00 SENATE BILL NO. 227 01 "An Act relating to the Multistate Tax Compact; relating to apportionment of income to 02 the state; establishing a state sales and use tax; relating to taxes levied by cities and 03 boroughs; relating to the corporate income tax; authorizing the Department of Revenue 04 to enter into the Streamlined Sales and Use Tax Agreement or substantially similar 05 agreement; relating to the oil and gas production tax; establishing an infrastructure 06 maintenance surcharge on oil; establishing a pipeline corridor maintenance fund; and 07 providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09  * Section 1. AS 28.10.021(a) is amended to read: 10 (a) The owner of a vehicle subject to registration shall apply for registration 11 under this chapter by properly completing the form prescribed by the commissioner 12 under AS 28.05.041. Before the issuance of a certificate of registration by the 13 department, the owner shall 01 (1) pay all registration fees and taxes required under this chapter, 02 [AND] federal heavy vehicle use taxes required under 26 U.S.C. 4481 (Internal 03 Revenue Code of 1954), and a tax levied under AS 43.44.010; 04 (2) unless the owner qualifies as a self-insurer under AS 28.20.400 or 05 is exempted from obtaining liability insurance under AS 28.22.011, certify to the 06 department the existence of a motor vehicle liability policy that complies with 07 AS 28.22.011 for the vehicle being registered; in this paragraph, "certify" means to 08 indicate by check-off on the vehicle registration form prescribed by the department the 09 existence of a policy of insurance, if a policy is required at that time, and the intention 10 to continue the policy or obtain a policy as required by this subsection; and 11 (3) comply with other applicable statutes and regulations. 12  * Sec. 2. AS 29.10.200(56) is amended to read: 13 (56) AS 29.45.650 [AS 29.45.650(c), (d), (e), (f), (i), (j), (k), AND (l)] 14 (sales and use tax); 15  * Sec. 3. AS 29.10.200(57) is amended to read: 16 (57) AS 29.45.700 [AS 29.45.700(d), (e), (g), AND (h)] (sales and use 17 tax); 18  * Sec. 4. AS 29.10.200 is amended by adding a new paragraph to read: 19 (68) AS 29.45.655 (specific taxes on property and services). 20  * Sec. 5. AS 29.35.110(a) is amended to read: 21 (a) Borough revenues received through taxes levied [COLLECTED] on an 22 areawide basis by the borough may be expended on general administrative costs and 23 on areawide functions only. Borough revenues received through taxes levied 24 [COLLECTED] on a nonareawide basis may be expended on general administrative 25 costs and functions that render service only to the area outside all cities in the 26 borough. 27  * Sec. 6. AS 29.35.170 is amended to read: 28 Sec. 29.35.170. Assessment and collection of taxes. (a) A borough shall 29 assess and collect property and other [, SALES, AND USE] taxes, except a local  30 sales or use tax under AS 29.45.650, that are levied in its boundaries, subject to 31 AS 29.45.  01 (b) Taxes, other than a local sales or use tax under AS 29.45.650, levied by 02 a city shall be collected by a borough and returned in full to the levying city. This 03 subsection applies to home rule and general law municipalities. 04  * Sec. 7. AS 29.45.650 is repealed and reenacted to read: 05 Sec. 29.45.650. Local sales and use tax. (a) Except as provided in 06 AS 04.21.010(c) and AS 29.45.750, a borough may levy a local sales tax on the sale of 07 personal property and on services provided in the borough. 08 (b) A borough levying a local sales tax may levy a use tax equal to the local 09 sales tax on the storage, use, or consumption of personal property and on the use of 10 services in the borough. 11 (c) A tax levied under this section shall be levied only on a purchaser. 12 (d) A tax levied under this section shall be subject to exemptions, definitions, 13 sourcing rules, and regulations under AS 43.44 and shall be administered and 14 collected by the state under AS 43.44. 15  * Sec. 8. AS 29.45 is amended by adding a new section to read: 16 Sec. 29.45.655. Specific taxes on property and services. Unless otherwise 17 prohibited by law, a municipality may levy and collect specific sales or excise taxes on 18 single categories of personal property or services, including 19 (1) bed taxes; 20 (2) car rental taxes: 21 (3) alcoholic beverages taxes; 22 (4) taxes on tobacco products, electronic smoking products, and 23 nicotine products; 24 (5) motor fuel taxes; 25 (6) fish taxes; and 26 (7) taxes on marijuana and marijuana products. 27  * Sec. 9. AS 29.45.660(a) is amended to read: 28 (a) If the borough levies [AND COLLECTS] only a local sales tax and use 29 tax, the assembly shall provide a notice substantially in the form set out in 30 AS 29.45.020. In providing notice under this subsection, the assembly shall substitute 31 for the millage equivalency its estimate of the equivalent sales tax rate for each of the 01 categories of financial assistance set out in AS 29.45.020. Notice shall be provided 02 (1) by posting on a continuously available online public notice  03 system or by publishing in a newspaper of general circulation in the borough a copy 04 of the notice at least once each week for a period of three successive weeks, with 05 publication to occur not later than 45 days after the final adoption of the borough's 06 budget; or 07 (2) if there is no newspaper of general circulation in the borough or a  08 continuously available online public notice system, by posting a copy of the notice 09 for at least 20 days in at least two public places in the borough, with posting to occur 10 not later than 45 days after the final adoption of the borough's budget. 11  * Sec. 10. AS 29.45.700 is repealed and reenacted to read: 12 Sec. 29.45.700. Power of levy. A city may levy a local sales and use tax in the 13 manner and subject to the same limitation provided for boroughs under AS 29.45.650 14 and 29.45.660. 15  * Sec. 11. AS 29.45.810(a) is amended to read: 16 (a) A party to a contract approved by the legislature as a result of submission 17 of a proposed contract developed under AS 43.82 or as a result of acts by the 18 legislature in implementing the purposes of AS 43.82, and the property, gas, products, 19 and activities associated with the approved qualified project that is subject to the 20 contract, are exempt, as specified in the contract, from all taxes identified in the 21 contract that would be levied [AND COLLECTED] by a municipality under state law 22 as a consequence of the participation by the party in the approved qualified project.  23  * Sec. 12. AS 36.10.005(a) is amended to read: 24 (a) The legislature finds that 25 (1) because of its unique climate and its distance from the contiguous 26 states, the state has historically suffered from unique social, seasonal, geographic, and 27 economic conditions that result in an unstable economy; 28 (2) the unstable economy is a hardship on the residents of the state and 29 is aggravated by the large numbers of seasonal and transient nonresident workers; 30 (3) the rate of unemployment among residents of the state is one of the 31 highest in the nation; 01 (4) the state has one of the highest ratios of nonresident to resident 02 workers in the nation; 03 (5) the state has a compelling interest in reducing the level of 04 unemployment among its residents; 05 (6) the construction industry in the state accounts for a substantial 06 percentage of the available employment; 07 (7) construction workers receive a greater percentage of all 08 unemployment benefits paid by the state than is typical of other states; 09 (8) historically, the rate of unemployment in the construction industry 10 in the state is higher than the rate of unemployment in other industries in the state; 11 (9) it is appropriate for the state to consider the welfare of its residents 12 when it funds construction activity; 13 (10) it is in the public interest for the state to allocate public funds for 14 capital projects in order to reduce unemployment among its resident construction 15 workers; 16 (11) the influx of nonresident construction workers contributes to or 17 causes the high unemployment rate among resident construction workers because 18 nonresident workers compete with residents for the limited number of available 19 construction jobs; 20 (12) nonresident workers displace a substantial number of qualified, 21 available, and unemployed Alaska workers on jobs on state funded public works 22 projects; 23 (13) the state has a special interest in seeing that the benefits of state 24 construction spending accrue to its residents; 25 (14) the natural resources of land owned by the state belong to the 26 citizens of the state; 27 (15) Alaskans have chosen to use the majority of the royalties derived 28 from the state's natural resources to fund state government; 29 (16) the vast majority of the state's revenue is derived from natural 30 resource income rather than from other forms of taxation; 31 (17) because the state has no personal income tax [OR SALES TAX], 01 nonresident workers use services provided by the state but do not contribute fairly to 02 the costs of those services; and 03 (18) Alaskans, more than the residents of other states, suffer 04 economically when nonresidents displace qualified residents since resident workers 05 contribute local taxes as well as their share of the royalties from natural resources. 06  * Sec. 13. AS 43.05.230(c) is amended to read: 07 (c) The department may permit the proper officer of a municipality, the 08 United States or of a state, territory or possession of the United States or of Canada or 09 of a province or territory of Canada, or the officer's authorized representative, to 10 inspect tax returns or reports filed with the department, or may furnish to the officer or 11 representative a copy of the tax return, if the other jurisdiction grants substantially 12 similar privileges to the department or its representative or to counsel for the state, and 13 if the department determines that the other jurisdiction provides adequate safeguards 14 for the confidentiality of the returns and reports, and that the returns and reports will 15 be used for tax purposes only. The department may also permit the division 16 responsible for employment and training services of the state Department of Labor and 17 Workforce Development to inspect tax returns or reports filed with the department or 18 may furnish a copy of the tax returns for tax purposes only. 19  * Sec. 14. AS 43.05.499(11) is amended to read: 20 (11) "taxpayer" means a person required to pay or collect a tax, 21 including a person required to pay a seafood marketing assessment under AS 16.51. 22  * Sec. 15. AS 43.19.010 is amended to read: 23 Sec. 43.19.010. Compact. The Multistate Tax Compact is hereby enacted into 24 law and entered into with all jurisdictions legally joining in it, in the form substantially 25 as follows: 26 ARTICLE I. 27 PURPOSES. 28 The purposes of this compact are to: 29 1. Facilitate proper determination of state and local tax liability of multistate 30 taxpayers, including the equitable apportionment of tax bases and settlement of 31 apportionment disputes. 01 2. Promote uniformity or compatibility in significant components of tax 02 systems. 03 3. Facilitate taxpayer convenience and compliance in the filing of tax returns 04 and in other phases of tax administration. 05 4. Avoid duplicative taxation. 06 ARTICLE II. 07 DEFINITIONS. 08 As used in this compact: 09 1. "State" means a state of the United States, the District of Columbia, the 10 Commonwealth of Puerto Rico, or any territory or possession of the United States. 11 2. "Subdivision" means any governmental unit or special district of a state. 12 3. "Taxpayer" means any corporation, partnership, firm, association, 13 governmental unit or agency or person acting as a business entity in more than one 14 state. 15 4. "Income tax" means a tax imposed on or measured by net income including 16 any tax imposed on or measured by an amount arrived at by deducting expenses from 17 gross income, one or more forms of which expenses are not specifically and directly 18 related to particular transactions. 19 5. "Capital stock tax" means a tax measured in any way by the capital of a 20 corporation considered in its entirety. 21 6. "Gross receipts tax" means a tax, other than a sales tax, which is imposed on 22 or measured by the gross volume of business, in terms of gross receipts or in other 23 terms, and in the determination of which no deduction is allowed which would 24 constitute the tax an income tax. 25 7. "Sales tax" means a tax imposed with respect to the transfer for a 26 consideration of ownership, possession or custody of tangible personal property or the 27 rendering of services measured by the price of the tangible personal property 28 transferred or services rendered and which is required by state or local law to be 29 separately stated from the sales price by the seller, or which is customarily separately 30 stated from the sales price, but does not include a tax imposed exclusively on the sale 31 of a specifically identified commodity or article or class of commodities or articles. 01 8. "Use tax" means a nonrecurring tax, other than a sales tax, which (a) is 02 imposed on or with respect to the exercise or enjoyment of any right or power over 03 tangible personal property incident to the ownership, possession or custody of that 04 property or the leasing of that property from another including any consumption, 05 keeping, retention, or other use of tangible personal property and (b) is complementary 06 to a sales tax. 07 9. "Tax" means an income tax, capital stock tax, gross receipts tax, sales tax, 08 use tax, and any other tax which has a multistate impact, except that the provisions of 09 Articles III, IV and V of this compact shall apply only to the taxes specifically 10 designated therein and the provisions of Article IX of this compact shall apply only in 11 respect to determinations pursuant to Article IV. 12 ARTICLE III. 13 ELEMENTS OF INCOME TAX LAWS. 14 TAXPAYERS OPTION, STATE AND LOCAL TAXES. 