HB 280: "An Act relating to the taxation of mining property; relating to contracts approved by municipalities for payments in lieu of taxes; and providing for an effective date."
00 HOUSE BILL NO. 280 01 "An Act relating to the taxation of mining property; relating to contracts approved by 02 municipalities for payments in lieu of taxes; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.05.405, as amended by sec. 66, ch. 163, SLA 2004, is amended to read: 05 Sec. 43.05.405. Jurisdiction. The office has original jurisdiction to hear 06 formal appeals from informal conference decisions of the Department of Revenue 07 under AS 43.05.240. Appeal to the office may be taken only from an informal 08 conference decision under AS 43.05.240. AS 44.64.060 does not apply to an 09 administrative hearing under the jurisdiction of the office under this section. 10 Jurisdiction of the office under this section is limited to, and AS 43.05.405 - 43.05.499 11 and AS 44.64.070 apply to and govern, an administrative appeal regarding 12 (1) electric and telephone cooperative taxes under AS 10.25; 13 (2) a seafood marketing assessment under AS 16.51; 14 (3) all taxes levied under AS 43, except the property taxes [TAX]
01 assessed under AS 43.56 and AS 43.67; and 02 (4) any other taxes administered by the Department of Revenue. 03 * Sec. 2. AS 43.10.042 is amended to read: 04 (a) A lien imposed under AS 43.10.010 - 43.10.060 is not valid as against a 05 mortgagee or other lien holder, pledgee, purchaser, or judgment creditor until notice of 06 it is recorded in the records of the recording district where the property subject to the 07 lien is situated. However, regardless of the date the liens are recorded, a lien arising 08 out of a tax due under AS 43.56, AS 43.67, and AS 43.75 [43.75], including the 09 penalties and interest on the tax, is a lien prior, paramount, and superior to all other 10 liens, mortgages, hypothecations, conveyances, and assignments, upon all the real and 11 personal property of the person liable for the tax, and upon all the real and personal 12 property used with the permission of the owner to carry on the business that is subject 13 to the tax. 14 * Sec. 3. AS 43 is amended by adding a new chapter to read: 15 Chapter 67. Mining Property Tax. 16 Sec. 43.67.010. Levy of tax. An annual tax is levied each tax year beginning 17 January 1, 2006, on the full and true value of real and tangible personal property used 18 or committed by contract or other agreement for use within this state primarily in the 19 production or transportation of minerals, or in the operation or maintenance of 20 facilities used in the production or transportation of minerals, located on land in the 21 unorganized borough as of January 1, 2005. The tax rate is the mill rate specified in 22 AS 14.17.410(b)(2), except the tax rate in a municipality incorporated after January 1, 23 2005, is the mill rate required to meet the local contribution required of that 24 municipality under AS 14.17.410(b)(2) plus two mills. 25 Sec. 43.67.020. In place of municipal taxes. (a) Except as provided in (b) of 26 this section, the taxes levied or authorized under AS 43.67.010 are in place of all other 27 taxes that would otherwise be imposed by a municipality on the property for a period 28 of 15 years after the production commencement date, including 29 (1) taxes on the retail sale or use of the taxable property; 30 (2) taxes on the sale or use of minerals; 31 (3) taxes on the sale or use of services used in or associated with the
01 taxable property or in its maintenance or operation; 02 (4) taxes on or measured by gross or net income from the taxable 03 property, including income from the exploration for, production of, or transportation 04 of minerals or taxable property; and 05 (5) any license, excise, fee, charge, severance, throughput, or other tax 06 on or pertaining to the taxable property or services used in or associated with the 07 taxable property or in its maintenance or operation. 08 (b) A municipality may levy a tax on the first $1,000 of the retail sale or use of 09 the taxable property and the first $1,000 of the sale or use of services used in or 10 associated with the taxable property or in its maintenance or operation. 11 Sec. 43.67.030. Assessment. (a) The department shall assess property for the 12 tax levied under AS 43.67.010 at its full and true value as of January 1 of the 13 assessment year except that the first assessment date shall be the production 14 commencement date. If the production commencement date is used as the assessment 15 date, the tax payable shall be prorated on the basis of the assessment year remaining. 