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

00                SENATE CS FOR CS FOR HOUSE BILL NO. 111(FIN)                                                             
01 "An Act relating to credits against the oil and gas production tax; relating to the                                     
02 applicability of certain credits earned under the oil and gas production tax to the tax on                              
03 corporations; relating to tax credit certificates against the oil and gas production tax                                
04 and the issuance and assignment of those certificates; relating to interest applicable to                               
05 delinquent taxes; relating to lease expenditures; relating to the oil and gas tax credit                                
06 fund; and providing for an effective date."                                                                             
07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
08    * Section 1. AS 43.05.225 is amended to read:                                                                      
09            Sec. 43.05.225. Interest. Unless otherwise provided,                                                       
10                 (1)  a delinquent tax under this title                                                              
11 (A)  [UNDER THIS TITLE,] before January 1, 2014, bears                                                                  
12 interest in each calendar quarter at the rate of five percentage points above the                                       
13 annual rate charged member banks for advances by the 12th Federal Reserve                                               
01            District as of the first day of that calendar quarter, or at the annual rate of 11                           
02            percent, whichever is greater, compounded quarterly as of the last day of that                               
03            quarter;                                                                                                     
04 (B)  [UNDER THIS TITLE,] on and after January 1, 2014, and                                                          
05 before January 1, 2018 [EXCEPT AS PROVIDED IN (C) OF THIS                                                           
06 PARAGRAPH], bears interest in each calendar quarter at the rate of three                                                
07 percentage points above the annual rate charged member banks for advances                                               
08 by the 12th Federal Reserve District as of the first day of that calendar quarter;                                      
09                      (C)  [UNDER AS 43.55,] on and after January 1, 2018 [2017,                                   
10 (i)  FOR THE FIRST THREE YEARS AFTER A TAX                                                                              
11 BECOMES DELINQUENT], bears interest in each calendar quarter at                                                         
12 the rate of three [SEVEN] percentage points above the annual rate                                                   
13 charged member banks for advances by the 12th federal reserve district                                                  
14 as of the first day of that calendar quarter, compounded quarterly as of                                                
15                 the last day of that quarter; [AND                                                                      
16 (ii)  AFTER THE FIRST THREE YEARS AFTER A                                                                               
17                 TAX BECOMES DELINQUENT, DOES NOT BEAR INTEREST;]                                                        
18                 (2)  the interest rate is 12 percent a year for                                                         
19                      (A)  delinquent fees payable under AS 05.15.095(c); and                                            
20 (B)  unclaimed property that is not timely paid or delivered, as                                                        
21            allowed by AS 34.45.470(a).                                                                                  
22    * Sec. 2. AS 43.20.044(a) is amended to read:                                                                      
23            (a)  A taxpayer may apply as a credit against the tax levied under this chapter                              
24                 (1)  the exploration incentive credit authorized by AS 27.30;                                   
25 (2)  an alternative tax credit for oil and gas exploration earned by                                                
26 the taxpayer under AS 43.55.025 for exploration expenditures incurred for work                                      
27       performed on or after July 1, 2016.                                                                           
28    * Sec. 3. AS 43.20.047(h) is amended to read:                                                                      
29 (h)  If the liquefied natural gas storage facility for which a credit was received                                      
30 under this section ceases commercial operation during the nine calendar years                                           
31 immediately following the calendar year in which the liquefied natural gas storage                                      
01 facility commences commercial operation, the tax liability under this chapter of the                                    
02 person who claimed the credit shall be increased, and a person not subject to the tax                                   
03 under this chapter that received a payment under (d) or former [AND] (e) of this                                    
04 section shall be liable to the state in the amount determined in this subsection. The                                   
05       amount of the increase in tax liability or liability to the state                                                 
06 (1)  for a person subject to the tax under this chapter, shall be                                                       
07 determined and assessed for the taxable year in which the liquefied natural gas storage                                 
08 facility ceases commercial operation, regardless of whether the liquefied natural gas                                   
09       storage facility subsequently resumes commercial operation;                                                       
10 (2)  for a person not subject to the tax due under this chapter, shall be                                               
11 determined and assessed as of December 31 of the calendar year in which the liquefied                                   
12 natural gas storage facility ceases commercial operation, regardless of whether the                                     
13       liquefied natural gas storage facility subsequently resumes commercial operation; and                             
14 (3)  is equal to the total amount of the credit taken or received as a                                                  
15 payment under (d) of this section, as applicable, multiplied by a fraction, the                                         
16 numerator of which is the difference between 10 and the number of calendar years for                                    
17 which the liquefied natural gas storage facility was eligible for a tax credit under this                               
18       section and the denominator of which is 10.                                                                       
19    * Sec. 4. AS 43.55.023(c) is amended to read:                                                                      
20            (c)  A credit or portion of a credit under this section                                                      
21 (1)  may not be used to reduce a person's tax liability under                                                       
22       AS 43.55.011(e) for any calendar year below zero;                                                             
23 (2)  may, if [, AND ANY UNUSED CREDIT OR PORTION OF A                                                               
24       CREDIT] not used under this subsection, [MAY] be applied in a later calendar year;                        
25 (3)  may, regardless of when the credit was earned, be used to                                                      
26       satisfy a tax, interest, penalty, fee, or other charge that                                                   
27 (A)  is related to the tax due under this chapter for a prior                                                       
28 year, except for a surcharge under AS 43.55.201 - 43.55.299 or 43.55.300                                            
29            or the tax levied by AS 43.55.011(i); and                                                                
30 (B)  has not, for the purpose of art. IX, sec. 17(a),                                                               
31 Constitution of the State of Alaska, been subject to an administrative                                              
01            proceeding or litigation.                                                                                
02    * Sec. 5. AS 43.55.023(d) is amended to read:                                                                      
03 (d)  A person that is entitled to take a tax credit under this section that wishes                                      
04 to transfer the unused credit to another person or, for a credit for a lease expenditure                            
05 incurred before January 1, 2018, obtain a cash payment under AS 43.55.028 may                                       
06 apply to the department for a transferable tax credit certificate. An application under                                 
07 this subsection must be in a form prescribed by the department and must include                                         
08 supporting information and documentation that the department reasonably requires.                                       
