SB 21: "An Act relating to appropriations from taxes paid under the Alaska Net Income Tax Act; relating to the oil and gas production tax rate; relating to gas used in the state; relating to monthly installment payments of the oil and gas production tax; relating to oil and gas production tax credits for certain losses and expenditures; relating to oil and gas production tax credit certificates; relating to nontransferable tax credits based on production; relating to the oil and gas tax credit fund; relating to annual statements by producers and explorers; relating to the determination of annual oil and gas production tax values including adjustments based on a percentage of gross value at the point of production from certain leases or properties; making conforming amendments; and providing for an effective date."
00 SENATE BILL NO. 21 01 "An Act relating to appropriations from taxes paid under the Alaska Net Income Tax 02 Act; relating to the oil and gas production tax rate; relating to gas used in the state; 03 relating to monthly installment payments of the oil and gas production tax; relating to 04 oil and gas production tax credits for certain losses and expenditures; relating to oil and 05 gas production tax credit certificates; relating to nontransferable tax credits based on 06 production; relating to the oil and gas tax credit fund; relating to annual statements by 07 producers and explorers; relating to the determination of annual oil and gas production 08 tax values including adjustments based on a percentage of gross value at the point of 09 production from certain leases or properties; making conforming amendments; and 10 providing for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. AS 29.60.850(b) is amended to read:
01 (b) Each fiscal year, the legislature may appropriate to the community revenue 02 sharing fund [AN AMOUNT EQUAL TO 20 PERCENT OF THE] money received by 03 the state during the previous calendar year under AS 43.20.030(c) [AS 43.55.011(g)]. 04 The amount may not exceed 05 (1) $60,000,000; or 06 (2) the amount that, when added to the fund balance on June 30 of the 07 previous fiscal year, equals $180,000,000. 08 * Sec. 2. AS 43.55.011(e) is amended to read: 09 (e) There is levied on the producer of oil or gas a tax for all oil and gas 10 produced each calendar year from each lease or property in the state, less any oil and 11 gas the ownership or right to which is exempt from taxation or constitutes a 12 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), (o), and 13 (p) of this section, the tax is equal to [THE SUM OF 14 (1)] the annual production tax value of the taxable oil and gas as 15 calculated under AS 43.55.160(a) [AS 43.55.160(a)(1)] multiplied by 25 percent [; 16 AND 17 (2) THE SUM, OVER ALL MONTHS OF THE CALENDAR YEAR, 18 OF THE TAX AMOUNTS DETERMINED UNDER (g) OF THIS SECTION]. 19 * Sec. 3. AS 43.55.011(o) is amended to read: 20 (o) Notwithstanding other provisions of this section, for a calendar year before 21 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas 22 produced from a lease or property outside the Cook Inlet sedimentary basin and used 23 in the state, other than gas subject to (p) of this section, may not exceed the amount 24 of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this section. 25 * Sec. 4. AS 43.55.020(a) is amended to read: 26 (a) For a calendar year, a producer subject to tax under AS 43.55.011 27 [AS 43.55.011(e) - (i) OR (p)] shall pay the tax as follows: 28 (1) 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 otherwise 31 provided under (2) of this subsection, the amount of the installment payment is the
01 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 02 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 03 of the installment payment may not be less than zero: 04 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 05 produced from leases or properties in the state outside the Cook Inlet 06 sedimentary basin [BUT NOT SUBJECT TO AS 43.55.011(o) OR (p)], other 07 than leases or properties subject to AS 43.55.011(f), the greater of 08 (i) zero; or 09 (ii) the sum of 25 percent and the tax rate calculated for 10 the month under AS 43.55.011(g) multiplied by the remainder obtained 11 by subtracting 1/12 of the producer's adjusted lease expenditures for the 12 calendar year of production under AS 43.55.165 and 43.55.170 that are 13 deductible for the oil and gas [LEASES OR PROPERTIES] under 14 AS 43.55.160 from the gross value at the point of production of the oil 15 and gas produced from the leases or properties during the month for 16 which the installment payment is calculated; 17 (B) for oil and gas produced from leases or properties subject 18 to AS 43.55.011(f), the greatest of 19 (i) zero; 20 (ii) zero percent, one percent, two percent, three 21 percent, or four percent, as applicable, of the gross value at the point of 22 production of the oil and gas produced from the [ALL] leases or 23 properties during the month for which the installment payment is 24 calculated; or 25 (iii) the sum of 25 percent and the tax rate calculated for 26 the month under AS 43.55.011(g) multiplied by the remainder obtained 27 by 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 and gas [THOSE LEASES OR PROPERTIES] 30 under AS 43.55.160 from the gross value at the point of production of 31 the oil and gas produced from those leases or properties during the