16 (b) The full and true value of taxable property is 17 (1) on the production commencement date, the actual capital cost 18 incurred or accrued with respect to the property as of the date of assessment; 19 (2) determined on each January 1 after the commencement date on the 20 basis of replacement cost less depreciation; "depreciation," for purposes of this 21 paragraph, shall be based on the economic life of proven reserves with due 22 consideration given to the elapsed life of the facilities. 23 (c) The department may enter into agreements with a municipality for the 24 cooperative or joint administration of the assessing authority. 25 (d) For purposes of this section, "actual capital cost" and "replacement cost" 26 do not include interest capitalized before or during the period of construction or the 27 value of intangible expenses. 28 Sec. 43.67.040. Returns. (a) The department by notice may require every 29 person having ownership or control of an interest in taxable property to submit a 30 return within 30 days after the production commencement date and by January 31 of 31 each year following the production commencement date in the form prescribed by the
01 department, based on property values existing on January 1 of each year, except as 02 otherwise provided in this chapter. 03 (b) The department by written notice may require a person to provide 04 additional information within 30 days after the notice. 05 Sec. 43.67.050. Investigation. (a) The department may make an 06 investigation of property on which a return has been filed or of taxable property upon 07 which no return has been filed. In either case, the department may make its own 08 valuation of the taxable property, which is prima facie evidence of full and true value. 09 (b) An employee or agent of the department may enter premises necessary for 10 the investigation during reasonable hours and may, subject to reasonable safety 11 regulations generally imposed, examine property and appropriate records. The owner 12 of the taxable property shall, upon request, furnish to the employee or agent of the 13 department reasonable assistance required for the investigation. If the department is 14 refused entry, the department may seek a court order to compel entry. 15 (c) For the purpose of the investigation, the owner of the taxable property or a 16 representative of the owner may be required to appear for examination under oath by 17 the department. 18 Sec. 43.67.060. Assessment roll. The department shall prepare annually the 19 assessment roll for taxation under this chapter. The roll must contain 20 (1) a description of all taxable property; 21 (2) the assessed value of all taxable property; 22 (3) the names and addresses of persons owning property subject to 23 assessment and taxation. 24 Sec. 43.67.070. Assessment notice. (a) On or before March 1 of each year, 25 the department shall send to every owner of taxable property named in the assessment 26 roll a notice of assessment, showing the assessed value of the property. Notice of 27 assessment is effective on the date of mailing. 28 (b) The department shall send to a municipality a copy of the notice of 29 assessment on taxable property that is assessed under the provisions of this chapter 30 and that is located in the municipality. 31 Sec. 43.67.080. Objection to the department. (a) An owner of taxable
01 property or a municipality receiving an assessment notice may object to the 02 assessment by advising the department in writing of the objection to the assessment 03 within 20 days after the effective date of the notice. 04 (b) The department shall provide by regulation for notices of objections to the 05 owners of taxable property and municipalities. 06 (c) Following an objection, the department may adjust the assessment and the 07 assessment roll. An adjustment based on an objection from an owner of taxable 08 property or a municipality shall be made within 30 days after the effective date of the 09 notice of assessment. 10 Sec. 43.67.090. Appeal to the State Assessment Review Board. The owner 11 of taxable property or a municipality may appeal an assessment to the State 12 Assessment Review Board established under AS 43.56.040. The appeal must be filed 13 in writing within 30 days after an assessment or the adjustment, if any, made under 14 AS 43.67.080. 15 Sec. 43.67.100. Certification. Not later than June 1 of each year, the 16 department shall certify the final assessment roll and mail to the owner of the taxable 17 property or an authorized agent a statement of the amount of tax due. 18 Sec. 43.67.110. Supplementary assessment rolls. The department shall 19 include taxable property omitted from the assessment roll on a supplementary roll 20 using the procedures set out in this chapter for the original roll. 21 Sec. 43.67.120. Collection and deposit. (a) The tax levied by AS 43.67.010 22 is payable to the department on or before June 30 of the taxable year. 23 (b) The department shall provide for voluntary prepayment and for payment 24 by installments. 25 (c) The tax levied under AS 43.67.010 and interest and penalties collected 26 with respect to this levy shall be deposited in a special mining tax property tax account 27 in the general fund. The legislature may appropriate the balance of the account into 28 the public education fund (AS 14.17.300). 29 (d) If jurisdiction over the taxable property is obtained by a newly 30 incorporated municipality, the tax is payable to the municipality. 31 Sec. 43.67.130. Penalty for delinquent taxes. When the tax levied by