09 The department shall grant or deny an application, or grant an application as to a lesser                               
10 amount than that claimed and deny it as to the excess, not later than 120 days after the                                
11 latest of (1) March 31 of the year following the calendar year in which the qualified                                   
12 capital expenditure or carried-forward annual loss for which the credit is claimed was                                  
13 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for                                
14 the calendar year in which the qualified capital expenditure or carried-forward annual                                  
15 loss for which the credit is claimed was incurred; or (3) the date the application was                                  
16 received by the department. If, based on the information then available to it, the                                      
17 department is reasonably satisfied that the applicant is entitled to a credit, the                                      
18 department shall issue the applicant a transferable tax credit certificate for the amount                               
19       of the credit. A certificate issued under this subsection does not expire.                                        
20    * Sec. 6. AS 43.55.023(d), as amended by sec. 5 of this Act, is amended to read:                                   
21 (d)  A person that is entitled to take a tax credit under this section that wishes                                      
22 to transfer the unused credit to another person [OR, FOR A CREDIT FOR A LEASE                                           
23 EXPENDITURE INCURRED BEFORE JANUARY 1, 2018, OBTAIN A CASH                                                              
24 PAYMENT UNDER AS 43.55.028] may apply to the department for a transferable                                              
25 tax credit certificate. An application under this subsection must be in a form                                          
26 prescribed by the department and must include supporting information and                                                
27 documentation that the department reasonably requires. The department shall grant or                                    
28 deny an application, or grant an application as to a lesser amount than that claimed and                                
29 deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the                               
30 year following the calendar year in which the qualified capital expenditure or carried-                                 
31 forward annual loss for which the credit is claimed was incurred; (2) the date the                                      
01 statement required under AS 43.55.030(a) or (e) was filed for the calendar year in                                      
02 which the qualified capital expenditure or carried-forward annual loss for which the                                    
03 credit is claimed was incurred; or (3) the date the application was received by the                                     
04 department. If, based on the information then available to it, the department is                                        
05 reasonably satisfied that the applicant is entitled to a credit, the department shall issue                             
06 the applicant a transferable tax credit certificate for the amount of the credit. A                                     
07       certificate issued under this subsection does not expire.                                                         
08    * Sec. 7. AS 43.55.023(e) is amended to read:                                                                      
09 (e)  A person to which a transferable tax credit certificate is issued under (d) of                                     
10 this section may transfer the certificate to another person, and a transferee may further                               
11 transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and                          
12 notwithstanding any action the department may take with respect to the applicant                                        
13 under (g) of this section, the owner of a certificate may apply the credit or a portion of                              
14       the credit shown on the certificate                                                                               
15 (1)  [ONLY] against a tax levied by AS 43.55.011(e); however [.                                                 
16 HOWEVER], a credit shown on a transferable tax credit certificate may not be applied                                    
17 under this paragraph to reduce a transferee's total tax liability under                                             
18 AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80                                         
19 percent of the tax that would otherwise be due without applying that credit; any [.                                 
20 ANY] portion of a credit not used under this paragraph [SUBSECTION] may be                                          
21       applied in a later period; or                                                                                 
22 (2)  regardless of when the credit was earned, to satisfy a tax,                                                    
23       interest, penalty, fee, or other charge that                                                                  
24 (A)  is related to the tax due under this chapter, except for a                                                     
25 surcharge under AS 43.55.201 - 43.55.299 or 43.55.300 or the tax levied by                                          
26            AS 43.55.011(i);                                                                                         
27 (B)  is for a calendar year before the year in which the                                                            
28            certificate is applied; and                                                                              
29 (C)  has not, for the purpose of art. IX, sec. 17(a),                                                               
30 Constitution of the State of Alaska, been subject to an administrative                                              
31            proceeding or litigation.                                                                                
01    * Sec. 8. AS 43.55.023(g) is amended to read:                                                                      
02 (g)  The issuance of a transferable tax credit certificate under (d) of this section                                    
03 or former (m) of this section [OR THE PURCHASE OF A CERTIFICATE UNDER                                                   
04 AS 43.55.028] does not limit the department's ability to later audit a tax credit claim to                              
05 which the certificate relates or to adjust the claim if the department determines, as a                                 
06 result of the audit, that the applicant was not entitled to the amount of the credit for                                
07 which the certificate was issued. The tax liability of the applicant under                                              
08 AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit                                      
09 that exceeds that to which the applicant was entitled, or the applicant's available valid                               
10 outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced                                    
11 by that amount. If the applicant's tax liability is increased under this subsection, the                                
12 increase bears interest under AS 43.05.225 from the date the transferable tax credit                                    
13 certificate was issued. For purposes of this subsection, an applicant that is an explorer                               
14       is considered a producer subject to the tax levied by AS 43.55.011(e).                                            
15    * Sec. 9. AS 43.55.025(a) is amended to read:                                                                      
16 (a)  Subject to the terms and conditions of this section, a credit against the                                          
17 [PRODUCTION] tax levied by AS 43.55.011(e) or, if the credit is for exploration                                     
18 expenditures incurred for work performed on or after July 1, 2016, against the                                      
19 tax levied by AS 43.20 is allowed for exploration expenditures that qualify under (b)                               
20       of this section in an amount equal to one of the following:                                                       
21 (1)  30 percent of the total exploration expenditures that qualify only                                                 
22       under (b) and (c) of this section;                                                                                
23 (2)  30 percent of the total exploration expenditures that qualify only                                                 
24       under (b) and (d) of this section;                                                                                
25 (3)  40 percent of the total exploration expenditures that qualify under                                                
26       (b), (c), and (d) of this section;                                                                                
27 (4)  40 percent of the total exploration expenditures that qualify only                                                 
28       under (b) and (e) of this section;                                                                                
29 (5)  80, 90, or 100 percent, or a lesser amount described in (l) of this                                                
30 section, of the total exploration expenditures described in (b)(1) and (2) of this section                              
31 and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this                                  
