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SCS CSHB 111(RES): "An Act relating to the oil and gas production tax and credits against the oil and gas production tax; relating to certain tax credits under the tax on corporations and the refund of those credits; relating to the applicability of certain credits earned under the oil and gas production tax to the tax on corporations; relating to interest applicable to delinquent taxes; relating to lease expenditures; and providing for an effective date."

00                SENATE CS FOR CS FOR HOUSE BILL NO. 111(RES)                                                             
01 "An Act relating to the oil and gas production tax and credits against the oil and gas                                  
02 production tax; relating to certain tax credits under the tax on corporations and the                                   
03 refund of those credits; relating to the applicability of certain credits earned under the                              
04 oil and gas production tax to the tax on corporations; relating to interest applicable to                               
05 delinquent taxes; relating to lease expenditures; and providing for an effective date."                                 
06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
07    * Section 1. AS 43.05.225 is amended to read:                                                                      
08            Sec. 43.05.225. Interest. Unless otherwise provided,                                                       
09                 (1)  a delinquent tax under this title                                                              
10 (A)  [UNDER THIS TITLE,] before January 1, 2014, bears                                                                  
11 interest in each calendar quarter at the rate of five percentage points above the                                       
12 annual rate charged member banks for advances by the 12th Federal Reserve                                               
13 District as of the first day of that calendar quarter, or at the annual rate of 11                                      
01            percent, whichever is greater, compounded quarterly as of the last day of that                               
02            quarter;                                                                                                     
03 (B)  [UNDER THIS TITLE,] on and after January 1, 2014, and                                                          
04 before January 1, 2018 [EXCEPT AS PROVIDED IN (C) OF THIS                                                           
05 PARAGRAPH], bears interest in each calendar quarter at the rate of three                                                
06 percentage points above the annual rate charged member banks for advances                                               
07 by the 12th Federal Reserve District as of the first day of that calendar quarter;                                      
08                      (C)  [UNDER AS 43.55,] on and after January 1, 2018 [2017,                                   
09                           (i)  FOR THE FIRST THREE YEARS AFTER A TAX                                                    
10 BECOMES DELINQUENT], bears interest in each calendar quarter at                                                         
11 the rate of three [SEVEN] percentage points above the annual rate                                                   
12 charged member banks for advances by the 12th federal reserve district                                                  
13 as of the first day of that calendar quarter, compounded quarterly as of                                                
14                 the last day of that quarter; [AND                                                                      
15 (ii)  AFTER THE FIRST THREE YEARS AFTER A                                                                               
16                 TAX BECOMES DELINQUENT, DOES NOT BEAR INTEREST;]                                                        
17                 (2)  the interest rate is 12 percent a year for                                                         
18                      (A)  delinquent fees payable under AS 05.15.095(c); and                                            
19 (B)  unclaimed property that is not timely paid or delivered, as                                                        
20            allowed by AS 34.45.470(a).                                                                                  
21    * Sec. 2. AS 43.20.044(a) is amended to read:                                                                      
22            (a)  A taxpayer may apply as a credit against the tax levied under this chapter                              
23                 (1)  the exploration incentive credit authorized by AS 27.30;                                   
24 (2)  the alternative tax credit for oil and gas exploration authorized                                              
25       by AS 43.55.025.                                                                                              
26    * Sec. 3. AS 43.20.046(e) is amended to read:                                                                      
27 (e)  Subject to AS 43.20.057 [THE REQUIREMENTS IN AS 43.55.028(j)],                                                 
28 the department may [USE AVAILABLE MONEY IN THE OIL AND GAS TAX                                                          
29 CREDIT FUND ESTABLISHED IN AS 43.55.028 TO] make a [THE] refund applied                                             
30 for under (d) of this section in whole or in part if the department finds that, after                                   
31 application of all available tax credits, the claimant's total tax liability under this                                 
01       chapter for the calendar year in which the claim is made is zero.                                                 
02    * Sec. 4. AS 43.20.047(e) is amended to read:                                                                      
03 (e)  Subject to AS 43.20.057 [THE REQUIREMENTS IN AS 43.55.028(j)],                                                 
04 the department may [USE MONEY AVAILABLE IN THE OIL AND GAS TAX                                                          
05 CREDIT FUND ESTABLISHED IN AS 43.55.028 TO] make a refund or payment                                                    
06 under (d) of this section in whole or in part if the department finds that, after                                       
07 application of all available tax credits, the claimant's total tax liability under this                                 
08       chapter for the calendar year in which the claim is made is zero.                                                 
09    * Sec. 5. AS 43.20.053(e) is amended to read:                                                                      
10 (e)  Subject to AS 43.20.057 [THE REQUIREMENTS IN AS 43.55.028(j)],                                                 
11 the department may [USE MONEY AVAILABLE IN THE OIL AND GAS TAX                                                          
12 CREDIT FUND ESTABLISHED IN AS 43.55.028 TO] make a refund or payment                                                    
13 under (d) of this section in whole or in part if the department finds that, after                                       
14 application of all available tax credits, the claimant's total tax liability under this                                 
15       chapter for the calendar year in which the claim is made is zero.                                                 
16    * Sec. 6. AS 43.20 is amended by adding a new section to read:                                                     
17 Sec. 43.20.057. Credit refunds and payments. (a) Subject to appropriation                                             
18 for a purpose described in this section, the department may make a refund or payment                                    
19       claimed under AS 43.20.046, 43.20.047, or 43.20.053.                                                              
20 (b)  The department shall adopt regulations to carry out the purposes of this                                           
21 section, including standards and procedures to allocate available money among claims                                    
22 for refunds and payments under AS 43.20.046, 43.20.047, and 43.20.053 when the                                          
23 total amount of the applications for purchase and claims for refund exceeds the                                         
24 amount of available money appropriated for the purposes described in this section.                                      