01 month for which the installment payment is calculated; 02 (C) for oil or [AND] gas [PRODUCED FROM EACH LEASE 03 OR PROPERTY] subject to AS 43.55.011(j), (k), or (o) [, OR (p)], for each 04 lease or property, the greater of 05 (i) zero; or 06 (ii) the sum of 25 percent and the tax rate calculated for 07 the month under AS 43.55.011(g) multiplied by the remainder obtained 08 by subtracting 1/12 of the producer's adjusted lease expenditures for the 09 calendar year of production under AS 43.55.165 and 43.55.170 that are 10 deductible under AS 43.55.160 for the oil or gas, respectively, 11 produced from the lease or property from the gross value at the point of 12 production of the oil or gas, respectively, produced from the lease or 13 property during the month for which the installment payment is 14 calculated; 15 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 16 (i) the sum of 25 percent and the tax rate calculated 17 for the month under AS 43.55.011(g) multiplied by the remainder 18 obtained by subtracting 1/12 of the producer's adjusted lease 19 expenditures for the calendar year of production under 20 AS 43.55.165 and 43.55.170 that are deductible for the oil and gas 21 under AS 43.55.160 from the gross value at the point of production 22 of the oil and gas produced from the leases or properties during the 23 month for which the installment payment is calculated, but not less 24 than zero; or 25 (ii) four percent of the gross value at the point of 26 production of the oil and gas produced from the leases or 27 properties during the month, but not less than zero; 28 (2) an amount calculated under (1)(C) of this subsection for oil or gas 29 [PRODUCED FROM A LEASE OR PROPERTY 30 (A)] subject to AS 43.55.011(j), (k), or (o) may not exceed the 31 product obtained by carrying out the calculation set out in AS 43.55.011(j)(1)
01 or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) 02 or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) 03 or 43.55.011(o), as applicable, the amount of taxable gas produced during the 04 month for the amount of taxable gas produced during the calendar year and 05 substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of 06 taxable oil produced during the month for the amount of taxable oil produced 07 during the calendar year; 08 [(B) SUBJECT TO AS 43.55.011(p) MAY NOT EXCEED 09 FOUR PERCENT OF THE GROSS VALUE AT THE POINT OF 10 PRODUCTION OF THE OIL OR GAS;] 11 (3) an installment payment of the estimated tax levied by 12 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 13 on the last day of the following month; the amount of the installment payment is the 14 sum of 15 (A) the applicable tax rate for oil provided under 16 AS 43.55.011(i), multiplied by the gross value at the point of production of the 17 oil taxable under AS 43.55.011(i) and produced from the lease or property 18 during the month; and 19 (B) the applicable tax rate for gas provided under 20 AS 43.55.011(i), multiplied by the gross value at the point of production of the 21 gas taxable under AS 43.55.011(i) and produced from the lease or property 22 during the month; 23 (4) any amount of tax levied by AS 43.55.011 [AS 43.55.011(e) OR 24 (i)], net of any credits applied as allowed by law, that exceeds the total of the amounts 25 due as installment payments of estimated tax is due on March 31 of the year following 26 the calendar year of production. 27 * Sec. 5. AS 43.55.020(a), as amended by sec. 4 of this Act, is amended to read: 28 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 29 the tax as follows: 30 (1) an installment payment of the estimated tax levied by 31 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each
01 month of the calendar year on the last day of the following month; except as otherwise 02 provided under (2) of this subsection, the amount of the installment payment is the 03 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 04 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 05 of the installment payment may not be less than zero: 06 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 07 produced from leases or properties in the state outside the Cook Inlet 08 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 09 the greater of 10 (i) zero; or 11 (ii) [THE SUM OF] 25 percent of [AND THE TAX 12 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 13 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 14 producer's adjusted lease expenditures for the calendar year of 15 production under AS 43.55.165 and 43.55.170 that are deductible for 16 the oil and gas under AS 43.55.160 from the gross value at the point of 17 production of the oil and gas produced from the leases or properties 18 during the month for which the installment payment is calculated; 19 (B) for oil and gas produced from leases or properties subject 20 to AS 43.55.011(f), the greatest of 21 (i) zero; 22 (ii) zero percent, one percent, two percent, three 23 percent, or four percent, as applicable of the gross value at the point of 24 production of the oil and gas produced from the leases or properties 25 during the month for which the installment payment is calculated; or 26 (iii) [THE SUM OF] 25 percent of [AND THE TAX 27 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 28 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 29 producer's adjusted lease expenditures for the calendar year of 30 production under AS 43.55.165 and 43.55.170 that are deductible for 31 the oil and gas under AS 43.55.160 from the gross value at the point of
01 production of the oil and gas produced from those leases or properties 02 during the month for which the installment payment is calculated, 03 except that for the purposes of this calculation the gross value at 04 the point of production of oil and gas subject to AS 43.55.160(f) is 05 reduced by 20 percent; 06 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 07 each lease or property, the greater of 08 (i) zero; or 09 (ii) [THE SUM OF] 25 percent of [AND THE TAX 10 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 11 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 12 producer's adjusted lease expenditures for the calendar year of 13 production under AS 43.55.165 and 43.55.170 that are deductible under 14 AS 43.55.160 for the oil or gas, respectively, produced from the lease 15 or property from the gross value at the point of production of the oil or 16 gas, respectively, produced from the lease or property during the month 17 for which the installment payment is calculated; 18 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 19 (i) [THE SUM OF] 25 percent of [AND THE TAX 20 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 21 MULTIPLIED BY] the remainder obtained by subtracting 1/12 of the 22 producer's adjusted lease expenditures for the calendar year of 23 production under AS 43.55.165 and 43.55.170 that are deductible for 24 the oil and gas under AS 43.55.160 from 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, but 27 not less than zero; or 28 (ii) four percent of the gross value at the point of 29 production of the oil and gas produced from the leases or properties 30 during the month, but not less than zero; 31 (2) an amount calculated under (1)(C) of this subsection for oil or gas
