HCS CSSB 71(FIN) am H: "An Act relating to the fishery resource landing tax and cost recovery fisheries; relating to a product development tax credit for certain salmon and herring products; providing for an effective date by amending the effective date of sec. 3, ch. 57, SLA 2003; and providing for an effective date."
00 HOUSE CS FOR CS FOR SENATE BILL NO. 71(FIN) am H 01 "An Act relating to the fishery resource landing tax and cost recovery fisheries; relating 02 to a product development tax credit for certain salmon and herring products; providing 03 for an effective date by amending the effective date of sec. 3, ch. 57, SLA 2003; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 16.10.455(c) is amended to read: 07 (c) As a condition of participation in a common property salmon fishery in a 08 terminal harvest area under this section, a fisherman who participates in the fishery is 09 subject to the payment of the assessment levied under (d) of this section on the 10 projected value of the salmon or on the pounds of salmon harvested. The 11 assessment is levied on the [VALUE OF] salmon that the fisherman takes in the 12 terminal harvest area and sells to a licensed buyer. The buyer of the salmon must be 13 licensed under AS 43.75, and the buyer shall collect the assessment on salmon taken 14 in a terminal harvest area at the time of purchase and remit the assessment to the
01 Department of Revenue in accordance with regulations adopted by the Department of 02 Revenue. 03 * Sec. 2. AS 16.10.455(d) is amended to read: 04 (d) The Department of Revenue may, by regulation, annually, by March 1 of 05 each year, set the [RATE OF THE] assessment levied on salmon taken in a terminal 06 harvest area in consultation with the Department of Commerce, Community, and 07 Economic Development, the hatchery permit holder, and representatives of affected 08 commercial fishermen. The [RATE OF THE] assessment shall provide sufficient 09 revenue to cover debt service to the state, reasonable operating expenses, reasonable 10 maintenance expenses, and development or maintenance of a reserve fund up to 100 11 percent of annual operating costs of the hatchery permit holder. In setting the [RATE 12 OF THE] assessment, the department shall consider the estimated return and harvest 13 of salmon in the terminal harvest area, the projected price to be paid for salmon in the 14 region, the amount of the existing reserve held by the hatchery permit holder, and the 15 amount by which the assessment collected in previous years exceeded or fell short of 16 the amount anticipated to be collected. The [TOTAL RATE OF THE] assessment may 17 not exceed 50 percent of the value of the salmon. The department may levy the 18 assessment as a percentage of the projected value of the salmon returning to the 19 terminal harvest area or as a flat rate on each pound of salmon harvested in the 20 area, to the nearest whole cent. 21 * Sec. 3. AS 43.75.035(a) is amended to read: 22 (a) A taxpayer that is a fisheries business may claim a [SALMON] product 23 development tax credit of 50 percent of qualified investment in new property first 24 placed into service in a shore-based plant or on a vessel in the state in the tax year. 25 * Sec. 4. AS 43.75.035(b) is amended to read: 26 (b) The amount of the tax credit applied against taxes under this section may 27 not 28 (1) exceed 50 percent of the taxpayer's tax liability incurred under this 29 chapter for processing of salmon and herring during the tax year; or 30 (2) be claimed for property first placed into service after December 31, 31 2020 [2015].
01 * Sec. 5. AS 43.75.035(c) is amended to read: 02 (c) If the property for which a tax credit is claimed is installed on a vessel, the 03 amount of qualified investment under (a) of this section is determined by multiplying 04 the investment cost of the qualified investment property by a fraction, the numerator 05 of which is the weight of raw salmon or raw herring processed on the vessel by the 06 taxpayer in the state in the tax year in which the property is first placed into service, 07 and the denominator of which is the weight of raw salmon or raw herring processed 08 on the vessel by the taxpayer in and outside of the state in the tax year in which the 09 property is first placed into service. 10 * Sec. 6. AS 43.75.035(d) is amended to read: 11 (d) An unused credit under this section may be carried forward and applied 12 against the tax liability incurred on salmon and herring in the following three tax 13 years. 