25       The regulations adopted by the department                                                                         
26 (1)  may not, when allocating available money under this section,                                                       
27 distinguish an application for a claim for a refund or payment under AS 43.20.046,                                      
28       43.20.047, or 43.20.053; and                                                                                      
29 (2)  must, when allocating available money under this section, grant a                                                  
30 preference, between two claimants, to the claimant with a higher percentage of                                          
31 resident workers in the claimant's workforce, including workers employed by the                                         
01 claimant's direct contractors, in the state in the previous calendar year; in this                                      
02       paragraph, "resident worker" has the meaning given in AS 43.40.092(b).                                            
03 (c)  If a claimant has an outstanding liability to the state directly related to the                                    
04 claimant's oil or gas exploration, development, or production and the department has                                    
05 not previously reduced the amount paid to that claimant for refund because of that                                      
06 outstanding liability, the department may pay only that portion of a refund that                                        
07 exceeds the outstanding liability. After notifying the claimant, the department may                                     
08 apply the amount by which the department reduced payment for a refund because of                                        
09 an outstanding liability to satisfy the outstanding liability. Satisfaction of an                                       
10 outstanding liability under this subsection does not affect the claimant's ability to                                   
11 contest that liability. The department may enter into contracts or agreements with                                      
12 another department to which the outstanding liability is owed. In this subsection,                                      
13 "outstanding liability" means an amount of tax, interest, penalty, fee, rental, royalty, or                             
14 other charge for which the state has issued a demand for payment that has not been                                      
15       paid when due and, if contested, has not been finally resolved against the state.                                 
16    * Sec. 7. AS 43.55.023(c) is amended to read:                                                                      
17            (c)  A credit or portion of a credit under this section                                                      
18 (1)  may not be used to reduce a person's tax liability under                                                       
19       AS 43.55.011(e) for any calendar year below zero;                                                             
20 (2)  may, if [, AND ANY UNUSED CREDIT OR PORTION OF A                                                               
21       CREDIT] not used under this subsection, [MAY] be applied in a later calendar year;                        
22 (3)  may, regardless of when the credit was earned, be used to                                                      
23 satisfy an outstanding tax, interest, penalty, fee, or other charge related to the tax                              
24 due under this chapter, including an amount assessed as a result of an amended                                      
25 return under AS 43.55.075(b), that has not been subject to an administrative                                        
26       proceeding or litigation.                                                                                     
27    * Sec. 8. AS 43.55.023(d) is amended to read:                                                                      
28 (d)  A person that is entitled to take a tax credit under this section that wishes                                      
29 to transfer the unused credit to another person [OR OBTAIN A CASH PAYMENT                                               
30 UNDER AS 43.55.028] may apply to the department for a transferable tax credit                                           
31 certificate. An application under this subsection must be in a form prescribed by the                                   
01 department and must include supporting information and documentation that the                                           
02 department reasonably requires. The department shall grant or deny an application, or                                   
03 grant an application as to a lesser amount than that claimed and deny it as to the                                      
04 excess, not later than 120 days after the latest of (1) March 31 of the year following                                  
05 the calendar year in which the qualified capital expenditure or carried-forward annual                                  
06 loss for which the credit is claimed was incurred; (2) the date the statement required                                  
07 under AS 43.55.030(a) or (e) was filed for the calendar year in which the qualified                                     
08 capital expenditure or carried-forward annual loss for which the credit is claimed was                                  
09 incurred; or (3) the date the application was received by the department. If, based on                                  
10 the information then available to it, the department is reasonably satisfied that the                                   
11 applicant is entitled to a credit, the department shall issue the applicant a transferable                              
12 tax credit certificate for the amount of the credit. A certificate issued under this                                    
13       subsection does not expire.                                                                                       
14    * Sec. 9. AS 43.55.023(e) is amended to read:                                                                      
15 (e)  A person to which a transferable tax credit certificate is issued under (d) of                                     
16 this section may transfer the certificate to another person, and a transferee may further                               
17 transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and                          
18 notwithstanding any action the department may take with respect to the applicant                                        
19 under (g) of this section, the owner of a certificate may apply the credit or a portion of                              
20       the credit shown on the certificate                                                                               
21 (1)  [ONLY] against a tax levied by AS 43.55.011(e); however [.                                                 
22 HOWEVER], a credit shown on a transferable tax credit certificate may not be applied                                    
23 under this paragraph to reduce a transferee's total tax liability under                                             
24 AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80                                         
25 percent of the tax that would otherwise be due without applying that credit; any [.                                 
