CSSB 305(RES): "An Act providing for a production tax on oil and gas; repealing the oil and gas production (severance) tax; relating to the calculation of the gross value at the point of production of oil or gas and to the determination of the value of oil and gas for purposes of the production tax on oil and gas; providing for tax credits against the tax for certain expenditures and losses; relating to the relationship of the production tax on oil and gas to other taxes, to the dates those tax payments and surcharges are due, to interest on overpayments of the tax, and to the treatment of the tax in a producer's settlement with the royalty owners; relating to flared gas, and to oil and gas used in the operation of a lease or property under the production tax; relating to the prevailing value of oil or gas under the production tax; relating to surcharges on oil; relating to statements or other information required to be filed with or furnished to the Department of Revenue, to the penalty for failure to file certain reports for the tax, to the powers of the Department of Revenue, and to the disclosure of certain information required to be furnished to the Department of Revenue as applicable to the administration of the tax; relating to criminal penalties for violating conditions governing access to and use of confidential information relating to the tax, and to the deposit of tax money collected by the Department of Revenue; amending the definitions of 'gas,' 'oil,' and certain other terms for purposes of the production tax, and as the definition of the term 'gas' applies in the Alaska Stranded Gas Development Act, and adding further definitions; making conforming amendments; and providing for an effective date."
00 CS FOR SENATE BILL NO. 305(RES) 01 "An Act providing for a production tax on oil and gas; repealing the oil and gas 02 production (severance) tax; relating to the calculation of the gross value at the point of 03 production of oil or gas and to the determination of the value of oil and gas for purposes 04 of the production tax on oil and gas; providing for tax credits against the tax for certain 05 expenditures and losses; relating to the relationship of the production tax on oil and gas 06 to other taxes, to the dates those tax payments and surcharges are due, to interest on 07 overpayments of the tax, and to the treatment of the tax in a producer's settlement with 08 the royalty owners; relating to flared gas, and to oil and gas used in the operation of a 09 lease or property under the production tax; relating to the prevailing value of oil or gas 10 under the production tax; relating to surcharges on oil; relating to statements or other 11 information required to be filed with or furnished to the Department of Revenue, to the 12 penalty for failure to file certain reports for the tax, to the powers of the Department of
01 Revenue, and to the disclosure of certain information required to be furnished to the 02 Department of Revenue as applicable to the administration of the tax; relating to 03 criminal penalties for violating conditions governing access to and use of confidential 04 information relating to the tax, and to the deposit of tax money collected by the 05 Department of Revenue; amending the definitions of 'gas,' 'oil,' and certain other terms 06 for purposes of the production tax, and as the definition of the term 'gas' applies in the 07 Alaska Stranded Gas Development Act, and adding further definitions; making 08 conforming amendments; and providing for an effective date." 09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 10 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 11 to read: 12 INTENT OF SEC. 11 OF THIS ACT. It is the intent of the legislature through sec. 11 13 of this Act to confirm by clarification the long-standing interpretation of AS 43.55.020(f) by 14 the Department of Revenue. 15 * Sec. 2. AS 43.05.230(f) is amended to read: 16 (f) A wilful violation of the provisions of this section or of a condition 17 imposed under AS 43.55.040(1)(B) is punishable by a fine of not more than $5,000, 18 or by imprisonment for not more than two years, or by both. 19 * Sec. 3. AS 43.20.031(c) is amended to read: 20 (c) In computing the tax under this chapter, the taxpayer is not entitled to 21 deduct any taxes based on or measured by net income. The taxpayer may deduct the 22 tax levied and paid under AS 43.55. 23 * Sec. 4. AS 43.20.072(b) is amended to read: 24 (b) A taxpayer's business income to be apportioned under this section to the 25 state shall be the federal taxable income of the taxpayer's consolidated business for the 26 tax period, except that 27 (1) taxes based on or measured by net income that are deducted in the 28 determination of the federal taxable income shall be added back; the tax levied and
01 paid under AS 43.55 may not be added back; 02 (2) intangible drilling and development costs that are deducted as 03 expenses under 26 U.S.C. 263(c) (Internal Revenue Code) in the determination of the 04 federal taxable income shall be capitalized and depreciated as if the option to treat 05 them as expenses under 26 U.S.C. 263(c) (Internal Revenue Code) had not been 06 exercised; 07 (3) depletion deducted on the percentage depletion basis under 26 08 U.S.C. 613 (Internal Revenue Code) in the determination of the federal taxable income 09 shall be recomputed and deducted on the cost depletion basis under 26 U.S.C. 612 10 (Internal Revenue Code); and 11 (4) depreciation shall be computed on the basis of 26 U.S.C. 167 12 (Internal Revenue Code) as that section read on June 30, 1981. 13 * Sec. 5. AS 43.55.011 is amended by adding new subsections to read: 14 (e) There is levied on the producer of oil or gas a tax for all oil and gas 15 produced each month from each lease or property in the state, less any oil and gas the 16 ownership or right to which is exempt from taxation or constitutes a lessor's royalty 17 interest under an oil and gas lease. The tax is equal to 25 percent of the production tax 18 value of the taxable oil and gas as calculated under AS 43.55.160. 19 (f) Notwithstanding (e) of this section, there is levied on the producer of oil or 20 gas a tax for all oil and gas produced each month from each lease or property in the 21 state the ownership or right to which constitutes a lessor's royalty interest under an oil 22 and gas lease, except for oil and gas the ownership or right to which is exempt from 23 taxation. The provisions of this subsection apply for a lessor's royalty interest under an 24 oil and gas lease as follows: 25 (1) the rate of tax levied on oil and gas produced from a lease that is in 26 effect on the effective date of this subsection 27 (A) in the Cook Inlet basin is equal to 1.5 percent of the gross 28 value at the point of production of the oil and gas; 29 (B) except as described in (A) of this paragraph, is equal to five 30 percent of the gross value at the point of production of the oil and gas; 31 (2) if the department determines that, for purposes of reducing the
