HCS CSSB 23(RLS): "An Act relating to taxes and tax credits; relating to oil and gas production taxes; relating to tax credits for oil and gas exploration; relating to tax credits and cost savings for liquefied natural gas storage and reducing costs to consumers; relating to an exemption from rental payments on state land for certain liquefied natural gas facilities; relating to transferable film production tax credits and film production tax credit certificates; relating to the taxes against which a film production tax credit may be applied; transferring the film office to the Department of Revenue and relating to that office; establishing the Alaska Film Incentive Review Commission; establishing a film production promotion program; relating to the amount of credit that may be awarded for compensation to producers, directors, writers, and actors who are not residents; providing for a fee to be paid at the time an application for eligibility for the film production tax credit is filed; providing a one-time credit for the first episodic scripted television production in the state; requiring the legislative audit division to audit the Alaska film production incentive program; providing for an effective date by repealing the effective dates of secs. 3 and 4, ch. 63, SLA 2008; and providing for an effective date."
00 HOUSE CS FOR CS FOR SENATE BILL NO. 23(RLS) 01 "An Act relating to taxes and tax credits; relating to oil and gas production taxes; 02 relating to tax credits for oil and gas exploration; relating to tax credits and cost savings 03 for liquefied natural gas storage and reducing costs to consumers; relating to an 04 exemption from rental payments on state land for certain liquefied natural gas facilities; 05 relating to transferable film production tax credits and film production tax credit 06 certificates; relating to the taxes against which a film production tax credit may be 07 applied; transferring the film office to the Department of Revenue and relating to that 08 office; establishing the Alaska Film Incentive Review Commission; establishing a film 09 production promotion program; relating to the amount of credit that may be awarded 10 for compensation to producers, directors, writers, and actors who are not residents; 11 providing for a fee to be paid at the time an application for eligibility for the film 12 production tax credit is filed; providing a one-time credit for the first episodic scripted 13 television production in the state; requiring the legislative audit division to audit the
01 Alaska film production incentive program; providing for an effective date by repealing 02 the effective dates of secs. 3 and 4, ch. 63, SLA 2008; and providing for an effective 03 date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 24.20.271 is amended to read: 06 Sec. 24.20.271. Powers and duties. The legislative audit division shall 07 (1) conduct a performance post-audit of boards and commissions 08 designated in AS 44.66.010 and of those programs and activities of agencies subject to 09 termination as determined in the manner set out in AS 44.66.020 and 44.66.030, and 10 make the audit, together with a written report, available to the legislature not later than 11 the first day of the regular session of the legislature convening in each year set out 12 with reference to boards, commissions, or agency programs whose activities are 13 subject to termination as prescribed in AS 44.66; the division shall notify the 14 legislature that the audit and report are available; 15 (2) audit at least once every three years the books and accounts of all 16 custodians of public funds and all disbursing officers of the state; 17 (3) at the direction of the Legislative Budget and Audit Committee, 18 conduct performance post-audits on any agency of state government; 19 (4) cooperate with state agencies by offering advice and assistance as 20 requested in establishing or improving the accounting systems used by state agencies; 21 (5) require the assistance and cooperation of all state officials and 22 other state employees in the inspection, examination, and audit of state agency books 23 and accounts; 24 (6) have access at all times to the books, accounts, reports, or other 25 records, whether confidential or not, of every state agency; 26 (7) ascertain, as necessary for audit verification, the amount of agency 27 funds on deposit in any bank as shown on the books of the bank; no bank may be held 28 liable for making information required under this paragraph available to the legislative 29 audit division; 30 (8) complete studies and prepare reports, memoranda, or other