26 ANY] portion of a credit not used under this paragraph [SUBSECTION] may be                                          
27       applied in a later period; or                                                                                 
28 (2)  regardless of when the credit was earned, to satisfy an                                                        
29 outstanding tax, interest, penalty, fee, or other charge related to the tax due                                     
30 under this chapter, including an amount assessed as a result of an amended                                          
31 return under AS 43.55.075(b), that has not been subject to an administrative                                        
01       proceeding or litigation.                                                                                     
02    * Sec. 10. AS 43.55.024 is amended by adding a new subsection to read:                                             
03 (k)  In a calendar year for which a tax credit under (j) of this section is used to                                     
04 reduce a producer's tax liability below the amount due under AS 43.55.011(e), a tax                                     
05 credit under (c) or (i) of this section may be used to reduce the producer's tax liability                              
06 for that year below the amount calculated under AS 43.55.011(f), but not below zero.                                    
07 The department may not restrict the order in which the credits under (c), (i), and (j) of                               
08       this section are applied when calculating tax liability under this chapter.                                       
09    * Sec. 11. AS 43.55.025(a) is amended to read:                                                                     
10 (a)  Subject to the terms and conditions of this section, a credit against the                                          
11 [PRODUCTION] tax levied by AS 43.55.011(e) or AS 43.20 is allowed for                                               
12 exploration expenditures that qualify under (b) of this section in an amount equal to                                   
13       one of the following:                                                                                             
14 (1)  30 percent of the total exploration expenditures that qualify only                                                 
15       under (b) and (c) of this section;                                                                                
16 (2)  30 percent of the total exploration expenditures that qualify only                                                 
17       under (b) and (d) of this section;                                                                                
18 (3)  40 percent of the total exploration expenditures that qualify under                                                
19       (b), (c), and (d) of this section;                                                                                
20 (4)  40 percent of the total exploration expenditures that qualify only                                                 
21       under (b) and (e) of this section;                                                                                
22 (5)  80, 90, or 100 percent, or a lesser amount described in (l) of this                                                
23 section, of the total exploration expenditures described in (b)(1) and (2) of this section                              
24 and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this                                  
25       section;                                                                                                          
26 (6)  the lesser of $25,000,000 or 80 percent of the total exploration                                                   
27 drilling expenditures described in (m) of this section and that qualify under (b) and                                   
28       (c)(1), (c)(2)(A), and (c)(2)(C) of this section; or                                                              
29 (7)  the lesser of $7,500,000 or 75 percent of the total seismic                                                        
30 exploration expenditures described in (n) of this section and that qualify under (b) of                                 
31       this section.                                                                                                     
01    * Sec. 12. AS 43.55.025(f) is amended to read:                                                                     
02            (f)  For a production tax credit under this section,                                                         
03 (1)  an explorer shall, in a form prescribed by the department and,                                                     
04 except for a credit under (k) of this section, within six months of the completion of the                               
05 exploration activity, claim the credit and submit information sufficient to demonstrate                                 
06 to the department's satisfaction that the claimed exploration expenditures qualify under                                
07 this section; in addition, the explorer shall submit information necessary for the                                      
08 commissioner of natural resources to evaluate the validity of the explorer's compliance                                 
09       with the requirements of this section;                                                                            
10                 (2)  an explorer shall agree, in writing,                                                               
11 (A)  to notify the Department of Natural Resources, within 30                                                           
12 days after completion of seismic or geophysical data processing, completion of                                          
13 well drilling, or filing of a claim for credit, whichever is the latest, for which                                      
14 exploration costs are claimed, of the date of completion and submit a report to                                         
15 that department describing the processing sequence and providing a list of data                                         
16            sets available;                                                                                              
17 (B)  to provide to the Department of Natural Resources, within                                                          
18 30 days after the date of a request, unless a longer period is provided by the                                          
19 Department of Natural Resources, specific data sets, ancillary data, and reports                                        
20            identified in (A) of this paragraph; in this subparagraph,                                                   
21 (i)  a seismic or geophysical data set includes the data                                                                
22 for an entire seismic survey, irrespective of whether the survey area                                                   
23 covers nonstate land in addition to state land or land in a unit in                                                     
24                 addition to land outside a unit;                                                                        
25 (ii)  well data include all analyses conducted on physical                                                              
26 material, and well logs collected from the well, results, and copies of                                                 
27 data collected and data analyses for the well, including well logs;                                                     
28 sample analyses; testing geophysical and velocity data including                                                        
29 seismic profiles and check shot surveys; testing data and analyses; age                                                 
30                 data; geochemical analyses; and tangible material;                                                      
31 (C)  that, notwithstanding any provision of AS 38, information                                                          
01 provided under this paragraph will be held confidential by the Department of                                            