01       section;                                                                                                          
02                 (6)  the lesser of $25,000,000 or 80 percent of the total exploration                                   
03       drilling expenditures described in (m) of this section and that qualify under (b) and                             
04       (c)(1), (c)(2)(A), and (c)(2)(C) of this section; or                                                              
05                 (7)  the lesser of $7,500,000 or 75 percent of the total seismic                                        
06       exploration expenditures described in (n) of this section and that qualify under (b) of                           
07       this section.                                                                                                     
08    * Sec. 10. AS 43.55.025(a), as amended by sec. 9 of this Act, is amended to read:                                  
09            (a)  Subject to the terms and conditions of this section, a credit against the tax                           
10 levied by AS 43.55.011(e) or, if the credit is for exploration expenditures incurred for                                
11 work performed on or after July 1, 2016, against the tax levied by AS 43.20 is allowed                                  
12 for exploration expenditures that qualify under (b) of this section in an amount equal                                  
13       to 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)(2) and (3) [(b)(1) AND                              
24 (2)] of this section and not excluded by (b)(4) and (5) [(b)(3) AND (4)] of this section                            
25       that qualify only under (l) of this 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. 11. AS 43.55.025(b) is amended to read:                                                                     
02            (b)  To qualify for the production tax credit under (a) of this section, an                                  
03       exploration expenditure                                                                                           
04 (1)  must be incurred for work performed after June 30, 2008, and                                                   
05 before July 1, 2016, except that, [TO QUALIFY FOR THE PRODUCTION TAX                                                
06 CREDIT UNDER (a)(1), (2), (3), OR (4) OF THIS SECTION] for exploration                                                  
07 conducted outside of the Cook Inlet sedimentary basin and south of 68 degrees North                                     
08       latitude, to qualify for the production tax credit under                                                      
09                      (A)  (a)(1), (2), or (3) of this section, an exploration                                       
10 expenditure must be incurred for work performed after June 30, 2008, and                                                
11            before January 1, 2022; [,] and                                                                          
12 (B)  (a)(4) of this section, an exploration expenditure must                                                        
13 be incurred for work performed after June 30, 2008, and before                                                      
14            January 1, 2018;                                                                                         
15 (2) [(1)]  may be for seismic or other geophysical exploration costs not                                            
16       connected with a specific well;                                                                                   
17                 (3) [(2)]  if for an exploration well,                                                              
18 (A)  must be incurred by an explorer that holds an interest in the                                                      
19            exploration well for which the production tax credit is claimed;                                             
20 (B)  may be for either a well that encounters an oil or gas                                                             
21            deposit or a dry hole;                                                                                       
22 (C)  must be for a well that has been completed, suspended, or                                                          
23 abandoned at the time the explorer claims the tax credit under (f) of this                                              
24            section; and                                                                                                 
25 (D)  must be for goods, services, or rentals of personal property                                                       
26 reasonably required for the surface preparation, drilling, casing, cementing,                                           
27 and logging of an exploration well, and, in the case of a dry hole, for the                                             
28 expenses required for abandonment if the well is abandoned within 18 months                                             
29            after the date the well was spudded;                                                                         
30 (4) [(3)]  may not be for administration, supervision, engineering, or                                              
31 lease operating costs; geological or management costs; community relations or                                           
01 environmental costs; bonuses, taxes, or other payments to governments related to the                                    
02 well; costs, including repairs and replacements, arising from or associated with fraud,                                 
03 wilful misconduct, gross negligence, criminal negligence, or violation of law,                                          
04 including a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or                                       
05       other costs that are generally recognized as indirect costs or financing costs; and                               
06                 (5) [(4)]  may not be incurred for an exploration well or seismic                                   
07       exploration that is included in a plan of exploration or a plan of development for any                            
08       unit before May 14, 2003.                                                                                         
09    * Sec. 12. AS 43.55.025(f) is amended to read:                                                                     
10            (f)  For a production tax credit under this section,                                                         
11 (1)  an explorer shall, in a form prescribed by the department and,                                                     
12 except for a credit under (k) of this section, within six months of the completion of the                               
13 exploration activity, claim the credit and submit information sufficient to demonstrate                                 
14 to the department's satisfaction that the claimed exploration expenditures qualify under                                
15 this section; in addition, the explorer shall submit information necessary for the                                      
16 commissioner of natural resources to evaluate the validity of the explorer's compliance                                 
17       with the requirements of this section;                                                                            
18                 (2)  an explorer shall agree, in writing,                                                               
19 (A)  to notify the Department of Natural Resources, within 30                                                           
20 days after completion of seismic or geophysical data processing, completion of                                          
21 well drilling, or filing of a claim for credit, whichever is the latest, for which                                      
22 exploration costs are claimed, of the date of completion and submit a report to                                         
23 that department describing the processing sequence and providing a list of data                                         
24            sets available;                                                                                              
25 (B)  to provide to the Department of Natural Resources, within                                                          
26 30 days after the date of a request, unless a longer period is provided by the                                          
27 Department of Natural Resources, specific data sets, ancillary data, and reports                                        
28            identified in (A) of this paragraph; in this subparagraph,                                                   
29 (i)  a seismic or geophysical data set includes the data                                                                
30 for an entire seismic survey, irrespective of whether the survey area                                                   
31 covers nonstate land in addition to state land or land in a unit in                                                     
01                 addition to land outside a unit;                                                                        
02 (ii)  well data include all analyses conducted on physical                                                              
03 material, and well logs collected from the well, results, and copies of                                                 
04 data collected and data analyses for the well, including well logs;                                                     
05 sample analyses; testing geophysical and velocity data including                                                        
06 seismic profiles and check shot surveys; testing data and analyses; age                                                 