01 materials as directed by the Legislative Budget and Audit Committee; 02 (9) have direct access to any information related to the management of 03 the University of Alaska and have the same right of access as exists with respect to 04 every other state agency; 05 (10) conduct an audit every two years of information found in the 06 annual reports required under AS 42.05.211 and AS 42.06.220 regarding compliance 07 by the Regulatory Commission of Alaska with the requirements of AS 42.05.175(a) - 08 (e) and of the timeline extensions made by the commission under AS 42.05.175(f), 09 and of other performance measures adopted by the commission; 10 (11) conduct audits of the Alaska film production incentive 11 program (AS 44.25.100 - 44.25.190) and make the audits available to the 12 legislature on the first day of the regular session of the legislature in 2015, 2017, 13 and 2021. 14 * Sec. 2. AS 38.05 is amended by adding a new section to read: 15 Sec. 38.05.096. Exemption from rental payments on land leased for certain 16 liquefied natural gas storage facilities. (a) A person leasing state land for a liquefied 17 natural gas storage facility other than a gas storage facility subject to AS 38.05.180(u) 18 may request an exemption from lease payments as provided in this section. The 19 exemption is applicable for the periods described in (b) of this section. 20 (b) The exemption is available for the calendar year in which the liquefied 21 natural gas storage facility commences commercial operation and for each of the nine 22 calendar years immediately following the first year of commercial operation. 23 However, an exemption is not applicable for the calendar year after the facility ceases 24 commercial operation or for any subsequent calendar year. 25 (c) The lessee shall provide the director with any information the director 26 requests to determine whether the lessee qualifies for the exemption. 27 (d) Information related to state land leased for a liquefied natural gas storage 28 facility qualifying for the exemption in this section is public information and may be 29 furnished to the Regulatory Commission of Alaska. On request, the director shall 30 provide the name of each person using state land leased for a liquefied natural gas 31 storage facility, the years for which an exemption was granted, and the amount of the
01 exemption. 02 (e) A person receiving an exemption for a payment under this section that 03 contracts to store liquefied natural gas for a utility regulated under AS 42.05 shall 04 reduce the storage price to reflect the value of the exemption. 05 (f) In this section, 06 (1) "ceases commercial operation" and "commences commercial 07 operation" have the meanings given in AS 31.05.032; 08 (2) "liquefied natural gas storage facility" has the meaning given in 09 AS 42.05.990. 10 * Sec. 3. AS 42.05.381(k) is amended to read: 11 (k) The cost to the utility of storing gas in a gas storage facility or storing 12 liquefied natural gas in a liquefied natural gas storage facility that is allowed in 13 determining a just and reasonable rate shall reflect the reduction in cost attributable to 14 any exemption from a payment due under AS 38.05.096 or 38.05.180(u), as 15 applicable, [AS 38.05.180(u)] and the value of a tax credit that the owner of the gas 16 storage facility received under AS 43.20.046 or 43.20.047, as applicable. The 17 commission may request the (1) commissioner of natural resources to report the value 18 of the exemption from a payment due under AS 38.05.096 or 38.05.180(u), as 19 applicable, [AS 38.05.180(u)] that the gas storage facility received; and (2) 20 commissioner of revenue to report information on the amount of tax credits claimed 21 under AS 43.20.046 and 43.20.047, as applicable, for the gas storage facility or 22 liquefied natural gas storage facility. In this subsection, 23 (1) "gas storage facility" has the meaning given in AS 31.05.032; 24 (2) "liquefied natural gas storage facility" has the meaning given 25 in AS 42.05.990. 26 * Sec. 4. AS 42.05.990(5) is amended to read: 27 (5) "public utility" or "utility" includes every corporation whether 28 public, cooperative, or otherwise, company, individual, or association of individuals, 29 their lessees, trustees, or receivers appointed by a court, that owns, operates, manages, 30 or controls any plant, pipeline, or system for 31 (A) furnishing, by generation, transmission, or distribution,
01 electrical service to the public for compensation; 02 (B) furnishing telecommunications service to the public for 03 compensation; 04 (C) furnishing water, steam, or sewer service to the public for 05 compensation; 06 (D) furnishing by transmission or distribution of natural or 07 manufactured gas to the public for compensation; 08 (E) furnishing for distribution or by distribution petroleum or 09 petroleum products to the public for compensation when the consumer has no 10 alternative in the choice of supplier of a comparable product and service at an 11 equal or lesser price; 12 (F) furnishing collection and disposal service of garbage, 13 refuse, trash, or other waste material to the public for compensation; 14 (G) furnishing the service of natural gas storage to the public 15 for compensation; 16 (H) furnishing the service of liquefied natural gas storage to 17 the public for compensation; 18 * Sec. 5. AS 42.05.990 