02            Natural Resources,                                                                                           
03 (i)  in the case of well data, until the expiration of the                                                              
04 24-month period of confidentiality described in AS 31.05.035(c), at                                                     
05 which time the Department of Natural Resources will release the                                                         
06 information after 30 days' public notice unless, in the discretion of the                                               
07 commissioner of natural resources, it is necessary to protect                                                           
08 information relating to the valuation of unleased acreage in the same                                                   
09 vicinity, or unless the well is on private land and the owner, including                                                
10 the lessor but not the lessee, of the oil and gas resources has not given                                               
11                 permission to release the well data;                                                                    
12 (ii)  in the case of seismic or other geophysical data,                                                                 
13 other than seismic data acquired by seismic exploration subject to (k) of                                               
14 this section, for 10 years following the completion date, at which time                                                 
15 the Department of Natural Resources will release the information after                                                  
16 30 days' public notice, except as to seismic or other geophysical data                                                  
17 acquired from private land, unless the owner, including a lessor but not                                                
18 a lessee, of the oil and gas resources in the private land gives                                                        
19 permission to release the seismic or other geophysical data associated                                                  
20                 with the private land;                                                                                  
21 (iii)  in the case of seismic data obtained by seismic                                                                  
22 exploration subject to (k) of this section, only until the expiration of 30                                             
23 days' public notice issued on or after the date the production tax credit                                               
24                 certificate is issued under (5) of this subsection;                                                     
25 (3)  if more than one explorer holds an interest in a well or seismic                                                   
26 exploration, each explorer may claim an amount of credit that is proportional to the                                    
27       explorer's cost incurred;                                                                                         
28 (4)  the department may exercise the full extent of its powers as though                                                
29 the explorer were a taxpayer under this title, in order to verify that the claimed                                      
30       expenditures are qualified exploration expenditures under this section; and                                       
31 (5)  if the department is satisfied that the explorer's claimed                                                         
01 expenditures are qualified under this section and that all data required to be submitted                                
02 under this section have been submitted, the department shall issue to the explorer a                                    
03 production tax credit certificate for the amount of credit to be allowed against                                        
04 [PRODUCTION] taxes levied by AS 43.55.011(e) and AS 43.20; for a production                                         
05 tax credit under (a)(4) of this section, the department shall grant or deny an                                      
06 application, or grant an application as to a lesser amount than that claimed and                                    
07 deny it as to the excess, not later than 120 days after the date that the department                                
08 has received the application and all data required to be submitted under this                                       
09 section; notwithstanding any contrary provision of AS 38, AS 40.25.100, or                                          
10       AS 43.05.230, the following information is not confidential:                                                      
11                      (A)  the explorer's name;                                                                          
12                      (B)  the date of the application;                                                                  
13                      (C)  the location of the well or seismic exploration;                                              
14                      (D)  the date of the department's issuance of the certificate; and                                 
15 (E)  the date on which the information required to be submitted                                                         
16            under this section will be released.                                                                         
17    * Sec. 13. AS 43.55.025(h) is amended to read:                                                                     
18 (h)  A producer that purchases a production tax credit certificate may apply the                                        
19 credits against its production tax levied by AS 43.55.011(e). Regardless of the price                                   
20 the producer paid for the certificate, the producer may receive a credit against its                                    
21 production tax liability for the full amount of the credit, but for not more than the                                   
22 amount for which the certificate is issued. A production tax credit or production tax                               
23       credit certificate allowed under this section                                                                 
24                 (1)  may not be applied more than once;                                                         
25                 (2)  may be applied                                                                                 
26                      (A)  in a later calendar year; or                                                              
27 (B)  regardless of when the credit was earned, to satisfy an                                                        
28 outstanding tax, interest, penalty, fee, or other charge related to the tax                                         
29 due under this chapter, including an amount assessed as a result of an                                              
30 amended return under AS 43.55.075(b), that has not been subject to an                                               
31            administrative proceeding or litigation.                                                                 
01    * Sec. 14. AS 43.55.025(i) is amended to read:                                                                     
02            (i)  For a production tax credit under this section,                                                         
03                 (1)  a credit may not be applied to reduce a taxpayer's tax liability under                             
04                      (A)  AS 43.55.011(e) below zero for a calendar year;                                           
05                      (B)  AS 43.20 below zero for a tax year; and                                                   
06 (2)  an amount of the production tax credit in excess of the amount that                                                
07 may be applied for a calendar or tax year under this subsection may be carried                                      
08 forward and applied against the taxpayer's tax liability under AS 43.55.011(e) in one                                   
09       or more later calendar years or under AS 43.20 in one or more later tax years.                                
