Legislature(2017 - 2018)SENATE FINANCE 532
05/11/2017 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB79 | |
| HB111 | |
| SB34 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 79 | TELECONFERENCED | |
| += | HB 111 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 34 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 111(FIN)(efd fld)
"An Act relating to the oil and gas production tax,
tax payments, and credits; relating to interest
applicable to delinquent oil and gas production tax;
relating to carried-forward lease expenditures based
on losses and limiting those lease expenditures to an
amount equal to the gross value at the point of
production of oil and gas produced from the lease or
property where the lease expenditure was incurred;
relating to information concerning tax credits, lease
expenditures, and oi l and gas taxes; relating to the
disclosure of that information to the public; relating
to an adjustment in the gross value at the point of
production; and relating to a legislative working
group."
2:18:49 PM
Vice-Chair Bishop MOVED to ADOPT the committee substitute
for CS SBHB 111(FIN)(efd fld), Work Draft 30-LS0450\B
(Nauman, 5/10/17).
Co-Chair MacKinnon OBJECTED for discussion.
Co-Chair MacKinnon stated that the CS eliminated the
state's cash exposure by ending the program of refundable
oil and gas tax credits to small or new companies. She
stated that work after 2017 would no longer be eligible for
cash credits. The only credits remaining statewide would be
those in Middle Earth, and those would be nonrefundable.
She stated that it would conclude a multiple year effort to
phase out the credits that began in 2013. The bill provided
opportunities to reduce the credit backlog, which following
two years of vetoes by the current administration.
2:23:35 PM
LAURA CRAMER, STAFF, SENATOR ANNA MACKINNON, explained the
committee substitute with the Sectional Analysis (copy on
file):
Section 1 Amends AS 31.05.030(n), Alaska Oil and Gas
Conservation Act, Powers and duties of commission.
Conforming to the Sec. 28 requirement that the Alaska
Oil and Gas Conservation Commission determine the
start of regular production for purposes of applying a
carry-forward annual loss.
Section 2 Amends AS 43.05.225, Administration of
Revenue Laws, Interest.
For all delinquent taxes under the Department of
Revenue, interest is three points above the annual
rate set by the 12th Federal Reserve District,
compounded quarterly, and is applied the entire time a
tax is delinquent.
Section 3 Amends AS 43.20.044(a), Alaska Net Income
Tax Act, Exploration incentive credit
A taxpayer that earns an exploration credit under AS
43.55.025 for work done after July 1, 2016, may apply
the credit against the taxpayer's own corporate income
tax. Effective immediately.
Section 4 Amends AS 43.20.047(h), Alaska Net Income
Tax Act, Liquefied natural gas storage facility tax
credit.
Conforming to the future repeal of the Oil and Gas Tax
Credit Fund and conforming repeals. Effective the
later of Jan. 1, 2022, or when there are no
outstanding applications for credit refunds.
Section 5 Amends AS 43.55.023(c), Oil and Gas
Production Tax, Tax credits for certain losses and
expenditures.
Credits earned under this section may be applied
against prior-year taxes, interest, penalties or fees
related to the oil and gas production tax, providing
those liabilities have not been subject to an
administrative proceeding or litigation. Credits may
not be used against conservation surcharges or the
private royalty tax. Effective immediately.
Section 6 Amends AS 43.55.023(d), Oil and Gas
Production Tax, Tax credits for certain losses and
expenditures.
Cash payments for credits under this section are
available only for work performed before Jan. 1, 2018.
Section 7 Amends AS 43.55.023(d), Oil and Gas
Production Tax, Tax credits for certain losses and
expenditures, as amended by Sec. 6.
Conforming to the future repeal in Sec. 31 of the Oil
and Gas Tax Credit Fund. Effective the later of Jan.
1, 2022, or when there are no outstanding applications
for credit refunds.
Section 8 Amends AS 43.55.023(e), Oil and Gas
Production Tax, Tax credits for certain losses and
expenditures.
Transferrable tax credit certificates issued under
this section may be applied against prior-year taxes,
interest, penalties or fees related to the oil and gas
production tax, providing those liabilities have not
been subject to an administrative proceeding or
litigation. Credits may not be used against
conservation surcharges or the private royalty tax.
Effective immediately.
Section 9 Amends AS 43.55.023(g), Oil and Gas
Production Tax, Tax credits for certain losses and
expenditures.
Conforming to the future repeal in Sec. 31 of the Oil
and Gas Tax Credit Fund. Effective the later of Jan.
1, 2022, or when there are no outstanding applications
for credit refunds.
Section 10 Amends AS 43.55.025(a), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
Credits under this section for work done on or after
July 1, 2016, may be applied against corporate income
taxes. Effective immediately.
Section 11 Amends AS 43.55.025(a), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration, as amended by Sec. 10.
Conforming to the sunset of the AS 43.55.025(a)(4)
credit after Jan. 1, 2018, in Sec. 12.
Section 12 Amends AS 43.55.025(b), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
The 40% credit for seismic work under AS
43.55.025(a)(4) will not be available for work done
after Jan. 1, 2018.