is amended by adding new paragraphs to read: 19 (11) "liquefied natural gas storage facility" means a facility that 20 receives natural gas volumes in a liquid or gaseous state from customers, holds the gas 21 volumes in a liquid state in a reservoir, and delivers the gas volumes in a liquid or 22 gaseous state to the customer; in this paragraph, "facility" includes 23 (A) all parts of the facility from the point at which the natural 24 gas volumes are received by the facility from the customer to the point at 25 which the natural gas volumes are delivered by the facility to the customer; 26 (B) a facility consisting of a reservoir, either underground or 27 aboveground, and one or more of the following components of the facility: 28 (i) pipe; 29 (ii) compressor stations; 30 (iii) station equipment; 31 (iv) liquefaction plant or facility;
01 (v) gasification plant or facility; 02 (vi) on-site or remote monitoring, supervision, and 03 control facilities; 04 (vii) gas processing plants and gas treatment plants, but 05 not including a manufacturing plant or facility; 06 (viii) other equipment necessary to receive, place into 07 the reservoir, monitor, remove from the reservoir, process, and deliver 08 natural gas; 09 (12) "reservoir" means a receptacle or chamber, either natural or man- 10 made, holding a gas or liquid, and includes a tank or a depleted or nearly depleted 11 pool; 12 (13) "service of liquefied natural gas storage" means the operation of a 13 liquefied natural gas storage facility; "service of liquefied natural gas storage" does 14 not include the storage of liquefied natural gas 15 (A) owned by or contractually obligated to the owner, operator, 16 or manager of the liquefied natural gas storage facility; 17 (B) that is incidental to the production or sale of natural gas to 18 one or more third-party customers; or 19 (C) for which the price of storage is not separately itemized. 20 * Sec. 6. AS 43.20 is amended by adding a new section to article 1 to read: 21 Sec. 43.20.047. Liquefied natural gas storage facility tax credit. (a) A 22 person that is an owner of a liquefied natural gas storage facility described in (b) of 23 this section that commences commercial operation before January 1, 2020, may apply 24 a refundable credit against a tax liability that may be imposed on the person under this 25 chapter or receive the amount of the credit in the form of a payment for the taxable 26 year in which the liquefied natural gas storage facility commences commercial 27 operation. The tax credit or payment under this section may not exceed the lesser of 28 $15,000,000 or 50 percent of the costs incurred to establish or expand the liquefied 29 natural gas storage facility. The tax credit in this section is in addition to any other 30 credit under this chapter for which the person is eligible. 31 (b) To qualify for the credit in this section, a liquefied natural gas storage
01 facility 02 (1) must have a liquefied natural gas storage volume of not less than 03 25,000 gallons of liquefied natural gas, or, if the credit is claimed for an expansion, the 04 expansion must have increased the capacity of an existing liquefied natural gas storage 05 facility by more than 25,000 gallons; 06 (2) may not have been in operation as a liquefied natural gas storage 07 facility before January 1, 2011, unless the tax credit in this section is based on the 08 expansion of the liquefied natural gas storage facility after December 31, 2011; 09 (3) must be regulated under AS 42.05 as a utility and be available to 10 furnish the service of liquefied natural gas storage to customers, utilities, or industrial 11 facilities; in this paragraph, "service of liquefied natural gas storage" has the meaning 12 given in AS 42.05.990; 13 (4) if located on state land and leased or subject to a lease under 14 AS 38.05, must be in compliance with the terms of the lease; and 15 (5) must have commenced commercial operation on or before the date 16 the person takes a credit under (a) of this section or applies for a payment under (a) of 17 this section. 18 (c) To claim the credit or request a payment, a person shall submit to the 19 department a certification of the capacity of the liquefied natural gas storage facility 20 measured in gallons or the capacity of an expansion to an existing liquefied natural gas 21 storage facility measured in gallons, the date that the liquefied natural gas storage 22 facility commenced commercial operation, the date that any expansion to the liquefied 23 natural gas storage facility commenced commercial operation, and other information 24 required by the department. 25 (d) A person applying the credit under this section against a liability under this 26 chapter shall claim the credit on the person's return. A person entitled to a tax credit 27 under this section that is greater than the person's tax liability under this chapter may 28 request a refund or payment in the amount of the unused portion of the tax credit. 29 (e) The department may use money available in the oil and gas tax credit fund 30 established in AS 43.55.028 to make a refund or payment under (d) of this section in 31 whole or in part if the department finds that (1) the claimant does not have an