01 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 02 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 03 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 04 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 05 amount of taxable gas produced during the month for the amount of taxable gas 06 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 07 (2)(A), as applicable, the amount of taxable oil produced during the month for the 08 amount of taxable oil produced during the calendar year; 09 (3) an installment payment of the estimated tax levied by 10 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 11 on the last day of the following month; the amount of the installment payment is the 12 sum of 13 (A) the applicable tax rate for oil provided under 14 AS 43.55.011(i), multiplied by the gross value at the point of production of the 15 oil taxable under AS 43.55.011(i) and produced from the lease or property 16 during the month; and 17 (B) the applicable tax rate for gas provided under 18 AS 43.55.011(i), multiplied by the gross value at the point of production of the 19 gas taxable under AS 43.55.011(i) and produced from the lease or property 20 during the month; 21 (4) any amount of tax levied by AS 43.55.011, net of any credits 22 applied as allowed by law, that exceeds the total of the amounts due as installment 23 payments of estimated tax is due on March 31 of the year following the calendar year 24 of production. 25 * Sec. 6. AS 43.55.020(d) is amended to read: 26 (d) In making settlement with the royalty owner for oil and gas that is taxable 27 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 28 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 29 time the tax becomes due to the amount of the tax paid. If the total deductions of 30 installment payments of estimated tax for a calendar year exceed the actual tax for that 31 calendar year, the producer shall, before April 1 of the following year, refund the
01 excess to the royalty owner. Unless otherwise agreed between the producer and the 02 royalty owner, the amount of the tax paid under AS 43.55.011(e) [AS 43.55.011(e) - 03 (g)] on taxable royalty oil and gas for a calendar year, other than oil and gas the 04 ownership or right to which constitutes a landowner's royalty interest, is considered to 05 be the gross value at the point of production of the taxable royalty oil and gas 06 produced during the calendar year multiplied by a figure that is a quotient, in which 07 (1) the numerator is the producer's total tax liability under 08 AS 43.55.011(e) [AS 43.55.011(e) - (g)] for the calendar year of production; and 09 (2) the denominator is the total gross value at the point of production 10 of the oil and gas taxable under AS 43.55.011(e) [AS 43.55.011(e) - (g)] produced by 11 the producer from all leases and properties in the state during the calendar year. 12 * Sec. 7. AS 43.55.023(a) is amended to read: 13 (a) A producer or explorer may take a tax credit for a qualified capital 14 expenditure as follows: 15 (1) notwithstanding that a qualified capital expenditure may be a 16 deductible lease expenditure for purposes of calculating the production tax value of oil 17 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 18 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 19 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 20 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 21 expenditure; [HOWEVER, NOT MORE THAN HALF OF THE TAX CREDIT MAY 22 BE APPLIED FOR A SINGLE CALENDAR YEAR;] 23 (2) a producer or explorer may take a credit for a qualified capital 24 expenditure incurred in connection with geological or geophysical exploration or in 25 connection with an exploration well only if the producer or explorer 26 (A) agrees, in writing, to the applicable provisions of 27 AS 43.55.025(f)(2); and 28 (B) submits to the Department of Natural Resources all data 29 that would be required to be submitted under AS 43.55.025(f)(2). 30 * Sec. 8. AS 43.55.023(a), as amended by sec. 7 of the Act, is amended to read: 31 (a) A producer or explorer may take a tax credit for a qualified capital
01 expenditure as follows: 02 (1) notwithstanding that a qualified capital expenditure may be a 03 deductible lease expenditure for purposes of calculating the production tax value of oil 04 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 05 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 06 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 07 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 08 expenditure; 09 (2) a producer or explorer may take a credit for a qualified capital 10 expenditure incurred in connection with geological or geophysical exploration or in 11 connection with an exploration well only if the producer or explorer 12 (A) agrees, in writing, to the applicable provisions of 13 AS 43.55.025(f)(2); and 14 (B) submits to the Department of Natural Resources all data 15 that would be required to be submitted under AS 43.55.025(f)(2); 16 (3) a credit for a qualified capital expenditure incurred to explore 17 for, develop, or produce oil or gas deposits located north of 68 degrees North 18 latitude may be taken only if the expenditure is incurred before January 1, 2014. 