SSSB 292: "An Act levying a net profits tax on the production of oil, authorizing a tax credit for qualifying exploration costs associated with the exploration for and development of oil, providing relief from the tax when the taxpayer demonstrates that a reduction in the tax is necessary to establish or reestablish production from an oil field or pool that would not otherwise be economically feasible; and repealing the currently levied properties production (severance) tax as it applies to oil; and providing for an effective date."
00 SPONSOR SUBSTITUTE FOR SENATE BILL NO. 292 01 "An Act levying a net profits tax on the production of oil, authorizing a tax credit for 02 qualifying exploration costs associated with the exploration for and development of oil, 03 providing relief from the tax when the taxpayer demonstrates that a reduction in the tax 04 is necessary to establish or reestablish production from an oil field or pool that would 05 not otherwise be economically feasible; and repealing the currently levied properties 06 production (severance) tax as it applies to oil; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 43.55.013(j) is amended to read: 09 (j) The department may aggregate two or more leases or properties, or 10 portions of them [(OR PORTIONS OF THEM)], for purposes of determining 11 economic limit factors under this section and applying them to [AS 43.55.011 OR] 12 AS 43.55.016, when economically interdependent [OIL OR GAS] production 13 operations are not confined to a single lease or property. The department may also
01 segregate a lease or property into two or more parts, for purposes of determining 02 economic limit factors under this section and applying them under [AS 43.55.011 OR] 03 AS 43.55.016, when two or more economically independent [OIL OR GAS] 04 production operations are being conducted on it [, OR WHEN OLD CRUDE OIL IS 05 PRODUCED FROM THE SAME LEASE OR PROPERTY AS OTHER OIL]. 06 * Sec. 2. AS 43.55.020(a) is amended to read: 07 (a) The production tax on [OIL OR] gas shall be paid monthly. The tax is due 08 on the 20th day of each calendar month on [OIL OR] gas produced from each lease or 09 property during the preceding month. If the tax is not paid before the end of the month 10 in which it becomes due, the tax becomes delinquent. 11 * Sec. 3. AS 43.55.020(b) is amended to read: 12 (b) The production tax on [OIL OR] gas shall be paid by or on behalf of the 13 producer. 14 * Sec. 4. AS 43.55.020(d) is amended to read: 15 (d) In making settlement with the royalty owner the producer may deduct the 16 amount of the tax paid on royalty [OIL OR] gas, or may deduct royalty [OIL OR] gas 17 equivalent in value at the time the tax becomes due to the amount of the tax paid. 18 * Sec. 5. AS 43.55.020(e) is amended to read: 19 (e) Gas produced in excess of that needed for safety purposes, except gas used 20 in the operation of a lease or property in drilling for or producing oil or gas, or for 21 repressuring, is considered, for the purpose of this chapter [AS 43.55.011 - 22 43.55.150] and in the amount used, as gas produced from a lease or property. Gas 23 flared beyond the amount authorized for safety by the Alaska Oil and Gas 24 Conservation Commission under AS 31.05 is considered as gas produced, except that 25 it is subject to a penalty equal to the tax computed under AS 43.55.016 per 1,000 cubic 26 feet of gas for the month in which the gas was flared. 27 * Sec. 6. AS 43.55.020(f) is amended to read: 28 (f) If, under this chapter, oil or gas is sold under circumstances where the 29 sale price does not represent the prevailing value for oil or gas of like kind, character, 30 or quality in the field or area from which the product is produced, the department may 31 require the tax to be paid upon the basis of the value of oil or gas of the same kind,
01 quality, and character prevailing during the calendar month of production for that field 02 or area. 03 * Sec. 7. AS 43.55.025(a) is amended to read: 04 (a) Subject to the terms and conditions of this section, on [OIL AND] gas 05 produced on or after July 1, 2004, from an oil and gas lease, or on gas produced from a 06 gas only lease, a credit against the production tax due under this chapter is allowed for 07 exploration expenditures that qualify under (b) of this section in an amount equal to 08 one of the following: 09 (1) 20 percent of the total exploration expenditures that qualify only 10 under (b) and (c) of this section; 11 (2) 20 percent of the total exploration expenditures for work performed 12 before July 1, 2007, and that qualify only under (b) and (d) of this section; 13 (3) 40 percent of the total exploration expenditures that qualify under 14 (b), (c), and (d) of this section; or 15 (4) 40 percent of the total exploration expenditures that qualify only 16 under (b) and (e) of this section. 