01 outstanding liability to the state for unpaid delinquent taxes under this title; and (2) 02 after application of all available tax credits, the claimant's total tax liability under this 03 chapter for the calendar year in which the claim is made is zero. In this subsection, 04 "unpaid delinquent tax" means an amount of tax for which the department has issued 05 an assessment that has not been paid and, if contested, has not been finally resolved in 06 the taxpayer's favor. 07 (f) For the purpose of determining the amount of the credit under this section, 08 the costs incurred to establish a liquefied natural gas storage facility or to expand a 09 liquefied natural gas storage facility shall be submitted to the department with 10 verification by an independent certified public accountant, licensed in the state. The 11 volume of working liquefied natural gas storage or volume of the expansion to an 12 existing liquefied natural gas storage facility shall be verified by a professional 13 engineer licensed in the state with relevant experience. 14 (g) A person may not receive a credit under this section for the acquisition of a 15 liquefied natural gas storage facility for which a credit has been taken under this 16 section. 17 (h) If the liquefied natural gas storage facility for which a credit was received 18 under this section ceases commercial operation during the nine calendar years 19 immediately following the calendar year in which the liquefied natural gas storage 20 facility commences commercial operation, the tax liability under this chapter of the 21 person who claimed the credit shall be increased, and a person not subject to the tax 22 under this chapter that received a payment under (d) and (e) of this section shall be 23 liable to the state in the amount determined in this subsection. The amount of the 24 increase in tax liability or liability to the state 25 (1) for a person subject to the tax under this chapter, shall be 26 determined and assessed for the taxable year in which the liquefied natural gas storage 27 facility ceases commercial operation, regardless of whether the liquefied natural gas 28 storage facility subsequently resumes commercial operation; 29 (2) for a person not subject to the tax due under this chapter, shall be 30 determined and assessed as of December 31 of the calendar year in which the liquefied 31 natural gas storage facility ceases commercial operation, regardless of whether the
01 liquefied natural gas storage facility subsequently resumes commercial operation; and 02 (3) is equal to the total amount of the credit taken or received as a 03 payment under (d) of this section, as applicable, multiplied by a fraction, the 04 numerator of which is the difference between 10 and the number of calendar years for 05 which the liquefied natural gas storage facility was eligible for a tax credit under this 06 section and the denominator of which is 10. 07 (i) The issuance of a refund under this section does not limit the department's 08 ability to later audit or adjust the claim if the department determines, as a result of the 09 audit, that the person that claimed the credit was not entitled to the amount of the 10 credit. The tax liability of the person receiving the credit under this chapter is 11 increased by the amount of the credit that exceeds that to which the person was 12 entitled. If the tax liability is increased under this subsection, the increase bears 13 interest at the rate set by AS 43.05.225 from the date the refund was issued. 14 (j) A person claiming a tax credit under this section for a liquefied natural gas 15 storage facility that ceases commercial operation within nine calendar years 16 immediately following the calendar year in which the liquefied natural gas storage 17 facility commences commercial operation shall notify the department in writing of the 18 date the liquefied natural gas storage facility ceased commercial operation. The notice 19 must be filed with the return for the taxable year in which the liquefied natural gas 20 storage facility ceases commercial operation. 21 (k) A refund under this section does not bear interest. 22 (l) In this section, 23 (1) "ceases commercial operation" means that the liquefied natural gas 24 storage facility fails to add or withdraw 20 percent or more of its working capacity of 25 liquefied natural gas during a calendar year after the calendar year in which the 26 liquefied natural gas storage facility commences commercial operation; 27 (2) "commences commercial operation" means the first input of 28 liquefied natural gas into a liquefied natural gas storage facility for purposes other than 29 testing; 30 (3) "liquefied natural gas storage facility" has the meaning given in 31 AS 42.05.990.