Section 13 Amends AS 43.55.025(f), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
Exploration credits under AS 43.55.025 for work done
after July 1, 2016, against corporate income taxes.
Effective immediately.
Section 14 Amends AS 43.55.025(g), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
Exploration tax credits under this section that are
transferred to another taxpayer may not be applied
against the purchaser's corporate income taxes.
Effective immediately.
Section 15 Amends AS 43.55.025(h), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
Tax credit certificates and tax credits under this
section may be applied against prior-year taxes,
interest, penalties or fees related to the oil and gas
production tax, providing those liabilities have not
been subject to an administrative proceeding or
litigation. Credits may not be used against
conservation surcharges or the private royalty tax.
Effective immediately.
Section 16 Amends AS 43.55.025(i), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
Exploration credits issued under this section for work
done after July 1, 2016, may be used against corporate
income tax, but may not be used to reduce corporate
income taxes below zero. Effective immediately.
Section 17 Amends AS 43.55.025(k), Oil and Gas
Production Tax, Alternative tax credit for oil and gas
exploration.
Conforming to the sunset of the seismic credit in Sec.
12.
Section 18 Adds a new subsection to AS 43.55.025, Oil
and Gas Production Tax, Alternative tax credit for oil
and gas exploration.
Creates a conditional tax credit certificate that the
Department of Revenue must issue to explorers. The
conditional certificate enables the holder to submit
an application for a refund while waiting for the
state to issue a transferrable certificate, but the
conditional certificates may not be purchased by the
state. Effective immediately.
Section 19 Amends AS 43.55.028(a), Oil and Gas
Production Tax, Oil and gas tax credit fund
established; cash purchase of tax credit certificates.
As of Jan. 1, 2018, the tax credit fund is only able
to purchase oil and gas tax credits issued for work
done before Jan. 1, 2018, and to purchase instate
refinery and LNG storage facility income tax credits.
Section 20 Amends AS 43.55.028(e), Oil and Gas
Production Tax, Oil and gas tax credit fund
established; cash purchase of tax credit certificates.
Allows the Department of Revenue to accept, but not
purchase, a conditional certificate from an explorer.
Effective immediately.
Section 21 Amends AS 43.55.028(e), Oil and Gas
Production Tax, Oil and gas tax credit fund
established; cash purchase of tax credit certificates,
as amended by Sec. 20.
Conforming to the Sec. 19 provision ending new entries
to the credit purchase program Jan. 1, 2018.
Co-Chair MacKinnon wondered whether Section 21 was
conforming language to Section 19. Ms. Cramer replied in
the affirmative.
Section 22 Amends AS 43.55.029(a), Oil and Gas
Production Tax, Assignment of tax credit certificate.
Conforming to the Sec. 30 repeal of the net operating
loss credit.
2:34:03 PM
Ms. Cramer continued to discuss the Sectional Analysis:
Section 23 Amends AS 43.55.160(d), Oil and Gas
Production Tax, Determination of production tax value
of oil and gas.
Conforming to the Sec. 30 repeal of the net operating
loss credit.
Section 24 Amends AS 43.55.160(e), Oil and Gas
Production Tax, Determination of production tax value
of oil and gas.
North Slope and Middle Earth lease expenditures may be
used to establish a carried-forward annual loss. Gross
value reductions for new oil cannot make a loss larger
than it would otherwise be. Also, makes conforming
changes to the Sec. 30 repeal of the net operating
loss credit and the Sec. 25 terms for lease
expenditures.
Section 25 Amends AS 43.55.165(a), Oil and Gas
Production Tax, Lease expenditures.
Lease expenditures include those, for the North Slope
and Middle Earth, that were unable to be deducted in
the previous year.
Section 26 Amends AS 43.55.165(f), Oil and Gas
Production Tax, Lease expenditures.
Conforming to the Sec. 30 repeal of the net operating
loss credit.
Section 27 Adds a new paragraph to AS 43.55.165(l),
Oil and Gas Production Tax, Lease expenditures.
Defines "carried-forward annual loss" as a loss
established per Sec. 25.
2:37:02 PM
Ms. Cramer continued to discuss the Sectional Analysis:
Section 28 Adds new subsections to AS 43.55.165, Oil
and Gas Production Tax, Lease expenditures.
Implements new terms for how a carried-forward annual
loss is applied. A taxpayer may choose to apply all or
some of its loss, or to carry it forward. In applying
carry-forward annual losses, a producer subject to the
minimum tax may apply the amount that would reduce
taxes to the equal amount under the minimum tax, and
not to zero. Carry-forward annual losses in excess of
the amount applied to reduce taxes to the equal of the
minimum tax are carried forward.
Fifty percent of carry-forward annual losses incurred
from a lease or property not yet in production may be
used immediately; the remaining 50% may be used once
the lease or property enters regular production, as
determined by the Alaska Oil and Gas Conservation
Commission.
Section 29 Amends AS 43.55.170(c), Oil and Gas
Production Tax, Adjustments to lease expenditures.