17 * Sec. 8. AS 43.55.025(b) is amended to read: 18 (b) To qualify for the production tax credit under (a) of this section, an 19 exploration expenditure must be incurred for work performed on or after July 1, 2003, 20 and before July 1, 2007, except that an exploration expenditure for a Cook Inlet 21 prospect must be incurred for work performed on or after July 1, 2005, and before 22 July 1, 2010, and except that an exploration expenditure, in whole or in part, south of 23 68 degrees, 15 minutes, North latitude, and not part of a Cook Inlet prospect must be 24 incurred for work performed on or after July 1, 2003, and before July 1, 2010, and 25 (1) may be for seismic or geophysical exploration costs not connected 26 with a specific well; 27 (2) if for an exploration well, 28 (A) must be incurred by an explorer that holds an interest in the 29 exploration well for which the production tax credit is claimed; 30 (B) may be for either a [AN OIL OR] gas discovery well or a 31 dry hole; and
01 (C) must be for goods, services, or rentals of personal property 02 reasonably required for the surface preparation, drilling, casing, cementing, 03 and logging of an exploration well, and, in the case of a dry hole, for the 04 expenses required for abandonment if the well is abandoned within 18 months 05 after the date the well was spudded; 06 (3) may not be for testing, stimulation, or completion costs; 07 administration, supervision, engineering, or lease operating costs; geological or 08 management costs; community relations or environmental costs; bonuses, taxes, or 09 other payments to governments related to the well; or other costs that are generally 10 recognized as indirect costs or financing costs; and 11 (4) may not be incurred for an exploration well or seismic exploration 12 that is included in a plan of exploration or a plan of development for any unit on 13 May 13, 2003. 14 * Sec. 9. AS 43.55.025(c) is amended to read: 15 (c) To be eligible for the 20 percent production tax credit authorized by (a)(1) 16 of this section or the 40 percent production tax credit authorized by (a)(3) of this 17 section, exploration expenditures must 18 (1) qualify under (b) of this section; and 19 (2) be for an exploration well, subject to the following: 20 (A) for an exploration well other than a well that is described in 21 (B) of this paragraph, the well must be located and drilled in such a manner 22 that the bottom hole is located not less than three miles away from the bottom 23 hole of a preexisting suspended, completed, or abandoned [OIL OR] gas well; 24 in this subparagraph, "preexisting" means a well that was spudded more than 25 150 days but less than 35 years before the exploration well was spudded; 26 (B) for an exploration well that explores a Cook Inlet prospect, 27 the well must be located at least three miles from any other well drilled for 28 [OIL AND] gas with all distances measured as the horizontal distance between 29 exploration targets, except that the exploration well that is located within three 30 miles of a well drilled for [OIL AND] gas qualifies for the tax credit 31 authorized by this subsection if the exploration well tests potential
01 hydrocarbon traps that the commissioner of natural resources determines, after 02 analyzing evidence submitted by the explorer and from other information that 03 the commissioner of natural resources determines relevant, constitute a 04 distinctly separate exploration target. 05 * Sec. 10. AS 43.55.025(f) is amended to read: 06 (f) For a production tax credit under this section, 07 (1) an explorer shall, in a form prescribed by the department and 08 within six months of the completion of the exploration activity, claim the credit and 09 submit information sufficient to demonstrate to the department's satisfaction that the 10 claimed exploration expenditures qualify under this section; 11 (2) an explorer shall agree, in writing, 12 (A) to notify the Department of Natural Resources, within 30 13 days after completion of seismic or geophysical data processing, completion of 14 a well, or filing of a claim for credit, whichever is the latest, for which 15 exploration costs are claimed, of