01 * Sec. 7. AS 43.55.011(e) is amended to read: 02 (e) There is levied on the producer of oil or gas a tax for all oil and gas 03 produced each calendar year from each lease or property in the state, less any oil and 04 gas the ownership or right to which is exempt from taxation or constitutes a 05 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), [AND] 06 (o), and (p) of this section, the tax is equal to the sum of 07 (1) the annual production tax value of the taxable oil and gas as 08 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 09 (2) the sum, over all months of the calendar year, of the tax amounts 10 determined under (g) of this section. 11 * Sec. 8. AS 43.55.011 is amended by adding a new subsection to read: 12 (p) For the seven years immediately following the commencement of 13 commercial production of oil or gas produced from leases or properties in the state 14 that are outside the Cook Inlet sedimentary basin and that do not include land located 15 north of 68 degrees North latitude, where that commercial production began after 16 December 31, 2012, and before January 1, 2022, the levy of tax under (e) of this 17 section for oil and gas may not exceed four percent of the gross value at the point of 18 production. 19 * Sec. 9. AS 43.55.020(a) is amended to read: 20 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 21 or (p) shall pay the tax as follows: 22 (1) an installment payment of the estimated tax levied by 23 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 24 month of the calendar year on the last day of the following month; except as otherwise 25 provided under (2) of this subsection, the amount of the installment payment is the 26 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 27 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 28 of the installment payment may not be less than zero: 29 (A) for oil and gas produced from leases or properties in the 30 state outside the Cook Inlet sedimentary basin but not subject to 31 AS 43.55.011(o) or (p), other than leases or properties subject to
01 AS 43.55.011(f), the greater of 02 (i) zero; or 03 (ii) the sum of 25 percent and the tax rate calculated for 04 the month under AS 43.55.011(g) multiplied by the remainder obtained 05 by subtracting 1/12 of the producer's adjusted lease expenditures for the 06 calendar year of production under AS 43.55.165 and 43.55.170 that are 07 deductible for the leases or properties under AS 43.55.160 from the 08 gross value at the point of production of the oil and gas produced from 09 the leases or properties during the month for which the installment 10 payment is calculated; 11 (B) for oil and gas produced from leases or properties subject 12 to AS 43.55.011(f), the greatest of 13 (i) zero; 14 (ii) zero percent, one percent, two percent, three 15 percent, or four percent, as applicable, of the gross value at the point of 16 production of the oil and gas produced from all leases or properties 17 during the month for which the installment payment is calculated; or 18 (iii) the sum of 25 percent and the tax rate calculated for 19 the month under AS 43.55.011(g) multiplied by the remainder obtained 20 by subtracting 1/12 of the producer's adjusted lease expenditures for the 21 calendar year of production under AS 43.55.165 and 43.55.170 that are 22 deductible for those leases or properties under AS 43.55.160 from the 23 gross value at the point of production of the oil and gas produced from 24 those leases or properties during the month for which the installment 25 payment is calculated; 26 (C) for oil and gas produced from each lease or property 27 subject to AS 43.55.011(j), (k), [OR] (o), or (p), the greater of 28 (i) zero; or 29 (ii) the sum of 25 percent and the tax rate calculated for 30 the month under AS 43.55.011(g) multiplied by the remainder obtained 31 by subtracting 1/12 of the producer's adjusted lease expenditures for the
01 calendar year of production under AS 43.55.165 and 43.55.170 that are 02 deductible under AS 43.55.160 for oil or gas, respectively, produced 03 from the lease or property from the gross value at the point of 04 production of the oil or gas, respectively, produced from the lease or 05 property during the month for which the installment payment is 06 calculated; 07 (2) an amount calculated under (1)(C) of this subsection for oil or gas 08 produced from a lease or property 09 (A) subject to AS 43.55.011(j), (k), or (o) may not exceed the 10 product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) 11 or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) 12 or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) 13 or 43.55.011(o), as