07                 data; geochemical analyses; and tangible material;                                                      
08 (C)  that, notwithstanding any provision of AS 38, information                                                          
09 provided under this paragraph will be held confidential by the Department of                                            
10            Natural Resources,                                                                                           
11 (i)  in the case of well data, until the expiration of the                                                              
12 24-month period of confidentiality described in AS 31.05.035(c), at                                                     
13 which time the Department of Natural Resources will release the                                                         
14 information after 30 days' public notice unless, in the discretion of the                                               
15 commissioner of natural resources, it is necessary to protect                                                           
16 information relating to the valuation of unleased acreage in the same                                                   
17 vicinity, or unless the well is on private land and the owner, including                                                
18 the lessor but not the lessee, of the oil and gas resources has not given                                               
19                 permission to release the well data;                                                                    
20 (ii)  in the case of seismic or other geophysical data,                                                                 
21 other than seismic data acquired by seismic exploration subject to (k) of                                               
22 this section, for 10 years following the completion date, at which time                                                 
23 the Department of Natural Resources will release the information after                                                  
24 30 days' public notice, except as to seismic or other geophysical data                                                  
25 acquired from private land, unless the owner, including a lessor but not                                                
26 a lessee, of the oil and gas resources in the private land gives                                                        
27 permission to release the seismic or other geophysical data associated                                                  
28                 with the private land;                                                                                  
29 (iii)  in the case of seismic data obtained by seismic                                                                  
30 exploration subject to (k) of this section, only until the expiration of 30                                             
31 days' public notice issued on or after the date the production tax credit                                               
01                 certificate is issued under (5) of this subsection;                                                     
02                 (3)  if more than one explorer holds an interest in a well or seismic                                   
03       exploration, each explorer may claim an amount of credit that is proportional to the                              
04       explorer's cost incurred;                                                                                         
05                 (4)  the department may exercise the full extent of its powers as though                                
06       the explorer were a taxpayer under this title, in order to verify that the claimed                                
07       expenditures are qualified exploration expenditures under this section; and                                       
08                 (5)  if the department is satisfied that the explorer's claimed                                         
09       expenditures are qualified under this section and that all data required to be submitted                          
10 under this section have been submitted, the department shall issue to the explorer a                                    
11 production tax credit certificate for the amount of credit to be allowed against                                        
12 production taxes levied by AS 43.55.011(e) and, if the credit is for exploration                                    
13 expenditures incurred for work performed on or after July 1, 2016, against taxes                                    
14 levied by AS 43.20; notwithstanding any contrary provision of AS 38, AS 40.25.100,                                  
15       or AS 43.05.230, the following information is not confidential:                                                   
16                      (A)  the explorer's name;                                                                          
17                      (B)  the date of the application;                                                                  
18                      (C)  the location of the well or seismic exploration;                                              
19                      (D)  the date of the department's issuance of the certificate; and                                 
20 (E)  the date on which the information required to be submitted                                                         
21            under this section will be released.                                                                         
22    * Sec. 13. AS 43.55.025(g) is amended to read:                                                                     
23 (g)  An explorer, other than an entity that is exempt from taxation under this                                          
24 chapter, may transfer, convey, or sell its production tax credit certificate to any person,                             
25 and any person who receives a production tax credit certificate may also transfer,                                      
26 convey, or sell the certificate. A production tax credit certificate that is                                        
27 transferred, conveyed, or sold under this section may not be applied against the                                    
28       tax levied by AS 43.20.                                                                                       
29    * Sec. 14. AS 43.55.025(h) is amended to read:                                                                     
30 (h)  A producer that purchases a production tax credit certificate may apply the                                        
31 credits against its production tax levied by AS 43.55.011(e). Regardless of the price                                   
01 the producer paid for the certificate, the producer may receive a credit against its                                    
02 production tax liability for the full amount of the credit, but for not more than the                                   
03 amount for which the certificate is issued. A production tax credit or a portion of a                               
04 production tax credit or a production tax credit certificate or a portion of a                                      
05       production tax credit certificate allowed under this section                                                  
06                 (1)  may not be applied more than once;                                                         
07                 (2)  may be applied in a later calendar year;                                                       
08                 (3)  may, regardless of when the credit was earned, be used to                                      
09       satisfy a tax, interest, penalty, fee, or other charge that                                                   
10 (A)  is related to the tax due under this chapter for a prior                                                       
11 year, except for a surcharge under AS 43.55.201 - 43.55.299 or 43.55.300                                            
12            or the tax levied by AS 43.55.011(i); and                                                                
13 (B)  has not, for the purpose of art. IX, sec. 17(a),                                                               
14 Constitution of the State of Alaska, been subject to an administrative                                              
15            proceeding or litigation.                                                                                
16    * Sec. 15. AS 43.55.025(i) is amended to read:                                                                     
17            (i)  For a production tax credit under this section,                                                         
18 (1)  a credit may not be applied to reduce a taxpayer's tax liability under                                             
19       AS 43.55.011(e) below zero for a calendar year;                                                                   
20 (2)  if the production tax credit is for exploration expenditures                                                   
21 incurred for work performed on or after July 1, 2016, the explorer may apply the                                    
22 credit to reduce the explorer's tax liability under AS 43.20, except that the credit                                
23 may not be applied to reduce the explorer's tax liability under AS 43.20 below                                      
24       zero for a tax year; and                                                                                      
25 (3) [(2)]  an amount of the production tax credit in excess of the amount                                           
26 that may be applied for a calendar or tax year under this subsection may be carried                                 
27 forward and applied against the taxpayer's tax liability under AS 43.55.011(e) in one                                   
28       or more later calendar years or under AS 43.20 in one or more later tax years.                                