the date of completion and submit a report to 16 that department describing the processing sequence and providing a list of data 17 sets available; if, under (c)(2)(B) of this section, an explorer submits a claim 18 for a credit for expenditures for an exploration well that is located within three 19 miles of a well already drilled for [OIL AND] gas, in addition to the 20 submissions required under (1) of this subsection, the explorer shall submit the 21 information necessary for the commissioner of natural resources to evaluate 22 the validity of the explorer's claim that the well is directed at a distinctly 23 separate exploration target, and the commissioner of natural resources shall, 24 upon receipt of all evidence sufficient for the commissioner to evaluate the 25 explorer's claim, make that determination within 60 days; 26 (B) to provide to the Department of Natural Resources, within 27 30 days after the date of a request, specific data sets, ancillary data, and reports 28 identified in (A) of this paragraph; 29 (C) that, notwithstanding any provision of AS 38, information 30 provided under this paragraph will be held confidential by the Department of 31 Natural Resources for 10 years following the completion date, at which time
01 that department will release the information after 30 days' public notice; 02 (3) if more than one explorer holds an interest in a well or seismic 03 exploration, each explorer may claim an amount of credit that is proportional to the 04 explorer's cost incurred; 05 (4) the department may exercise the full extent of its powers as though 06 the explorer were a taxpayer under this title, in order to verify that the claimed 07 expenditures are qualified exploration expenditures under this section; and 08 (5) if the department is satisfied that the explorer's claimed 09 expenditures are qualified under this section, the department shall issue to the explorer 10 a production tax credit certificate for the amount of credit to be allowed against 11 production taxes due under this chapter; however, notwithstanding any other provision 12 of this section, the department may not issue to an explorer a production tax credit 13 certificate if the total of production tax credits submitted for Cook Inlet production, 14 based on exploration expenditures for work performed during the period described in 15 (b) of this section for that production, that have been approved by the department 16 exceeds $20,000,000. 17 * Sec. 11. AS 43.55.025(k)(1) is amended to read: 18 (1) "Cook Inlet production" means [OIL OR] gas production from the 19 Cook Inlet sedimentary basin, as that term is defined by regulation adopted to 20 implement AS 38.05.180(f)(4); 21 * Sec. 12. AS 43.55.025(k)(3) is amended to read: 22 (3) "explorer" means a person who, in exploring for new [OIL OR] gas 23 reserves, incurs expenditures. 24 * Sec. 13. AS 43.55.080 is amended to read: 25 Sec. 43.55.080. Collection and deposit of revenue. The department shall 26 deposit in the general fund the money collected by it under AS 43.55.013 - 43.55.150 27 and 43.55.400 - 43.55.420 [AS 43.55.011 - 43.55.150]. 28 * Sec. 14. AS 43.55.135 is amended to read: 29 Sec. 43.55.135. Measurement. For the purposes of this chapter 30 [AS 43.55.011 - 43.55.150], oil shall be measured in terms of a "barrel of oil" and gas 31 shall be measured in terms of a "cubic foot of gas."
01 * Sec. 15. AS 43.55.150(a) is amended to read: 02 (a) For the purposes of this chapter [AS 43.55.011 - 43.55.150], the gross 03 value shall be calculated using the reasonable costs of transportation of the oil or gas. 04 The reasonable costs of transportation shall be the actual costs, except 05 (1) when the parties to the transportation of oil or gas are affiliated; 06 (2) when the contract for the transportation of oil or gas is not an arm's 07 length transaction or is not representative of the market value of that transportation; 08 (3) when the method of transportation of oil or gas is not reasonable in 09 view of existing alternative methods of transportation. 10 * Sec. 16. AS 43.55.201(b) is amended to read: 11 (b) The surcharge imposed by (a) of this section 12 (1) is in addition to [AND SHALL BE PAID IN THE SAME 13 MANNER AS] the tax imposed by AS 43.55.400 - 43.55.420 [AS 43.55.011 - 14 43.55.150;] and is in addition to the surcharge imposed by AS 43.55.300 - 43.55.310; 15 and 16 (2) shall be paid in the same manner as the tax imposed by 17 AS 43.55.400 - 43.55.420. 