10    * Sec. 15. AS 43.55.028(e) is amended to read:                                                                     
11 (e)  Subject to appropriation for a purpose described in this section, for a                                        
12 credit earned before January 1, 2018, the [THE] department, on the written                                          
13 application of a person to whom a transferable tax credit certificate has been issued                                   
14 under AS 43.55.023(d) or former AS 43.55.023(m) or to whom a production tax credit                                      
15 certificate has been issued under AS 43.55.025(f), may [USE AVAILABLE MONEY                                             
16 IN THE OIL AND GAS TAX CREDIT FUND TO] purchase, in whole or in part, the                                               
17 certificate. [THE DEPARTMENT MAY NOT PURCHASE A TOTAL OF MORE                                                           
18 THAN $70,000,000 IN TAX CREDIT CERTIFICATES FROM A PERSON IN A                                                          
19 CALENDAR YEAR.] Before purchasing a certificate or part of a certificate, the                                           
20       department shall find that                                                                                        
21 (1)  the calendar year of the purchase is not earlier than the first                                                    
22 calendar year for which the credit shown on the certificate would otherwise be allowed                                  
23       to be applied against a tax;                                                                                      
24 (2)  [THE APPLICATION IS NOT THE RESULT OF THE                                                                          
25 DIVISION OF A SINGLE ENTITY INTO MULTIPLE ENTITIES THAT WOULD                                                           
26 REASONABLY BE EXPECTED TO APPLY AS A SINGLE ENTITY IF THE                                                               
27       $70,000,000 LIMITATION IN THIS SUBSECTION DID NOT EXIST;                                                          
28 (3)]  the applicant's total tax liability under AS 43.55.011(e), after                                                  
29 application of all available tax credits, for the calendar year in which the application is                             
30       made is zero;                                                                                                     
31 (3) [(4)]  the applicant's average daily production of oil and gas taxable                                          
01       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
02       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
03                 (4) [(5)]  the purchase is consistent with this section and regulations                             
04       adopted under this section.                                                                                       
05    * Sec. 16. AS 43.55.028(g) is amended to read:                                                                     
06 (g)  The department shall adopt regulations to carry out the purposes of this                                           
07 section, including standards and procedures to allocate available money among                                           
08 applications for the purchase of credit certificates [PURCHASES UNDER THIS                                          
09 CHAPTER AND CLAIMS FOR REFUNDS AND PAYMENTS UNDER                                                                       
10 AS 43.20.046, 43.20.047, OR 43.20.053] when the total amount of the applications for                                    
11 purchase exceeds [AND CLAIMS FOR REFUND EXCEED] the amount of                                                       
12 [AVAILABLE] money appropriated for the purposes described in this section [IN                                       
13       THE FUND]. The regulations adopted by the department                                                              
14 [(1)  MAY NOT, WHEN ALLOCATING AVAILABLE MONEY IN                                                                       
15 THE FUND UNDER THIS SECTION, DISTINGUISH AN APPLICATION FOR                                                             
16 THE PURCHASE OF A CREDIT CERTIFICATE ISSUED UNDER FORMER                                                                
17 AS 43.55.023(m) OR A CLAIM FOR A REFUND OR PAYMENT UNDER                                                                
18       AS 43.20.046, 43.20.047, OR 43.20.053;                                                                            
19 (2)]  must, when allocating [AVAILABLE] money [IN THE FUND]                                                             
20 under this section, grant a preference, between two applicants, to the applicant with a                                 
21 higher percentage of resident workers in the applicant's workforce, including workers                                   
22 employed by the applicant's direct contractors, in the state in the previous calendar                                   
23 year. In [; IN] this subsection [PARAGRAPH], "resident worker" has the meaning                                  
24       given in AS 43.40.092(b) [;                                                                                       
25 (3)  MUST PROVIDE FOR THE PURCHASE OF THE AMOUNT                                                                        
26 EQUAL TO THE FIRST 50 PERCENT OF THE CREDIT REPURCHASE LIMIT                                                            
27 FOR EACH PERSON UNDER (e) OF THIS SECTION AT A RATE OF 100                                                              
28 PERCENT OF THE VALUE OF THE CERTIFICATE OR PORTION OF THE                                                               
29 CERTIFICATE REQUESTED TO BE PURCHASED AND THE AMOUNT EQUAL                                                              
30 TO THE NEXT 50 PERCENT OF THE CREDIT REPURCHASE LIMIT FOR                                                               
31 EACH PERSON UNDER (e) OF THIS SECTION AT A RATE OF 75 PERCENT OF                                                        
01 THE VALUE OF THE CERTIFICATE OR PORTION OF THE CERTIFICATE                                                              
02       REQUESTED TO BE PURCHASED].                                                                                       
03    * Sec. 17. AS 43.55.028(j) is amended to read:                                                                     
04 (j)  If an applicant [OR CLAIMANT] has an outstanding liability to the state                                            
05 directly related to the applicant's [OR CLAIMANT'S] oil or gas exploration,                                             
06 development, or production and the department has not previously reduced the amount                                     
07 paid to that applicant [OR CLAIMANT] for a certificate [OR REFUND] because of                                           
08 that outstanding liability, the department may purchase only that portion of a                                          
09 certificate [OR PAY ONLY THAT PORTION OF A REFUND] that exceeds the                                                     
10 outstanding liability. After notifying the applicant [OR CLAIMANT], the department                                      
11 may apply the amount by which the department reduced its purchase of a certificate                                      
12 [OR PAYMENT FOR A REFUND] because of an outstanding liability to satisfy the                                            
13 outstanding liability. Satisfaction of an outstanding liability under this subsection does                              
14 not affect the applicant's ability to contest that liability. The department may enter into                             
15 contracts or agreements with another department to which the outstanding liability is                                   
16 owed. In this subsection, "outstanding liability" means an amount of tax, interest,                                     