14 * Sec. 7. AS 43.75.035(g) is amended to read: 15 (g) If, during a tax year, property for which a credit was claimed under this 16 section is disposed of by the taxpayer, ceases to be qualified investment property, or is 17 removed from service in the state, the tax due under this chapter is increased by the 18 recapture percentage of the aggregate decrease in the credit allowed under this section 19 for all prior tax years that would have resulted solely from reducing to zero the credit 20 allowed for the qualified investment property under this section. The amount of tax 21 credit attributable to the qualified investment that is carried forward from prior tax 22 years is terminated as of the first day of the tax year in which the qualified investment 23 property is disposed of by the taxpayer, ceases to be qualified investment property, or 24 is removed from service in the state. For purposes of this subsection, 25 (1) the recapture percentage during the year in which the property is 26 first placed into service or during the first year following the year in which the 27 property is first placed into service is 100 percent; 28 (2) the recapture percentage during the second year following the year 29 in which the property is first placed into service is 75 percent; 30 (3) the recapture percentage during the third year following the year in 31 which the property is first placed into service is 50 percent;
01 (4) the recapture percentage during the fourth or subsequent year 02 following the year in which the property is first placed into service is zero percent; 03 (5) qualified investment property used on a vessel is considered to 04 have been removed from the state on the first day of a tax year in which the proportion 05 of raw salmon or raw herring processed in the state on the vessel is less than 50 06 percent of total weight of raw salmon or raw herring processed on the vessel in and 07 outside of the state. 08 * Sec. 8. AS 43.75.035(i) is amended to read: 09 (i) The department shall develop and implement procedures by which a 10 taxpayer that is a fisheries business may submit the taxpayer's proposed investment to 11 the department and request a preliminary determination of whether the investment 12 qualifies for the [SALMON] product development tax credit under this section. A 13 preliminary determination by the department that the taxpayer's submission qualifies 14 for the credit is binding, unless the department determines that the taxpayer has made 15 a material misrepresentation in the taxpayer's submission. 16 * Sec. 9. AS 43.75.035(j)(3) is amended to read: 17 (3) "qualified investment" means the investment cost to purchase or 18 convert [IN] depreciable tangible personal property with a useful life of three years or 19 more to be used predominantly to perform an ice making, processing, packaging, or 20 product finishing function that is a significant component in producing value-added 21 salmon or herring products, including canned salmon products in can sizes other 22 than 14.75 ounces or 7.5 ounces [BEYOND GUTTING OF THE SALMON]; in this 23 paragraph, "property" 24 (A) includes 25 (i) equipment used to fillet, skin, portion, mince, 26 form, extrude, stuff, inject, mix, marinate, preserve, dry, smoke, 27 brine, package, freeze, scale, grind, separate meat from bone, or 28 remove pin bones [FILLETING, SKINNING, PORTIONING, 29 MINCING, FORMING, EXTRUDING, STUFFING, INJECTING, 30 MIXING, MARINATING, PRESERVING, DRYING, SMOKING, 31 BRINING, PACKAGING, BLAST FREEZING, OR PIN BONE
01 REMOVAL EQUIPMENT]; 02 (ii) new parts necessary for, or costs associated with, 03 converting a canned salmon line to produce can sizes other than 04 14.75 ounces or 7.5 ounces [TO CONVERT AN EXISTING CAN 05 SEAMER TO POP-TOP CAN PRODUCTION]; 06 (iii) conveyors used specifically in the act of producing 07 a value-added salmon or herring product; [AND] 08 (iv) ice making machines; 09 (v) new canning equipment for herring products; 10 and 11 (vi) equipment used to transform salmon or herring 12 byproduct that is discarded as waste into saleable product; 13 (B) does not include 14 (i) vehicles, forklifts, conveyors not used specifically in 15 the act of producing a value-added salmon or herring product, cranes, 16 pumps, or other equipment used to transport salmon or herring, or 17 salmon or herring products, knives, gloves, tools, supplies and 18 materials, equipment, other than ice making machines, that is not 19 processing, packaging, or product finishing equipment, or other 20 equipment, the use of which is incidental to the production, packaging, 21 or finishing of value-added salmon or herring products; [OR] 22 (ii) the overhaul, retooling, or modification of new or 23 existing property, except for new parts necessary for, or costs 24 associated with, converting a canned salmon line to produce can 25 sizes other than 14.75 ounces or 7.5 ounces; or 26 (iii) property used predominantly to produce a 27 salmon or herring product that is not taxed under this chapter [TO 28 CONVERT AN EXISTING CAN SEAMER TO POP-TOP CAN 29 PRODUCTION]; 30 * Sec. 10. AS 43.75.035(j)(6) is amended to read: 31 (6) "value-added salmon or herring product" means the product of a
