or right to which is exempt from taxation. The provisions of this subsection 04 apply to a landowner's royalty interest as follows: 05 (1) the tax levied for oil is equal to five percent of the gross value at 06 the point of production of the oil; 07 (2) the tax levied for gas is equal to 1.667 percent of the gross value at 08 the point of production of the gas; 09 (3) if the department determines that, for purposes of reducing the 10 producer's tax liability under (1) or (2) of this subsection, the producer has received or 11 will receive consideration from the royalty owner offsetting all or a part of the 12 producer's royalty obligation, other than a deduction under AS 43.55.020(d) of the 13 amount of a tax paid, then, notwithstanding (1) and (2) of this subsection, the tax is 14 equal to 20 [25] percent of the gross value at the point of production of the oil and gas. 15 * Sec. 4. 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(e) - (i) 17 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 produced from leases or properties in the 26 state outside the Cook Inlet sedimentary basin but not subject to 27 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), the 28 greater of 29 (i) zero; or 30 (ii) the sum of 20 [25] percent and the tax rate 31 calculated for the month under AS 43.55.011(g) multiplied by the
01 remainder obtained by subtracting 1/12 of the producer's adjusted lease 02 expenditures for the calendar year of production under AS 43.55.165 03 and 43.55.170 that are deductible for the 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 all leases or properties 13 during the month for which the installment payment is calculated; or 14 (iii) the sum of 20 [25] percent and the tax rate 15 calculated for the month under AS 43.55.011(g) multiplied by the 16 remainder obtained by subtracting 1/12 of the producer's adjusted lease 17 expenditures for the calendar year of production under AS 43.55.165 18 and 43.55.170 that are deductible for those leases or properties under 19 AS 43.55.160 from the gross value at the point of production of the oil 20 and gas produced from those leases or properties during the month for 21 which the installment payment is calculated; 22 (C) for oil and gas produced from each lease or property 23 subject to AS 43.55.011(j), (k), or (o), the greater of 24 (i) zero; or 25 (ii) the sum of 20 [25] percent and the tax rate 26 calculated for the month under AS 43.55.011(g) multiplied by the 27 remainder obtained by subtracting 1/12 of the producer's adjusted lease 28 expenditures for the calendar year of production under AS 43.55.165 29 and 43.55.170 that are deductible under AS 43.55.160 for oil or gas, 30 respectively, produced from the lease or property from the gross value 31 at the point of production of the oil or gas, respectively, produced from
01 the lease or property during the month for which the installment 02 payment is calculated; 03 (2) an amount calculated under (1)(C) of this subsection for oil or gas 04 produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not 05 exceed the product obtained by carrying out the calculation set out in 06 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 07 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 08 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 09 gas produced during the month for the amount of taxable gas produced during the 10 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 11 amount of taxable oil produced during the month for the amount of taxable oil 12 produced during the calendar year; 13 (3) an installment payment of the estimated tax levied by 14 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 15 on the last day of the following month; the amount of the installment payment is the 16 sum of 17 (A) the applicable tax rate for oil provided under 18 AS 43.55.011(i), multiplied by the gross value at the point of production of the 19 oil taxable under AS 43.55.011(i) and produced from the lease or property 20 during the month; and 21 (B) the applicable tax rate for gas provided under 22 AS 43.55.011(i), multiplied by the gross value at the point of production of the 23 gas taxable under AS 43.55.011(i) and produced from the lease or property 24 during the month; 25 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 26 credits applied as allowed by law, that exceeds the total of the amounts due as 27 installment payments of estimated tax is due on March 31 of the year following the 28 calendar year of production. 29 * Sec. 5. AS 43.55.023(b) is amended to read: 30 (b) A producer or explorer may elect to take a tax credit in the amount of 20 31 [25] percent of a carried-forward annual loss. A credit under this subsection may be
01 applied against a tax levied by AS 43.55.011(e). For purposes of this subsection, a 02 carried-forward annual loss is the amount of a producer's or explorer's adjusted lease 03 expenditures under AS 43.55.165 and 43.55.170 for a previous calendar year that was 04 not deductible in calculating production tax values for that calendar year under 05 AS 43.55.160. 06 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 TRANSITION: PAYMENT OF TAX. A person that was required to make one or 09 more installment payments of estimated tax or other payment of tax under AS 43.55.020(a) 10 during the period after December 31, 2010, and before the effective date of secs. 2 and 5 of 11 this Act, but failed to pay the full amount of the installment payments or other payment 12 because of the retroactive application of AS 43.55.011(e), as amended by sec. 1 of this Act, 13 and AS 43.55.023(b), as amended by sec. 5 of this Act, which are retroactive to January 1, 14 2011, under sec. 9 of this Act, shall pay, before April 1, 2012, the balance of any tax due for 15 the period after December 31, 2010, and before the effective date of this section. 16 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 19 contrary provision of AS 44.62.240, if the Department of Revenue expressly designates in the 20 regulation that the regulation applies retroactively to January 1, 2011, a regulation adopted by 21 the Department of Revenue to implement, interpret, make specific, or otherwise carry out 22 secs. 1 - 5 of this Act may apply retroactively to January 1, 2011. 23 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 TRANSITION: REGULATIONS. The Department of Revenue may proceed to adopt 26 regulations to implement this Act. The regulations take effect under AS 44.62 (Administrative 27 Procedure Act), but not before the effective date of the law implemented by the regulation. 28 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. Sections 1 - 5 of 31 this Act are retroactive to January 1, 2011.
01 * Sec. 10. This Act takes effect immediately under AS 01.10.070(c).