15 1. Any taxpayer subject to an income tax whose income is subject to 16 apportionment and allocation for tax purposes pursuant to the laws of a party state or 17 pursuant to the laws of subdivisions in two or more party states may elect to apportion 18 and allocate the taxpayer's income in the manner provided by the laws of such state or 19 by the laws of such states and subdivisions without reference to this compact, or may 20 elect to apportion and allocate in accordance with Article IV. This election for any tax 21 year may be made in all party states or subdivisions thereof or in any one or more of 22 the party states or subdivisions thereof without reference to the election made in the 23 others. For the purposes of this paragraph, taxes imposed by subdivisions shall be 24 considered separately from state taxes and the apportionment and allocation also may 25 be applied to the entire tax base. In no instance wherein Article IV is employed for all 26 subdivisions of a state may the sum of all apportionments and allocations to 27 subdivisions within a state be greater than the apportionment and allocation that would 28 be assignable to that state if the apportionment or allocation were being made with 29 respect to a state income tax. 30 TAXPAYER OPTION, SHORT FORM. 31 2. Each party state or any subdivision thereof which imposes an income tax 01 shall provide by law that any taxpayer required to file a return, whose only activities 02 within the taxing jurisdiction consist of sales and do not include owning or renting real 03 estate or tangible personal property, and whose dollar volume of gross sales made 04 during the tax year within the state or subdivision, as the case may be, is not in excess 05 of $100,000 may elect to report and pay any tax due on the basis of a percentage of 06 such volume, and shall adopt rates which shall produce a tax which reasonably 07 approximates the tax otherwise due. The Multistate Tax Commission, not more than 08 once in five years, may adjust the $100,000 figure in order to reflect such changes as 09 may occur in the real value of the dollar, and such adjusted figure, upon adoption by 10 the commission, shall replace the $100,000 figure specifically provided herein. Each 11 party state and subdivision thereof may make the same election available to taxpayers 12 additional to those specified in this paragraph. 13 COVERAGE. 14 3. Nothing in this Article relates to the reporting or payment of any tax other 15 than an income tax. 16 ARTICLE IV. 17 DIVISION OF INCOME. 18 1. As used in this Article, unless the context otherwise requires: 19 (a) "Apportionable income" means:  20 (i) all income that is apportionable under the Constitution of the  21 United States and is not allocated under the laws of this state, including:  22 (A) ["BUSINESS INCOME" MEANS] income arising from 23 transactions and activity in the regular course of the taxpayer's trade or 24 business; and 25 (B) [INCLUDES] income arising from tangible and intangible 26 property if the acquisition, management, employment, development, or 27 [AND] disposition of the property is or was related to the operation 28 [CONSTITUTE INTEGRAL PARTS] of the taxpayer's [REGULAR] trade or 29 business; and  30 (ii) any income that would be allocable to this state under the  31 Constitution of the United States, but that is apportioned rather than allocated  01 pursuant to the laws of this state [OPERATIONS]. 02 (b) "Commercial domicile" means the principal place from which the trade or 03 business of the taxpayer is directed or managed. 04 (c) "Compensation" means wages, salaries, commissions and any other form 05 of remuneration paid to employees for personal services. 06 (d) "Financial organization" means any bank, trust company, savings bank, 07 industrial bank, land bank, safe deposit company, private banker, savings and loan 08 association, credit union, cooperative bank, small loan company, sales finance 09 company, investment company, or any type of insurance company. 10 (e) "Non-apportionable [NONBUSINESS] income" means all income other 11 than apportionable [BUSINESS] income. 12 (f) "Public utility" means any business entity (1) which owns or operates any 13 plant, equipment, property, franchise, or license for the transmission of 14 communications, transportation of goods or persons, except by pipe line, or the 15 production, transmission, sale, delivery, or furnishing of electricity, water or steam; 16 and (2) whose rates of charges for goods or services have been established or 17 approved by a federal, state or local government or governmental agency. 18 (g) "sales" means all gross receipts of the taxpayer that are not allocated 19 under paragraphs of this Article, and that are received from transactions and  20 activity in the regular course of the taxpayer's trade or business; except that sales  21 of a taxpayer from hedging transactions and from the maturity, redemption,  22 exchange, loan, or other disposition of cash or securities, shall be excluded. 23 (h) "State" means any state of the United States, the District of Columbia, the 24 Commonwealth of Puerto Rico, any territory or possession of the United States, and 25 any foreign country or political subdivision thereof. 26 (i) "This state" means the state in which the relevant tax return is filed or, in 27 the case of application of this Article to the apportionment and allocation of income 28 for local tax purposes, the subdivision or local taxing district in which the relevant tax 29 return is filed. 30 2. Any taxpayer having income from business activity which is taxable both 31 within and outside this state, other than activity as a financial organization or public 01 utility or the rendering of purely personal services by an individual, shall allocate and 02 apportion net income as provided in this Article. If a taxpayer has income from 03 business activity as a public utility but derives the greater percentage of income from 04 activities subject to this Article, the taxpayer may elect to allocate and apportion the 05 taxpayer's entire net income as provided in this Article. 06 3. For purposes of allocation and apportionment of income under this Article, a 07 taxpayer is taxable in another state if (1) in that state the taxpayer is subject to a net 08 income tax, a franchise tax measured by net income, a franchise tax for the privilege 09 of doing business, or a corporate stock tax, or (2) that state has jurisdiction to subject 10 the taxpayer to a net income tax regardless of whether, in fact, the state does or does 11 not. 12 4. Rents and royalties from real or tangible personal property, capital gains, 13 interest, dividends or patent or copyright royalties, to the extent that they constitute 14 nonapportionable [NONBUSINESS] income, shall be allocated as provided in 15 paragraphs 5 through 8 of this Article. 16 5.(a) Net rents and royalties from real property located in this state are 17 allocable to this state. 18 (b) Net rents and royalties from tangible personal property are allocable to this 19 state: (1) if and to the extent that the property is utilized in this state, or (2) in their 20 entirety if the taxpayer's commercial domicile is in this state and the taxpayer is not 21 organized under the laws of or taxable in the state in which the property is utilized. 22 (c) The extent of utilization of tangible personal property in a state is 23 determined by multiplying the rents and royalties by a fraction, the numerator of 24 which is the number of days of physical location of the property in the state during the 25 rental or royalty period in the taxable year and the denominator of which is the number 26 of days of physical location of the property everywhere during all rental or royalty 27 periods in the taxable year. If the physical location of the property during the rental or 28 royalty period is unknown or unascertainable by the taxpayer, tangible personal 29 property is utilized in the state in which the property was located at the time the rental 30 or royalty payer obtained possession. 31 6.(a) Capital gains and losses from sales of real property located in this state 01 are allocable to this state. 02 (b) Capital gains and losses from sales of tangible personal property are 03 allocable to this state if (1) the property had a situs in this state at the time of the sale, 04 or (2) the taxpayer's commercial domicile is in this state and the taxpayer is not 05 taxable in the state in which the property had a situs. 06 (c) Capital gains and losses from sales of intangible personal property are 07 allocable to this state if the taxpayer's commercial domicile is in this state. 08 7. Interest and dividends are allocable to this state if the taxpayer's commercial 09 domicile is in this state. 10 8.(a) Patent and copyright royalties are allocable to this state: (1) if and to the 11 extent that the patent or copyright is utilized by the payer in this state, or (2) if and to 12 the extent that the patent or copyright is utilized by the payer in a state in which the 13 taxpayer is not taxable and the taxpayer's commercial domicile is in this state. 14 (b) A patent is utilized in a state to the extent that it is employed in production, 15 fabrication, manufacturing, or other processing in the state or to the extent that a 16 patented product is produced in the state. If the basis of receipts from patent royalties 17 does not permit allocation to states or if the accounting procedures do not reflect states 18 of utilization, the patent is utilized in the state in which the taxpayer's commercial 19 domicile is located. 20 (c) A copyright is utilized in a state to the extent that printing or other 21 publication originates in the state. If the basis of receipts from copyright royalties does 22 not permit allocation to states or if the accounting procedures do not reflect states of 23 utilization, the copyright is utilized in the state in which the taxpayer's commercial 24 domicile is located. 25 9. All apportionable [BUSINESS] income shall be apportioned to this state by 26 multiplying the income by a fraction, the numerator of which is the property factor 27 plus the payroll factor plus the sales factor, and the denominator of which is three. 28 10. The property factor is a fraction, the numerator of which is the average 29 value of the taxpayer's real and tangible personal property owned or rented and used in 30 this state during the tax period and the denominator of which is the average value of 31 all the taxpayer's real and tangible personal property owned or rented and used during 01 the tax period. 02 11. Property owned by the taxpayer is valued at its original cost. Property 03 rented by the taxpayer is valued at eight times the net annual rental rate. Net annual 04 rental rate is the annual rental rate paid by the taxpayer less any annual rental rate 05 received by the taxpayer from subrentals. 06 12. The average value of property shall be determined by averaging the values 07 at the beginning and ending of the tax period but the tax administrator may require the 08 averaging of monthly values during the tax period if reasonably required to reflect 09 properly the average value of the taxpayer's property. 10 13. The payroll factor is a fraction, the numerator of which is the total amount 11 paid in this state during the tax period by the taxpayer for compensation and the 12 denominator of which is the total compensation paid everywhere during the tax period. 13 14. Compensation is paid in this state if: 14 (a) the individual's service is performed entirely within the state; 15 (b) the individual's service is performed both inside and outside the state, but 16 the service performed outside the state is incidental to the individual's service within 17 this state; or 18 (c) some of the service is performed in the state and (1) the base of operations 19 or, if there is no base of operations, the place from which the service is directed or 20 controlled is in the state, or (2) the base of operations or the place from which the 21 service is directed or controlled is not in any state in which some part of the service is 22 performed, but the individual's residence is in this state. 23 15. The sales factor is a fraction, the numerator of which is the total sales of 24 the taxpayer in this state during the tax period, and the denominator of which is the 25 total sales of the taxpayer everywhere during the tax period. 26 16. Sales of tangible personal property are in this state if: 27 (a) the property is delivered or shipped to a purchaser, other than the United 28 States Government, within this state regardless of the f.o.b. point or other conditions 29 of the sale; or 30 (b) the property is shipped from an office, store, warehouse, factory, or other 31 place of storage in this state and (1) the purchaser is the United States Government or 01 (2) the taxpayer is not taxable in the state of the purchaser. 02 17.(a) Sales, other than sales described in Section 16 [OF TANGIBLE 03 PERSONAL PROPERTY], are in this state if the taxpayer's market for the sales is  04 in this state. The taxpayer's market for sales is in this state:  05 (1) in the case of sale, rental, lease, or license of real property, if  06 and to the extent the property is located in this state;  07 (2) in the case of rental, lease, or license of tangible personal  08 property, if and to the extent the property is located in this state;  09 (3) in the case of sale of a service, if and to the extent the service is  10 delivered to a location in this state; and  11 (4) in the case of intangible property,  12 (i) that is rented, leased, or licensed, if and to the extent the  13 property is used in this state, provided that intangible property utilized in  14 marketing a good or service to a consumer is "used in this state" if that  15 good or service is purchased by a consumer who is in this state; and  16 (ii) that is sold, if and to the extent the property is used in  17 this state, provided that: 18 (A) a contract right, government license, or similar  19 intangible property that authorizes the holder to conduct a  20 business activity in a specific geographic area is "used in this state"  21 if the geographic area includes all or part of this state;  22 (B) sales from intangible property sales that are  23 contingent on the productivity, use, or disposition of the intangible  24 property shall be treated as a sale of the rental, lease, or licensing  25 of such intangible property under subsection (a)(4)(i); and  26 (C) all other sales of intangible property shall be  27 excluded from the numerator and denominator of the sales factor. 