29    * Sec. 16. AS 43.55.025(k) is amended to read:                                                                     
30 (k)  Subject to the terms and conditions of this section, if a claim is filed under                                     
31 (f)(1) of this section before January 1, 2016, a credit against the production tax levied                               
01       by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible                                   
02       expenditure under this subsection incurred for seismic exploration performed before                               
03       July 1, 2003. To be eligible under this subsection, an expenditure must                                           
04                 (1)  have been for seismic exploration that                                                             
05                      (A)  obtained data that the commissioner of natural resources                                      
06            considers to be in the best interest of the state to acquire for public distribution;                        
07            and                                                                                                          
08                      (B)  was conducted outside the boundaries of a production unit;                                    
09            however, the amount of the expenditure that is otherwise eligible under this                                 
10 section is reduced proportionately by the portion of the seismic exploration                                            
11            activity that crossed into a production unit; and                                                            
12                 (2)  qualify under (b)(4) [(b)(3)] of this section.                                                 
13    * Sec. 17. AS 43.55.025 is amended by adding a new subsection to read:                                             
14 (q)  On the day on which an application for a tax credit certificate is submitted                                       
15 under (f) of this section, the department shall issue to the explorer a conditional tax                                 
16       credit certificate. A conditional tax credit certificate under this subsection                                    
17 (1)  may be used to apply for the purchase of a tax credit certificate                                                  
18       under AS 43.55.028(e);                                                                                            
19                 (2)  may not be sold, transferred, or conveyed;                                                         
20                 (3)  has no value; and                                                                                  
21 (4)  expires on the day on which the department issues a transferable                                                   
22       tax credit certificate under (f) of this section.                                                                 
23    * Sec. 18. AS 43.55.028(a) is amended to read:                                                                     
24 (a)  The oil and gas tax credit fund is established as a separate fund of the state.                                    
25 The purpose of the fund is to purchase transferable tax credit certificates issued under                                
26 AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to                                    
27 pay refunds and payments claimed under AS 43.20.046, 43.20.047, or 43.20.053. The                                   
28 oil and gas tax credit fund established under this subsection may not be used to                                    
29 purchase a tax credit certificate for a credit earned under this chapter for activity                               
30       occurring on or after January 1, 2018.                                                                        
31    * Sec. 19. AS 43.55.028(e) is amended to read:                                                                     
01 (e)  The department, on the written application of a person to whom a                                                   
02 transferable tax credit certificate has been issued under AS 43.55.023(d) or former                                     
03 AS 43.55.023(m) or to whom a production tax credit certificate has been issued under                                    
04 AS 43.55.025(f), may use available money in the oil and gas tax credit fund to                                          
05 purchase, in whole or in part, the certificate. For purposes of this subsection, the                                
06 department may, at the time of application, accept from an explorer a conditional                                   
07 tax credit certificate issued under AS 43.55.025(q); however, the department may                                    
08 not purchase a conditional tax credit certificate. The department may not purchase                                  
09 a total of more than $70,000,000 in tax credit certificates from a person in a calendar                                 
10 year. Before purchasing a certificate or part of a certificate, the department shall find                               
11       that                                                                                                              
12 (1)  the calendar year of the purchase is not earlier than the first                                                    
13 calendar year for which the credit shown on the certificate would otherwise be allowed                                  
14       to be applied against a tax;                                                                                      
15 (2)  the application is not the result of the division of a single entity into                                          
16 multiple entities that would reasonably be expected to apply as a single entity if the                                  
17       $70,000,000 limitation in this subsection did not exist;                                                          
18 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                                   
19 application of all available tax credits, for the calendar year in which the application is                             
20       made is zero;                                                                                                     
21 (4)  the applicant's average daily production of oil and gas taxable                                                    
22 under AS 43.55.011(e) during the calendar year preceding the calendar year in which                                     
23       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
24 (5)  the purchase is consistent with this section and regulations adopted                                               
25       under this section.                                                                                               
26    * Sec. 20. AS 43.55.028(e), as amended by sec. 19 of this Act, is amended to read:                                 
27 (e)  The department, on the written application of a person to whom a                                                   
28 transferable tax credit certificate has been issued under AS 43.55.023(d) or former                                     
29 AS 43.55.023(m) for an expenditure incurred before January 1, 2018, or to whom                                      
30 a production tax credit certificate has been issued under AS 43.55.025(f) for an                                    
31 expenditure incurred before January 1, 2018, may use available money in the oil                                     
01 and gas tax credit fund to purchase, in whole or in part, the certificate. For purposes of                              
02 this subsection, the department may, at the time of application, accept from an                                         