18 * Sec. 17. AS 43.55.201(c) is amended to read: 19 (c) A producer of oil shall make reports of production in the same manner and 20 under the same penalties as required under AS 43.55.020 - 43.55.150 and 43.55.400 - 21 43.55.420 [AS 43.55.011 - 43.55.150]. 22 * Sec. 18. AS 43.55.300(b) is amended to read: 23 (b) The surcharge imposed by (a) of this section 24 (1) is in addition to [AND SHALL BE PAID IN THE SAME 25 MANNER AS] the tax imposed by AS 43.55.400 - 43.55.420 [AS 43.55.011 - 26 43.55.150;] and is in addition to the surcharge imposed by AS 43.55.201 - 43.55.231; 27 and 28 (2) shall be paid in the same manner as the tax imposed by 29 AS 43.55.400 - 43.55.420. 30 * Sec. 19. AS 43.55.300(c) is amended to read: 31 (c) A producer of oil shall make reports of production in the same manner and
01 under the same penalties as required under AS 43.55.020 - 43.55.150 and 43.55.400 - 02 43.55.420 [AS 43.55.011 - 43.55.150]. 03 * Sec. 20. AS 43.55 is amended by adding new sections to read: 04 Article 3A. Production Profits Sharing Tax. 05 Sec. 43.55.400. Production profits sharing tax. (a) There is levied on the 06 producer of oil a tax for all oil from each lease or property in the state, less any oil the 07 ownership or right to which is exempt from taxation. 08 (b) The tax levied under this section is equal to a percentage as determined in 09 (c) or (d) of this section of the gross production revenues of the oil produced, based on 10 the gross value of the oil at the point of production, net of royalties paid on the oil 11 production under AS 38.05, and less the taxpayer's 12 (1) lease expenses; and 13 (2) capital expenses related to the lease. 14 (c) The rate of tax levied under this section, except as provided for heavy oil 15 under (d) of this section, is 30 percent. 16 (d) The tax levied under this section on heavy oil is determined as follows: 17 (1) subject to adjustment under (2) of this subsection, when the 18 average prevailing value of Alaska North Slope oil is 19 (A) not more than $40 a barrel, tax is not due under this 20 section; 21 (B) more than $40 a barrel but not more than $45 a barrel, the 22 tax rate is 2.5 percent; 23 (C) more than $45 a barrel but not more than $50 a barrel, the 24 tax rate is five percent; 25 (D) more than $50 a barrel but not more than $55 a barrel, the 26 tax rate is 10 percent; 27 (E) more than $55 a barrel, the tax rate is 15 percent; 28 (2) on and after July 1, 2007, the commissioner shall 29 (A) annually revise the dollar prices described in (1) of this 30 subsection to reflect inflation, as defined by regulation adopted by the 31 department; and
01 (B) promptly report the application of the revisions to all 02 taxpayers subject to the tax levied and collected under this section; 03 (3) in this subsection, 04 (A) "heavy oil" means oil equal to or less than 20 degrees API 05 gravity; 06 (B) "prevailing value of Alaska North Slope oil" means 07 (i) for oil, or commingled oil and natural gas liquids, 08 that are transferred by the producer in an arm's-length, third-party sale, 09 the average spot price for Alaska North Slope oil at the United States 10 West Coast during the month that is referenced in the sales contract 11 pricing provision; if more than one month is referenced in the sales 12 contract pricing provision, the month with more daily spot price reports 13 that fall within the contract price reference period must be used; in the 14 case of an equal number of spot price reports, the month closer to the 15 month of production must be used; if the sales contract does not have a 16 price reference period, the prevailing value determined under (iii) of 17 this subparagraph must be used; 18 (ii) for oil, or commingled oil and natural gas liquids, 19 that are transferred by the producer in an arm's-length, third-party 20 exchange, the average spot price for Alaska North Slope oil at the 21 United States West Coast during the same month that is applied by the 22 department to the crude received in the exchange; if the department 23 cannot determine the month in which the crude was received, the 24 prevailing value determined under (iii) of this subparagraph must be 25 used; or 26 (iii) for other oil, or commingled oil and natural gas 27 liquids, including that which is refined, used as fuel or petrochemical 28 feedstock, or otherwise consumed at a refinery or plant owned by the 29 producer, the average spot price for Alaska North Slope oil at the 30 United States West Coast during the month of delivery of that oil, or 31 commingled oil and natural gas liquids.