01 producer's tax liability under (1) of this subsection, the producer has received or will 02 receive consideration from the lessor offsetting all or a part of the producer's royalty 03 obligation, other than a deduction under AS 43.55.020(d) of the amount of a tax paid, 04 notwithstanding (1) of this subsection, the tax is equal to 20 percent of the gross value 05 at the point of production of the oil and gas; 06 (3) unless otherwise expressly agreed between the producer and the 07 royalty owner, in making settlement with the royalty owner with respect to royalty oil 08 or gas taxed under this subsection, the producer may deduct the amount of the tax paid 09 on taxable royalty oil or gas under this subsection, or may deduct taxable royalty oil or 10 gas equivalent in value at the time the tax becomes due, and the provisions of 11 AS 43.55.020(d) are not applicable to that taxable royalty oil or gas; and 12 (4) the commissioner shall recommend to the legislature the rate of tax 13 applicable to the lessor's royalty interest on private lease holdings on leases that are 14 entered into after the effective date of this subsection. 15 (g) In addition to the taxes levied under (e) and (f) of this section, if the 16 average ANS West Coast price per barrel of oil during a month exceeds $40, there is 17 levied on the producer of oil a tax for oil produced during that month from each lease 18 or property in the state, less any oil the ownership or right to which is exempt from 19 taxation. The tax levied under this subsection is equal to 20 [((ANS West Coast price - $40) x .002) x [ANS wellhead price x (1 - PPT rate)]] 21 x (total taxable barrels of oil at the point of production) 22 where 23 (1) "ANS wellhead price" means the prevailing value for oil produced 24 in the Alaska North Slope area; and 25 (2) the PPT, or production profit tax, rate is 25 percent. 26 (h) For purposes of (g) of this section, the department may calculate the 27 average price or may, by regulation, specify the method by which the average price 28 shall be calculated with reference to one or more published sources of price 29 information. If, in the department's judgment, reliable published sources of price 30 information on Alaska North Slope crude oil cease, or appear likely to soon cease, to 31 be available, or if, in the department's judgment, the price of Alaska North Slope crude
01 oil ceases, or appears likely to soon cease, to be a reliable indicator of the general 02 price level of crude oils, the department shall, by regulation, specify a substitute 03 formula for computing the oil price index. The substitute formula specified by the 04 department under this subsection must bear, as nearly as is reasonably possible, the 05 same relationship to the general price level of crude oils as did the price of Alaska 06 North Slope crude oil. 07 * Sec. 6. AS 43.55.017(a) is amended to read: 08 (a) Except as provided in this chapter, the taxes imposed by this chapter are in 09 place of all taxes now imposed by the state or any of its municipalities, and neither the 10 state nor a municipality may impose a tax on [UPON] 11 (1) producing oil or gas leases; 12 (2) oil or gas produced or extracted in the state; 13 (3) the value of intangible drilling and development costs, as 14 described in 26 U.S.C. 263(c) (Internal Revenue Code), as amended through 15 January 1, 1974 [EXPLORATION EXPENSES]. 16 * Sec. 7. AS 43.55.020(a) is repealed and reenacted to read: 17 (a) The production tax on oil and gas shall be paid as set out in this subsection. 18 Ninety-five percent of the tax levied under AS 43.55.011(e), net of any credits applied 19 under this chapter, is due on the last day of each calendar month on oil and gas 20 produced from each lease or property during the preceding month. The remaining 21 portion of the tax levied under AS 43.55.011(e), net of any credits applied under this 22 chapter, is due on the last day of the third month following the calendar quarter during 23 which the oil and gas were produced. An unpaid amount of tax that is not paid when 24 due in accordance with this subsection becomes delinquent. An overpayment of tax 25 with respect to a month may be applied against the tax due for any later month. 26 Notwithstanding any contrary provision of AS 43.05.280, interest on an overpayment 27 is allowed only from a date that is 90 days after the last day of the third month 28 following the calendar quarter of production, as described in this subsection, and 29 interest is not allowed if the overpayment was refunded within the 90-day period. In 30 addition, the producer shall comply with the requirements of AS 43.55.030(a) and (e). 31 In this subsection, "calendar quarter" means each of the three-month periods ending
01 March 31, June 30, September 30, and December 31. 02 * Sec. 8. AS 43.55.020(b) is amended to read: 03 (b) The production tax on oil and [OR] gas shall be paid by or on behalf of the 04 producer. 05 * Sec. 9. AS 43.55.020(d) is amended to read: 06 (d) In making settlement with the royalty owner for oil or gas that is taxable 07 under AS 43.55.011(e), the producer may deduct the amount of the tax paid on 08 taxable royalty oil and [OR] gas, or may deduct taxable royalty oil or gas equivalent 09 in value at the time the tax becomes due to the amount of the tax paid. Unless 10 otherwise agreed between the producer and the royalty owner, the amount of the 11 tax paid under AS 43.55.011(e) on taxable royalty oil and gas for a month other 12 than oil or gas the ownership or right to which constitutes a lessor's royalty 13 interest under an oil or gas lease is considered to be the gross value at the point of 14 production of the taxable royalty oil and gas produced during the month 15 multiplied by a figure that is a quotient, in which 16 (1) the numerator is the producer's total tax liability under 17 AS 43.55.011(e) for the month of production; and 18 (2) the denominator is the total gross value at the point of 19 production of the oil and gas taxable under AS 43.55.011(e) produced by the 20 producer from all leases and properties in the state during the month. 21 * Sec. 10. AS 43.55.020(e) is repealed and reenacted to read: 22 (e) Gas flared, released, or allowed to escape in excess of the amount 23 authorized by the Alaska Oil and Gas Conservation Commission is considered, for the 24 purpose of AS 43.55.011 - 43.55.160, as gas produced from a lease or property. Oil or 25 gas used in the operation of a lease or property in the state in drilling for or producing 26 oil or gas, or for repressuring, except to the extent determined by the Alaska Oil and 27 Gas Conservation Commission to be waste, is not considered, for the purpose of 28 AS 43.55.011 - 43.55.160, as oil or gas produced from a lease or property. 29 * Sec. 11. AS 43.55.020(f) is amended to read: 30 (f) If oil or gas is produced but not sold, or if oil or gas is produced and 31 sold under circumstances where the sale price does not represent the prevailing value