17 penalty, fee, rental, royalty, or other charge for which the state has issued a demand                                  
18 for payment that has not been paid when due and, if contested, has not been finally                                     
19       resolved against the state.                                                                                       
20    * Sec. 18. AS 43.55.029(a) is amended to read:                                                                     
21 (a)  An explorer or producer that has applied for a production tax credit under                                         
22 AS 43.55.023(a) or (l) [AS 43.55.023(a), (b), OR (l)] or 43.55.025(a) may make a                                  
23 present assignment of the production tax credit certificate expected to be issued by the                                
24 department to a third-party assignee. The assignment may be made either at the time                                     
25 the application is filed with the department or not later than 30 days after the date of                                
26 filing with the department. Once a notice of assignment in compliance with this                                         
27 section is filed with the department, the assignment is irrevocable and cannot be                                       
28 modified by the explorer or producer without the written consent of the assignee                                        
29 named in the assignment. If a production tax credit certificate is issued to the explorer                               
30 or producer, the notice of assignment remains effective and shall be filed with the                                     
31 department by the explorer or producer together with any application for the                                            
01       department to purchase the certificate under AS 43.55.028(e).                                                     
02    * Sec. 19. AS 43.55.160(d) is amended to read:                                                                     
03 (d)  Irrespective of whether a producer produces taxable oil or gas during a                                            
04 calendar year or month, the producer is considered to have generated a positive                                         
05 production tax value if a calculation described in (a) of this section yields a positive                                
06 number because the producer's adjusted lease expenditures for a calendar year under                                     
07 AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a                                 
08 payment or credit under AS 43.55.170. An explorer that has taken a tax credit under                                     
09 former AS 43.55.023(b) or that has obtained a transferable tax credit certificate under                             
10 AS 43.55.023(d) for the amount of a tax credit under former AS 43.55.023(b) is                                      
11 considered a producer, subject to the tax levied under AS 43.55.011(e), to the extent                                   
12 that the explorer generates a positive production tax value as the result of the                                        
13       explorer's receiving a payment or credit under AS 43.55.170.                                                      
14    * Sec. 20. AS 43.55.160(e) is amended to read:                                                                     
15 (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170                                                   
16 incurred to produce oil or gas from leases or properties north of 68 degrees                                        
17 North latitude that would otherwise be deductible by a producer in a calendar year                                  
18 but whose deduction would cause an annual production tax value calculated under                                         
19 (a)(1) or (h) of this section of taxable oil or gas produced during the calendar year to                                
20 be less than zero may be used to establish a carried-forward annual loss under                                          
21 AS 43.55.165(a)(3) [AS 43.55.023(b)]. However, the department shall provide by                                      
22 regulation a method to ensure that, for a period for which a producer's tax liability is                                
23 limited by AS 43.55.011(o) [AS 43.55.011(j), (k), (o), OR (p)], any adjusted lease                                  
24 expenditures under AS 43.55.165 and 43.55.170 that would otherwise be deductible                                        
25 by a producer for that period but whose deduction would cause a production tax value                                    
26 calculated under (a)(1)(E) [(a)(1)(C), (D), (E), OR (F), OR (h)(3)] of this section to be                           
27 less than zero are accounted for as though the adjusted lease expenditures had first                                    
28 been used as deductions in calculating the production tax values of oil or gas subject to                               
29 any of the limitations under AS 43.55.011(o) [AS 43.55.011(j), (k), (o), OR (p)] that                               
30 have positive production tax values so as to reduce the tax liability calculated without                                
31 regard to the limitation to the maximum amount provided for under the applicable                                        
01 provision of AS 43.55.011(o) [AS 43.55.011(j), (k), (o), OR (p)]. Only the amount of                                
02 those adjusted lease expenditures remaining after the accounting provided for under                                     
03 this subsection may be used to establish a carried-forward annual loss under                                            
04 AS 43.55.165(a)(3) [AS 43.55.023(b)]. In this subsection, "producer" includes                                       
05       "explorer."                                                                                                       
06    * Sec. 21. AS 43.55.165(a), as amended by sec. 29, ch. 4, 4SSLA 2016, is amended to read:                          
07            (a)  For purposes of this chapter, a producer's lease expenditures for a calendar                            
08       year are                                                                                                          
09                 (1)  costs, other than items listed in (e) of this section, that are                                    
10 (A)  incurred by the producer during the calendar year after                                                            
11 March 31, 2006, to explore for, develop, or produce oil or gas deposits located                                         
12 within the producer's leases or properties in the state or, in the case of land in                                      
13 which the producer does not own an operating right, operating interest, or                                              
14 working interest, to explore for oil or gas deposits within other land in the                                           
15            state; and                                                                                                   
16 (B)  allowed by the department by regulation, based on the                                                              
17 department's determination that the costs satisfy the following three                                                   
18            requirements:                                                                                                
19 (i)  the costs must be incurred upstream of the point of                                                                
20                 production of oil and gas;                                                                              
21 (ii)  the costs must be ordinary and necessary costs of                                                                 
22 exploring for, developing, or producing, as applicable, oil or gas                                                      
23                 deposits; and                                                                                           