01 (e) For purposes of computation of payment of the tax under this section, a 02 deduction for pipeline expenses is not allowed. 03 (f) Tax is not due under this section from a field that produces less than 1,000 04 barrels of daily production. For purposes of determining daily production under this 05 subsection, 06 (1) the department may 07 (A) aggregate two or more leases or properties, or portions of 08 them, when economically interdependent oil production operations are not 09 confined to a single lease or property within a field or involve two or more 10 pools; or 11 (B) segregate a lease or property that involves more than one 12 pool within a field when two or more economically independent oil production 13 operations are being conducted on it; 14 (2) "field" means a general area that is underlain or appears to be 15 underlain by at least one pool, and includes the underground reservoir containing oil; 16 in this paragraph, 17 (A) "pool" means an underground reservoir containing oil; each 18 zone of a general structure that is completely separated from any other zone in 19 the structure is covered by the term "pool"; 20 (B) the words "field" and "pool" mean the same thing when 21 only one underground reservoir is involved, but "field," unlike "pool," may 22 relate to two or more pools. 23 (g) A taxpayer may apply for and obtain a reduction of the tax due under this 24 section if the commissioner determines that the application meets the requirements of 25 AS 38.05.180(j)(1)(A), (j)(1)(B), or (j)(1)(C). When the commissioner receives an 26 application under this subsection, the commissioner 27 (1) may not approve a tax reduction 28 (A) unless the applicant makes a clear and convincing showing 29 that the tax reduction meets the requirements of this subsection and is in the 30 best interests of the state; 31 (B) without including an explicit condition that the tax
01 reduction is not assignable without the prior written approval, which may not 02 be unreasonably withheld, by the commissioner; the commissioner shall, in the 03 preliminary and final findings and determinations, set out the conditions under 04 which the tax reduction may be assigned; 05 (2) shall require the applicant to submit, with the application for the 06 tax reduction, financial and technical data that demonstrate that the requirements of 07 this subsection are met; the commissioner 08 (A) may require disclosure of only the financial and technical 09 data related to development, production, and transportation of oil and gas or 10 gas only from the field or pool that are reasonably available to the applicant; 11 and 12 (B) shall keep the data confidential under AS 38.05.035(a)(9) 13 at the request of the applicant; the confidential data may be disclosed by the 14 commissioner to legislators and to the legislative auditor and as directed by the 15 chair or vice-chair of the Legislative Budget and Audit Committee to the 16 director of the division of legislative finance, the permanent employees of their 17 respective divisions who are responsible for evaluating a tax reduction, and to 18 agents or contractors of the legislative auditor or the legislative finance director 19 who are engaged under contract to evaluate the tax reduction, if they sign an 20 appropriate confidentiality agreement; 21 (3) may require the applicant for the tax reduction under this 22 subsection to pay for the services of an independent contractor, selected by the 23 applicant from a list of qualified consultants compiled by the commissioner, to 24 evaluate hydrocarbon development, production, transportation, and economics and to 25 assist the commissioner in evaluating the application and financial and technical data; 26 if, under this paragraph, the commissioner requires payment for the services of an 27 independent contractor, the total cost of the services to be paid for by the applicant 28 may not exceed $150,000 for each application, and the commissioner shall determine 29 the relevant scope of the work to be performed by the contractor; selection of an 30 independent contractor under this paragraph is not subject to AS 36.30; 31 (4) shall make and publish a preliminary findings and determination on
01 the tax reduction application, give reasonable public notice of the preliminary findings 02 and determination, and invite public comment on the preliminary findings and 03 determination during a 30-day period for receipt of public comment; 04 (5) shall offer to appear before the Legislative Budget and Audit 05 Committee, on a day that is not earlier than 10 days and not later than 20 days after 06 giving public notice under (4) of this subsection, to provide the committee a review of 07 the commissioner's preliminary findings and determination on the tax reduction 08 application and administrative process; if the Legislative Budget and Audit Committee 09 accepts the commissioner's offer, the committee shall give notice of the committee's 10 meeting to all members of the legislature; 11 (6) shall make copies of the preliminary findings and determination 12 available to 13 (A) the presiding officer of each house of the legislature; 14 (B) the chairs of the legislature's standing committees on 15 resources; and 