01 for oil or gas of like kind, character, or quality in the field or area from which the 02 product is produced, the department may require the tax to be paid upon the basis of 03 the value of oil or gas of the same kind, quality, and character prevailing during the 04 calendar month of production for that field or area. 05 * Sec. 12. AS 43.55.020 is amended by adding a new subsection to read: 06 (g) The tax levied under AS 43.55.011(f) shall be paid monthly and is due on 07 the last day of each calendar month on oil and gas produced from each lease or 08 property during the preceding month, and, if not paid before the end of the month in 09 which it becomes due, the tax becomes delinquent. 10 * Sec. 13. AS 43.55 is amended by adding a new section to read: 11 Sec. 43.55.024. Tax credits for certain losses and expenditures. (a) 12 Notwithstanding that a qualified capital expenditure may be a deductible lease 13 expenditure for purposes of calculating the production tax value of oil and gas under 14 AS 43.55.160(a), unless a credit for that expenditure is taken under AS 43.55.025, 15 (1) a producer or explorer that incurs a qualified capital expenditure 16 may also elect to take a tax credit in the amount of 20 percent of that expenditure; 17 (2) for a calendar year for which the producer makes an election under 18 AS 43.55.160(f), instead of taking a tax credit at a rate authorized by (1) of this 19 subsection as to each separate qualified capital expenditure after it has been incurred, a 20 producer that incurs a qualified capital expenditure during that year and that wishes to 21 apply a credit based on that expenditure against a tax due under AS 43.55.011 - 22 43.55.160 shall calculate and apply every month an annualized tax credit in an amount 23 equal to one and two-thirds percent of the total qualified capital expenditures incurred 24 for expenditures for exploration, development, or production during that year and for 25 which the tax credit is taken for that year. 26 (b) A producer or explorer may elect to take a tax credit in the amount of 25 27 percent of a carried-forward annual loss. A credit under this subsection may be applied 28 against a tax for which a credit may be elected under (a) of this section and may be 29 applied irrespective of whether the producer or explorer also claims a credit for 30 transitional investment expenditures authorized by (i) of this section. For purposes of 31 this subsection, a carried-forward annual loss is the amount of a producer's or
01 explorer's adjusted lease expenditures under AS 43.55.160 for a previous calendar 02 year that was not deductible in any month under AS 43.55.160(a) and (b). 03 (c) A credit or portion of a credit under this section may not be used to reduce 04 a person's tax liability under AS 43.55.011(e) for any month below zero, and any 05 unused credit or portion of a credit not used under this subsection may be applied in a 06 later month. 07 (d) Except as limited by (i) of this section, a person entitled to take a tax credit 08 under this section that wishes to transfer the unused credit to another person may 09 apply to the department for a transferable tax credit certificate. An application under 10 this subsection must be on a form prescribed by the department and must include 11 supporting information and documentation that the department reasonably requires. 12 The department shall grant or deny an application, or grant an application as to a lesser 13 amount than that claimed and deny it as to the excess, not later than 60 days after the 14 latest of (1) March 31 of the year following the calendar year in which the qualified 15 capital expenditure or carried-forward annual loss for which the credit is claimed was 16 incurred; (2) if the applicant is required under AS 43.55.030(e) to file a statement on 17 or before March 31 of the year following the calendar year in which the qualified 18 capital expenditures or carried-forward annual loss for which the credit was incurred, 19 the date the statement was filed; or (3) the date the application was received by the 20 department. If, based on the information then available to it, the department is 21 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 22 the applicant a transferable tax credit certificate for the amount of the credit. A 23 certificate issued under this subsection does not expire. 24 (e) A person to which a transferable tax credit certificate is issued under (d) of 25 this section may transfer the certificate to another person, and a transferee may further 26 transfer the certificate. Subject to the limitations set out in (a) - (c) of this section, and 27 notwithstanding any action the department may take with respect to the applicant 28 under (f) of this section, the owner of a certificate may apply the credit or a portion of 29 the credit shown on the certificate only against a tax due under AS 43.55.011(e). 30 However, a credit shown on a transferable tax credit certificate may not be applied to 31 reduce a transferee's total tax due under AS 43.55.011(e) on oil and gas produced
01 during a calendar year to less than 80 percent of the tax that would otherwise be due 02 without applying that credit. Any portion of a credit not used under this subsection 03 may be applied in a later period. 04 (f) The issuance of a transferable tax credit certificate under (d) of this section 05 does not limit the department's ability to later investigate or audit a tax credit claim to 06 which the certificate relates or to adjust or deny the claim if the department determines 07 that the applicant was not entitled to the amount of the credit for which the certificate 08 was issued. The tax liability of the applicant under AS 43.55.011(e) and 43.55.017 - 09 43.55.160 is increased by the amount of the credit that exceeds that to which the 10 applicant was entitled. That amount bears interest under AS 43.05.225 from the date 11 the transferable tax credit certificate was issued. For purposes of this subsection, an 12 applicant that is an explorer is considered a producer subject to the tax levied under 13 AS 43.55.011(e). 14 (g) The department may adopt regulations to carry out the purposes of this 15 section, including prescribing reporting, record keeping, and certification procedures 16 and requirements to verify the accuracy of credits claimed and to ensure that a credit is 17 not used more than once, and otherwise implementing this section. 18 (h) Except as provided in (i) of this section, a producer or explorer may not 19 elect to take a tax credit under this section for a lease expenditure under AS 43.55.160 20 that is an expenditure incurred 21 (1) to acquire an asset (A) the cost of previously acquiring which was a 22 lease expenditure under AS 43.55.160(c) or would have been a lease expenditure 23 under AS 43.55.160(c) if it had been incurred on or after April 1, 2006; or (B) that has 24 previously been placed in service in the state; an expenditure to acquire an asset is not 25 excluded under this paragraph if not more than an immaterial portion of the asset 26 meets a description under (A) or (B) of this paragraph; for purposes of this paragraph, 27 "asset" includes geological, geophysical, and well data and interpretations; 28 (2) for an extended period of disuse, dismantlement, removal, 29 surrender, or abandonment of a well, facility, pipeline, platform, or other structure, or 30 for the restoration of a lease, field, unit, area, or body of water in conjunction with an 31 extended period of disuse, dismantlement, removal, surrender, or abandonment of a
01 facility described in this paragraph. 02 (i) For the purposes of this section, 03 (1) a producer's transitional investment expenditures are the sum of the 04 expenditures the producer incurred on or after April 1, 2001, and before April 1, 2006, 05 that would be qualified capital expenditures if they were incurred on or after April 1, 06 2006, less the sum of the payments or credits the producer received before April 1, 07 2006, for the sale or other transfer of assets, including geological, geophysical, or well 08 data or interpretations, acquired by the producer as a result of expenditures the 09 producer incurred before April 1, 2006, that would be qualified capital expenditures, if 10 they were incurred on or after April 1, 2006; 11 (2) a producer may elect to take a tax credit in the amount of 20 12 percent of the producer's transitional investment expenditures, but only to the extent 13 that the amount does not exceed 14 (A) one-half of the producer's qualified capital expenditures 15 that are incurred during the month, if the producer does not make an election 16 under AS 43.55.160(f); 17 (B) 1/24 of the producer's qualified capital expenditures that 18 are incurred during the calendar year, if the producer makes an election under 19 AS 43.55.160(f); 20 (3) a producer may not take a tax credit for a transitional investment 21 expenditure 22 (A) in any month that ends after March 31, 2013; 23 (B) more than once; or 24 (C) if a credit for that expenditure was taken under 25 AS 43.55.025; 26 (4) notwithstanding (d) - (f) of this section, a producer may not transfer 27 a tax credit or obtain a transferable tax credit certificate for a transitional investment 28 expenditure. 29 (j) In this section, 30 (1) "explorer" has the meaning given in AS 43.55.025; 31 (2) "qualified capital expenditure" means, except as otherwise
