HB 511: "An Act relating to the limitations period for assessments for certain state taxes, and for collection, after assessment, of taxes due the state; and providing for an effective date."
00HOUSE BILL NO. 511 01 "An Act relating to the limitations period for assessments for certain state taxes, 02 and for collection, after assessment, of taxes due the state; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. LEGISLATIVE FINDINGS AND PURPOSE. (a) The legislature finds that 06 (1) with respect to income taxes imposed under former AS 43.21 and oil and 07 gas production, or severance, taxes imposed by AS 43.55, 08 (A) the Department of Revenue has interpreted AS 43.05.260 to permit 09 it to issue an amended assessment at any time during the administrative consideration 10 of an appeal or of a claim for credit or refund; 11 (B) the department's interpretation of AS 43.05.260 is correct; and 12 (C) it is in the public interest that AS 43.05.260 be clarified by 13 amendment, effective from the date of enactment of that section, to reflect this 14 longstanding administrative interpretation;
01 (2) the legal and factual issues arising out of the separate accounting methods 02 used in the levy and collection of income taxes imposed under former AS 43.21 and oil and 03 gas production, or severance, taxes imposed by AS 43.55 are complex and require lengthy 04 audits by the Department of Revenue to accurately determine the amount of the taxes that are 05 due the state from the respective levies; 06 (3) two other factors have contributed to the lengthy period required to issue 07 accurate tax assessments for the taxes imposed by former AS 43.21 and AS 43.55: 08 (A) throughout the 1970's and the 1980's, the Department of Revenue's 09 ability to audit these tax returns effectively was constrained by its audit resources; and 10 (B) subsequent to the enactment of former AS 43.21 in 1978, taxpayers 11 requested suspension of action on assessments pending the outcome of a challenge to 12 the constitutionality of the separate accounting method as applied to the levy and 13 collection of the income tax; litigation arising out of this challenge was filed in 1979 14 and concluded in 1986; 15 (4) the six-year limitation on the collection of taxes, as applicable to income 16 taxes imposed by former AS 43.21 and property production taxes imposed by AS 43.55, 17 should be amended retroactively to clarify that the limitation on collections is tolled during 18 any administrative or judicial consideration of an assessment; the adoption of the amendment 19 embodies the interpretation by and practice of the Department of Revenue since the enactment 20 of AS 43.05.270 by sec. 1, ch. 94, SLA 1976; 21 (5) often a tax levy cannot be made or a proceeding in court cannot be initiated 22 for the collection of unpaid taxes within six years after the assessment of that tax because 23 (A) the protest of an assessment begins a process that often takes 24 several years to complete; 25 (B) after a final administrative decision on a protest has issued, judicial 26 resolution of the protest often lasts several more years; and 27 (C) commencement of a separate collection action while an 28 administrative or judicial appeal of a taxpayer's protest of an assessment is pending 29 is impractical and an inefficient use of the resources of the executive and judicial 30 branches of the state government; 31 (6) substantial taxes assessed under former AS 43.21 and under AS 43.55
01 remain uncollected; 02 (7) these uncollected taxes are in large part the result of disputes over value 03 at the point of production for oil and gas produced in the state; and 04 (8) substantial public revenue is at risk in the litigation to which reference is 05 made in (b)(2) of this section, and it is contrary to the public interest to allow these revenues 06 to go uncollected. 07 (b) The purpose of the amendment of AS 43.05.260(a), made by sec. 2 of this Act, 08 and of AS 43.05.270(a), made by sec. 3 of this Act, is 09 (1) to validate and affirm the longstanding administrative interpretation and 10 practices of the Department of Revenue in assessing and collecting taxes; and 11 (2) to resolve the inconsistent decisions of the state Superior Court reached in 12 Tesoro Petroleum Corporation, et al., v. State of Alaska, Department of Revenue, Superior 13 Court No. 3AN-89-7130 Civ., and State of Alaska, Department of Revenue v. Exxon 14 Corporation, et al., Superior Court No. 3AN-89-5215 Civ. 15 * Sec. 2. AS 43.05.260(a) is amended to read: 16 (a) Except as provided in (c) of this section and AS 43.20.200(b), the amount 17 of a tax imposed by this title must be assessed within three years after the return was 18 filed, whether or not a return was filed on or after the date prescribed by law. 19 However, notwithstanding the limitation on assessments for a tax imposed by 20 former AS 43.21 or by AS 43.55, the department may increase or decrease the 21 amount of tax due by issuing or amending 22 (1) an assessment at any time during the administrative 23 consideration of a taxpayer grievance on an assessment filed by the taxpayer 24 under AS 43.05.240; or 25 (2) a claim for credit or refund of a tax filed by the taxpayer under 26 AS 43.05.275 [IF THE TAX IS NOT ASSESSED BEFORE THE EXPIRATION OF 27 THE THREE-YEAR PERIOD, PROCEEDINGS MAY NOT BE INSTITUTED IN 28 COURT FOR THE COLLECTION OF THE TAX]. 29 * Sec. 3. AS 43.05.270(a) is amended to read: 30 (a) When the assessment of a tax imposed by this title has been made within 31 the period of limitation under AS 43.05.260, the tax may be collected by levy or by
01 a proceeding in court [, BUT ONLY] if the levy is made or the proceeding is begun: 02 (1) within six years after the latest of any of the following: 03 (A) the assessment of the tax; 04 (B) the final administrative determination of the grievance, 05 if the taxpayer files a grievance from an assessment; or 06 (C) the final judicial resolution of an appeal, if the taxpayer 07 appeals from a final adjudicative determination of a grievance; or 08 (2) before the expiration of a period for collection agreed upon in 09 writing by the department and the taxpayer before the expiration of the six-year period; 10 a period agreed upon may be extended by subsequent agreements in writing made 11 before the expiration of the period previously agreed upon [; THE PERIOD 12 PROVIDED BY THIS PARAGRAPH DURING WHICH A TAX MAY BE 13 COLLECTED BY LEVY MAY NOT BE EXTENDED OR CURTAILED BECAUSE 14 OF A JUDGMENT AGAINST THE TAXPAYER]. 15 * Sec. 4. Sections 2 and 3 of this Act are retroactive to January 1, 1976. 16 * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).