24 (iii)  the costs must be direct costs of exploring for,                                                                 
25                 developing, or producing, as applicable, oil or gas deposits; [AND]                                     
26 (2)  a reasonable allowance for that calendar year, as determined under                                                 
27 regulations adopted by the department, for overhead expenses that are directly related                                  
28       to exploring for, developing, or producing, as applicable, the oil or gas deposits; and                       
29 (3)  lease expenditures incurred in a previous calendar year,                                                       
30       subject to (m) - (p) of this section, that                                                                    
31 (A)  met the requirements of AS 43.55.160(e) in the year in                                                         
01            which the lease expenditures were incurred;                                                              
02                      (B)  have not been deducted in the determination of the                                        
03            production tax value of oil and gas under AS 43.55.160(a) or (h) in a                                    
04            previous calendar year;                                                                                  
05                      (C)  were not the basis of a credit under this title; and                                      
06                      (D)  were incurred to explore for, develop, or produce an oil                                  
07            or gas deposit located north of 68 degrees North latitude.                                               
08    * Sec. 22. AS 43.55.165(f) is amended to read:                                                                     
09            (f)  For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures                                   
10 incurred to explore for an oil or gas deposit located within land in which an explorer                                  
11 does not own a working interest, the term "producer" in this section includes                                           
12       "explorer."                                                                                                       
13    * Sec. 23. AS 43.55.165 is amended by adding new subsections to read:                                              
14 (m)  A loss carried forward under (a)(3) of this section shall increase in value                                        
15 at a rate of 10 percent, compounded annually. An increase in value under this                                           
16 subsection begins to accrue on January 1 of the calendar year immediately following                                     
17 the calendar year in which the loss was accrued and no longer accrues on                                                
18 December 31 of the calendar year immediately preceding the calendar year in which a                                     
19 carried-forward annual loss is applied. An increase in value accrued under this                                         
20 subsection has no value except as applied in this section. An increase in value may not                                 
21       accrue                                                                                                            
22                 (1)  for a partial calendar year;                                                                       
23 (2)  for more than seven calendar years, consecutive or nonconsecutive;                                                 
24       or                                                                                                                
25 (3)  on a loss carried forward by a producer that, during the calendar                                                  
26 year in which the loss was accrued, had commercial production of oil or gas produced                                    
27       from a lease or property located north of 68 degrees North latitude.                                              
28 (n)  A loss carried forward under (a)(3) of this section may be applied only in a                                       
29 calendar year after application of a producer's lease expenditures that are incurred in                                 
30       that calendar year.                                                                                               
31 (o)  An increase in value accrued under (m) of this section may be applied only                                         
01       in                                                                                                                
02                 (1)  a calendar year in which the producer applying the increase in                                     
03       value under (m) of this section                                                                                   
04                      (A)  has production of oil or gas from a lease or property that                                    
05            includes land north of 68 degrees North latitude; and                                                        
06                      (B)  holds a right, title, or interest in the lease or property where                              
07            the lease expenditure was incurred that accrued the increase in value; and                                   
08                 (2)  the calendar year commercial production begins on the lease or                                     
09       property where the lease expenditure was incurred that accrued the increase in value or                           
10       in a later calendar year.                                                                                         
11 (p)  During a calendar year in which a taxpayer is subject to the tax under                                             
12 AS 43.55.011(f), the amount of annual carried-forward loss applied in that year is                                      
13 equal to the amount, when combined with the lease expenditures of the current year,                                     
14 necessary to reduce the amount calculated under AS 43.55.011(e) to the equivalent                                       
15 amount of tax due under AS 43.55.011(f). An amount of carried-forward annual loss                                       
16 in excess of the amount described in this subsection may continue to be carried                                         
17       forward.                                                                                                          
18    * Sec. 24. AS 43.55.170(c) is amended to read:                                                                     
19 (c)  For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures                                              
20 incurred to explore for an oil or gas deposit located within land in which an explorer                                  
21 does not own a working interest, the term "producer" in this section includes                                           
22       "explorer."                                                                                                       
23    * Sec. 25. AS 43.55.023(b), 43.55.028(a), 43.55.028(b), 43.55.028(c), 43.55.028(d),                                
24 43.55.028(f), 43.55.028(h), 43.55.028(i), and 43.55.029(b)(4) are repealed.                                             
25    * Sec. 26. The uncodified law of the State of Alaska is amended by adding a new section to                         
26 read:                                                                                                                   
27 APPLICABILITY: TAX CREDITS UNDER AS 43.55.025 APPLIED AGAINST                                                           
28 TAX DUE UNDER AS 43.20. AS 43.20.044(a), as amended by sec. 2 of this Act, and                                          
29 AS 43.55.025(a), (f), and (i), as amended by secs. 11, 12, and 14 of this Act, apply to a tax                           
30 credit that has been earned under AS 43.55.025, regardless of when the credit was earned.                               