01 provided in (h) of this section, an expenditure that is a lease expenditure under 02 AS 43.55.160 and is 03 (A) incurred for geological or geophysical exploration; or 04 (B) treated as a capitalized expenditure under 26 U.S.C. 05 (Internal Revenue Code), as amended, regardless of elections made under 26 06 U.S.C. 263(c) (Internal Revenue Code), as amended, and either is treated as a 07 capitalized expenditure by the person incurring the expenditure or is eligible to 08 be deducted as an expense under 26 U.S.C. 263(c) (Internal Revenue Code), as 09 amended. 10 * Sec. 14. AS 43.55.030(a) is amended to read: 11 (a) The tax shall be paid to the department, and the person paying the tax shall 12 file with the department at the time the tax or a portion of the tax is required to be 13 paid a statement, under oath, on forms prescribed by or acceptable to the department, 14 giving, with other information required, the following: 15 (1) a description of each [THE] lease or property from which the oil 16 and [OR] gas were [WAS] produced, by name, legal description, lease number, or 17 [BY] accounting codes [CODE NUMBERS] assigned by the department; 18 (2) the names of the producer and the person paying the tax; 19 (3) the gross amount of oil and the gross amount of [OR] gas 20 produced from each [THE] lease or property, and the percentage of the gross amount 21 of oil and gas owned by each producer for whom the tax is paid; 22 (4) the gross [TOTAL] value at the point of production of the oil 23 and of the [OR] gas produced from each [THE] lease or property owned by each 24 producer for whom the tax is paid; [AND] 25 (5) the name of the first purchaser and the price received for the oil 26 and for the [OR] gas, unless relieved from this requirement in whole or in part by 27 the department; and 28 (6) the producer's lease expenditures and adjustments as 29 calculated under AS 43.55.160 [IF SOLD IN THE STATE]. 30 * Sec. 15. AS 43.55.030(d) is amended to read: 31 (d) Reports by or on behalf of the producer are delinquent the first day
01 following the day the tax is due. [EACH PRODUCER IS SUBJECT TO A PENALTY 02 OF $25 A DAY FOR EACH LEASE OR PROPERTY UPON WHICH THE 03 REPORT IS NOT FILED. THE PENALTY FOR FAILURE TO FILE A REPORT IS 04 IN ADDITION TO THE PENALTY FOR DELINQUENT TAXES, AND IS A LIEN 05 AGAINST THE ASSETS OF THE PRODUCER.] 06 * Sec. 16. AS 43.55.030 is amended by adding a new subsection to read: 07 (e) In addition to other required information, the producer shall file a 08 statement, on or before the last day of each calendar quarter of a year, showing any 09 adjustments or corrections to the statements that were required under (a) of this section 10 to be filed for the three months of the preceding calendar quarter during which the oil 11 or gas was produced. In this subsection, "calendar quarter" means each of the three- 12 month periods ending March 31, June 30, September 30, and December 31. 13 * Sec. 17. AS 43.55.040 is amended to read: 14 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 15 AS 43.05.405 - 43.05.499, the department may 16 (1) require a person engaged in production and the agent or employee 17 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 18 or gas to furnish, whether by the filing of regular statements or reports or 19 otherwise, additional information that is considered by the department as necessary to 20 compute the amount of the tax; notwithstanding any contrary provision of law, the 21 disclosure of additional information under this paragraph to the producer 22 obligated to pay the tax does not violate AS 40.25.100(a) or AS 43.05.230(a); 23 before disclosing information under this paragraph that is otherwise required to 24 be held confidential under AS 40.25.100(a) or AS 43.05.230(a), the department 25 shall 26 (A) provide the person that furnished the information a 27 reasonable opportunity to be heard regarding the proposed disclosure and 28 the conditions to be imposed under (B) of this paragraph; and 29 (B) impose appropriate conditions limiting 30 (i) access to the information to those legal counsel, 31 consultants, employees, officers, and agents of the producer who
01 have a need to know that information for the purpose of 02 determining or contesting the producer's tax obligation; and 03 (ii) the use of the information to use for that 04 purpose; 05 (2) examine the books, records, and files of such a person; 06 (3) conduct hearings and compel the attendance of witnesses and the 07 production of books, records, and papers of any person; and 08 (4) make an investigation or hold an inquiry that is considered 09 necessary to a disclosure of the facts as to 10 (A) the amount of production from any oil or gas location, or of 11 a company or other producer of oil or gas; and 12 (B) the rendition of the oil and gas for taxing purposes. 13 * Sec. 18. AS 43.55.080 is amended to read: 14 Sec. 43.55.080. Collection and deposit of revenue. Except as otherwise 15 provided under art. IX, sec. 17, Constitution of the State of Alaska, the [THE] 16 department shall deposit in the general fund the money collected by it under 17 AS 43.55.011 - 43.55.160 [AS 43.55.011 - 43.55.150]. 18 * Sec. 19. AS 43.55.135 is amended to read: 19 Sec. 43.55.135. Measurement. For the purposes of AS 43.55.011 - 43.55.160 20 [AS 43.55.011 - 43.55.150], oil is [SHALL BE] measured in terms of a "barrel of oil" 21 and gas is [SHALL BE] measured in terms of a "cubic foot of gas." 22 * Sec. 20. AS 43.55.150(a) is amended to read: 23 (a) For the purposes of AS 43.55.011 - 43.55.160 [AS 43.55.011 - 43.55.150], 24 the gross value at the point of production is [SHALL BE] calculated using the 25 reasonable costs of transportation of the oil or gas. The reasonable costs of 26 transportation are [SHALL BE] the actual costs, except when the 27 (1) [WHEN THE] parties to the transportation of oil or gas are 28 affiliated; 29 (2) [WHEN THE] contract for the transportation of oil or gas is not an 30 arm's length transaction or is not representative of the market value of that 31 transportation;
