txt

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).