28 [: (a) THE INCOME-PRODUCING ACTIVITY IS PERFORMED IN 29 THIS STATE; OR] 30 (b) If the state or states of assignment under subsection (a) cannot be  31 determined, the state or states of assignment shall be reasonably approximated.  01 (c) If the taxpayer is not taxable in a state to which a sale is assigned  02 under subsection (a) or (b), or if the state of assignment cannot be determined  03 under subsection (a) or reasonably approximated under subsection (b), such a  04 sale shall be excluded from the denominator of the sales factor.  05 (d) The tax administrator may adopt regulations as necessary or  06 appropriate to carry out the purposes of this section [THE INCOME- 07 PRODUCING ACTIVITY IS PERFORMED BOTH IN AND OUTSIDE THIS 08 STATE AND A GREATER PROPORTION OF THE INCOME-PRODUCING 09 ACTIVITY IS PERFORMED IN THIS STATE THAN IN ANY OTHER STATE, 10 BASED ON COSTS OF PERFORMANCE]. 11 18. If the allocation and apportionment provisions of this Article do not fairly 12 represent the extent of the taxpayer's business activity in this state, the taxpayer may 13 petition for or the tax administrator may require, in respect to all or any part of the 14 taxpayer's business activity, if reasonable: 15 (a) separate accounting; 16 (b) the exclusion of any one or more of the factors; 17 (c) the inclusion of one or more additional factors which will fairly represent 18 the taxpayer's business activity in this state; or 19 (d) the employment of any other method to effectuate an equitable allocation 20 and apportionment of the taxpayer's income. 21 ARTICLE V. 22 ELEMENTS OF SALES AND USE TAX LAWS. 23 TAX CREDIT. 24 1. Each purchaser liable for a use tax on tangible personal property shall be 25 entitled to full credit for the combined amount or amounts of legally imposed sales or 26 use taxes paid by the purchaser with respect to the same property to another state and 27 any subdivision thereof. The credit shall be applied first against the amount of any use 28 tax due the state, and any unused portion of the credit shall then be applied against the 29 amount of any use tax due a subdivision. 30 EXEMPTION CERTIFICATES, VENDORS MAY RELY. 31 2. Whenever a vendor receives and accepts in good faith from a purchaser a 01 resale or other exemption certificate or other written evidence of exemption authorized 02 by the appropriate state or subdivision taxing authority, the vendor shall be relieved of 03 liability for a sales or use tax with respect to the transaction. 04 ARTICLE VI. 05 THE COMMISSION. 06 ORGANIZATION AND MANAGEMENT. 07 1.(a) The Multistate Tax Commission is hereby established. It shall be 08 composed of one "member" from each party state who shall be the head of the state 09 agency charged with the administration of the types of taxes to which this compact 10 applies. If there is more than one such agency the state shall provide by law for the 11 selection of the commission member from the heads of the relevant agencies. State 12 law may provide that a member of the commission be represented by an alternate but 13 only if there is on file with the commission written notification of the designation and 14 identity of the alternate. The attorney general of each party state or the designee of the 15 attorney general, or other counsel if the laws of the party state specifically provide, 16 shall be entitled to attend the meetings of the commission, but shall not vote. Such 17 attorneys general, designees, or other counsel shall receive all notices of meetings 18 required under paragraph 1(e) of this Article. 19 (b) Each party state shall provide by law for the selection of representatives 20 from its subdivisions affected by this compact to consult with the commission member 21 from that state. 22 (c) Each member shall be entitled to one vote. The commission shall not act 23 unless a majority of the members are present, and no action shall be binding unless 24 approved by a majority of the total number of members. 25 (d) The commission shall adopt an official seal to be used as it may provide. 26 (e) The commission shall hold an annual meeting and such other regular 27 meetings as its bylaws may provide and such special meetings as its executive 28 committee may determine. The commission bylaws shall specify the dates of the 29 annual and any other regular meetings, and shall provide for the giving of notice of 30 annual, regular and special meetings. Notices of special meetings shall include the 31 reasons therefor and an agenda of the items to be considered. 01 (f) The commission shall elect annually, from among its members, a chairman, 02 a vice-chairman and a treasurer. The commission shall appoint an executive director 03 who shall serve at its pleasure, and it shall fix the duties and compensation of the 04 executive director. The executive director shall be secretary of the commission. The 05 commission shall make provision for the bonding of such of its officers and employees 06 as it may deem appropriate. 07 (g) Irrespective of the civil service, personnel or other merit system laws of 08 any party state, the executive director shall appoint or discharge such personnel as 09 may be necessary for the performance of the functions of the commission and shall fix 10 their duties and compensation. The commission bylaws shall provide for personnel 11 policies and programs. 12 (h) The commission may borrow, accept or contract for the services of 13 personnel from any state, the United States, or any other governmental entity. 14 (i) The commission may accept for any of its purposes and functions any and 15 all donations and grants of money, equipment, supplies, materials and services, 16 conditional or otherwise, from any governmental entity, and may utilize and dispose 17 of the same. 18 (j) The commission may establish one or more offices for the transacting of its 19 business. 20 (k) The commission shall adopt bylaws for the conduct of its business. The 21 commission shall publish its bylaws in convenient form, and shall file a copy of the 22 bylaws and any amendments thereto with the appropriate agency or officer in each of 23 the party states. 24 (l) The commission annually shall make to the governor and legislature of 25 each party state a report covering its activities for the preceding year. Any donation or 26 grant accepted by the commission or services borrowed shall be reported in the annual 27 report of the commission, and shall include the nature, amount and conditions, if any, 28 of the donation, gift, grant or services borrowed and the identity of the donor or 29 lender. The commission may make additional reports as it may deem desirable. 30 COMMITTEES. 31 2.(a) To assist in the conduct of its business when the full commission is not 01 meeting, the commission shall have an executive committee of seven members, 02 including the chairman, vice-chairman, treasurer and four other members elected 03 annually by the commission. The executive committee, subject to the provisions of 04 this compact and consistent with the policies of the commission, shall function as 05 provided in the bylaws of the commission. 06 (b) The commission may establish advisory and technical committees, 07 membership on which may include private persons and public officials, in furthering 08 any of its activities. Such committees may consider any matter of concern to the 09 commission, including problems of special interest to any party state and problems 10 dealing with particular types of taxes. 11 (c) The commission may establish such additional committees as its bylaws 12 may provide. 13 POWERS. 14 3. In addition to powers conferred elsewhere in this compact, the commission 15 shall have power to: 16 (a) Study state and local tax systems and particular types of state and local 17 taxes. 18 (b) Develop and recommend proposals for an increase in uniformity or 19 compatibility of state and local tax laws with a view toward encouraging the 20 simplification and improvement of state and local tax law and administration. 21 (c) Compile and publish information as in its judgment would assist the party 22 states in implementation of the compact and taxpayers in complying with state and 23 local tax laws. 24 (d) Do all things necessary and incidental to the administration of its functions 25 pursuant to this compact. 26 FINANCE. 27 4.(a) The commission shall submit to the governor or designated officer or 28 officers of each party state a budget of its estimated expenditures for such period as 29 may be required by the laws of that state for presentation to the legislature thereof. 30 (b) Each of the commission's budgets of estimated expenditures shall contain 31 specific recommendations of the amounts to be appropriated by each of the party 01 states. The total amount of appropriations requested under any such budget shall be 02 apportioned among the party states as follows: one-tenth in equal shares; and the 03 remainder in proportion to the amount of revenue collected by each party state and its 04 subdivisions from income taxes, capital stock taxes, gross receipts, taxes, sales and use 05 taxes. In determining such amounts, the commission shall employ such available 06 public sources of information as, in its judgment, present the most equitable and 07 accurate comparisons among the party states. Each of the commission's budgets of 08 estimated expenditures and requests for appropriations shall indicate the sources used 09 in obtaining information employed in applying the formula contained in this 10 paragraph. 11 (c) The commission shall not pledge the credit of any party state. The 12 commission may meet any of its obligations in whole or in part with funds available to 13 it under paragraph 1(i) of this Article: provided that the commission takes specific 14 action setting aside such funds prior to incurring any obligation to be met in whole or 15 in part in such manner. Except where the commission makes use of funds available to 16 it under paragraph 1(i), the commission shall not incur any obligation prior to the 17 allotment of funds by the party states adequate to meet the same. 18 (d) The commission shall keep accurate accounts of all receipts and 19 disbursements. The receipts and disbursements of the commission shall be subject to 20 the audit and accounting procedures established under its bylaws. All receipts and 21 disbursements of funds handled by the commission shall be audited yearly by a 22 certified or licensed public accountant and the report of the audit shall be included in 23 and become part of the annual report of the commission. 24 (e) The accounts of the commission shall be open at any reasonable time for 25 inspection by duly constituted officers of the party states and by any persons 26 authorized by the commission. 27 (f) Nothing contained in this Article shall be construed to prevent commission 28 compliance with laws relating to audit or inspection of accounts by or on behalf of any 29 government contributing to the support of the commission. 30 ARTICLE VII. 31 UNIFORM REGULATIONS AND FORMS. 01 1. Whenever any two or more party states, or subdivisions of party states, have 02 uniform or similar provisions of law relating to an income tax, capital stock tax, gross 03 receipts tax, sales or use tax, the commission may adopt uniform regulations for any 04 phase of the administration of such law, including assertion of jurisdiction to tax, or 05 prescribing uniform tax forms. The commission may also act with respect to the 06 provisions of Article IV of this compact. 07 2. Prior to the adoption of any regulation, the commission shall: 08 (a) As provided in its bylaws, hold at least one public hearing on due notice to 09 all affected party states and subdivisions thereof and to all taxpayers and other persons 10 who have made timely request of the commission for advance notice of its regulation- 11 making proceedings. 12 (b) Afford all affected party states and subdivisions and interested persons an 13 opportunity to submit relevant written data and views, which shall be considered fully 14 by the commission. 15 3. The commission shall submit any regulations adopted by it to the 16 appropriate officials of all party states and subdivisions to which they might apply. 17 Each such state and subdivision shall consider any such regulations for adoption in 18 accordance with its own laws and procedures. 19 ARTICLE VIII. 20 INTERSTATE AUDITS. 21 1. This Article shall be in force only in those party states that specifically 22 provide therefor by statute. 23 2. Any party state or subdivision thereof desiring to make or participate in an 24 audit of any accounts, books, papers, records or other documents may request the 25 commission to perform the audit on its behalf. In responding to the request, the 26 commission shall have access to and may examine, at any reasonable time, such 27 accounts, books, papers, records, and other documents and any relevant property or 28 stock of merchandise. The commission may enter into agreements with party states or 29 their subdivisions for assistance in performance of the audit. The commission shall 30 make charges, to be paid by the state or local government or governments for which it 31 performs the service, for any audits performed by it in order to reimburse itself for the 01 actual costs incurred in making the audit. 02 3. The commission may require the attendance of any person within the state 03 where it is conducting an audit or part thereof at a time and place fixed by it within 04 such state for the purpose of giving testimony with respect to any account, book, 05 paper, document, other record, property or stock of merchandise being examined in 06 connection with the audit. If the person is not within the jurisdiction, the person may 07 be required to attend for such purpose at any time and place fixed by the commission 08 within the state of which the person is a resident: provided that such state has adopted 09 this Article. 10 4. The commission may apply to any court having power to issue compulsory 11 process for orders in aid of its powers and responsibilities pursuant to this Article and 12 any and all such courts shall have jurisdiction to issue such orders. Failure of any 13 person to obey any such order shall be punishable as contempt of the issuing court. If 14 the party or subject matter on account of which the commission seeks an order is 15 within the jurisdiction of the court to which application is made, such application may 16 be to a court in the state or subdivision on behalf of which the audit is being made or a 17 court in the state in which the object of the order being sought is situated. The 18 provisions of this paragraph apply only to courts in a state that has adopted this 19 Article. 