01 salmon or herring that is processed beyond heading, gutting, or separation in a 02 manner that [MATERIALLY] enhances the value or quality of the salmon or herring 03 product, such as shelf-stable, retort pouched, smoked, pickled, or filleted salmon, 04 ikura, leather, [OR] jerky, or a saleable product made from waste byproduct of 05 salmon or herring; "value-added salmon or herring product" does not include a 06 salmon or herring or salmon or herring product that 07 (A) has been subjected to only one or more of heading, gutting, 08 freezing, or packaging [, QUALITY ASSURANCE PRACTICES, OR 09 VALUE RETENTION PRACTICES]; 10 (B) is salmon skeins or other unprocessed salmon or 11 unprocessed herring products whether fresh or frozen; or 12 (C) [IS CANNED, EXCEPT FOR SALMON PRODUCTS IN 13 A POP-TOP CAN; OR 14 (D)] is produced out of the state. 15 * Sec. 11. AS 43.77.020(b) is amended to read: 16 (b) The return shall be made on the basis of the calendar year. The return 17 [AND] is due on the last day of the month following the month that the 18 department posts the statewide average fish price calculated by the Department 19 of Fish and Game for [BEFORE APRIL 1 AFTER THE CLOSE OF] the calendar 20 year for which the return is made, and any unpaid tax shall be paid with the return. 21 * Sec. 12. AS 43.77.020(d) is amended to read: 22 (d) A person subject to the tax under this chapter shall make quarterly 23 payments of the tax estimated to be due for the year, as required under (e) of this 24 section [REGULATIONS ADOPTED BY THE DEPARTMENT]. A taxpayer will be 25 subject to an estimated tax penalty, determined by applying the interest rate specified 26 in AS 43.05.225 to the underpayment for each quarter, unless the taxpayer makes 27 estimated tax payments as required under (e) of this section [IN EQUAL 28 INSTALLMENTS THAT TOTAL EITHER 29 (1) AT LEAST 90 PERCENT OF THE TAXPAYER'S TAX 30 LIABILITY UNDER THIS CHAPTER FOR THE TAX YEAR; OR 31 (2) AT LEAST 100 PERCENT OF THE TAXPAYER'S TAX
01 LIABILITY UNDER THIS CHAPTER FOR THE PRIOR TAX YEAR]. 02 * Sec. 13. AS 43.77.020 is amended by adding new subsections to read: 03 (e) A person subject to tax under this chapter shall make estimated quarterly 04 tax payments on or before March 31, June 30, September 30, and December 31 of 05 each year using one of the following methods: 06 (1) four equal installments the sum of which is at least equal to the 07 taxpayer's tax liability under this chapter for the immediately preceding calendar year; 08 (2) four equal installments the sum of which equals at least 90 percent 09 of the taxpayer's tax liability under this chapter for the current calendar year; or 10 (3) four installments, calculated in each quarter, equal to 90 percent of 11 the sum of the number of pounds of unprocessed fish of each species landed in the 12 state during the quarter that are subject to tax under this chapter, multiplied by the 13 respective statewide average price for each species posted by the department in the 14 immediately preceding calendar year, multiplied by the applicable tax rate under this 15 chapter. 16 (f) By March 31 of each year, a taxpayer electing to use the method under 17 (e)(3) of this section shall notify the department of the election. Once the election is 18 made, the taxpayer may not change the estimated payment method until the following 19 calendar year. If a taxpayer does not notify the department of an election to use the 20 method under (e)(3) of this section, the department shall calculate the taxpayer's 21 estimated liability under (e)(1) and (2) of this section, and apply the estimated 22 payment method that results in the lowest tax liability to determine the taxpayer's 23 underpayment and estimated tax penalty. 24 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 TRANSITION AND IMPLEMENTATION. For the 2014 calendar year, a taxpayer 27 may make estimated quarterly tax payments under AS 43.77.020, and the regulations adopted 28 to implement that section, as they read on December 31, 2013, or under AS 43.77.020, as 29 amended by secs. 11 - 13 of this Act. A taxpayer may not make estimated tax payments for 30 the 2014 calendar year under AS 43.77.020(e)(3), added by sec. 13 of this Act, unless the 31 taxpayer notifies the department before January 1, 2015, of the taxpayer's intent to make
01 payments under that paragraph. 02 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 RETROACTIVITY. Sections 11 - 13 of this Act are retroactive to January 1, 2014. 05 * Sec. 16. Section 7, ch. 57, SLA 2003, as amended by sec. 4, ch. 3, SLA 2006, sec. 4, ch. 8, 06 SLA 2008, and sec. 3, ch. 102, SLA 2010, is amended to read: 07 Sec. 7. Section 3, ch. 57, SLA 2003, takes effect on the earlier of the 08 following: 09 (1) January 1, 2021 [2019]; or 10 (2) the date of the attorney general's notification to the lieutenant 11 governor and to the revisor of statutes that 12 (A) a court has entered final judgment that AS 43.75.035 or 13 43.75.036, added by sec. 1, ch. 57, SLA 2003, violates the commerce clause 14 contained in art. I, sec. 8, United States Constitution; and 15 (B) the time for an appeal of that judgment has expired, or, if 16 an appeal was taken, a final order on the appeal has been entered that AS 17 43.75.035 or 43.75.036, added by sec. 1, ch. 57, SLA 2003, violates the 18 commerce clause contained in the United States Constitution. 19 * Sec. 17. This Act takes effect immediately under AS 01.10.070(c).