01 (3) [WHEN THE] method of transportation of oil or gas is not 02 reasonable in view of existing alternative methods of transportation. 03 * Sec. 21. AS 43.55.150 is amended by adding a new subsection to read: 04 (d) Under regulations adopted by the department, if the commissioner 05 completes a detailed fiscal analysis and determines that an election by a producer 06 under this subsection would serve the long-term fiscal interests of the state, the 07 department may allow a producer, subject to limitations prescribed by the department 08 as to the frequency of making elections, to elect prospectively to calculate the gross 09 value at the point of production of oil or gas based in whole or part on 10 (1) a formula prescribed by the department that uses, with adjustments 11 if appropriate, a royalty value or valuation methodology accepted by the 12 (A) Department of Natural Resources under AS 38.05, in the 13 case of oil and gas produced from a lease issued by the Department of Natural 14 Resources or produced from a lease or property that is part of a unit approved 15 by the Department of Natural Resources; or 16 (B) United States Department of the Interior under applicable 17 federal oil and gas leasing statutes, in the case of oil and gas produced from a 18 lease issued by the United States Department of the Interior that is not part of a 19 unit approved by the Department of Natural Resources, or produced from a 20 lease or property that is part of a unit approved by the United States 21 Department of the Interior but not approved by the Department of Natural 22 Resources; or 23 (2) another formula prescribed by the Department of Revenue that 24 reasonably estimates a value for the oil or gas at a specific geographical location, such 25 as the point of tender or delivery into a common carrier pipeline; the formula may use 26 factors such as published price indices for oil or gas in or outside the state, quality 27 differentials for oil or gas, transportation costs between markets, and inflation 28 adjustments. 29 * Sec. 22. AS 43.55 is amended by adding a new section to article 1 to read: 30 Sec. 43.55.160. Determination of production tax value of oil and gas. (a) 31 Except as provided in (f) and (h) of this section, for purposes of AS 43.55.011(e), the
01 production tax value of the taxable oil and gas produced during a month is the total of 02 the gross value at the point of production of the oil and gas taxable under 03 AS 43.55.011(e) and produced by the producer from all leases or properties in the 04 state, less the producer's lease expenditures for the month as adjusted under (e) of this 05 section. However, the production tax value calculated under this subsection may not 06 be less than zero. If a producer does not produce taxable oil or gas during a month, the 07 producer is considered to have generated a positive production tax value if the 08 calculation described in this subsection yields a positive number because the 09 producer's adjusted lease expenditures for a month are less than zero as a result of the 10 producer's receiving a payment or credit under (e) of this section or otherwise. 11 (b) For purposes of administration of (a) of this section, 12 (1) any adjusted lease expenditures that would otherwise be deductible 13 in a month but whose deduction would cause the production tax value calculated under 14 (a) of this section of the taxable oil and gas produced during the month to be less than 15 zero may be added to the producer's adjusted lease expenditures for one or more other 16 months in the same calendar year; the total of any adjusted lease expenditures that are 17 not deductible in any month during a calendar year because their deduction would 18 cause the production tax value calculated under (a) of this section of the taxable oil 19 and gas produced during one or more months to be less than zero may be used to 20 establish a carried-forward annual loss under AS 43.55.024(b); 21 (2) an explorer that has taken a tax credit under AS 43.55.024(b) or 22 that has obtained a transferable tax credit certificate under AS 43.55.024(d) for the 23 amount of a tax credit under AS 43.55.024(b) is considered a producer, subject to the 24 tax levied under AS 43.55.011(e), to the extent that the explorer generates a positive 25 production tax value as the result of the explorer's receiving a payment or credit 26 described in (e) of this section. 27 (c) For purposes of this section, 28 (1) a producer's lease expenditures for a period are the total costs 29 upstream of the point of production of oil and gas that are incurred on or after April 1, 30 2006, by the producer during the period and that are direct, ordinary, and necessary 31 costs of exploring for, developing, or producing oil or gas from deposits located within
01 the producer's leases or properties in the state or, in the case of land in which the 02 producer does not own a working interest, direct, ordinary, and necessary costs of 03 exploring for oil or gas deposits located within other land in the state; however, lease 04 expenditures do not include the costs incurred to satisfy a work commitment under an 05 exploration license under AS 38.05.132; in determining whether costs are direct, 06 ordinary, and necessary costs of exploring for, developing, or producing oil or gas 07 from a deposit of oil or gas located within a lease or property or other land in the state, 08 the department shall give substantial weight to 09 (A) the typical industry practices and standards in the state and 10 in the United States as to costs that an operator is allowed to bill a working 11 interest owner that is not the operator, under unit operating agreements or 12 similar operating agreements that were in effect on or before December 1, 13 2005, and were subject to negotiation with working interest owners, not the 14 operator, with substantial bargaining power; and 15 (B) the standards adopted by the Department of Natural 16 Resources as to the costs, other than interest, that a lessee is allowed to deduct 17 from revenue in calculating net profits under a lease issued under 18 AS 38.05.180(f)(3)(B), (D), or (E); 19 (2) the Department of Revenue may authorize a producer, including a 20 producer that is an operator, to treat as its lease expenditures under this section the 21 costs paid by the producer that are billed to the producer by an operator in accordance 22 with the terms of a unit operating agreement or similar operating agreement if the 23 Department of Revenue finds that 24 (A) the pertinent provisions of the operating agreement are 25 substantially consistent with the Department of Revenue's determinations and 26 standards otherwise applicable under this subsection; and 27 (B) at least one working interest owner party to the agreement, 28 other than the operator, has substantial incentive and ability to effectively audit 29 billings under the agreement. 30 (d) For purposes of (c) of this section, "direct costs" 31 (1) includes
01 (A) an expenditure, when incurred, to acquire an item if the 02 acquisition cost is otherwise a direct cost, notwithstanding that the expenditure 03 may be required to be capitalized rather than treated as an expense for financial 04 accounting or federal income tax purposes; 05 (B) payments of property taxes, sales and use taxes, motor fuel 06 taxes, and excise taxes; 07 (C) a reasonable allowance, as determined under regulations 08 adopted by the department, for overhead expenses directly related to exploring 09 for, developing, and producing oil or gas deposits located within leases or 10 properties or other land in the state; 11 (2) does not include 12 (A) depreciation or amortization; 13 (B) royalty payments for oil and gas; 14 (C) taxes based on or measured by net income; 15 (D) interest or other financing charges or costs of raising equity 16 or debt capital; 17 (E) acquisition costs for a lease or property or exploration 18 license; 19 (F) costs arising from fraud, wilful misconduct, or negligence; 20 (G) fines or penalties imposed by law; 21 (H) costs of arbitration, litigation, or other dispute resolution 22 activities that involve the state or concern the rights or obligations among 23 owners of interests in, or rights to production from, one or more leases or 24 properties or a unit; 25 (I) donations; 26 (J) costs incurred in organizing a partnership, joint venture, or 27 other business entity or arrangement; 28 (K) amounts paid to indemnify the state; the exclusion 29 provided by this paragraph does not apply to the costs of obtaining insurance 30 or a surety bond from a third-party insurer or surety; 31 (L) surcharges levied under AS 43.55.201 or 43.55.300;