16 (C) the chairs of the legislature's special committees on oil and 17 gas, if any; and 18 (7) shall, within 30 days after the close of the public comment period 19 under (4) of this subsection, 20 (A) prepare a summary of the public response to the 21 commissioner's preliminary findings and determination; 22 (B) make a final findings and determination; the 23 commissioner's final findings and determination prepared under this 24 subparagraph regarding a tax reduction is final and not appealable to the court; 25 (C) transmit a copy of the final findings and determination to 26 the taxpayer; and 27 (D) make copies of the final findings and determination 28 available to each person who submitted comment under (4) of this subsection 29 and who has filed a request for the copies. 30 Sec. 43.55.410. Payment of tax. A taxpayer shall pay the tax due under 31 AS 43.55.400 quarterly. The tax is due on the 20th day of each calendar month on oil
01 produced from each lease or property subject to the tax levied by AS 43.55.400 during 02 the preceding calendar quarter. If the tax is not paid before the end of the month in 03 which it becomes due, the tax becomes delinquent. For purposes of this section, 04 "calendar quarter" means each of the three-month periods ending March 31, June 30, 05 September 30, and December 31. 06 Sec. 43.55.420. Tax credit for new investments. (a) Subject to the terms and 07 conditions of this section, on oil subject to tax under AS 43.55.400 produced on or 08 after the effective date of this Act, from a lease or property, a credit against the 09 production tax due under AS 43.55.400 is allowed for 15 percent of the total 10 exploration expenditures that qualify under (c) of this section. 11 (b) The tax credit authorized under this section may not exceed one-half of the 12 taxpayer's tax liability under AS 43.55.400. 13 (c) To qualify for the tax credit under (a) of this section, an exploration 14 expenditure 15 (1) must be incurred 16 (A) for seismic or geophysical exploration costs that are 17 incurred generally and that are not connected with a specific well; 18 (B) if for an exploration well, 19 (i) by a taxpayer that holds an interest in the exploration 20 well for which the production tax credit is claimed; 21 (ii) for either a discovery well or a dry hole; and 22 (iii) for goods, services, or rentals of personal property 23 reasonably required for the surface preparation, drilling, casing, 24 cementing, and logging of an exploration well, and, in the case of a dry 25 hole, for the expenses required for abandonment if the well is 26 abandoned within 18 months after the date the well was spudded; and 27 (2) may not be incurred for testing, stimulation, or completion costs; 28 administration, supervision, engineering, or lease operating costs; geological or 29 management costs; community relations or environmental costs; bonuses, taxes, or 30 other payments to governments related to the well; or other costs that are generally 31 recognized as indirect costs or financing costs.
01 (d) To claim and obtain a tax credit under this section, 02 (1) a taxpayer shall, in a form prescribed by the department and within 03 six months of the completion of the exploration activity, claim the credit and submit 04 information sufficient to demonstrate to the department's satisfaction that the claimed 05 exploration expenditures qualify under this section; 06 (2) a taxpayer shall agree, in writing, 07 (A) to notify the Department of Natural Resources, within 30 08 days after completion of seismic or geophysical data processing, completion of 09 a well, or filing of a claim for credit, whichever is the latest, for which 10 exploration costs are claimed, of the date of completion, and submit a report to 11 that department describing the processing sequence and providing a list of data 12 sets available; the commissioner of natural resources shall, on receipt of all 13 evidence sufficient for the commissioner to evaluate the taxpayer's claim, 14 make that determination within 60 days; and 15 (B) to provide to the Department of Natural Resources, within 16 30 days after the date of a request, specific data sets, ancillary data, and reports 17 identified in (A) of this paragraph; notwithstanding any provision of AS 38 to 18 the contrary, the Department of Natural Resources shall hold confidential for 19 10 years following the completion date information provided under this 20 subparagraph, at which time that department shall release the information after 21 30 days' public notice; 22 (3) if more than one taxpayer who incurs expenses in exploring for 23 new oil reserves holds an interest in a well or seismic exploration, each taxpayer may 24 claim an amount of credit that is proportional to the taxpayer's cost incurred; 25 (4) the department may exercise the full extent of its powers to verify 26 that the claimed expenditures are qualified exploration expenditures under this section; 27 and 28 (5) if the department is satisfied that the taxpayer's claimed 29 expenditures are qualified under this section, the department shall issue to the taxpayer 30 a tax credit certificate for the amount of credit to be allowed against taxes due under 31 AS 43.55.400.