20 5. The commission may decline to perform any audit requested if it finds that 21 its available personnel or other resources are insufficient for the purpose or that, in the 22 terms requested, the audit is impracticable of satisfactory performance. If the 23 commission, on the basis of its experience, has reason to believe that an audit of a 24 particular taxpayer, either at a particular time or on a particular schedule, would be of 25 interest to a number of party states or their subdivisions, it may offer to make the audit 26 or audits, the offer to be contingent on sufficient participation therein as determined by 27 the commission. 28 6. Information obtained by any audit pursuant to this Article shall be 29 confidential and available only for tax purposes to party states, their subdivisions or 30 the United States. Availability of information shall be in accordance with the laws of 31 the states or subdivisions on whose account the commission performs the audit, and 01 only through the appropriate agencies or officers of such states or subdivisions. 02 Nothing in this Article shall be construed to require any taxpayer to keep records for 03 any period not otherwise required by law. 04 7. Other arrangements made or authorized pursuant to laws for cooperative 05 audit by or on behalf of the party states or any of their subdivisions are not superseded 06 or invalidated by this Article. 07 8. In no event shall the commission make any charge against a taxpayer for an 08 audit. 09 9. As used in this Article, "tax," in addition to the meaning ascribed to it in 10 Article II, means any tax or license fee imposed in whole or in part for revenue 11 purposes. 12 ARTICLE IX. 13 ARBITRATION. 14 1. Whenever the commission finds a need for settling disputes concerning 15 apportionments and allocations by arbitration, it may adopt a regulation placing this 16 Article in effect, notwithstanding the provisions of Article VII. 17 2. The commission shall select and maintain an arbitration panel composed of 18 officers and employees of state and local governments and private persons who shall 19 be knowledgeable and experienced in matters of tax law and administration. 20 3. Whenever a taxpayer who has elected to employ Article IV, or whenever the 21 laws of the party state or subdivision thereof are substantially identical with the 22 relevant provisions of Article IV, the taxpayer, by written notice to the commission 23 and to each party state or subdivision thereof that would be affected, may secure 24 arbitration of an apportionment or allocation, if the taxpayer is dissatisfied with the 25 final administrative determination of the tax agency of the state or subdivision with 26 respect thereto on the ground that it would subject the taxpayer to double or multiple 27 taxation by two or more party states or subdivisions thereof. Each party state and 28 subdivision thereof hereby consents to the arbitration as provided herein, and agrees to 29 be bound thereby. 30 4. The arbitration board shall be composed of one person selected by the 31 taxpayer, one by the agency or agencies involved, and one member of the 01 commission's arbitration panel. If the agencies involved are unable to agree on the 02 person to be selected by them, such person shall be selected by lot from the total 03 membership of the arbitration panel. The two persons selected for the board in the 04 manner provided by the foregoing provisions of this paragraph shall jointly select the 05 third member of the board. If they are unable to agree on the selection, the third 06 member shall be selected by lot from among the total membership of the arbitration 07 panel. No member of a board selected by lot shall be qualified to serve if the member 08 is an officer or employee or is otherwise affiliated with any party to the arbitration 09 proceeding. Residence within the jurisdiction of a party to the arbitration proceeding 10 shall not constitute affiliation within the meaning of this paragraph. 11 5. The board may sit in any state or subdivision party to the proceeding, in the 12 state of the taxpayer's incorporation, residence or domicile, in any state where the 13 taxpayer does business, or in any place that it finds most appropriate for gaining 14 access to evidence relevant to the matter before it. 15 6. The board shall give due notice of the times and places of its hearings. The 16 parties shall be entitled to be heard, to present evidence, and to examine and cross- 17 examine witnesses. The board shall act by majority vote. 18 7. The board shall have power to administer oaths, take testimony, subpoena 19 and require the attendance of witnesses and the production of accounts, books, papers, 20 records, and other documents, and issue commissions to take testimony. Subpoenas 21 may be signed by any member of the board. In case of failure to obey a subpoena, and 22 upon application by the board, any judge of a court of competent jurisdiction of the 23 state in which the board is sitting or in which the person to whom the subpoena is 24 directed may be found may make an order requiring compliance with the subpoena, 25 and the court may punish failure to obey the order as a contempt. The provisions of 26 this paragraph apply only in states that have adopted this Article. 27 8. Unless the parties otherwise agree the expenses and other costs of the 28 arbitration shall be assessed and allocated among the parties by the board in such 29 manner as it may determine. The commission shall fix a schedule of compensation for 30 members of arbitration boards and of other allowable expenses and costs. No officer 31 or employee of a state or local government who serves as a member of a board shall be 01 entitled to compensation therefor unless the member is required on account of the 02 service as a board member to forego the regular compensation attaching to the public 03 employment, but any such board member shall be entitled to expenses. 04 9. The board shall determine the disputed apportionment or allocation and any 05 matters necessary thereto. The determinations of the board shall be final for purposes 06 of making the apportionment or allocation, but for no other purpose. 07 10. The board shall file with the commission and with each tax agency 08 represented in the proceeding: the determination of the board; the board's written 09 statement of its reasons therefor; the record of the board's proceedings; and any other 10 documents required by the arbitration rules of the commission to be filed. 11 11. The commission shall publish the determinations of boards together with 12 the statements of the reasons therefor. 13 12. The commission shall adopt and publish rules of procedure and practice 14 and shall file a copy of such rules and of any amendment thereto with the appropriate 15 agency or officer in each of the party states. 16 13. Nothing contained herein shall prevent at any time a written compromise of 17 any matter or matters in dispute, if otherwise lawful, by the parties to the arbitration 18 proceedings. 19 ARTICLE X. 20 ENTRY INTO FORCE AND WITHDRAWAL. 21 1. This compact shall enter into force when enacted into law by any seven 22 states. Thereafter, this compact shall become effective as to any other state upon its 23 enactment thereof. The commission shall arrange for notification of all party states 24 whenever there is a new enactment of the compact. 25 2. Any party state may withdraw from this compact by enacting a statute 26 repealing the same. No withdrawal shall affect any liability already incurred by or 27 chargeable to a party state prior to the time of such withdrawal. 28 3. No proceeding commenced before an arbitration board prior to the 29 withdrawal of a state and to which the withdrawing state or any subdivision thereof is 30 a party shall be discontinued or terminated by the withdrawal, nor shall the board 31 thereby lose jurisdiction over any of the parties to the proceeding necessary to make a 01 binding determination therein. 02 ARTICLE XI. 03 EFFECT ON OTHER LAWS AND JURISDICTION. 04 Nothing in this compact shall be construed to: 05 (a) Affect the power of any state or subdivision thereof to fix rates of taxation, 06 except that a party state shall be obligated to implement Article III 2 of this compact. 07 (b) Apply to any tax or fixed fee imposed for the registration of a motor 08 vehicle or any tax on motor fuel, other than a sales tax: provided that the definition of 09 "tax" in Article VIII 9 may apply for the purposes of that Article and the commission's 10 powers of study and recommendation pursuant to Article VI 3 may apply. 11 (c) Withdraw or limit the jurisdiction of any state or local court or 12 administrative officer or body with respect to any person, corporation or other entity 13 or subject matter, except to the extent that such jurisdiction is expressly conferred by 14 or pursuant to this compact upon another agency or body. 15 (d) Supersede or limit the jurisdiction of any court of the United States. 16 ARTICLE XII. 17 CONSTRUCTION AND SEVERABILITY. 18 This compact shall be liberally construed so as to effectuate the purposes 19 thereof. The provisions of this compact shall be severable and if any phrase, clause, 20 sentence, or provision of this compact is declared to be contrary to the constitution of 21 any state or of the United States or the applicability thereof to any government, 22 agency, person or circumstance is held invalid, the validity of the remainder of this 23 compact and the applicability thereof to any government, agency, person or 24 circumstance shall not be affected thereby. If this compact shall be held contrary to the 25 constitution of any state participating therein, the compact shall remain in full force 26 and effect as to the remaining party states and in full force and effect as to the state 27 affected as to all severable matters. 28  * Sec. 16. AS 43.20.011(e) is repealed and reenacted to read: 29 (e) There is imposed for each taxable year upon the entire taxable income of 30 every corporation derived from sources within the state a tax of zero percent of the 31 taxable income. 01  * Sec. 17. AS 43.20.143(a) is amended to read: 02 (a) All apportionable [BUSINESS] income of water transportation carriers 03 shall be apportioned to this state in accordance with AS 43.19 (Multistate Tax 04 Compact) as modified by the following: 05 (1) the numerator of the property factor is the sum of the value for 06 property in a fixed location, including buildings and land used in the business, and 07 intrastate equipment and personal property determined according to AS 43.19 08 (Multistate Tax Compact), and the value of interstate mobile property determined on a 09 days-spent-in-ports basis as provided in (4) of this subsection; the denominator of the 10 property factor is determined according to AS 43.19 (Multistate Tax Compact); 11 (2) the numerator of the payroll factor is the sum of the wages and 12 salaries of employees assigned to fixed locations determined according to AS 43.19 13 (Multistate Tax Compact) and the wages and salaries of employees assigned to 14 interstate mobile property determined on a days-spent-in-ports basis as provided in (4) 15 of this subsection; the denominator of the payroll factor is determined in accordance 16 with AS 43.19 (Multistate Tax Compact); 17 (3) the numerator of the sales factor is the sum of all revenues from 18 intrastate activities and revenues from interstate activities determined on a days-spent- 19 in-ports basis as provided in (4) of this subsection; the denominator is determined in 20 accordance with AS 43.19 (Multistate Tax Compact); 21 (4) the portions of the numerator of the property, payroll, and sales 22 factors which are directly related to interstate mobile property operations are 23 determined by a ratio which the number of days spent in ports inside the state bears to 24 the total number of days spent in ports inside and outside the state; the term "days 25 spent in ports" does not include periods when ships are tied up because of strikes or 26 withheld from Alaska service for repairs, or because of seasonal reduction of service; 27 days in port are computed by dividing the total number of hours in all ports by 24. 28  * Sec. 18. AS 43.20.144(a) is amended to read: 29 (a) All apportionable [BUSINESS] income of a taxpayer engaged in the 30 production of oil or gas from a lease or property in this state or engaged in the 31 transportation of oil or gas by pipeline in this state shall be apportioned to this state in 01 accordance with AS 43.19 (Multistate Tax Compact) as modified by this section. 02  * Sec. 19. AS 43.20.144(b) is amended to read: 03 (b) A taxpayer's apportionable [BUSINESS] income to be apportioned under 04 this section to the state shall be the federal taxable income of the taxpayer's 05 consolidated business for the tax period, except that 06 (1) taxes based on or measured by net income that are deducted in the 07 determination of the federal taxable income shall be added back; the tax levied and 08 paid under AS 43.55 may not be added back; 09 (2) intangible drilling and development costs that are deducted as 10 expenses under 26 U.S.C. 263(c) (Internal Revenue Code) in the determination of the 11 federal taxable income shall be capitalized and depreciated as if the option to treat 12 them as expenses under 26 U.S.C. 263(c) (Internal Revenue Code) had not been 13 exercised; 14 (3) depletion deducted on the percentage depletion basis under 26 15 U.S.C. 613 (Internal Revenue Code) in the determination of the federal taxable income 16 shall be recomputed and deducted on the cost depletion basis under 26 U.S.C. 612 17 (Internal Revenue Code); and 18 (4) depreciation shall be computed on the basis of 26 U.S.C. 167 19 (Internal Revenue Code) as that section read on June 30, 1981. 