19 * Sec. 9. AS 43.55.023(b) is amended to read: 20 (b) A producer or explorer may elect to take a tax credit in the amount of 25 21 percent of a carried-forward annual loss; except that a tax credit based on lease 22 expenditures incurred after December 31, 2013, to explore for, develop, or 23 produce oil or gas deposits located north of 68 degrees North latitude is subject to 24 the provisions of (p) - (u) of this section. A credit under this subsection may be 25 applied against a tax levied by AS 43.55.011(e). For purposes of this subsection, a 26 carried-forward annual loss is the amount of a producer's or explorer's adjusted lease 27 expenditures under AS 43.55.165 and 43.55.170 for a previous calendar year that was 28 not deductible in calculating production tax values for that calendar year under 29 AS 43.55.160. 30 * Sec. 10. AS 43.55.023(c) is amended to read: 31 (c) A credit or portion of a credit under this section may not be used to reduce
01 a person's tax liability under AS 43.55.011(e) for any calendar year below zero, and 02 any unused credit or portion of a credit not used under this subsection may be applied 03 in a later calendar year, except as otherwise provided under (p) - (u) of this section. 04 * Sec. 11. AS 43.55.023(d) is amended to read: 05 (d) Except as limited by (i) of this section, a person that is entitled to take a tax 06 credit under this section that wishes to transfer the unused credit to another person or 07 obtain a cash payment under AS 43.55.028 may apply to the department for a 08 transferable tax credit certificate [CERTIFICATES]. An application under this 09 subsection must be in a form prescribed by the department and must include 10 supporting information and documentation that the department reasonably requires. 11 The department shall grant or deny an application, or grant an application as to a lesser 12 amount than that claimed and deny it as to the excess, not later than 120 days after the 13 latest of (1) March 31 of the year following the calendar year in which the qualified 14 capital expenditure or carried-forward annual loss for which the credit is claimed was 15 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 16 the calendar year in which the qualified capital expenditure or carried-forward annual 17 loss for which the credit is claimed was incurred; or (3) the date the application was 18 received by the department. If, based on the information then available to it, the 19 department is reasonably satisfied that the applicant is entitled to a credit, the 20 department shall issue the applicant a [TWO] transferable tax credit certificate for 21 [CERTIFICATES, EACH FOR HALF OF] the amount of the credit. [THE CREDIT 22 SHOWN ON ONE OF THE TWO CERTIFICATES IS AVAILABLE FOR 23 IMMEDIATE USE. THE CREDIT SHOWN ON THE SECOND OF THE TWO 24 CERTIFICATES MAY NOT BE APPLIED AGAINST A TAX FOR A CALENDAR 25 YEAR EARLIER THAN THE CALENDAR YEAR FOLLOWING THE 26 CALENDAR YEAR IN WHICH THE CERTIFICATE IS ISSUED, AND THE 27 CERTIFICATE MUST CONTAIN A CONSPICUOUS STATEMENT TO THAT 28 EFFECT.] A certificate issued under this subsection does not expire. 29 * Sec. 12. AS 43.55.023(d), as amended by sec. 11 of this Act, is amended to read: 30 (d) Except for a tax credit based on lease expenditures incurred after 31 December 31, 2013, to explore for, develop, or produce oil or gas deposits located
01 north of 68 degrees North latitude [AS LIMITED BY (i) OF THIS SECTION], a 02 person that is entitled to take a tax credit under this section that wishes to transfer the 03 unused credit to another person or obtain a cash payment under AS 43.55.028 may 04 apply to the department for a transferable tax credit certificate. An application under 05 this subsection must be in a form prescribed by the department and must include 06 supporting information and documentation that the department reasonably requires. 07 The department shall grant or deny an application, or grant an application as to a lesser 08 amount than that claimed and deny it as to the excess, not later than 120 days after the 09 latest of (1) March 31 of the year following the calendar year in which the qualified 10 capital expenditure or carried-forward annual loss for which the credit is claimed was 11 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 12 the calendar year in which the qualified capital expenditure or carried-forward annual 13 loss for which the credit is claimed was incurred; or (3) the date the application was 14 received by the department. If, based on the information then available to it, the 15 department is reasonably satisfied that the applicant is entitled to a credit, the 16 department shall issue the applicant a transferable tax credit certificate for the amount 17 of the credit. A certificate issued under this subsection does not expire. 18 * Sec. 13. AS 43.55.023(g) is amended to read: 19 (g) The issuance of a transferable tax credit certificate under (d) of this 20 section or former (m) of this section or the purchase of a certificate under 21 AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to 22 which the certificate relates or to adjust the claim if the department determines, as a 23 result of the audit, that the applicant was not entitled to the amount of the credit for 24 which the certificate was issued. The tax liability of the applicant under 25 AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit 26 that exceeds that to which the applicant was entitled, or the applicant's available valid 27 outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced 28 by that amount. If the applicant's tax liability is increased under this subsection, the 29 increase bears interest under AS 43.05.225 from the date the transferable tax credit 30 certificate was issued. For purposes of this subsection, an applicant that is an explorer 31 is considered a producer subject to the tax levied by AS 43.55.011(e).