03 explorer a conditional tax credit certificate issued under AS 43.55.025(q); however,                                    
04 the department may not purchase a conditional tax credit certificate. The department                                    
05 may not purchase a total of more than $70,000,000 in tax credit certificates from a                                     
06 person in a calendar year. Before purchasing a certificate or part of a certificate, the                                
07       department shall find that                                                                                        
08 (1)  the calendar year of the purchase is not earlier than the first                                                    
09 calendar year for which the credit shown on the certificate would otherwise be allowed                                  
10       to be applied against a tax;                                                                                      
11 (2)  the application is not the result of the division of a single entity into                                          
12 multiple entities that would reasonably be expected to apply as a single entity if the                                  
13       $70,000,000 limitation in this subsection did not exist;                                                          
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. 21. AS 43.55.029(a) is amended to read:                                                                     
23 (a)  An explorer or producer that has applied for a production tax credit under                                         
24 AS 43.55.023(a) or (l) [AS 43.55.023(a), (b), OR (l)] or 43.55.025(a) may make a                                  
25 present assignment of the production tax credit certificate expected to be issued by the                                
26 department to a third-party assignee. The assignment may be made either at the time                                     
27 the application is filed with the department or not later than 30 days after the date of                                
28 filing with the department. Once a notice of assignment in compliance with this                                         
29 section is filed with the department, the assignment is irrevocable and cannot be                                       
30 modified by the explorer or producer without the written consent of the assignee                                        
31 named in the assignment. If a production tax credit certificate is issued to the explorer                               
01 or producer, the notice of assignment remains effective and shall be filed with the                                     
02 department by the explorer or producer together with any application for the                                            
03       department to purchase the certificate under AS 43.55.028(e).                                                     
04    * Sec. 22. AS 43.55.160(d) is amended to read:                                                                     
05 (d)  Irrespective of whether a producer produces taxable oil or gas during a                                            
06 calendar year or month, the producer is considered to have generated a positive                                         
07 production tax value if a calculation described in (a) of this section yields a positive                                
08 number because the producer's adjusted lease expenditures for a calendar year under                                     
09 AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a                                 
10 payment or credit under AS 43.55.170. An explorer that has [TAKEN A TAX                                                 
11 CREDIT UNDER AS 43.55.023(b) OR THAT HAS] obtained a transferable tax credit                                            
12 certificate under AS 43.55.023(d) for the amount of a tax credit under former                                       
13 AS 43.55.023(b) is considered a producer, subject to the tax levied by [UNDER]                                      
14 AS 43.55.011(e), to the extent that the explorer generates a positive production tax                                    
15       value as the result of the explorer's receiving a payment or credit under AS 43.55.170.                           
16    * Sec. 23. AS 43.55.160(e) is amended to read:                                                                     
17 (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170                                                   
18 incurred to explore for, develop, or produce oil or gas from a lease or property                                    
19 outside the Cook Inlet sedimentary basin that would otherwise be deductible by a                                    
20 producer in a calendar year but whose deduction would cause an annual production tax                                    
21 value calculated under (a)(1) or (h) of this section of taxable oil or gas produced                                     
22 during the calendar year to be less than zero may be used to establish a carried-                                       
23 forward annual loss under AS 43.55.165(a)(3). A reduction under (f) or (g) of this                                  
24 section must be added back to the calculation of production tax values for that                                     
25 calendar year before the determination of a carried-forward annual loss under                                       
26 this subsection [AS 43.55.023(b)]. However, the department shall provide by                                         
27 regulation a method to ensure that, for a period for which a producer's tax liability is                                
28 limited by AS 43.55.011(o) or (p) [AS 43.55.011(j), (k), (o), OR (p)], any adjusted                                 
29 lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise be                                             
30 deductible by a producer for that period but whose deduction would cause a                                              
31 production tax value calculated under (a)(1)(E) or (F) or (h)(3) [(a)(1)(C), (D), (E),                              
01 OR (F), OR (h)(3)] of this section to be less than zero are accounted for as though the                                 
02 adjusted lease expenditures had first been used as deductions in calculating the                                        
03 production tax values of oil or gas subject to any of the limitations under                                             
04 AS 43.55.011(o) or (p) [AS 43.55.011(j), (k), (o), OR (p)] that have positive                                       
05 production tax values so as to reduce the tax liability calculated without regard to the                                
06 limitation to the maximum amount provided for under the applicable provision of                                         
07 AS 43.55.011(o) or (p) [AS 43.55.011(j), (k), (o), OR (p)]. Only the amount of those                                
08 adjusted lease expenditures remaining after the accounting provided for under this                                      
09 subsection may be used to establish a carried-forward annual loss under                                                 
10 AS 43.55.165(a)(3) [AS 43.55.023(b)]. In this subsection, "producer" includes                                       
11       "explorer."                                                                                                       
12    * Sec. 24. AS 43.55.165(a), as amended by sec. 29, ch. 4, 4SSLA 2016, is amended to read:                          
13 (a)  For purposes of this chapter, a producer's lease expenditures for a calendar                                       
14       year are                                                                                                          
15                 (1)  costs, other than items listed in (e) of this section, that are                                    