20  * Sec. 20. AS 43.20.144(c) is amended to read: 21 (c) A taxpayer's apportionable [BUSINESS] income shall be apportioned to 22 this state by multiplying the taxpayer's income determined under (b) of this section by 23 the apportionment factor applicable to the taxpayer among the following factors: 24 (1) the apportionment factor of a taxpayer subject to this section but 25 not engaged in the production of oil and gas, or of gas only, as appropriate, from a 26 lease or property in this state during the tax period is a fraction, the numerator of 27 which is the sum of the property factor under AS 43.19 (Multistate Tax Compact) and 28 the sales factor under (d) of this section for the taxpayer for that tax period, and the 29 denominator of which is two; 30 (2) the apportionment factor of a taxpayer subject to this section but 31 not engaged in the pipeline transportation of oil or gas in this state during the tax 01 period is a fraction, the numerator of which is the sum of the property factor under (e) 02 of this section and the extraction factor under (f) of this section for the taxpayer for the 03 tax period, and the denominator of which is two; 04 (3) the apportionment factor of a taxpayer engaged both in the 05 production of oil or gas from a lease or property in this state and in the pipeline 06 transportation of oil or gas in this state during the tax period is a fraction, the 07 numerator of which is the sum of the sales factor under (d) of this section, the property 08 factor under (e) of this section, and the extraction factor under (f) of this section for 09 the taxpayer for the tax period, and the denominator of which is three. 10  * Sec. 21. AS 43 is amended by adding a new chapter to read: 11 Chapter 44. Sales and Use Tax.  12 Article 1. Levy and Collection of the Tax.  13 Sec. 43.44.010. Levy of sales and use tax. (a) There is levied a sales tax on 14 the retail sale of personal property and services to a purchaser in the state. The rate of 15 the tax is 16 (1) four percent from April 1 through September 30; and 17 (2) two percent from October 1 through March 31. 18 (b) There is levied a use tax on the use in this state of personal property and 19 services identified in this subsection. The rate of the use tax is equal to the applicable 20 sales tax rate under (a) of this section at the time of the use. The use tax applies to 21 (1) personal property purchased 22 (A) outside the state as a result of a transaction that would have 23 been subject to the sales tax levied under this section had it occurred in the 24 state; or 25 (B) by a purchaser for use in an exempt manner but that was 26 later converted to a use subject to the sales tax levied under this section; or 27 (2) services purchased outside the state that would be subject to the 28 sales tax levied under this section if purchased in the state. 29 Sec. 43.44.020. Liability and collection of sales and use taxes. (a) A tax 30 levied under AS 43.44.010 is imposed on the purchaser. The seller, including a remote 31 seller, shall apply the tax to the sales price and collect the tax from the purchaser. The 01 seller holds the tax in trust for the state and shall pay the tax to the department. 02 (b) A tax levied under AS 43.44.010(b) is imposed on the user . A seller 03 located outside the state who has a nexus to the state and who sells goods or services 04 subject to the tax levied in AS 43.44.010(b) shall collect the use tax from the 05 purchaser and pay the tax collected to the department. 06 (c) A marketplace facilitator that meets the threshold requirements for a remote 07 seller under AS 43.44.490 is considered the seller for each sale facilitated through its 08 marketplace. A marketplace facilitator shall collect and remit the tax levied under this 09 chapter. 10 (d) Unless the tax has already been paid under (a) of this section, a person in 11 the state who purchases goods or services from a seller located outside the state that 12 does not qualify as a remote seller under this chapter shall pay the sales tax described 13 in AS 43.44.010(a) to the department. 14 (e) Unless the tax has already been paid under (b) of this section, the 15 purchaser of personal property or services subject to the use tax described in 16 AS 43.44.010(b) shall pay the tax to the department at the time the property or service 17 is first used in the state. 18 (f) A seller is liable for a tax the seller is required to collect under this section. 19 If a seller is not required to collect a tax under this section, the purchaser is liable for 20 the tax. Liability for the payment of a tax levied under this chapter is not extinguished 21 until the tax has been paid to the department. 22 (g) If a seller collects a tax in excess of a tax imposed under AS 43.44.010, the 23 seller shall remit the excess to the department. 24 (h) The department shall adopt regulations to prevent evasion of taxes 25 imposed under this chapter and to aid in its administration of the collection of taxes 26 under this chapter. 27 Sec. 43.44.030. Receipt and remittance of local sales and use taxes. (a) The 28 department shall receive municipal sales and use taxes levied under AS 29.45.650 and 29 29.45.700 and remit the proceeds to the municipality. Under AS 43.05 and AS 43.10, 30 the department shall administer, receive, and enforce a sales tax and use tax levied 31 under AS 29.45.650 and 29.45.700. 01 (b) The department is authorized to establish and collect administrative fees 02 from municipalities associated with the costs incurred from the receipt, audit, 03 enforcement, and remittance of a local sales tax and use tax levied under AS 29.45.650 04 and 29.45.700. 05 Sec. 43.44.040. Sourcing. Notwithstanding AS 43.44.430, the department 06 shall adopt regulations establishing sourcing rules for transactions subject to a tax 07 under this chapter. The regulations may adopt the standards of an agreement 08 authorized under AS 43.44.400. 09 Article 2. Exemptions.  10 Sec. 43.44.100. Exemptions. (a) The following are exempt from a tax levied 11 under this chapter: 12 (1) a sale by, sale to, or use by the United States; 13 (2) a sale by, sale to, or use by the state or an instrumentality of the 14 state, as defined in AS 39.52.960; this paragraph does not apply to a municipal utility 15 sales, an unincorporated community, an Indian tribe included in the list published 16 under 25 U.S.C. 5131, or a foreign government; in this paragraph, "unincorporated 17 community" means a place that is not incorporated as a city and in which 25 or more 18 persons reside as a social unit; 19 (b) The following are exempt from a sales or use tax levied under 20 AS 43.44.010: 21 (1) a purchase made with a voucher or other type of certificate issued 22 under 42 U.S.C. 1786 (Special Supplemental Food Program for Women, Infants, and 23 Children) or a food stamp or other food allotment under 7 U.S.C. 2011 – 2036 (Food 24 Stamp Program); for the purposes of this paragraph, the value of a food stamp 25 allotment paid in the form of a wage subsidy as authorized under AS 47.25.975(b) is 26 not considered to be an allotment issued under 7 U.S.C. 2011 – 2036 (Food Stamp 27 Program); 28 (2) a sale of a state license or permit; 29 (3) services among affiliated persons that report their income under 26 30 U.S.C. (Internal Revenue Code) on a single consolidated return; 31 (4) wages, salaries, commission, tips, and any other forms of 01 remuneration for personal services, if paid by an employer to an employee; 02 (5) proceeds from investments and other intangible items, including 03 (i) interest on money loaned or deposited; 04 (ii) dividends or interest from stocks, bonds, or 05 securities; 06 (iii) proceeds from the sale of stocks, bonds, or 07 securities; 08 (6) fees for services associated with financial instruments, interests, or 09 deposit accounts; 10 (7) an isolated or occasional sale of personal property; 11 (8) personal or household effects owned or possessed by an individual 12 for a period of six months or longer and brought into the state for the establishment of 13 initial permanent residence in the state and the use by a nonresident of property 14 brought into the state for the nonresident's own nonbusiness use while temporarily in 15 the state; 16 (9) a sale for resale and associated transportation associated with the 17 resale, if the purchaser presents, at the time of sale, an exemption certificate issued 18 under AS 43.44.210; 19 (10) a transaction between the holders of a joint interest or between the 20 partners in a business partnership; 21 (11) fuels sold for use in jet propulsion aircraft; 22 (12) a sale or construction of real property; however, the sale or 23 transportation of personal property that is later converted to real property is taxable 24 under this chapter unless the conversion is part of the construction of real property or 25 construction of an addition to real property; 26 (13) the following health care services and related items: 27 (A) health care services provided by a person licensed or 28 certified to provide those services under AS 08 or by a health care facility as 29 defined in AS 08.68.700(g); 30 (B) drugs, durable medical equipment, mobility enhancing 31 equipment, and prosthetic devices prescribed by a person licensed to prescribe 01 those goods under AS 08 or obtained from a health care facility as defined in 02 AS 08.68.700(g); 03 (14) the transport, handling, storage, drayage, or packing of property, 04 or other related service on property, if the property is transported in interstate or 05 foreign commerce; 06 (15) the sale of goods or services to a person who uses the goods or 07 services primarily in a trade or business if the cost of the goods or services is 08 (A) deductible by the purchaser under 26 U.S.C. 162 (Internal 09 Revenue Code), as that section read on January 1, 2026; or 10 (B) depreciable by the purchaser under 26 U.S.C. 167 or 168 11 (Internal Revenue Code), as that section read on January 1, 2026; 12 (16) insurance premiums subject to taxation under AS 21; 13 (17) the sale of personal property where the seller is obligated to make 14 delivery to the purchaser at a point outside the state, or to deliver the property for 15 transportation to the purchaser at a point outside the state; 16 (18) the rental or lease of real property for a period of 30 consecutive 17 days or more; and 18 (19) the sale of Internet access. 19 Article 3. Seller's Permit; Exemption Certificate.  20 Sec. 43.44.200. Seller's permit. (a) A person shall obtain a seller's permit 21 from the department before engaging in business in the state. A remote seller shall 22 obtain a seller's permit not later than 30 days after the remote seller exceeds the gross 23 revenue threshold under AS 43.44.490. 24 (b) An applicant for a seller's permit shall apply on a form or in a format 25 prescribed by the department stating 26 (1) the name under which the applicant intends to transact business; 27 (2) every location where the applicant intends to transact business for 28 which the permit is being sought; and 29 (3) any other information the department requires. 30 (c) The department shall issue an eligible applicant a numbered seller's permit. 31 A seller's permit is valid until revoked or suspended and is not assignable. 01 (d) A seller that makes sales exclusively through a registered marketplace 02 facilitator is not required to register, collect, or remit tax on those sales, and is not 03 subject to bonding or security requirements with respect to those sales. 04 (e) The name, address, and permit number of a person holding a seller's permit 05 is public information and shall be made available by the department 06 Sec. 43.44.210. Exemption certificate. A person selling for resale or a 07 purchaser claiming an exemption for business inputs under AS 43.44.100(b)(15) shall 08 obtain an exemption certificate from the department. The department shall issue an 09 eligible person an exemption certificate that includes 10 (1) a unique identification number assigned by the department; 11 (2) the general character of the property or service sold by the seller or used 12 by the purchaser in the regular course of business; 13 (3) the person's name and principal business address; and 14 (4) the person's signature or electronic signature. 15 Sec. 43.44.220. Revocation or suspension of seller's permit or exemption  16 certificate. (a) The department may revoke or suspend a seller's permit or a person's 17 exemption certificate, or both, if the person fails to comply with a provision of this 18 chapter. 19 (b) A person aggrieved by a revocation or suspension of a seller's permit or 20 exemption certificate under (a) of this section may file an appeal with the department 21 not later than 60 days after revocation or suspension. The appellant may present to the 22 appeals officer arguments and evidence relevant to the revocation or suspension. The 23 department shall give written notice of its decision on an appeal. In its decision, the 24 department may 25 (1) uphold the suspension or revocation; 26 (2) reinstate a suspended permit or certificate: or 27 (3) subject to (c) of this section, issue a new permit or certificate. 28 (c) The department may not issue a new seller's permit or exemption 29 certificate to a person whose permit or certificate has been revoked except on 30 application by the person accompanied by reasonable evidence of the person's 31 intention to comply with this chapter. The department may, as a condition of issuance 01 of a new permit or certificate, require security in addition to that authorized under 02 AS 43.44.340 in an amount reasonably necessary to ensure compliance with this 03 chapter. 04 (d) A person aggrieved by a final decision of the department under this section 05 may appeal the decision to the superior court as provided by law. 06 Sec. 43.44.230. Improper use of purchase obtained with exemption  07 certificate; penalty. A person who intentionally uses an exemption certificate for 08 property that is used for a purpose other than the purpose claimed is subject to a 09 penalty, payable to the department, of $100 or 100 percent of the tax due, whichever is 10 greater, for each transaction in which an improper use of the exemption certificate has 11 occurred. The penalty is in addition to tax, interest, or other penalties due. 12 Sec. 43.44.240. Commingling exemption certificate property. If a person 13 uses an exemption certificate for the purchase of personal property and commingles 14 that property with property that was not purchased with a exemption certificate but is 15 so similar that the identity of the property in the commingled mass cannot be 16 determined, sales from the mass of commingled property are considered to be sales of 17 the property purchased with the exemption certificate until the quantity of commingled 18 property sold equals the quantity of property originally purchased under the exemption 19 certificate. 