applicable, the amount of taxable gas produced during the 14 month for the amount of taxable gas produced during the calendar year and 15 substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of 16 taxable oil produced during the month for the amount of taxable oil produced 17 during the calendar year; 18 (B) subject to AS 43.55.011(p) may not exceed four percent 19 of the gross value at the point of production of the oil or gas; 20 (3) an installment payment of the estimated tax levied by 21 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 22 on the last day of the following month; the amount of the installment payment is the 23 sum of 24 (A) the applicable tax rate for oil provided under 25 AS 43.55.011(i), multiplied by the gross value at the point of production of the 26 oil taxable under AS 43.55.011(i) and produced from the lease or property 27 during the month; and 28 (B) the applicable tax rate for gas provided under 29 AS 43.55.011(i), multiplied by the gross value at the point of production of the 30 gas taxable under AS 43.55.011(i) and produced from the lease or property 31 during the month;
01 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 02 credits applied as allowed by law, that exceeds the total of the amounts due as 03 installment payments of estimated tax is due on March 31 of the year following the 04 calendar year of production. 05 * Sec. 10. AS 43.55.025(a) is amended to read: 06 (a) Subject to the terms and conditions of this section, a credit against the 07 production tax levied by AS 43.55.011(e) is allowed for exploration expenditures that 08 qualify under (b) of this section in an amount equal to one of the following: 09 (1) 30 percent of the total exploration expenditures that qualify only 10 under (b) and (c) of this section; 11 (2) 30 percent of the total exploration expenditures that qualify only 12 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; 15 (4) 40 percent of the total exploration expenditures that qualify only 16 under (b) and (e) of this section; [OR] 17 (5) 80, 90, or 100 percent, or a lesser amount described in (l) of this 18 section, of the total exploration expenditures described in (b)(1) and (2) of this section 19 and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this 20 section; 21 (6) the lesser of $25,000,000 or 80 percent of the total exploration 22 drilling expenditures described in (n) of this section and that qualify under (b) 23 and (c) of this section; or 24 (7) the lesser of $7,500,000 or 75 percent of the total seismic 25 exploration expenditures described in (o) of this section and that qualify under 26 (b) of this section. 27 * Sec. 11. AS 43.55.025(c) is amended to read: 28 (c) To be eligible for a [THE 30 PERCENT] production tax credit authorized 29 by (a)(1), (3), or (6) of this section [OR THE 40 PERCENT PRODUCTION TAX 30 CREDIT AUTHORIZED BY (a)(3) OF THIS SECTION], exploration expenditures 31 must
01 (1) qualify under (b) of this section; and 02 (2) be for an exploration well, subject to the following: 03 (A) before the well is spudded, 04 (i) the explorer shall submit to the commissioner of 05 natural resources the information necessary to determine whether the 06 geological objective of the well is a potential oil or gas trap that is 07 distinctly separate from any trap that has been tested by a preexisting 08 well; 09 (ii) at the time of the submittal of information under (i) 10 of this subparagraph, the commissioner of natural resources may 11 request from the explorer that specific data sets, ancillary data, and 12 reports including all results, and copies of well data collected and data 13 analyses for the well be provided to the Department of Natural 14 Resources upon completion of the drilling; in this sub-subparagraph, 15 well data include all analyses conducted on physical material, and well 16 logs collected from the well and sample analyses; testing geophysical 17 and velocity data including vertical seismic profiles and check shot 18 surveys; testing data and analyses; age data; geochemical analyses; and 19 access to tangible material; and 20 (iii) the commissioner of natural resources must make 21 an affirmative determination as to whether the geological objective of 22 the well is a potential oil or gas trap that is distinctly separate from any 23 trap that has been tested by a preexisting well and what information 24 under (ii) of this subparagraph must be submitted by the explorer after 25 completion, abandonment, or suspension under AS 31.05.030; the 26 commissioner of natural resources shall make that determination within 27 60 days after receiving all the necessary information from the explorer 28 based on the information received and on other information the 29 commissioner of natural resources considers relevant; 30 (B) for an exploration well other than a well to explore a Cook 31 Inlet prospect, the well must be located and drilled in such a manner that the