01 * Sec. 14. AS 43.55.023(n) is amended to read: 02 (n) For the purposes of (l) [AND (m)] of this section, a well lease expenditure 03 incurred in the state south of 68 degrees North latitude is a lease expenditure that is 04 (1) directly related to an exploration well, a stratigraphic test well, a 05 producing well, or an injection well other than a disposal well, located in the state 06 south of 68 degrees North latitude, if the expenditure is a qualified capital expenditure 07 and an intangible drilling and development cost authorized under 26 U.S.C. (Internal 08 Revenue Code), as amended, and 26 C.F.R. 1.612-4, regardless of the elections made 09 under 26 U.S.C. 263(c); in this paragraph, an expenditure directly related to a well 10 includes an expenditure for well sidetracking, well deepening, well completion or 11 recompletion, or well workover, regardless of whether the well is or has been a 12 producing well; or 13 (2) an expense for seismic work conducted within the boundaries of a 14 production or exploration unit. 15 * Sec. 15. AS 43.55.023 is amended by adding new subsections to read: 16 (p) A tax credit under (b) of this section based on lease expenditures incurred 17 after December 31, 2013, to explore for, develop, or produce oil or gas deposits 18 located north of 68 degrees North latitude may not be applied against a tax liability for 19 a calendar year that is 20 (1) two or more calendar years later than the calendar year during 21 which the lease expenditures were incurred, unless the producer has complied with the 22 filing requirements of AS 43.55.030(g); 23 (2) more than 10 calendar years later than the calendar year during 24 which the lease expenditures were incurred. 25 (q) A tax credit under (b) of this section based on lease expenditures incurred 26 during a given calendar year after December 31, 2014, to explore for, develop, or 27 produce oil or gas deposits located north of 68 degrees North latitude may not be 28 applied against a person's tax liability unless the person has applied against the 29 person's tax liability the entire amount of all available tax credits under (b) of this 30 section based on lease expenditures incurred during earlier calendar years after 31 December 31, 2013, to explore for, develop, or produce oil or gas deposits located
01 north of 68 degrees North latitude. 02 (r) Except as otherwise provided under (s) of this section, an amount of a tax 03 credit subject to (p)(1) of this section that is carried forward in compliance with 04 AS 43.55.030(g) increases at an annual rate of 15 percent, compounded annually, as 05 provided in this subsection. An amount of a tax credit begins to increase under this 06 subsection on January 1 of the second calendar year immediately following the 07 calendar year during which the lease expenditures on which the credit is based were 08 incurred, unless that second calendar year is the calendar year against the person's tax 09 liability for which the amount of the credit is applied. An amount of a tax credit stops 10 increasing under this subsection on December 31 of the calendar year immediately 11 preceding the calendar year against the person's tax liability for which the amount of 12 the credit is applied. An increase in the amount of a tax credit under this subsection 13 has no value except as applied against the person's tax liability and expires if not used 14 before the time provided under (p)(2) of this section. 15 (s) An amount of a tax credit subject to (p)(1) of this section is not increased 16 under (r) of this section for any period during or after a calendar year against a 17 person's tax liability for which the amount of the credit could have been applied. For 18 purposes of this subsection, the amount of a tax credit subject to (p)(1) of this section 19 that could have been applied against a person's tax liability for a calendar year is 20 determined by performing the following calculations, as applicable: 21 (1) subtract the amount, if any, of the person's tax credits under 22 AS 43.55.019 and 43.55.024(c) that has been applied against the tax levied on the 23 person for the calendar year by AS 43.55.011(e) from the amount, if any, of that tax; if 24 the remainder is not more than zero, the amount of a tax credit subject to (p)(1) of this 25 section that could have been applied against a person's tax liability for the calendar 26 year is zero; 27 (2) if the remainder obtained under (1) of this subsection is positive, 28 subtract that remainder from the total amount of the person's tax credits under (b) of 29 this section based on lease expenditures incurred after December 31, 2013, to explore 30 for, develop, or produce oil or gas deposits located north of 68 degrees North latitude 31 that was available, without regard to the limitation under (q) of this section, to be
01 applied against the tax levied on the person for the calendar year by AS 43.55.011(e), 02 including any increase in the amount of the tax credits under (r) of this section through 03 December 31 of the previous calendar year; if the remainder is negative, it is 04 considered to be equal to zero for purposes of this paragraph; 05 (3) subtract the remainder obtained under (2) of this subsection from 06 the amount, if any, of the person's tax credits under (b) of this section based on lease 07 expenditures incurred after December 31, 2013, to explore for, develop, or produce oil 08 or gas deposits located north of 68 degrees North latitude that was available, without 09 regard to the limitation under (q) of this section, to be applied against the tax levied on 10 the person for the calendar year by AS 43.55.011(e), including any increase in the 11 amount of the tax credits under (r) of this section through December 31 of the previous 12 calendar year, but that was not applied against that tax; the remainder is the amount of 13 a tax credit subject to (p)(1) of this section that could have been applied against the 14 person's