20 Article 4. Returns; Security; Credits and Refunds.  21 Sec. 43.44.300. Method of accounting. A seller shall report and pay the sales 22 and use tax under AS 43.44.010 using the same method of accounting that the person 23 uses for federal tax purposes. 24 Sec. 43.44.310. Returns and payment. A person liable for a tax under 25 AS 43.44.010 shall file a return and pay the tax on a monthly basis, on or before the 26 last day of the month following the month in which the tax obligation is incurred. A 27 return filed under this section shall be made on a form and in a format prescribed by 28 the department. 29 Sec. 43.44.320. Methods. (a) The department shall adopt regulations providing 30 for the payment of a tax under AS 43.44.010 based on a rounding method. 31 (b) The department may use sampling principles or methods in conducting a 01 sales tax or use tax audit. 02 Sec. 43.44.330. Timely filing allowance. (a) A person filing a return under 03 AS 43.44.310 may claim an allowance in the amount of one percent of the tax 04 determined to be payable to the state or $75 a month, whichever is less, if the return is 05 timely filed and the tax is timely paid. 06 (b) The allowance authorized by this section may be deducted on the return. 07 The allowance may not be greater than the tax payable to the state. 08 Sec. 43.44.340. Security; sale of security at auction; bond. (a) The 09 department may require a seller, including a remote seller, to deposit with the 10 department security in a form and amount determined appropriate by the department, 11 but not more than twice the estimated average liability for the period in which the 12 return is required to be filed or $10,000, whichever is less. The department may 13 increase or decrease the amount of security required, subject to the limitations of this 14 section. 15 (b) In addition to remedies under AS 43.10, the department may sell at a 16 public auction property deposited as security to recover a sales tax or use tax amount 17 required to be collected, including interest and penalties. The department shall give 18 notice of the sale not later than 30 days before a sale and shall serve the person who 19 deposited the security personally or by certified mail to the person's last known 20 address. After a sale under this subsection, any surplus above the amount due that is 21 not required as security under this section shall be returned to the person who 22 deposited the security. 23 (c) In lieu of security, the department may require a seller to file a bond issued 24 by a surety company authorized to transact business in the state to guarantee solvency 25 and responsibility. 26 (d) In addition to the other requirements of this section, the department may 27 require a corporate officer, director, or shareholder of a corporation to provide a 28 personal guarantee and assumption of liability for the payment of a tax due under this 29 chapter. 30 Sec. 43.44.350. Taxpayer quitting business; liability of successor. (a) All 31 taxes payable under this chapter are due and payable immediately whenever a 01 taxpayer quits business, sells, exchanges, or otherwise disposes of the business or 02 disposes of the stock of goods. The taxpayer shall file a return and pay the taxes due 03 not later than 10 days after the taxpayer quits business, sells, exchanges, or otherwise 04 disposes of the business or disposes of the stock of goods. 05 (b) Except as provided in (c) of this section, a person who becomes a 06 successor in a taxpayer's business or stock of goods is liable for the full amount of the 07 tax due unless the taxpayer pays the amount due. Payment of the tax by the successor 08 is considered a payment on the sales price and, if the payment is greater in amount 09 than the sales price, the amount of the difference becomes a debt due to the successor 10 from the taxpayer owing the tax under (a) of this section 11 (c) A successor is not liable for a tax due by a person from whom the 12 successor acquired a business or stock of goods if 13 (1) the successor gives written notice to the department of the 14 acquisition; and 15 (2) an assessment is not issued by the department against the former 16 owner of the business or stock of goods within six months of receipt of the notice from 17 the successor; if an assessment is issued by the department and a copy is not mailed to 18 the successor, the successor is not liable for the tax due. 19 Sec. 43.44.360. Tax as debt. (a) A tax levied under this chapter and related 20 interest and penalties become a personal debt of the person required to file a return 21 from the time the liability arises, regardless of when the time for payment of the 22 liability occurs. 23 (b) If a personal representative of an estate has voluntarily distributed the 24 assets held in that capacity without reserving sufficient assets to pay a tax and related 25 interest and penalties under this chapter, the personal representative is personally 26 liable for any deficiency to the extent permitted by AS 13.16. 27 (c) An officer or employee of a corporation whose duty it is to collect, 28 truthfully account for, and pay to the state a tax levied under this chapter and who fails 29 to pay the tax is liable to the state for the tax and the penalty and interest due on the 30 tax. This subsection applies to a corporate officer, director, or shareholder required by 31 the department to personally guarantee the payment of a tax for a corporation. 01 Sec. 43.44.370. Deductions for bad debts. (a) A person filing a return under 02 AS 43.44.310 may deduct sales found to be worthless. The bad debt may be deducted 03 when 04 (1) the debt is written off as uncollectable in the person's books and 05 records; and 06 (2) the debt qualifies as a deduction for federal income tax purposes 07 under 26 U.S.C. (Internal Revenue Code). 08 (b) If the amount of bad debt exceeds the amount of taxable sales during the 09 period in which the bad debt is written off, a person may file a refund claim with the 10 department. 11 (c) If a bad debt deducted under (a) of this section is subsequently collected, 12 the person who claimed the deduction shall pay the tax levied under AS 43.44.010 on 13 the amount collected. Any payments made on a debt or account under this subsection 14 are applied 15 (1) first to the taxable price of the property or service and the tax 16 levied under AS 43.44.010 on the property or service; and 17 (2) second to interest, service charges, and any other charges. 18 Sec. 43.44.380. Tax credit for sales or use tax paid to another state. A 19 purchaser liable for a sales or use tax under this chapter is entitled to a full credit for 20 the amount of sales or use tax paid on the same personal property or services to 21 another state. 22 Sec. 43.44.390. Refunds and credits. The department may credit or refund 23 overpayments of taxes, taxes erroneously or illegally assessed or collected, penalties 24 collected without authority, and taxes that are found unjustly assessed, excessive in 25 amount, or otherwise wrongfully collected, as established by regulation. When a 26 refund is allowed to a taxpayer, the refund shall be paid out of the general fund on a 27 warrant issued under a voucher approved by the department. 28 Article 5. General Provisions.  29 Sec. 43.44.400. Streamlined Sales and Use Tax Agreement. (a) The 30 department is authorized to enter into the Streamlined Sales and Use Tax Agreement, 31 approved by the Streamlined Sales Tax Governing Board, Inc., or substantially similar 01 agreement with one or more states. The department is authorized to act jointly with 02 other states that are members of the Streamlined Sales and Use Tax Agreement, or 03 substantially similar agreement, to establish standards for certification of a certified 04 service provider and certified automated system and to establish performance 05 standards for multistate sellers. 06 (b) If the department enters into the Streamlined Sales and use Tax 07 Agreement, or substantially similar agreement, the department shall adopt regulations 08 consistent with the agreement. 09 (c) The department may take all actions reasonably required to implement the 10 provisions set out in this section. 11 Sec. 43.44.410. Electronic registration, filing, and forms. (a) The 12 department may participate in any electronic sales and use tax registration system 13 made available in cooperation with other states through the Streamlined Sales and use 14 Tax Agreement or substantially similar agreement. 15 (b) The department may use and accept a standard electronic exemption form 16 made available in cooperation with other states through the Streamlined Sales and Use 17 Tax Agreement or substantially similar agreement. 18 (c) The department may prescribe and provide for the use of forms, 19 certificates, permits, and other documents required under this chapter in electronic 20 format, including the use of electronic signatures and authentications, and for 21 electronic filing. 22 Sec. 43.44.420. Field offices. The department may contract with a 23 municipality or other entity for the purpose of collecting a tax under this chapter for 24 that municipality's geographical area of the state. 25 Sec. 43.44.430. Regulations. The department may adopt regulations under 26 AS 44.62 (Administrative Procedure Act) to implement and administer this chapter. 27 Sec. 43.44.490. Definitions. In this chapter, 28 (1) "consideration" means a valuable inducement and includes money, 29 property, and services; 30 (2) "engaging in business" means carrying on or causing to be carried 31 on an activity with the purpose of direct or indirect benefit; 01 (3) "isolated or occasional sale" includes fundraising activities 02 conducted by a nonprofit organization that do not exceed 60 consecutive days in 03 duration; 04 (4) "marketplace facilitator" means a person that contracts with sellers 05 to facilitate the sale of the seller's product through a physical or electronic marketplace 06 operated by the person and collects the payment from the purchaser; 07 (5) "personal property" means property that can be seen, weighed, 08 measured, felt, or touched, or that is in any other manner perceptible to the senses, and 09 (A) includes electricity, water, gas, steam, Internet services, 10 electronic or digital goods, and prewritten computer software; 11 (B) does not include 12 (i) real property; or 13 (ii) intangible property, such as stocks, bonds, goodwill, 14 trademarks, patents, franchises, or copyrights; 15 (6) "remote seller" means a seller located outside the state who, during 16 the current or immediately preceding calendar year, received gross revenues in excess 17 of $100,000 from sales of goods and services delivered into the state; 18 (7) "retail sale" means a sale for any purpose other than resale in the 19 regular course of business; 20 (8) "sale," "selling," or "purchase" means any exchange, barter, rental, 21 lease, license, or transfer of title or possession of property or services for 22 consideration, including the right to use or consume property or services, regardless of 23 whether conditional or otherwise limited; 24 (9) "sales price" 25 (A) means the total amount of consideration, valued in United 26 States currency, including cash, credit, property, and services, for which 27 personal property or services are sold, whether received in money or otherwise, 28 without deduction of the following: 29 (i) the seller's cost of the property sold; 30 (ii) the cost of materials used, labor or service cost, 31 interest, losses, all costs of transportation to the seller, all taxes 01 imposed on the seller, and any other expense of the seller; 02 (iii) charges by the seller for any services necessary to 03 complete the sale; 04 (iv) delivery charges; 05 (v) installation charges; 06 (vi) the value of exempt personal property given to the 07 purchaser where taxable and exempt personal property have been 08 bundled together and sold by the seller as a single product or piece of 09 merchandise; 10 (B) does not include 11 (i) discounts, including cash, term, or coupons, that are 12 not reimbursed by a third party and that are allowed by a seller and 13 taken by a purchaser on a sale; 14 (ii) interest, financing, and carrying charges from credit 15 extended on the sale of personal property or services if the amount is 16 separately stated on the invoice, bill of sale, or similar document given 17 to the purchaser; or 18 (iii) taxes, fees or other charges legally imposed by a 19 federal, state, or local government directly on the consumer or the seller 20 that are separately stated on the invoice, bill of sale, or similar 21 document given to the purchaser; 22 (iv) the motor fuel tax levied under AS 43.40 23 (10) "sale for resale" means the sale of personal property to a 24 purchaser whose principal business is the resale of property, whether in the same or an 25 altered form; 26 (11) "services" means an activity engaged in for another person for 27 consideration and that is distinguished from the sale of property; in determining what 28 constitutes a service, the intended use, principal objective, or ultimate objective of the 29 contracting parties is irrelevant; "services" includes 30 (A) activities performed by a person for its member or 31 shareholders; 01 (B) construction activities and all personal property that will 02 become an ingredient or component part of a construction project; 03 (C) labor; 04 (D) professional services; 05 (E) transportation; 06 (F) telephone or other communications services; 07 (G) entertainment, including cable, subscription, or pay 08 television or other telecommunications service; 09 (H) the supplying of food, lodging, or other accommodations in 10 hotels, restaurants, or elsewhere; 11 (I) admission to exhibitions; 12 (J) the use of a computer, computer time, a computer system, a 13 computer program, a computer network, or any part of a computer system or 14 network; 15 (K) the supplying of equipment for use; and 16 (L) admission to places of entertainment; 17 (12) "use" or "using" includes use, consumption, or storage, other than 18 storage for resale or for use solely outside the state in the ordinary course of business. 