31    * Sec. 27. The uncodified law of the State of Alaska is amended by adding a new section to                         
01 read:                                                                                                                   
02 APPLICABILITY: APPLICATION FOR A PRODUCTION TAX CREDIT UNDER                                                            
03 AS 43.55.025(a). AS 43.55.025(f), as amended by sec. 12 of this Act, applies to an                                      
04 application for a production tax credit under AS 43.55.025(a)(4), regardless of when the                                
05 application was submitted, except that, for the purposes of AS 43.55.025(f), an application                             
06 received before January 1, 2017, shall be considered received on the effective date of this                             
07 section.                                                                                                                
08    * Sec. 28. The uncodified law of the State of Alaska is amended by adding a new section to                         
09 read:                                                                                                                   
10 APPLICABILITY: CREDIT CERTIFICATE CARRYBACK. AS 43.55.023(c), as                                                        
11 amended by sec. 7 of this Act, AS 43.55.023(e), as amended by sec. 9 of this Act, and                                   
12 AS 43.55.025(h), as amended by sec. 13 of this Act, apply to a transferable tax credit                                  
13 certificate issued under AS 43.55.023(d) or a production tax credit certificate issued under                            
14 AS 43.55.025(f), regardless of when the certificate was issued.                                                         
15    * Sec. 29. The uncodified law of the State of Alaska is amended by adding a new section to                         
16 read:                                                                                                                   
17 APPLICABILITY: LEASE EXPENDITURES. AS 43.55.165(a)(3) and 43.55.165(m)                                                  
18 - (p), added by secs. 21 and 23 of this Act, apply to a lease expenditure incurred on or after                          
19 the effective date of secs. 21 and 23 of this Act.                                                                      
20    * Sec. 30. The uncodified law of the State of Alaska is amended by adding a new section to                         
21 read:                                                                                                                   
22 TRANSITION: INTEREST ON DELINQUENT TAXES. Notwithstanding the                                                           
23 effective date of sec. 1 of this Act, a delinquent tax under AS 43.55 bears interest in each                            
24 calendar quarter of 2017 as provided under AS 43.05.225(1) as that paragraph read on the day                            
25 before the effective date of sec. 1 of this Act.                                                                        
26    * Sec. 31. The uncodified law of the State of Alaska is amended by adding a new section to                         
27 read:                                                                                                                   
28 TRANSITION: CARRIED-FORWARD ANNUAL LOSSES. (a) Notwithstanding the                                                      
29 repeal of AS 43.55.023(b) by sec. 25 of this Act and the amendments to AS 43.55.160(d) and                              
30 (e), 43.55.165(f), and 43.55.170(c) by secs. 19, 20, 22, and 24 of this Act, a taxpayer who                             
31 incurs a carried-forward annual loss before the repeal of AS 43.55.023(b) by sec. 25 of this                            
01 Act that qualifies for a carried-forward annual loss credit under AS 43.55.023(b) may apply                             
02 for a credit or tax credit certificate under AS 43.55.023(d), subject to the requirements of                            
03 AS 43.55.160(d) and (e), as those subsections read on the day before the repeal of                                      
04 AS 43.55.023(b) by sec. 25 of this Act.                                                                                 
05 (b)  The Department of Revenue may continue to apply and enforce AS 43.55.023(b),                                       
06 as that subsection read on the day before the repeal of AS 43.55.023(b) by sec. 25 of this Act,                         
07 for a carried-forward annual loss incurred before the repeal of AS 43.55.023(b) by sec. 25 of                           
08 this Act.                                                                                                               
09    * Sec. 32. The uncodified law of the State of Alaska is amended by adding a new section to                         
10 read:                                                                                                                   
11 TRANSITION: PURCHASE OF TRANSFERABLE TAX CREDIT                                                                         
12 CERTIFICATES. On and after the effective date of secs. 15 - 17 of this Act, the department                              
13 may, subject to AS 43.55.028(e), (g), and (j), as amended by secs. 15 - 17 of this Act,                                 
14 purchase a transferable tax credit certificate issued under AS 43.55.023(d) or former                                   
15 AS 43.55.023(m) earned for activity occurring before the effective date of secs. 15 - 17 of this                        
16 Act.                                                                                                                    
17    * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to                         
18 read:                                                                                                                   
19 TRANSITION: OIL AND GAS CREDIT FUND. Subject to appropriation, the                                                      
20 balance of the oil and gas tax credit fund created under AS 43.55.028(a) and repealed by sec.                           
21 25 of this Act lapses into the general fund.                                                                            
22    * Sec. 34. Sections 2, 7, 9, 11 - 14, and 26 - 28 of this Act take effect immediately under                        
23 AS 01.10.070(c).                                                                                                        
24    * Sec. 35. Section 21 of this Act takes effect on the effective date of sec. 29, ch. 4, 4SSLA                      
25 2016.                                                                                                                   
26    * Sec. 36. Except as provided in secs. 34 and 35 of this Act, this Act takes effect January 1,                     
27 2018.