tax liability for the calendar year. 15 (t) A tax credit under (b) of this section based on lease expenditures incurred 16 after December 31, 2013, to explore for, develop, or produce oil or gas deposits 17 located north of 68 degrees North latitude is not transferable except as provided in this 18 subsection. A person that is entitled to take a tax credit under (b) of this section based 19 on lease expenditures incurred after December 31, 2013, to explore for, develop, or 20 produce oil or gas deposits located north of 68 degrees North latitude may transfer the 21 tax credit to another person that acquires from the transferor an operating right, 22 operating interest, or working interest in a lease or property in the state that includes 23 land north of 68 degrees North latitude in which the transferor owned an operating 24 right, operating interest, or working interest at the time the lease expenditures were 25 incurred. A transferee may transfer the tax credit to another person that acquires from 26 the transferee an operating right, operating interest, or working interest in that lease or 27 property. A transferee's use of a tax credit is subject to the provisions of (u) of this 28 section. A transfer is conditioned on the filing with the department by the transferor 29 and transferee of notices or a joint notice in a form and manner prescribed by the 30 department and providing information and certifications required by the department by 31 regulation. A transferee's application of a tax credit again the transferee's production
01 tax liability is subject to audit by the department to the same extent as a tax credit that 02 has not been transferred. 03 (u) The provisions of this subsection apply to tax credits under (b) of this 04 section based on lease expenditures incurred after December 31, 2013, to explore for, 05 develop, or produce oil or gas deposits located north of 68 degrees North latitude 06 when the tax credit is used by a producer to which the tax credit has been transferred 07 under (t) of this section, by a producer or successor of a producer that has acquired the 08 person that incurred the lease expenditures on which the tax credit is based, or by a 09 producer or successor of a producer created by the merger of the person that incurred 10 the lease expenditures on which the tax credit is based with another person. The total 11 amount of a producer's tax credits subject to this subsection that may be applied 12 against the producer's tax liability under AS 43.55.011(e) for a calendar year may not 13 exceed 20 percent of the sum of the following amounts calculated for each lease or 14 property in the state that includes land north of 68 degrees North latitude from which 15 the producer produces oil or gas during the calendar year and in which the person that 16 incurred the lease expenditures on which the tax credit is based had owned an 17 operating right, operating interest, or working interest when the lease expenditures 18 were incurred: 19 GV X OS 20 where GV = the gross value at the point of production of the oil and gas, taxable under 21 AS 43.55.011(e), produced by the producer during the calendar year from the lease or 22 property; and OS = the percentage operating right, operating interest, or working 23 interest in the lease or property that had been owned by the person that incurred the 24 lease expenditures on which the tax credit is based when the lease expenditures were 25 incurred. 26 * Sec. 16. AS 43.55.024(d) is amended to read: 27 (d) A producer may not take a tax credit under (c) of this section for any 28 calendar year after the later of 29 (1) 2022 [2016]; or 30 (2) if the producer did not have commercial oil or gas production from 31 a lease or property in the state before April 1, 2006, the ninth calendar year after the
01 calendar year during which the producer first has commercial oil or gas production 02 before May 1, 2022 [2016], from at least one lease or property in the state. 03 * Sec. 17. AS 43.55.028(e) is amended to read: 04 (e) The department, on the written application of a person to whom a 05 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 06 AS 43.55.023(m) [(m)] or to whom a production tax credit certificate has been issued 07 under AS 43.55.025(f), may use available money in the oil and gas tax credit fund to 08 purchase, in whole or in part, the certificate if the department finds that 09 (1) the calendar year of the purchase is not earlier than the first 10 calendar year for which the credit shown on the certificate would otherwise be allowed 11 to be applied against a tax; 12 (2) the applicant does not have an outstanding liability to the state for 13 unpaid delinquent taxes under this title; 14 (3) the applicant's total tax liability under AS 43.55.011(e), after 15 application of all available tax credits, for the calendar year in which the application is 16 made is zero; 17 (4) the applicant's average daily production of oil and gas taxable 18 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 19 the application is made was not more than 50,000 BTU equivalent barrels; and 20 (5) the purchase is consistent with this section and regulations adopted 21 under this section. 22 * Sec. 18. AS 43.55.028(g) is amended to read: 23 (g) The department may adopt regulations to carry out the purposes of this 24 section, including standards and procedures to allocate available money among 25 applications for purchases under this chapter and claims for refunds and payments 26 under AS 43.20.046 or 43.20.047 when the total amount of the applications for 27 purchase and claims for refund exceed the amount of available money in the fund. The 28 regulations adopted by the department may not, when allocating available money in 29 the fund under this section, distinguish an application for the purchase of a credit 30 certificate issued under former AS 43.55.023(m) or a claim for a refund or payment 31 under AS 43.20.046 or 43.20.047.