01 bottom hole is located not less than three miles away from the bottom hole of a 02 preexisting well drilled for oil or gas, irrespective of whether the preexisting 03 well has been completed, suspended, or abandoned; 04 (C) after completion, suspension, or abandonment under 05 AS 31.05.030 of the exploration well, the commissioner of natural resources 06 must determine that the well was consistent with achieving the explorer's 07 stated geological objective. 08 * Sec. 12. AS 43.55.025 is amended by adding new subsections to read: 09 (n) The persons that drill the first four exploration wells in the state and within 10 the areas described in (p) of this section on state lands, private lands, or federal 11 onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a 12 prospect in a basin described in (p) of this section are eligible for a credit under (a)(6) 13 of this section. A credit under this subsection may not be taken for more than two 14 exploration wells in a single area described in (p)(1) - (6) of this section. Exploration 15 expenditures eligible for the credit in this subsection must be incurred for work 16 performed after June 1, 2012, and before July 1, 2016. A person planning to drill an 17 exploration well on private land and to apply for a credit under this subsection shall 18 obtain written consent from the owner of the oil and gas interest for the full public 19 release of all well data after the expiration of the confidentiality period applicable to 20 information collected under (f) of this section. The written consent of the owner of the 21 oil and gas interest must be submitted to the commissioner of natural resources before 22 approval of the proposed exploration well. In addition to the requirements in (c) of this 23 section and submission of the written consent of the owner of the oil and gas interest, a 24 person planning to drill an exploration well shall obtain approval from the 25 commissioner of natural resources before the well is spudded. The commissioner of 26 natural resources shall make a written determination approving or rejecting an 27 exploration well within 60 days after receiving the request for approval or as soon as is 28 practicable thereafter. Before approving the exploration well, the commissioner of 29 natural resources shall consider the following: the location of the well; the proximity 30 to a community in need of a local energy source; the proximity of existing 31 infrastructure; the experience and safety record of the explorer in conducting
01 operations in remote or roadless areas; the projected cost schedule; whether seismic 02 mapping and seismic data sufficiently identify a particular trap for exploration; 03 whether the targeted and planned depth and range are designed to penetrate and fully 04 evaluate the hydrocarbon potential of the proposed prospect and reach the level below 05 which economic hydrocarbon reservoirs are likely to be found, or reach 12,000 feet or 06 more true vertical depth; and whether the exploration plan provides for a full 07 evaluation of the wellbore below surface casing to the depth of the well. Whether the 08 exploration well for which a credit is requested under this subsection is located within 09 an area and a basin described under (p) of this section shall be determined by the 10 commissioner of natural resources and reported to the commissioner. A taxpayer that 11 obtains a credit under this subsection may not claim a tax credit under AS 43.55.023 12 or another provision in this section for the same exploration expenditure. 13 (o) The persons that conduct the first four seismic exploration projects in the 14 state and within the areas described in (p) of this section for the purpose of discovering 15 oil or gas in a basin are eligible for the credit under (a)(7) of this section. A credit 16 under this subsection may not be taken for more than one seismic exploration project 17 in a single area described in (p)(1) - (6) of this section. Exploration expenditures 18 eligible for the credit in this subsection must be incurred for work performed after 19 June 1, 2012, and before July 1, 2016. A person planning to conduct a seismic 20 exploration project on private land and to apply for a credit under this subsection shall 21 obtain written consent from the owner of the oil and gas interest for the full public 22 release of all geophysical data