19  * Sec. 22. AS 43.44.010(a), added by sec. 21 of this Act, is amended to read: 20 (a) There is levied a sales tax on the retail sale of personal property and 21 services to a purchaser in the state. The rate of the tax is zero percent 22 [(1) FOUR PERCENT FROM APRIL 1 THROUGH SEPTEMBER 23 30; AND 24 (2) TWO PERCENT FROM OCTOBER 1 THROUGH MARCH 31]. 25  * Sec. 23. AS 43.55.011(f) is amended to read: 26 (f) The levy of tax under (e) of this section for 27 (1) oil and gas produced before January 1, 2022, from leases or 28 properties that include land north of 68 degrees North latitude, other than gas subject 29 to (o) of this section, may not be less than 30 (A) four percent of the gross value at the point of production 31 when the average price per barrel for Alaska North Slope crude oil for sale on 01 the United States West Coast during the calendar year for which the tax is due 02 is more than $25; 03 (B) three percent of the gross value at the point of production 04 when the average price per barrel for Alaska North Slope crude oil for sale on 05 the United States West Coast during the calendar year for which the tax is due 06 is over $20 but not over $25; 07 (C) two percent of the gross value at the point of production 08 when the average price per barrel for Alaska North Slope crude oil for sale on 09 the United States West Coast during the calendar year for which the tax is due 10 is over $17.50 but not over $20; 11 (D) one percent of the gross value at the point of production 12 when the average price per barrel for Alaska North Slope crude oil for sale on 13 the United States West Coast during the calendar year for which the tax is due 14 is over $15 but not over $17.50; or 15 (E) zero percent of the gross value at the point of production 16 when the average price per barrel for Alaska North Slope crude oil for sale on 17 the United States West Coast during the calendar year for which the tax is due 18 is $15 or less; and 19 (2) oil produced on and after January 1, 2022, from leases or properties 20 that include land north of 68 degrees North latitude, may not be less than 21 (A) six [FOUR] percent of the gross value at the point of 22 production when the average price per barrel for Alaska North Slope crude oil 23 for sale on the United States West Coast during the calendar year for which the 24 tax is due is more than $25; 25 (B) three percent of the gross value at the point of production 26 when the average price per barrel for Alaska North Slope crude oil for sale on 27 the United States West Coast during the calendar year for which the tax is due 28 is over $20 but not over $25; 29 (C) two percent of the gross value at the point of production 30 when the average price per barrel for Alaska North Slope crude oil for sale on 31 the United States West Coast during the calendar year for which the tax is due 01 is over $17.50 but not over $20; 02 (D) one percent of the gross value at the point of production 03 when the average price per barrel for Alaska North Slope crude oil for sale on 04 the United States West Coast during the calendar year for which the tax is due 05 is over $15 but not over $17.50; or 06 (E) zero percent of the gross value at the point of production 07 when the average price per barrel for Alaska North Slope crude oil for sale on 08 the United States West Coast during the calendar year for which the tax is due 09 is $15 or less. 10  * Sec. 24. AS 43.55.011(f), as amended by sec. 23 of this Act, is amended to read: 11 (f) The levy of tax under (e) of this section for 12 (1) oil and gas produced before January 1, 2022, from leases or 13 properties that include land north of 68 degrees North latitude, other than gas subject 14 to (o) of this section, may not be less than 15 (A) four percent of the gross value at the point of production 16 when the average price per barrel for Alaska North Slope crude oil for sale on 17 the United States West Coast during the calendar year for which the tax is due 18 is more than $25; 19 (B) three percent of the gross value at the point of production 20 when the average price per barrel for Alaska North Slope crude oil for sale on 21 the United States West Coast during the calendar year for which the tax is due 22 is over $20 but not over $25; 23 (C) two percent of the gross value at the point of production 24 when the average price per barrel for Alaska North Slope crude oil for sale on 25 the United States West Coast during the calendar year for which the tax is due 26 is over $17.50 but not over $20; 27 (D) one percent of the gross value at the point of production 28 when the average price per barrel for Alaska North Slope crude oil for sale on 29 the United States West Coast during the calendar year for which the tax is due 30 is over $15 but not over $17.50; or 31 (E) zero percent of the gross value at the point of production 01 when the average price per barrel for Alaska North Slope crude oil for sale on 02 the United States West Coast during the calendar year for which the tax is due 03 is $15 or less; and 04 (2) oil produced on and after January 1, 2022, from leases or properties 05 that include land north of 68 degrees North latitude, may not be less than 06 (A) four [SIX] percent of the gross value at the point of 07 production when the average price per barrel for Alaska North Slope crude oil 08 for sale on the United States West Coast during the calendar year for which the 09 tax is due is more than $25; 10 (B) three percent of the gross value at the point of production 11 when the average price per barrel for Alaska North Slope crude oil for sale on 12 the United States West Coast during the calendar year for which the tax is due 13 is over $20 but not over $25; 14 (C) two percent of the gross value at the point of production 15 when the average price per barrel for Alaska North Slope crude oil for sale on 16 the United States West Coast during the calendar year for which the tax is due 17 is over $17.50 but not over $20; 18 (D) one percent of the gross value at the point of production 19 when the average price per barrel for Alaska North Slope crude oil for sale on 20 the United States West Coast during the calendar year for which the tax is due 21 is over $15 but not over $17.50; or 22 (E) zero percent of the gross value at the point of production 23 when the average price per barrel for Alaska North Slope crude oil for sale on 24 the United States West Coast during the calendar year for which the tax is due 25 is $15 or less. 26  * Sec. 25. AS 43.55.020(a) is amended to read: 27 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 28 the tax as follows: 29 (1) for oil and gas produced before January 1, 2014, an installment 30 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 31 as allowed by law, is due for each month of the calendar year on the last day of the 01 following month; except as otherwise provided under (2) of this subsection, the 02 amount of the installment payment is the sum of the following amounts, less 1/12 of 03 the tax credits that are allowed by law to be applied against the tax levied by 04 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 05 not be less than zero: 06 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 07 produced from leases or properties in the state outside the Cook Inlet 08 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 09 the greater of 10 (i) zero; or 11 (ii) the sum of 25 percent and the tax rate calculated for 12 the month under AS 43.55.011(g) multiplied by the remainder obtained 13 by subtracting 1/12 of the producer's adjusted lease expenditures for the 14 calendar year of production under AS 43.55.165 and 43.55.170 that are 15 deductible for the oil and gas under AS 43.55.160 from the gross value 16 at the point of production of the oil and gas produced from the leases or 17 properties during the month for which the installment payment is 18 calculated; 19 (B) for oil and gas produced from leases or properties subject 20 to AS 43.55.011(f), the greatest of 21 (i) zero; 22 (ii) zero percent, one percent, two percent, three 23 percent, or four percent, as applicable, of the gross value at the point of 24 production of the oil and gas produced from the leases or properties 25 during the month for which the installment payment is calculated; or 26 (iii) the sum of 25 percent and the tax rate calculated for 27 the month under AS 43.55.011(g) multiplied by the remainder obtained 28 by subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the oil and gas under AS 43.55.160 from the gross value 31 at the point of production of the oil and gas produced from those leases 01 or properties during the month for which the installment payment is 02 calculated; 03 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 04 each lease or property, the greater of 05 (i) zero; or 06 (ii) the sum of 25 percent and the tax rate calculated for 07 the month under AS 43.55.011(g) multiplied by the remainder obtained 08 by subtracting 1/12 of the producer's adjusted lease expenditures for the 09 calendar year of production under AS 43.55.165 and 43.55.170 that are 10 deductible under AS 43.55.160 for the oil or gas, respectively, 11 produced from the lease or property from the gross value at the point of 12 production of the oil or gas, respectively, produced from the lease or 13 property during the month for which the installment payment is 14 calculated; 15 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 16 (i) the sum of 25 percent and the tax rate calculated for 17 the month under AS 43.55.011(g) multiplied by the remainder obtained 18 by subtracting 1/12 of the producer's adjusted lease expenditures for the 19 calendar year of production under AS 43.55.165 and 43.55.170 that are 20 deductible for the oil and gas under AS 43.55.160 from the gross value 21 at the point of production of the oil and gas produced from the leases or 22 properties during the month for which the installment payment is 23 calculated, but not less than zero; or 24 (ii) four percent of the gross value at the point of 25 production of the oil and gas produced from the leases or properties 26 during the month, but not less than zero; 27 (2) an amount calculated under (1)(C) of this subsection for oil or gas 28 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 29 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 30 applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in 31 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 01 gas produced during the month for the amount of taxable gas produced during the 02 calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced 03 during the month for the amount of taxable oil produced during the calendar year; 04 (3) an installment payment of the estimated tax levied by 05 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 06 on the last day of the following month; the amount of the installment payment is the 07 sum of 08 (A) the applicable tax rate for oil provided under 09 AS 43.55.011(i), multiplied by the gross value at the point of production of the 10 oil taxable under AS 43.55.011(i) and produced from the lease or property 11 during the month; and 12 (B) the applicable tax rate for gas provided under 13 AS 43.55.011(i), multiplied by the gross value at the point of production of the 14 gas taxable under AS 43.55.011(i) and produced from the lease or property 15 during the month; 16 (4) any amount of tax levied by AS 43.55.011, net of any credits 17 applied as allowed by law, that exceeds the total of the amounts due as installment 18 payments of estimated tax is due on March 31 of the year following the calendar year 19 of production; 20 (5) for oil and gas produced on and after January 1, 2014, and before 21 January 1, 2022, an installment payment of the estimated tax levied by 22 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 23 month of the calendar year on the last day of the following month; except as otherwise 24 provided under (6) of this subsection, the amount of the installment payment is the 25 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 26 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 27 of the installment payment may not be less than zero: 28 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 29 produced from leases or properties in the state outside the Cook Inlet 30 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 31 the greater of 01 (i) zero; or 02 (ii) 35 percent multiplied by the remainder obtained by 03 subtracting 1/12 of the producer's adjusted lease expenditures for the 04 calendar year of production under AS 43.55.165 and 43.55.170 that are 05 deductible for the oil and gas under AS 43.55.160 from the gross value 06 at the point of production of the oil and gas produced from the leases or 07 properties during the month for which the installment payment is 08 calculated; 09 (B) for oil and gas produced from leases or properties subject 10 to AS 43.55.011(f), the greatest of 11 (i) zero; 12 (ii) zero percent, one percent, two percent, three 13 percent, or four percent, as applicable, of the gross value at the point of 14 production of the oil and gas produced from the leases or properties 15 during the month for which the installment payment is calculated; or 16 (iii) 35 percent multiplied by the remainder obtained by 17 subtracting 1/12 of the producer's adjusted lease expenditures for the 18 calendar year of production under AS 43.55.165 and 43.55.170 that are 19 deductible for the oil and gas under AS 43.55.160 from the gross value 20 at the point of production of the oil and gas produced from those leases 21 or properties during the month for which the installment payment is 22 calculated, except that, for the purposes of this calculation, a reduction 23 from the gross value at the point of production may apply for oil and 24 gas subject to AS 43.55.160(f) or (g); 25 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 26 each lease or property, the greater of 27 (i) zero; or 28 (ii) 35 percent multiplied by the remainder obtained by 29 subtracting 1/12 of the producer's adjusted lease expenditures for the 30 calendar year of production under AS 43.55.165 and 43.55.170 that are 31 deductible under AS 43.55.160 for the oil or gas, respectively, 01 produced from the lease or property from the gross value at the point of 02 production of the oil or gas, respectively, produced from the lease or 03 property during the month for which the installment payment is 04 calculated; 05 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 06 (i) 35 percent multiplied by the remainder