01 (M) the portion of costs incurred for any extended period of 02 disuse, dismantlement, removal, surrender, or abandonment of a well, facility, 03 pipeline, platform, or other structure, or for the restoration of a lease, field, 04 unit, area, body of water, or right-of-way in conjunction with an extended 05 period of disuse, dismantlement, removal, surrender, or abandonment, that is 06 attributable to production of oil or gas occurring before the effective date of 07 this section, calculated as a ratio of production of oil or gas associated with the 08 well, facility, pipeline platform or other structure, lease, field, unit, area, body 09 of water, or right-of-way occurring before the effective date of this section 10 divided by all production of oil or gas associated with that facility through the 11 end of the calendar month before commencement of the extended period of 12 disuse, dismantlement, removal, surrender, or abandonment; 13 (N) in a transaction that is not an arm's length transaction, 14 amounts incurred, to the extent that those amounts exceed fair market value; 15 the provisions of (k) of this section apply to a determination under this 16 subparagraph; 17 (O) an amount expended to purchase an interest in any 18 corporation, partnership, limited liability company, business trust, or any other 19 business entity, whether or not the transaction is treated as an asset sale for 20 federal income tax purposes. 21 (e) A producer's lease expenditures must be adjusted by subtracting certain 22 payments or credits received by the producer, as provided in this subsection. If one or 23 more payments or credits subject to this subsection are received by a producer during 24 a month or, under (f) of this section, during a calendar year, and if either the total 25 amount of the payments or credits exceeds the amount of the producer's lease 26 expenditures or the producer has no lease expenditures, the producer shall nevertheless 27 subtract those payments or credits from the lease expenditures or from zero, 28 respectively, and the producer's adjusted lease expenditures for that month or calendar 29 year are a negative number and shall be applied to the calculation under (a) of this 30 section as a negative number. The payments or credits that a producer shall subtract 31 from the producer's lease expenditures, or from zero, under this subsection are
01 payments or credits received by the producer for 02 (1) the use by another person of a production facility in which the 03 producer has an ownership interest or the management by the producer of a production 04 facility under a management agreement providing for the producer to receive a 05 management fee; 06 (2) a reimbursement or similar payment that offsets the producer's 07 lease expenditures, including a payment from the state or federal government for 08 reimbursement of the producer's upstream costs, including costs for gathering, 09 separating, cleaning, dehydration, compressing, or other field handling associated with 10 the production of oil or gas upstream of the point of production; 11 (3) the sale or other transfer of 12 (A) an asset, including geological, geophysical, or well data or 13 interpretations, acquired by the producer as a result of a lease expenditure or an 14 expenditure that would be a lease expenditure if it were incurred on or after 15 April 1, 2006; for purposes of this subsection, if a producer removes from the 16 state, for use outside the state, an asset described in this subparagraph, the 17 value of the asset at the time it is removed is considered a payment received by 18 the producer for the transfer of the asset; the provisions of (k) and (l) of this 19 section apply to an asset that is subject to this subparagraph; and 20 (B) oil or gas 21 (i) that is not considered produced from a lease or 22 property under AS 43.55.020(e); and 23 (ii) the cost of acquiring which is a lease expenditure 24 incurred by the person that acquires the oil or gas. 25 (f) In place of the adjusted lease expenditures for a month under (a) of this 26 section, a producer may, at any time, elect to substitute, for every month of a calendar 27 year, one-twelfth of the producer's adjusted lease expenditures for the calendar year. 28 (g) For a month for which (1) the production tax value of the taxable oil and 29 gas produced during the month calculated under (a) of this section exceeds zero, and 30 (2) the total amount of oil and gas, including oil and gas the ownership or right to 31 which is exempt from taxation, produced a day by the producer from all leases or
01 properties in the state averages less than 55,000 barrels of oil equivalent, a producer 02 that is qualified under (h) of this section may reduce the production tax value by 03 deducting an allowance in an amount calculated under this subsection. The allowance 04 is equal to the production tax value calculated under (a) of this section multiplied by 05 the fraction that is yielded by the following formula, except that the value of the 06 fraction may not be greater than one: 07 (5,000 - 0.2 x [ADP - 5,000] )/ADP 08 where "ADP" is the average for the month of the number of barrels of oil equivalent of 09 the total amount of oil and gas, including oil and gas the ownership or right to which is 10 exempt from taxation, produced a day by the producer from all leases or properties in 11 the state. For purposes of this subsection, a barrel of oil equivalent is a barrel of oil, in 12 the case of oil, or 6,000 cubic feet of gas, in the case of gas. 13 (h) On written application by a producer, including any information the 14 department may require, the department shall determine whether the producer 15 qualifies under this subsection for a calendar year. To qualify under this subsection, a 16 producer must demonstrate that its operation in the state or its ownership of an interest 17 in a lease or property in the state as a distinct producer entity would not result in the 18 division among multiple producer entities of any amount of oil or gas production or 19 any production tax value of taxable oil and gas, as defined under (a) of this section, 20 that would be reasonably expected to be attributed to a single producer entity if the 21 allowance provision of (g) of this section did not exist. The department may not make 22 a determination that a producer is qualified under (g) of this section and this 23 subsection after December 31, 2013. 24 (i) The department shall specify or approve a reasonable allocation method for 25 determining the portion of a cost that is appropriately treated as a lease expenditure 26 under (c) of this section if a cost that would otherwise constitute a lease expenditure 27 under (c) of this section is incurred to explore for, develop, or produce 28 (1) both an oil or gas deposit located within land outside the state and 29 an oil or gas deposit located within a lease or property, or other land, in the state; or 30 (2) an oil or gas deposit located partly within land outside the state and 31 partly within a lease or property, or other land, in the state.