16 (A)  incurred by the producer during the calendar year after                                                            
17 March 31, 2006, to explore for, develop, or produce oil or gas deposits located                                         
18 within the producer's leases or properties in the state or, in the case of land in                                      
19 which the producer does not own an operating right, operating interest, or                                              
20 working interest, to explore for oil or gas deposits within other land in the                                           
21            state; and                                                                                                   
22 (B)  allowed by the department by regulation, based on the                                                              
23 department's determination that the costs satisfy the following three                                                   
24            requirements:                                                                                                
25 (i)  the costs must be incurred upstream of the point of                                                                
26                 production of oil and gas;                                                                              
27 (ii)  the costs must be ordinary and necessary costs of                                                                 
28 exploring for, developing, or producing, as applicable, oil or gas                                                      
29                 deposits; and                                                                                           
30 (iii)  the costs must be direct costs of exploring for,                                                                 
31                 developing, or producing, as applicable, oil or gas deposits; [AND]                                     
01                 (2)  a reasonable allowance for that calendar year, as determined under                                 
02       regulations adopted by the department, for overhead expenses that are directly related                            
03       to exploring for, developing, or producing, as applicable, the oil or gas deposits; and                       
04                 (3)  lease expenditures incurred in a previous calendar year,                                       
05       subject to (m) and (n) of this section, that                                                                  
06                      (A)  met the requirements of AS 43.55.160(e) in the year in                                    
07            which the lease expenditures were incurred;                                                              
08                      (B)  have not been deducted in the determination of the                                        
09            production tax value of oil and gas under AS 43.55.160(a) or (h) in a                                    
10            previous calendar year;                                                                                  
11                      (C)  were not the basis of a credit under this title; and                                      
12 (D)  were incurred to explore for, develop, or produce an oil                                                       
13 or gas deposit located in the state outside the Cook Inlet sedimentary                                              
14            basin.                                                                                                   
15    * Sec. 25. AS 43.55.165(f) is amended to read:                                                                     
16 (f)  For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures                                              
17 incurred to explore for an oil or gas deposit located within land in which an explorer                                  
18 does not own a working interest, the term "producer" in this section includes                                           
19       "explorer."                                                                                                       
20    * Sec. 26. AS 43.55.165(l) is amended by adding a new paragraph to read:                                           
21 (4)  "carried-forward annual loss" means a loss established under (a)(3)                                                
22       of this section.                                                                                                  
23    * Sec. 27. AS 43.55.165 is amended by adding new subsections to read:                                              
24 (m)  In a calendar year, after application of a producer's lease expenditures that                                      
25 are incurred in that calendar year, the producer may choose to apply all or a portion of                                
26 a carried-forward annual loss or carry any unused portion forward. The department                                       
27 may not require a producer to apply all or a portion of a carried-forward annual loss in                                
28       a calendar year.                                                                                                  
29 (n)  During a calendar year in which a taxpayer's liability under                                                       
30 AS 43.55.011(e) is determined under AS 43.55.011(f), the maximum amount of                                              
31 carried-forward annual loss that a taxpayer may apply in that year is equal to the                                      
01 amount, when combined with the lease expenditures of the current year and any                                           
02 credits under this chapter, necessary to reduce the amount calculated under                                             
03 AS 43.55.011(e) to the equivalent amount of tax due under AS 43.55.011(f) before the                                    
04 application of any credits under this chapter. An amount of carried-forward annual                                      
05       loss not applied under this subsection may continue to be carried forward.                                        
06    * Sec. 28. AS 43.55.170(c) is amended to read:                                                                     
07 (c)  For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures                                              
08 incurred to explore for an oil or gas deposit located within land in which an explorer                                  
09 does not own a working interest, the term "producer" in this section includes                                           
10       "explorer."                                                                                                       
11    * Sec. 29. AS 43.55.023(b) is repealed January 1, 2018.                                                            
12    * Sec. 30. AS 43.05.230(l); AS 43.20.046(e), 43.20.047(e), 43.20.053(e); AS 43.55.028,                             
13 and 43.55.029 are repealed.                                                                                             
14    * Sec. 31. The uncodified law of the State of Alaska is amended by adding a new section to                         
15 read:                                                                                                                   
16 APPLICABILITY: TAX CREDITS UNDER AS 43.55.025 APPLIED AGAINST                                                           
17 TAX DUE UNDER AS 43.20. AS 43.20.044(a), as amended by sec. 2 of this Act, and                                          
18 AS 43.55.025(a), (f), and (i), as amended by secs. 9, 12, and 15 of this Act, apply to a tax                            
19 credit that has been earned under AS 43.55.025 for work performed on or after July 1, 2016.                             