Conforming to the Sec. 30 repeal of the net operating
loss credit.
Section 30 Repealer
Repeals the net operating loss credit, AS
43.55.023(b), on Jan. 1, 2018.
Section 31 Repealer
At the later of Jan. 1, 2022, or when all outstanding
applications for credit refunds have been paid,
repeals the Oil and Gas Tax Credit Fund and AS
43.55.028; assignability of credits to third parties,
AS 43.55.029; and makes conforming repeals in sections
of statute referencing the fund: AS 43.05.230(l),
Administration of Revenue Laws, Disclosure of tax
returns and reports, annual disclosure of
disbursements from the fund; AS 43.20.046(e), Alaska
Net Income Tax Act, Gas storage facility tax credit,
use of fund to pay the credit; AS 43.20.047(e), Alaska
Net Income Tax Act, Liquefied natural gas storage
facility tax credit, use of fund to pay the credit;
and AS 43.20.053(e), Alaska Net Income Tax Act,
Qualified in-state oil refinery infrastructure
expenditures tax credit, use of fund to pay the
credit.
2:38:55 PM
Ms. Cramer continued with the Sectional Analysis:
Section 32 Applicability
Credits under AS 43.55.025 may be applied against
corporate income taxes by the company that incurred
the credits, regardless of when the credits were
earned. Effective immediately.
Section 33 Applicability
Credits may be applied against prior year oil and gas
tax liabilities, regardless of when the credits were
earned. Effective immediately.
Section 34 Applicability
The new provisions related to lease expenditures apply
to lease expenditures incurred on or after Jan. 1,
2018.
Section 35 Transition language
Interest rates charged on delinquent taxes for
calendar year 2017 are the rates in statute before the
changes in Sec. 2 take effect on Jan. 1, 2018.
Section 36 Transition language
Ensures the public disclosure of tax credit refund
recipients is made on April 30 of the year following
the year in which the Oil and Gas Tax Credit Fund is
repealed, as the public disclosure is also repealed to
conform. Effective the later of Jan. 1, 2022, or when
there are no outstanding applications for credit
refunds.
Section 37 Transition language
Taxpayers who incur a loss before Jan. 1, 2018, remain
eligible for the net operating loss credit in current
statute that is repealed as of Jan. 1, 2018.
Section 38 Transition language
When the Oil and Gas Tax Credit Fund is repealed after
outstanding applications have been paid, any balance
of the fund lapses into the general fund. Effective
the later of Jan. 1, 2022, or when there are no
outstanding applications for refunds.
Section 39 Transition language
Dept. of Revenue may adopt regulations retroactively.
Effective immediately.
Section 40 Conditional effect, notification language
Sections related to the repeal of the Oil and Gas Tax
Credit Fund take effect only after the Commissioner of
Revenue notifies the revisors when there are no
outstanding applications for the purchase of tax
credits, and it has been at least one year since an
application has been received. Effective immediately.
Section 41 Effective date
Sets an immediate effective date for sections related
to the ability to use Middle Earth exploration credits
against the company's own corporate income tax
liability, and to use credits against prior year tax
liabilities that have not been subject to an
administrative proceeding or to litigation.
Section 42 Effective date
Sets a Jan. 1, 2018, effective date for Section 25,
which is treated separately because it makes changes
to a section of statute that is undergoing other
changes this year based on House Bill 247 of 2016.
Section 43 Effective date
Sets an effective date of the later of Jan. 1, 2022,
or Jan. 1 of the year in which notice is provided that
all outstanding applicants for credit purchases have
been paid, for the repeal of the Oil and Gas Tax
Credit Fund and conforming sections.
Section 44 Effective date
Sets a Jan. 1, 2018 effective date for all other
sections.
2:42:47 PM
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
further OBJECTION, the proposed committee substitute was
adopted.
2:43:05 PM
AT EASE
2:44:01 PM
RECONVENED
2:44:09 PM
Co-Chair MacKinnon announced that amendments should be
submitted by 8am the following day, because she intended to
move the bill from committee the following day. She stated
that there would be a fiscal note presentation at that
meeting.
CSHB 111(FIN)(efd fld) was HEARD and HELD in committee for
further consideration.
2:45:32 PM
AT EASE
2:48:25 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 111 Work Draft version B.pdf |
SFIN 5/11/2017 9:00:00 AM |
HB 111 |
| HB 111 v B Sectional Analysis.pdf |
SFIN 5/11/2017 9:00:00 AM |
HB 111 |
| CS SB 34 v.T Explanation.pdf |
SFIN 5/11/2017 9:00:00 AM |
SB 34 |
| SB 34 CS SB 34 v.T.pdf |
SFIN 5/11/2017 9:00:00 AM |
SB 34 |
| SB 34 Air Force Letter - Real ID.pdf |
SFIN 5/11/2017 9:00:00 AM |
SB 34 |
| HB 111 Public Testimony Letters 4.pdf |
SFIN 5/11/2017 9:00:00 AM |
HB 111 |