01 (j) For purposes of AS 43.55.024(a) and (b) and only as to expenditures 02 incurred to explore for an oil or gas deposit located within land in which an explorer, 03 as defined in AS 43.55.025, does not own a working interest, the term "producer" in 04 (b), (c), and (e) of this section includes "explorer." 05 (k) For purposes of making a determination under (d)(2)(N) of this section, 06 and for purposes of making a subtraction that may be required under (e)(3)(A) of this 07 section, the standard to be applied is that of a producer dealing at arm's length with an 08 uncontrolled entity. To that end, 09 (1) the department may adopt regulations incorporating the concepts of 10 26 U.S.C. 482 (Internal Revenue Code), as amended, and 26 U.S.C. 6662(e) (Internal 11 Revenue Code), as amended, the related or accompanying regulations of each of those 12 sections, and any ruling or guidance issued by the Internal Revenue Service that 13 relates to each of those sections; 14 (2) on request of the department, a producer shall provide 15 documentation supporting the arm's length nature of the transactions resulting in a cost 16 to the producer; the department may base its consideration and determination under 17 (d)(2)(N) of this section and this subsection only on documentation that was in 18 existence at the time the tax return for the taxable period in question is due; if a 19 producer fails to comply with a request under this paragraph, there shall be added to 20 any underpayment determined by the department under this section a penalty in the 21 amount of five percent of the underpayment. 22 (l) For purposes of determining the amount of the adjustment by subtraction 23 that must be made to a producer's lease expenditures as a result of the producer's 24 receiving a payment or credit under (e)(3)(A) of this section, 25 (1) if the sale or transfer of the asset is made for less than the amount 26 that would have been received in an arm's length transaction, 27 (A) the principle set out in (k) of this section, as interpreted and 28 implemented by the regulations of the department authorized by (k)(1) of this 29 section, applies; and 30 (B) the amount of the adjustment by subtraction shall be 31 calculated using the fair market value of the asset; and
01 (2) the producer shall adjust by subtraction from the producer's direct 02 costs the sale of a relinquished asset; the department may adopt regulations to 03 implement this paragraph; for purposes of this paragraph, a "relinquished asset" is an 04 asset that was first acquired by the producer before the effective date of this section 05 and that has been replaced by the producer's later purchase of an asset that serves a 06 substantially similar function as the asset that was relinquished. 07 (m) The department may adopt regulations that establish additional standards 08 necessary to carrying out the purposes of this section. 09 (n) For purposes of this section, 10 (1) "explore" includes conducting geological or geophysical 11 exploration, including drilling a stratigraphic test well; 12 (2) "ordinary and necessary" has the meaning given to "ordinary and 13 necessary" in 26 U.S.C. 162 (Internal Revenue Code) and regulations adopted under 14 that section; 15 (3) "stratigraphic test well" means a well drilled for the sole purpose of 16 obtaining geological information to aid in exploring for an oil or gas deposit and the 17 target zones of which are located in the state. 18 * Sec. 23. AS 43.55.201 is amended to read: 19 Sec. 43.55.201. Surcharge levied. (a) Every producer of oil shall pay a 20 surcharge of $.01 [$.02] per barrel of oil produced from each lease or property in the 21 state, less any oil the ownership or right to which is exempt from taxation. 22 (b) The surcharge imposed by (a) of this section is in addition to the tax 23 imposed by AS 43.55.011 and shall be paid in the [SAME] manner described in 24 AS 43.55.020. The surcharge [AS THE TAX IMPOSED BY AS 43.55.011 - 25 43.55.150; AND] is in addition to the surcharge imposed by AS 43.55.300 - 26 43.55.310. 27 (c) A producer of oil shall make reports of production in the same manner and 28 under the same penalties as required under AS 43.55.011 - 43.55.160 [AS 43.55.011 - 29 43.55.150]. 30 * Sec. 24. AS 43.55.201 is amended by adding a new subsection to read: 31 (d) Oil not considered under AS 43.55.020(e) to be produced from a lease or
01 property is not considered to be produced from a lease or property for purposes of this 02 section. 03 * Sec. 25. AS 43.55.300 is amended to read: 04 Sec. 43.55.300. Surcharge levied. (a) Every producer of oil shall pay a 05 surcharge of $.05 [$.03] per barrel of oil produced from each lease or property in the 06 state, less any oil the ownership or right to which is exempt from taxation. 07 (b) The surcharge imposed by (a) of this section is in addition to the tax 08 imposed by AS 43.55.011 and shall be paid in the [SAME] manner described in 09 AS 43.55.020. The surcharge [AS THE TAX IMPOSED BY AS 43.55.011 - 10 43.55.150; AND] is in addition to the surcharge imposed by AS 43.55.201 - 11 43.55.231. 12 (c) A producer of oil shall make reports of production in the same manner and 13 under the same penalties as required under AS 43.55.011 - 43.55.160 [AS 43.55.011 - 14 43.55.150]. 15 * Sec. 26. AS 43.55.300 is amended by adding a new subsection to read: 16 (d) Oil not considered under AS 43.55.020(e) to be produced from a lease or 17 property is not considered to be produced from a lease or property for purposes of this 18 section. 19 * Sec. 27. AS 43.55.900(6) is repealed and reenacted to read: 20 (6) "gas" means 21 (A) all natural, associated, or casinghead gas; 22 (B) all hydrocarbons that 23 (i) are recovered by mechanical separation of well 24 fluids or by gas processing; and 25 (ii) exist in a gaseous phase at the completion of 26 mechanical separation and any gas processing; and 27 (C) all other hydrocarbons produced from a well not defined as 28 oil; 29 * Sec. 28. AS 43.55.900(7) is repealed and reenacted to read: 30 (7) "gross value at the point of production" means 31 (A) for oil, the value of the oil at the automatic custody transfer
01 meter or device through which the oil enters into the facilities of a carrier 02 pipeline or other transportation carrier in a condition of pipeline quality; in the 03 absence of an automatic custody transfer meter or device, "gross value at the 04 point of production" means the value of the oil at the mechanism or device to 05 measure the quantity of oil that has been approved by the department for that 06 purpose, through which the oil is tendered and accepted in a condition of 07 pipeline quality into the facilities of a carrier pipeline or other transportation 08 carrier or into a field topping plant; 09 (B) for gas, other than gas described in (C) of this paragraph, 10 that is 11 (i) not subjected to or recovered by mechanical 12 separation or gas processing, the value of the gas at the first point 13 where the gas is accurately metered; 14 (ii) subjected to or recovered by mechanical separation 15 but not gas processing, the value of the gas at the first point where the 16 gas is accurately metered after completion of mechanical separation; 17 (iii) subjected to or recovered by gas processing, the 18 value of the gas at the first point where the gas is accurately metered 19 after completion of gas processing; 20 (C) for gas run through an integrated gas processing and gas 21 treatment facility that does not accurately meter the gas after the gas 22 processing and before the gas treatment, the value of the gas at the first point 23 where gas processing is completed or where gas treatment begins, whichever is 24 further upstream; 25 * Sec. 29. AS 43.55.900(10) is repealed and reenacted to read: 26 (10) "oil" means 27 (A) crude petroleum oil; and 28 (B) all liquid hydrocarbons that are recovered by mechanical 29 separation of well fluids or by gas processing; 30 * Sec. 30. AS 43.55.900 is amended by adding new paragraphs to read: 31 (17) "Cook Inlet basin" means the area bounded by
01 (A) the north boundary of Township 18 North, Seward 02 Meridian; 03 (B) the Seward Meridian; 04 (C) the south boundary of Township 7 South, Seward 05 Meridian; and 06 (D) the west boundary of Range 19 West, Seward Meridian; 07 (18) "gas processing" 08 (A) means processing a gaseous mixture of hydrocarbons 09 (i) by means of absorption, adsorption, externally 10 applied refrigeration, artificial compression followed by adiabatic 11 expansion using the Joule-Thomson effect, or another physical process 12 that is not mechanical separation; 13 (ii) for the purpose of extracting and recovering liquid 14 hydrocarbons; and 15 (iii) upstream of any gas treatment and upstream of the 16 inlet of any gas pipeline system transporting gas to a market; 17 (B) does not include gas treatment; 18 (19) "gas treatment" 19 (A) means conditioning gas and removing from gas 20 nonhydrocarbon substances for the purpose of rendering the gas acceptable for 21 tender and acceptance into a gas pipeline system; and 22 (B) includes incidentally removing liquid hydrocarbons from 23 the gas. 24 * Sec. 31. AS 43.55.011(a), 43.55.011(b), 43.55.011(c), 43.55.012, 43.55.013, 43.55.016, 25 43.55.900(1), 43.55.900(8), 43.55.900(11), 43.55.900(12), and 43.55.900(16) are repealed. 26 * Sec. 32. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 APPLICABILITY. (a) Sections 5, 7 - 10, 12 - 14, 16, and 20 - 31 of this Act apply to 29 oil and gas produced on or after April 1, 2006. 30 (b) Section 11 of this Act applies to oil and gas produced before, on, or after the 31 effective date of sec. 11 of this Act.