obtained by 07 subtracting 1/12 of the producer's adjusted lease expenditures for the 08 calendar year of production under AS 43.55.165 and 43.55.170 that are 09 deductible for the oil and gas under AS 43.55.160 from the gross value 10 at the point of production of the oil and gas produced from the leases or 11 properties during the month for which the installment payment is 12 calculated, but not less than zero; or 13 (ii) four percent of the gross value at the point of 14 production of the oil and gas produced from the leases or properties 15 during the month, but not less than zero; 16 (6) an amount calculated under (5)(C) of this subsection for oil or gas 17 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 18 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 19 applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in 20 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 21 gas produced during the month for the amount of taxable gas produced during the 22 calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced 23 during the month for the amount of taxable oil produced during the calendar year; 24 (7) for oil and gas produced on or after January 1, 2022, an installment 25 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 26 as allowed by law, is due for each month of the calendar year on the last day of the 27 following month; except as otherwise provided under (10) of this subsection, the 28 amount of the installment payment is the sum of the following amounts, less 1/12 of 29 the tax credits that are allowed by law to be applied against the tax levied by 30 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 31 not be less than zero: 01 (A) for oil produced from leases or properties subject to 02 AS 43.55.011(f), the greatest of 03 (i) zero; 04 (ii) zero percent, one percent, two percent, three 05 percent, [OR] four percent, or, for oil produced on or after January  06 1, 2027, six percent, as applicable, of the gross value at the point of 07 production of the oil produced from the leases or properties during the 08 month for which the installment payment is calculated; or 09 (iii) 35 percent multiplied by the remainder obtained by 10 subtracting 1/12 of the producer's adjusted lease expenditures for the 11 calendar year of production under AS 43.55.165 and 43.55.170 that are 12 deductible for the oil under AS 43.55.160(h)(1) from the gross value at 13 the point of production of the oil produced from those leases or 14 properties during the month for which the installment payment is 15 calculated, except that, for the purposes of this calculation, a reduction 16 from the gross value at the point of production may apply for oil 17 subject to AS 43.55.160(f) or 43.55.160(f) and (g); 18 (B) for oil produced before or during the last calendar year 19 under AS 43.55.024(b) for which the producer could take a tax credit under 20 AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet 21 sedimentary basin, no part of which is north of 68 degrees North latitude, other 22 than leases or properties subject to AS 43.55.011(o) or (p), the greater of 23 (i) zero; or 24 (ii) 35 percent multiplied by the remainder obtained by 25 subtracting 1/12 of the producer's adjusted lease expenditures for the 26 calendar year of production under AS 43.55.165 and 43.55.170 that are 27 deductible for the oil under AS 43.55.160(h)(2) from the gross value at 28 the point of production of the oil produced from the leases or properties 29 during the month for which the installment payment is calculated; 30 (C) for oil and gas produced from leases or properties subject 31 to AS 43.55.011(p), except as otherwise provided under (8) of this subsection, 01 the sum of 02 (i) 35 percent multiplied by the remainder obtained by 03 subtracting 1/12 of the producer's adjusted lease expenditures for the 04 calendar year of production under AS 43.55.165 and 43.55.170 that are 05 deductible for the oil under AS 43.55.160(h)(3) from the gross value at 06 the point of production of the oil produced from the leases or properties 07 during the month for which the installment payment is calculated, but 08 not less than zero; and 09 (ii) 13 percent of the gross value at the point of 10 production of the gas produced from the leases or properties during the 11 month, but not less than zero; 12 (D) for oil produced from leases or properties in the state, no 13 part of which is north of 68 degrees North latitude, other than leases or 14 properties subject to (B), (C), or (F) of this paragraph, the greater of 15 (i) zero; or 16 (ii) 35 percent multiplied by the remainder obtained by 17 subtracting 1/12 of the producer's adjusted lease expenditures for the 18 calendar year of production under AS 43.55.165 and 43.55.170 that are 19 deductible for the oil under AS 43.55.160(h)(4) from the gross value at 20 the point of production of the oil produced from the leases or properties 21 during the month for which the installment payment is calculated; 22 (E) for gas produced from each lease or property in the state 23 outside the Cook Inlet sedimentary basin, other than a lease or property subject 24 to AS 43.55.011(o) or (p), 13 percent of the gross value at the point of 25 production of the gas produced from the lease or property during the month for 26 which the installment payment is calculated, but not less than zero; 27 (F) for oil subject to AS 43.55.011(k), for each lease or 28 property, the greater of 29 (i) zero; or 30 (ii) 35 percent multiplied by the remainder obtained by 31 subtracting 1/12 of the producer's adjusted lease expenditures for the 01 calendar year of production under AS 43.55.165 and 43.55.170 that are 02 deductible under AS 43.55.160 for the oil produced from the lease or 03 property from the gross value at the point of production of the oil 04 produced from the lease or property during the month for which the 05 installment payment is calculated; 06 (G) for gas subject to AS 43.55.011(j) or (o), for each lease or 07 property, the greater of 08 (i) zero; or 09 (ii) 13 percent of the gross value at the point of 10 production of the gas produced from the lease or property during the 11 month for which the installment payment is calculated; 12 (8) an amount calculated under (7)(C) of this subsection may not 13 exceed four percent of the gross value at the point of production of the oil and gas 14 produced from leases or properties subject to AS 43.55.011(p) during the month for 15 which the installment payment is calculated; 16 (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and 17 (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the point 18 of production is determined under AS 43.55.011(f)(1) or (2) but substituting the 19 phrase "month for which the installment payment is calculated" in AS 43.55.011(f)(1) 20 and (2) for the phrase "calendar year for which the tax is due"; 21 (10) an amount calculated under (7)(F) or (G) of this subsection for oil 22 or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 23 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 24 applicable, for gas, or set out in AS 43.55.011(k) for oil, but substituting in 25 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 26 gas produced during the month for the amount of taxable gas produced during the 27 calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced 28 during the month for the amount of taxable oil produced during the calendar year. 29  * Sec. 26. AS 43.55.023(c) is amended to read: 30 (c) A credit or portion of a credit under this section 31 (1) may not be used to reduce a person's tax liability under 01 AS 43.55.011(e) for any calendar year below zero; 02 (2) may, if not used under this subsection, be applied in a later 03 calendar year; 04 (3) may, regardless of when the credit was earned, be used to satisfy a 05 tax, interest, penalty, fee, or other charge that 06 (A) is related to the tax due under this chapter for a prior year, 07 except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or  08 43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 09 (B) has not, for the purpose of art. IX, sec. 17(a), Constitution 10 of the State of Alaska, been subject to an administrative proceeding or 11 litigation. 12  * Sec. 27. AS 43.55.023(e) is amended to read: 13 (e) A person to which a transferable tax credit certificate is issued under (d) of 14 this section may transfer the certificate to another person, and a transferee may further 15 transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and 16 notwithstanding any action the department may take with respect to the applicant 17 under (g) of this section, the owner of a certificate may apply the credit or a portion of 18 the credit shown on the certificate 19 (1) against a tax levied by AS 43.55.011(e); however, a credit shown 20 on a transferable tax credit certificate may not be applied under this paragraph to 21 reduce a transferee's total tax liability under AS 43.55.011(e) for oil and gas produced 22 during a calendar year to less than 80 percent of the tax that would otherwise be due 23 without applying that credit; any portion of a credit not used under this paragraph may 24 be applied in a later period; or 25 (2) regardless of when the credit was earned, to satisfy a tax, interest, 26 penalty, fee, or other charge that 27 (A) is related to the tax due under this chapter, except for a 28 surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 43.55.320 or 29 the tax levied by AS 43.55.011(i) or 43.55.014; 30 (B) is for a calendar year before the year in which the 31 certificate is applied; and 01 (C) has not, for the purpose of art. IX, sec. 17(a), Constitution 02 of the State of Alaska, been subject to an administrative proceeding or 03 litigation. 04  * Sec. 28. AS 43.55.025(h) is amended to read: 05 (h) A producer that purchases a production tax credit certificate may apply the 06 credits against its production tax levied by AS 43.55.011(e). Regardless of the price 07 the producer paid for the certificate, the producer may receive a credit against its 08 production tax liability for the full amount of the credit, but for not more than the 09 amount for which the certificate is issued. A production tax credit or a portion of a 10 production tax credit or a production tax credit certificate or a portion of a production 11 tax credit certificate allowed under this section  12 (1) may not be applied more than once; 13 (2) may be applied in a later calendar year; 14 (3) may, regardless of when the credit was earned, be applied to satisfy 15 a tax, interest, penalty, fee, or other charge that 16 (A) is related to the tax due under this chapter for a prior year, 17 except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or  18 43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 19 (B) has not, for the purpose of art. IX, sec. 17(a), Constitution 20 of the State of Alaska, been subject to an administrative proceeding or 21 litigation. 22  * Sec. 29. AS 43.55.165(e)(11) is amended to read: 23 (11) surcharges levied under AS 43.55.201, [OR] 43.55.300, or  24 43.55.320; 25  * Sec. 30. AS 43.55.201(b) is amended to read: 26 (b) The surcharge imposed by (a) of this section is in addition to the tax 27 imposed by AS 43.55.011 and is due on the last day of the month on oil produced 28 from each lease or property during the preceding month. The surcharge is in addition 29 to the surcharge imposed by AS 43.55.300 - 43.55.310 and 43.55.320. 30  * Sec. 31. AS 43.55 is amended by adding new sections to article 3 to read: 31 Sec. 43.55.320. Infrastructure maintenance surcharge on oil. (a) Every 01 producer of oil shall pay a surcharge of $.15 per barrel of oil produced from each lease 02 or property in the state, less any oil the ownership or right to which is exempt from 03 taxation. 04 (b) The surcharge imposed by (a) of this section is in addition to the tax 05 imposed by AS 43.55.011 and the surcharges imposed by AS 43.55.201 and 06 43.55.300. 07 (c) A tax credit authorized under this chapter may not be applied to reduce a 08 producer's liability for the surcharge. 09 (d) The surcharge is due on the last day of the month on oil produced from 10 each lease or property during the preceding month. The surcharge shall be paid at the 11 same time and in the same manner as the surcharge imposed under AS 43.55.201. 12 Sec. 43.55.325. Pipeline corridor maintenance fund. (a) The pipeline 13 corridor maintenance fund is established in the general fund. 14 (b) The legislature may appropriate to the fund the revenue collected under 15 AS 43.55.320 and other money. 16 (c) Money in the fund may be appropriated for maintenance and operation 17 costs incurred by the state along the pipeline corridor. 18 (d) Nothing in this section creates a dedicated fund. 19  * Sec. 32. AS 43.55.900(24) is amended to read: 20 (24) "surcharge" means 21 (A) when used in AS 43.55.201 - 43.55.299, the surcharge 22 levied by AS 43.55.201; 23 (B) when used in AS 43.55.300 - 43.55.310, the surcharge 24 levied by AS 43.55.300;  25 (C) when used in AS 43.55.320 - 43.55.325, the surcharge  26 levied by AS 43.55.320; 27  * Sec. 33. AS 29.05.210(b)(1) is repealed. 28  * Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 APPLICABILITY. AS 43.44.010, added by sec. 21 of this Act, applies to purchases 31 made on or after the effective date of sec. 21 of this Act. 01  * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 CONDITIONAL EFFECT. This Act takes effect only if the following legislation is 04 passed by the Thirty-Fourth Alaska State Legislature and enacted into law: 05 (1) version of HB 275 or similar bill; 06 (2) version of HB 274 or similar bill; 07 (3) version of HJR 30 or similar resolution. 08  * Sec. 36. If this Act takes effect under sec. 35 of this Act, 09 (1) secs. 26 - 32 of this Act take effect July 1, 2026; 10 (2) secs. 15, 17 - 20, 23, and 25 of this Act take effect January 1, 2027; 11 (3) sec. 16 of this Act takes effect January 1, 2031; 12 (4) sec. 22 of this Act takes effect January 1, 2034; 13 (5) sec. 24 of this Act takes effect on the earlier of the following: 14 (A) January 1, 2032; or 15 (B) January 1 of the calendar year following the first calendar year in 16 which the average daily throughput of the Trans-Alaska Pipeline System exceeds 17 650,000 barrels per day. 18  * Sec. 37. Except as provided in sec. 36 of this Act, if this Act takes effect under sec. 35 of 19 this Act, it takes effect 12 months after enactment.