01 (e) Except as limited by (f) of this section, a taxpayer may transfer, convey, or 02 sell its tax credit certificate to any person, and any person who receives a tax credit 03 certificate may also transfer, convey, or sell the certificate. 04 (f) A taxpayer may not purchase or take receipt of a tax credit certificate under 05 this section unless the taxpayer provides evidence to the commissioner of exploration 06 activities that qualify under (c) of this section undertaken by the taxpayer or by an 07 agent of the taxpayer within the three years immediately preceding acquisition of the 08 tax credit certificate. A tax credit certificate obtained in violation of this section is 09 void. 10 (g) A taxpayer that purchases a tax credit certificate may apply the credits 11 against its tax liability under AS 43.55.400. Regardless of the price the taxpayer paid 12 for the certificate, the taxpayer may receive a credit against its tax liability under 13 AS 43.55.400 for the full amount of the credit, but for not more than the amount for 14 which the certificate is issued. A tax credit allowed under this section may not be 15 applied more than once. 16 (h) For a tax credit under this section, 17 (1) the amount of the credit that may be applied against the production 18 tax for each calendar quarter may not exceed the total tax liability of the taxpayer 19 applying the credit for the same period; and 20 (2) an amount of the tax credit that is greater than the total tax liability 21 of the taxpayer applying the credit for a calendar quarter may be carried forward and 22 applied against the taxpayer's tax liability under AS 43.55.400 in one or more 23 immediately following calendar quarters. 24 (i) Notwithstanding any other provision of this title, of AS 31.05, or of 25 AS 40.25.100, the department shall provide to the Department of Natural Resources 26 information submitted with a claim under this section to support the eligibility of an 27 exploration expenditure, including seismic exploration data and well data, and any 28 information described in (f)(2) of this section received by the department. 29 * Sec. 21. AS 43.82.210(a) is amended to read: 30 (a) If the commissioner approves an application and proposed project plan 31 under AS 43.82.140, the commissioner may develop proposed terms for inclusion in a
01 contract under AS 43.82.020 for periodic payment in lieu of one or more of the 02 following taxes that otherwise would be imposed by the state or a municipality on the 03 qualified sponsor or member of a qualified sponsor group as a consequence of 04 participating in an approved qualified project: 05 (1) [OIL AND] gas production taxes, the net profits tax on oil, and 06 the oil surcharges under AS 43.55; 07 (2) oil and gas exploration, production, and pipeline transportation 08 property taxes under AS 43.56; 09 (3) [REPEALED 10 (4)] Alaska net income tax under AS 43.20; 11 (4) [(5)] municipal sales and use tax under AS 29.45.650 - 29.45.710; 12 (5) [(6)] municipal property tax under AS 29.45.010 - 29.45.250 or 13 29.45.550 - 29.45.600; 14 (6) [(7)] municipal special assessments under AS 29.46; 15 (7) [(8)] a comparable tax or levy imposed by the state or a 16 municipality after June 18, 1998; 17 (8) [(9)] other state or municipal taxes or categories of taxes identified 18 by the commissioner. 19 * Sec. 22. AS 43.55.011, 43.55.012, 43.55.013(b), 43.55.013(d), and 43.55.900(12) are 20 repealed. 21 * Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 TRANSITIONAL PROVISION FOR EXPIRING OIL PRODUCTION TAX 24 CREDIT. Notwithstanding the amendments to AS 43.55.025 made by secs. 7 - 12 of this Act 25 limiting application of the production tax credit under that section to gas, a taxpayer who, on 26 January 1, 2006, holds production credits for oil that are subject to the carry-forward 27 provision of AS 43.55.025(i), may apply the unused amounts of those credits against the net 28 profits tax on oil due under AS 43.55.400. 29 * Sec. 24. The uncodified law of the State of Alaska is amended by adding a new section to 30 read: 31 RETROACTIVE APPLICATION. This Act is retroactive to January 1, 2006, and
01 applies to oil produced after December 31, 2005, that is subject to the properties production 02 tax on oil under AS 43.55. 03 * Sec. 25. This Act takes effect immediately under AS 01.10.070(c).