01 AS 43.67.010 becomes delinquent, a penalty of 10 percent shall be added. 02 Sec. 43.67.140. Remedy. The remedy of distraint of property set out in 03 AS 43.20.270 applies to the tax levied by AS 43.67.010. However, only property 04 subject to the tax may be distrained. 05 Sec. 43.67.150. Regulations. The board and the department may adopt 06 regulations under AS 44.62 (Administrative Procedure Act) as appropriate to carry out 07 their respective duties under this chapter. 08 Sec. 43.67.160. Exemptions from municipal tax and mining property tax. 09 (a) The following are exempt from taxation by municipalities incorporated on or after 10 January 1, 2005: 11 (1) property rights attached to or inherent in the right to explore for or 12 produce minerals; 13 (2) mineral leases or properties, whether producing or not; 14 (3) minerals in place; 15 (4) minerals produced or extracted in the state; 16 (5) the value of intangible exploration expenses; 17 (6) tangible property used for the exploration and development of 18 minerals; 19 (7) roads, storage facilities, terminals, docks and other port facilities, 20 and airstrips, publicly owned or privately owned and open to public use. 21 (b) The following are exempt from the tax levied in AS 43.67.010: 22 (1) roads, storage facilities, terminals, docks and other port facilities, 23 and air strips, publicly owned or privately owned and open to public use; 24 (2) property that is used in production or transportation of minerals and 25 that is located in a municipality 15 or more years after the production commencement 26 date. 27 (c) Property used in the production or transportation of minerals where the 28 actual capital cost incurred or accrued with respect to the mine and related facilities is 29 less than $10,000,000 is exempt from taxation under AS 43.67.010. However, a 30 person having ownership or control of an interest in property that would be taxable 31 under AS 43.67.010 except for this subsection may elect to have the property treated
01 as taxable property by filing an election on a form determined by the department. An 02 election under this subsection must be filed on or before the production 03 commencement date if the production commencement date is after January 1, 2006, or 04 with the first tax return on or before July 1, 2006, for property producing minerals on 05 or before January 1, 2006. 06 Sec. 43.67.170. Definitions. In this chapter, 07 (1) "board" means the State Assessment Review Board under 08 AS 43.56.040; 09 (2) "minerals" means valuable metals, ores, and coal; 10 (3) "production commencement date" means the date on which the 11 initial shipment of products from mining operations is made; 12 (4) "real and tangible personal property" and "property" include 13 (A) buildings, machinery, appliances, supplies, equipment, 14 transmission lines, power plants, and pipelines; and 15 (B) roads, storage facilities, terminals, docks and other port 16 facilities, and air strips; 17 (5) "taxable property" means property taxable under AS 43.67.010, 18 including property that is taxable because of an election under AS 43.67.160(c). 19 * Sec. 4. AS 29.45.810 is amended by adding a new subsection to read: 20 (c) A party to a contract for payments in lieu of taxes with a municipality, and 21 the property, products, and activities associated with the project that are subject to the 22 contract, are exempt, as specified in the contract, from all taxes identified in the 23 contract that would be levied and collected by a municipality under state law as a 24 consequence of the participation by the party in the project. 25 * Sec. 5. AS 29.46.010 is amended by adding a new subsection to read: 26 (c) Notwithstanding (a) of this section, a party to a contract for payments in 27 lieu of taxes with a municipality is exempt as specified in the contract from 28 assessment under this chapter against real property associated with the approved 29 qualified project that is subject to the contract. 30 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 31 read:
01 TRANSITION: REGULATIONS. The Department of Revenue may proceed to adopt 02 regulations to implement AS 43.67.010 - 43.67.170, added by sec. 3 of this Act. The 03 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 04 effective date of sec. 3 of this Act. 05 * Sec. 7. Section 6 of this Act takes effect immediately under AS 01.10.070(c). 06 * Sec. 8. Except as provided in sec. 7 of this Act, this Act takes effect January 1, 2006.