01 * Sec. 19. AS 43.55.030(e) is amended to read: 02 (e) An explorer or producer that incurs a lease expenditure under 03 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 04 year but does not produce oil or gas from a lease or property in the state during the 05 calendar year shall file with the department on March 31 of the following year a 06 statement, under oath, in a form prescribed by the department, giving, with other 07 information required, the following: 08 (1) the explorer's or producer's qualified capital expenditures, as 09 defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and 10 adjustments or other payments or credits under AS 43.55.170; and 11 (2) if the explorer or producer receives a payment or credit under 12 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 13 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 14 * Sec. 20. AS 43.55.030 is amended by adding a new subsection to read: 15 (g) A person that intends to carry forward a tax credit subject to 16 AS 43.55.023(p)(1) so that the credit will be available to be applied against the 17 person's tax liability for a calendar year that is two or more calendar years later than 18 the calendar year during which the lease expenditures on which the credit is based 19 were incurred, subject to the limitation of AS 43.55.023(p)(2), shall file with the 20 department a statement, under oath, in a form prescribed by the department, on 21 March 31 of the year immediately following the calendar year during which the lease 22 expenditures on which the credit is based were incurred, and on March 31 of each 23 subsequent year until, and including, the last calendar year against the person's tax 24 liability for which an amount of the credit is applied. The statement must include 25 (1) documentation of the nature and amount of adjusted lease 26 expenditures for which a credit is claimed and intended to be carried forward, unless 27 provided in a previously filed statement under this subsection; 28 (2) calculation of the amount of the claimed credit, unless provided in 29 a previously filed statement under this subsection, and of any increase in an amount of 30 credit under AS 43.55.023(r), and documentation of compliance with the limitations 31 provided in AS 43.55.023(s);
01 (3) identification of any amount of the credit that was applied against 02 the person's tax liability for the calendar year preceding the year in which the 03 statement is due and of the amount of the credit that continues to be carried forward; 04 (4) other information required by the department. 05 * Sec. 21. AS 43.55.160(a) is amended to read: 06 (a) Except as provided in (b) of this section, for the purposes of 07 (1) AS 43.55.011(e), the annual production tax value of the taxable oil, 08 gas, or oil and gas subject to this paragraph produced during a calendar year is the 09 gross value at the point of production of the oil, gas, or oil and gas taxable under 10 AS 43.55.011(e), less the producer's lease expenditures under AS 43.55.165 for the 11 calendar year applicable to the oil, gas, or oil and gas, as applicable, produced by the 12 producer from leases or properties, as adjusted under AS 43.55.170; this paragraph 13 applies to 14 (A) oil and gas produced from leases or properties in the state 15 that include land north of 68 degrees North latitude, other than gas produced 16 before 2022 and used in the state; 17 (B) oil and gas produced from leases or properties in the state 18 outside the Cook Inlet sedimentary basin, no part of which is north of 68 19 degrees North latitude; this subparagraph does not apply to [GAS] 20 (i) gas produced before 2022 and used in the state; or 21 (ii) oil and gas subject to AS 43.55.011(p); 22 (C) oil produced before 2022 from each [A] lease or property 23 in the Cook Inlet sedimentary basin; 24 (D) gas produced before 2022 from each [A] lease or property 25 in the Cook Inlet sedimentary basin; 26 (E) gas produced before 2022 from each [A] lease or property 27 in the state outside the Cook Inlet sedimentary basin and used in the state, 28 other than gas subject to AS 43.55.011(p); 29 (F) oil and gas subject to AS 43.55.011(p) produced from 30 leases or properties in the state; 31 (G) oil and gas produced from leases or properties in the
01 state [A LEASE OR PROPERTY] no part of which is north of 68 degrees 02 North latitude, other than oil or gas described in (B), (C), (D), (E), or (F) of 03 this paragraph; 04 (2) AS 43.55.011(g), the monthly production tax value of the taxable 05 (A) oil and gas produced during a month from leases or 06 properties in the state that include land north of 68 degrees North latitude is the 07 gross value at the point of production of the oil and gas taxable under 08 AS 43.55.011(e) and produced by the producer from those leases or properties, 09 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 10 calendar year applicable to the oil and gas produced by the producer from 11 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 12 does not apply to gas subject to AS 43.55.011(o); 13 (B) oil and gas produced during a month from leases or 14 properties in the state outside the Cook Inlet sedimentary basin, no part of 15 which is north of 68 degrees North latitude, is the gross value at the point of 16 production of the oil and gas taxable under AS 43.55.011(e) and produced by 17 the producer from those leases or properties, less 1/12 of the producer's lease 18 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 19 gas produced by the producer from those leases or properties, as adjusted under 20 AS 43.55.170; this subparagraph does not apply to gas subject to 21 AS 43.55.011(o); 22 (C) oil produced during a month from a lease or property in the 23 Cook Inlet sedimentary basin is the gross value at the point of production of 24 the oil taxable under AS 43.55.011(e) and produced by the producer from that 25 lease or property, less 1/12 of the producer's lease expenditures under 26 AS 43.55.165 for the calendar year applicable to the oil produced by the 27 producer from that lease or property, as adjusted under AS 43.55.170; 28 (D) gas produced during a month from a lease or property in 29 the Cook Inlet sedimentary basin is the gross value at the point of production 30 of the gas taxable under AS 43.55.011(e) and produced by the producer from 31 that lease or property, less 1/12 of the producer's lease expenditures under