20    * Sec. 32. The uncodified law of the State of Alaska is amended by adding a new section to                         
21 read:                                                                                                                   
22 APPLICABILITY: TAX CREDIT AND CREDIT CERTIFICATE CARRYBACK.                                                             
23 AS 43.55.023(c), as amended by sec. 4 of this Act, AS 43.55.023(e), as amended by sec. 7 of                             
24 this Act, and AS 43.55.025(h), as amended by sec. 14 of this Act, apply to a tax credit earned                          
25 or transferable tax credit certificate issued under AS 43.55.023 or a production tax credit                             
26 certificate issued under AS 43.55.025(f), regardless of when the credit was earned or the                               
27 certificate was issued.                                                                                                 
28    * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to                         
29 read:                                                                                                                   
30 APPLICABILITY: LEASE EXPENDITURES. AS 43.55.165(a)(3) and 43.55.165(m)                                                  
31 and (n), added by secs. 24 and 27 of this Act, apply to a lease expenditure incurred on or after                        
01 the effective date of secs. 24 and 27 of this Act.                                                                      
02    * Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to                         
03 read:                                                                                                                   
04 TRANSITION: INTEREST ON DELINQUENT TAXES. Notwithstanding the                                                           
05 effective date of sec. 1 of this Act, a delinquent tax under AS 43.55 bears interest in each                            
06 calendar quarter of 2017 as provided under AS 43.05.225(1) as that paragraph read on the day                            
07 before the effective date of sec. 1 of this Act.                                                                        
08    * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to                         
09 read:                                                                                                                   
10 TRANSITION: PUBLIC INFORMATION UNDER AS 43.05.230(l).                                                                   
11 Notwithstanding the repeal of AS 43.05.230(l) by sec. 30 of this Act, on April 30 of the year                           
12 following the calendar year in which sec. 30 of this Act takes effect, the Department of                                
13 Revenue shall make public the information required under AS 43.05.230(l), as that section                               
14 read on the day before the effective date of sec. 30 of this Act.                                                       
15    * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to                         
16 read:                                                                                                                   
17 TRANSITION: CARRIED-FORWARD ANNUAL LOSSES. (a) Notwithstanding the                                                      
18 repeal of AS 43.55.023(b) by sec. 29 of this Act and the amendments to AS 43.55.160(d) and                              
19 (e), 43.55.165(f), and 43.55.170(c) by secs. 22, 23, 25, and 28 of this Act, a taxpayer who                             
20 incurs a carried-forward annual loss before the repeal of AS 43.55.023(b) by sec. 29 of this                            
21 Act that qualifies for a carried-forward annual loss credit under AS 43.55.023(b) may apply                             
22 for a credit or tax credit certificate under AS 43.55.023(d), subject to the requirements of                            
23 AS 43.55.160(d) and (e), as those subsections read on the day before the repeal of                                      
24 AS 43.55.023(b) by sec. 29 of this Act.                                                                                 
25 (b)  The Department of Revenue may continue to apply and enforce AS 43.55.023(b),                                       
26 as that subsection read on the day before the repeal of AS 43.55.023(b) by sec. 29 of this Act,                         
27 for a carried-forward annual loss incurred before the repeal of AS 43.55.023(b) by sec. 29 of                           
28 this Act.                                                                                                               
29    * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to                         
30 read:                                                                                                                   
31 TRANSITION: OIL AND GAS CREDIT FUND. Subject to appropriation, the                                                      
01 balance of the oil and gas tax credit fund created under AS 43.55.028(a) and repealed by sec.                           
02 30 of this Act lapses into the general fund.                                                                            
03    * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to                         
04 read:                                                                                                                   
05 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                           
06 contrary provision of AS 44.62.240, if the Department of Revenue expressly designates in a                              
07 regulation that the regulation applies retroactively, a regulation adopted by the Department of                         
08 Revenue to implement, interpret, make specific, or otherwise carry out this Act may apply                               
09 retroactively to the effective date of the law implemented by the regulation.                                           
10    * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to                         
11 read:                                                                                                                   
12 CONDITIONAL EFFECT; NOTIFICATION. (a) Sections 3, 6, 8, 30, 35, and 37 of                                               
13 this Act take effect only if the commissioner of revenue notifies the revisor of statutes in                            
14 writing as required under (b) of this section.                                                                          
15       (b)  The commissioner of revenue shall notify the revisor of statutes in writing when                             
16 (1)  there are no outstanding applications for purchase of tax credit certificates                                      
17 or claims for refunds or payments for which payment has not been made under                                             
18 AS 43.55.028(e); and                                                                                                    
19 (2)  it has been at least one year since a person has applied for a purchase,                                           
20 payment, or refund under AS 43.55.028.                                                                                  
21       (c)  In this section,                                                                                             
22 (1)  "claim for refund or payment" means a refund and payment claimed under                                             
23 AS 43.20.046, 43.20.047, or 43.20.053 subject to payment under AS 43.55.028;                                            
24 (2)  "tax credit certificate" means a transferable tax credit certificate issued                                        
25 under AS 43.55.023 or a production tax credit certificate issued under AS 43.55.025 subject                             
26 to purchase under AS 43.55.028.                                                                                         
27    * Sec. 40. Sections 2, 4, 7, 9, 12 - 15, 17, 19, 31, 32, 38, and 39 of this Act take effect                        
28 immediately under AS 01.10.070(c).                                                                                      
29    * Sec. 41. Section 24 of this Act takes effect on the effective date of sec. 29, ch. 4, 4SSLA                      
30 2016.                                                                                                                   
31    * Sec. 42. If, under sec. 39 of this Act, secs. 3, 6, 8, 30, 35, and 37 of this Act take effect,                   
01 they take effect on the later of                                                                                        
02            (1)  January 1, 2022; or                                                                                     
03            (2)  January 1 of the calendar year following the year of notice under sec. 39 of                            
04 this Act.                                                                                                               
05    * Sec. 43. Except as provided in secs. 40 - 42 of this Act, this Act takes effect January 1,                       
06 2018.