01 * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITIONAL PROVISIONS. (a) Notwithstanding any contrary provision of 04 AS 43.55.024(a), enacted by sec. 13 of this Act, for oil and gas produced on or after April 1, 05 2006, and before January 1, 2007, the phrase "every month an annualized tax credit in an 06 amount equal to one and two-thirds percent" in AS 43.55.024(a)(2), enacted by sec. 13 of this 07 Act, shall be replaced by the phrase "every month during the period April 1, 2006, through 08 December 31, 2006, an annualized tax credit in an amount equal to 2.222 percent." 09 (b) Notwithstanding any contrary provision of AS 43.55.024(e), enacted by sec. 13 of 10 this Act, for oil and gas produced on or after April 1, 2006, and before January 1, 2007, the 11 phrase "a calendar year" in AS 43.55.024(e), enacted by sec. 13 of this Act, shall be replaced 12 by the phrase "the last nine months of the calendar year." 13 (c) Notwithstanding any contrary provision of AS 43.55.024(i)(2), enacted by sec. 13 14 of this Act, for oil and gas produced on or after April 1, 2006, and before January 1, 2007, 15 (1) the number "1/24" in AS 43.55.024(i)(2)(B), enacted by sec. 13 of this 16 Act, shall be replaced by the number "1/18"; 17 (2) the phrase "calendar year" in AS 43.55.024(i)(2)(B), enacted by sec. 13 of 18 this Act, shall be replaced by the phrase "last nine months of the calendar year." 19 (d) Notwithstanding any contrary provision of AS 43.55.160(f), enacted by sec. 22 of 20 this Act, for oil and gas produced on or after April 1, 2006, and before January 1, 2007, the 21 phrase "for every month of a calendar year, one-twelfth of the producer's adjusted lease 22 expenditures for the calendar year" in AS 43.55.160(f), enacted by sec. 22 of this Act, shall be 23 replaced by the phrase "for each of the last nine months of 2006, one-ninth of the producer's 24 adjusted lease expenditures for that nine-month period." 25 (e) For oil and gas produced before April 1, 2006, the provisions of AS 43.55, and 26 regulations adopted under AS 43.55, that were in effect before April 1, 2006, and that were 27 applicable to the oil and gas continue to apply to that oil and gas. 28 (f) Notwithstanding any contrary provision of AS 43.55.020(a), as repealed and 29 reenacted by sec. 7 of this Act, or of AS 43.55.020(g), enacted by sec. 12 of this Act, for oil 30 and gas produced on or after April 1, 2006, and before the first day of the first month that 31 begins at least 180 days after the effective date of secs. 7 and 12 of this Act,
01 (1) the amount of the taxes that would have been levied on the producer under 02 AS 43.55, as the provisions of that chapter read on March 31, 2006, is due on the last day of 03 each calendar month on the oil and gas that was produced from each lease or property during 04 the preceding month; 05 (2) the portion, if any, of the taxes levied under AS 43.55.011(e) - (g), enacted 06 by sec. 5 of this Act, that remains unpaid, net of any credits applied as allowed by law, is due 07 on the last day of the second month that begins at least 180 days after the effective date of sec. 08 5 of this Act. 09 (g) Notwithstanding any contrary provision of AS 43.55.030(a), as amended by sec. 10 14 of this Act, for oil and gas produced on or after April 1, 2006, and before the first day of 11 the first month that begins at least 180 days after the effective date of sec. 14 of this Act, the 12 person paying the tax shall file with the Department of Revenue, at the time an amount of tax 13 is due 14 (1) under (f)(1) of this section, the statement required under former 15 AS 43.55.030(a), as that subsection read on March 31, 2006; and 16 (2) under (f)(2) of this section, the statements required under AS 43.55.030(a), 17 as amended by sec. 14 of this Act. 18 (h) For purposes of taxes to be calculated and due under (f)(1) of this section and 19 statements to be filed under (g)(1) of this section, regulations that were adopted by the 20 Department of Revenue under AS 43.55, as the provisions of that chapter read on March 31, 21 2006, and that were in effect on that date apply to those taxes and statements. 22 * Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 TRANSITION: REGULATIONS AND RETROACTIVITY OF REGULATIONS. (a) 25 The Department of Revenue may proceed to adopt regulations to implement the changes 26 made by this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), 27 but not before the effective date of the law implemented by the regulation. 28 (b) Notwithstanding any contrary provision of AS 44.62.240, a regulation adopted by 29 the Department of Revenue to implement, interpret make specific, or otherwise carry out the 30 provisions of secs. 5, 7 - 10, 12 - 14, 16, 20 - 31, and 33 of this Act may apply retroactively as 31 of April 1, 2006, if the Department of Revenue expressly designates in the regulation that the
01 regulation applies retroactively to that date. 02 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 05 heading of 06 (1) AS 43.55 from "Oil and Gas Production Taxes and Oil Surcharge" to "Oil 07 and Gas Production Tax and Oil Surcharge"; 08 (2) article 1 of AS 43.55 from "Oil and Gas Properties Production Taxes" to 09 "Oil and Gas Production Tax"; 10 (3) AS 43.55.011 from "Oil production tax" to "Oil and gas production tax"; 11 (4) AS 43.55.025 from "Tax credit for oil and gas exploration or gas only 12 exploration" to "Alternative tax credit for oil and gas exploration or gas only exploration"; 13 (5) AS 43.55.150 from "Determination of gross value" to "Determination of 14 gross value at the point of production." 15 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 CONDITIONAL RETROACTIVITY. If the sections of this Act that, under sec. 38 of 18 this Act, are scheduled to take effect April 1, 2006, take effect on or after April 1, 2006, those 19 sections of this Act are retroactive to April 1, 2006. 20 * Sec. 37. Sections 1 - 4, 6, 11, 15, 17 - 19, and 32 - 36 of this Act take effect immediately 21 under AS 01.10.070(c). 22 * Sec. 38. Except as provided in sec. 37 of this Act, this Act takes effect April 1, 2006.