01 AS 43.55.165 for the calendar year applicable to the gas produced by the 02 producer from that lease or property, as adjusted under AS 43.55.170; 03 (E) gas produced during a month from a lease or property 04 outside the Cook Inlet sedimentary basin and used in the state is the gross 05 value at the point of production of that gas taxable under AS 43.55.011(e) and 06 produced by the producer from that lease or property, less 1/12 of the 07 producer's lease expenditures under AS 43.55.165 for the calendar year 08 applicable to that gas produced by the producer from that lease or property, as 09 adjusted under AS 43.55.170. 10 * Sec. 22. AS 43.55.160(a) is repealed and reenacted to read: 11 (a) Except as provided in (b) and (f) of this section, for the purposes of 12 AS 43.55.011(e), the annual production tax value of taxable oil, gas, or oil and gas 13 produced by a producer during a calendar year, in a given category for which a 14 separate production tax value is required to be calculated under this subsection, is 15 equal to the gross value at the point of production of that oil, gas, or oil and gas, 16 respectively, taxable under AS 43.55.011(e), less the producer's lease expenditures 17 under AS 43.55.165 for the calendar year that are applicable to the oil, gas, or oil and 18 gas, respectively, in that category produced by the producer during the calendar year, 19 as adjusted under AS 43.55.170. A separate annual production tax value must be 20 calculated for 21 (1) oil and gas produced from leases or properties in the state that 22 include land north of 68 degrees North latitude, other than gas produced before 2022 23 and used in the state; 24 (2) oil and gas produced from leases or properties in the state outside 25 the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North 26 latitude, during a calendar year before or during the last calendar year under 27 AS 43.55.024(b) for which the producer could take a tax credit under 28 AS 43.55.024(a); this paragraph does not apply to 29 (A) gas produced before 2022 and used in the state; or 30 (B) oil and gas subject to AS 43.55.011(p); 31 (3) oil produced before 2022 from each lease or property in the Cook
01 Inlet sedimentary basin; 02 (4) gas produced before 2022 from each lease or property in the Cook 03 Inlet sedimentary basin; 04 (5) gas produced before 2022 from each lease or property in the state 05 outside the Cook Inlet sedimentary basin and used in the state, other than gas subject 06 to AS 43.55.011(p); 07 (6) oil and gas subject to AS 43.55.011(p) produced from leases or 08 properties in the state; 09 (7) oil and gas produced from leases or properties in the state no part 10 of which is north of 68 degrees North latitude, other than oil or gas described in (2), 11 (3), (4), (5), or (6) of this subsection. 12 * Sec. 23. AS 43.55.160(e) is amended to read: 13 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 14 would otherwise be deductible by a producer in a calendar year but whose deduction 15 would cause an annual production tax value calculated under (a) [(a)(1)] of this 16 section of taxable oil or gas produced during the calendar year to be less than zero 17 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 18 However, the department shall provide by regulation a method to ensure that, for a 19 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 20 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 21 otherwise be deductible by a producer for that period but whose deduction would 22 cause a production tax value calculated under (a)(3), (4), (5), or (6) [(a)(1)(C), (D), 23 (E), OR (F)] of this section to be less than zero are accounted for as though the 24 adjusted lease expenditures had first been used as deductions in calculating the 25 production tax values of oil or gas subject to any of the limitations under 26 AS 43.55.011(j), (k), (o), or (p) that have positive production tax values so as to 27 reduce the tax liability calculated without regard to the limitation to the maximum 28 amount provided for under the applicable provision of AS 43.55.011(j), (k), (o), or (p). 29 Only the amount of those adjusted lease expenditures remaining after the accounting 30 provided for under this subsection may be used to establish a carried-forward annual 31 loss under AS 43.55.023(b). In this subsection, "producer" includes "explorer."
01 * Sec. 24. AS 43.55.160 is amended by adding a new subsection to read: 02 (f) In the calculation of an annual production tax value under (a)(1) of this 03 section, the gross value at the point of production of oil or gas meeting either or both 04 of the following criteria is reduced by 20 percent: (1) the oil or gas is produced from a 05 lease or property that does not contain land that was within a unit on January 1, 2003; 06 (2) the oil or gas is produced from a participating area established after December 31, 07 2011, that is within a unit formed under AS 38.05.180(p) before January 1, 2003, if 08 the participating area does not contain a reservoir that had previously been in a 09 participating area established before January 1, 2012. However, the gross value at the 10 point of production is not reduced if it is zero or less before any reduction. 11 * Sec. 25. AS 43.55.023(m) is repealed. 12 * Sec. 26. AS 43.55.011(g), 43.55.023(i), and 43.55.160(c) are repealed. 13 * Sec. 27. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 APPLICABILITY. (a) Sections 2, 5, 6, 22 - 24, and 26 of this Act apply to oil and gas 16 produced after December 31, 2013. 17 (b) Sections 3 and 21 apply to oil and gas produced after December 31, 2012. 18 (c) Sections 7, 11, 13, 14, and 25 of this Act apply to expenditures incurred after 19 December 31, 2012. 20 (d) Sections 9, 10, 12, 15, and 20 of this Act apply to expenditures incurred after 21 December 31, 2013. 22 * Sec. 28. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 RETROACTIVITY. Sections 3, 7, 11, 13, 14, 17, 21, and 25 of this Act are retroactive 25 to January 1, 2013. 26 * Sec. 29. The uncodified law of the State of Alaska is amending by adding a new section to 27 read: 28 TRANSITION: REGULATIONS. The Department of Revenue may adopt regulations 29 to implement this Act. The regulations take effect under AS 44.62 (Administrative Procedure 30 Act), but not before the effective date of the respective provision of this Act. 31 * Sec. 30. Sections 1, 2, 5, 6, 9, 10, 12, 15, 20, 22 - 24, and 26 of this Act take effect
01 January 1, 2014. 02 * Sec. 31. Except as provided in sec. 30 of this Act, this Act takes effect immediately under 03 AS 01.10.070(c).