and compliance with the data submission requirements 23 in (f)(2) of this section. Notwithstanding (f)(2)(C)(ii) of this section, to qualify for a 24 credit under this subsection, a person shall submit the written consent of the owner of 25 the oil and gas interest for the release of data if applicable, and all data required under 26 (f)(2) of this section to the Department of Natural Resources and shall agree in writing 27 that all seismic data requirements submitted under the requirements of (f)(2) of this 28 section may be made public two years after receiving a credit under this subsection. A 29 person intending to qualify for the tax credit under this subsection shall obtain 30 approval from the commissioner of natural resources before the commencement of the 31 seismic exploration activities. The commissioner of natural resources shall make a
01 written determination approving or rejecting a seismic project within 60 days after 02 receiving the request for approval or as soon as is practicable thereafter. Before 03 approving a seismic exploration project, the commissioner shall consider the 04 following: the location of the project; the projected cost schedule; the data acquisition 05 and data processing plan; the reasons for choosing the particular area for seismic 06 exploration; and the experience and safety record of the person in conducting seismic 07 exploration operations in remote or roadless areas. Whether the seismic exploration 08 project for which a credit is requested under this subsection is located in a basin 09 described in (p) of this section shall be determined by the commissioner of natural 10 resources and reported to the commissioner. A taxpayer that obtains a credit under this 11 subsection may not claim a tax credit under AS 43.55.023 or another provision in this 12 section for the same exploration expenditure. 13 (p) The activity that is the basis for a credit claimed under (a)(6) and (n) of 14 this section or (a)(7) and (o) of this section must be for the exploration of a basin and 15 within the following areas whose central points are determined using the World 16 Geographic System of 1984 datum, 17 (1) 100 miles from 66.896128 degrees North, -162.598187 degrees 18 West; 19 (2) 150 miles from 64.839474 degrees North, -147.72094 degrees 20 West; 21 (3) 50 miles from 62.776428 degrees North, -164.495201 degrees 22 West; 23 (4) 50 miles from 62.110357 degrees North, -145.530551 degrees 24 West; 25 (5) 100 miles from 58.189868 degrees North, -157.371104 degrees 26 West; 27 (6) 100 miles from 56.005988 degrees North, -160.56083 degrees 28 West. 29 * Sec. 13. AS 43.55.028(a) is amended to read: 30 (a) The oil and gas tax credit fund is established as a separate fund of the state. 31 The purpose of the fund is to purchase transferable tax credit certificates issued under
01 AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to 02 pay refunds and payments claimed under AS 43.20.046 or 43.20.047. 03 * Sec. 14. AS 43.55.028(g) is amended to read: 04 (g) The department may adopt regulations to carry out the purposes of this 05 section, including standards and procedures to allocate available money among 06 applications for purchases under this chapter and claims for refunds and payments 07 under AS 43.20.046 or 43.20.047 when the total amount of the applications for 08 purchase and claims for refund exceed the amount of available money in the fund. The 09 regulations adopted by the department may not, when allocating available money in 10 the fund under this section, distinguish an application for the purchase of a credit 11 certificate issued under AS 43.55.023(m) or a claim for refund under AS 43.20.046 or 12 AS 43.20.047. 13 * Sec. 15. AS 43.55.160(a) is amended to read: 14 (a) Except as provided in (b) of this section, for the purposes of 15 (1) AS 43.55.011(e), the annual production tax value of the taxable oil, 16 gas, or [(A)] oil and gas subject to this paragraph produced during a calendar year 17 [FROM LEASES OR PROPERTIES IN THE STATE THAT INCLUDE LAND 18 NORTH OF 68 DEGREES NORTH LATITUDE] is the gross value at the point of 19 production of the oil, gas, or oil and gas taxable under AS 43.55.011(e) [AND 20 PRODUCED BY THE PRODUCER FROM THOSE LEASES OR PROPERTIES], 21 less the producer's lease expenditures under AS 43.55.165 for the calendar year 22 applicable to the oil, gas, or oil and gas, as applicable, produced by the producer from 23 [THOSE] leases or properties, as adjusted under AS 43.55.170; this paragraph 24 applies to 25 (A) oil and gas produced from leases or properties in the 26 state that include land north of 68 degrees North latitude, other than gas 27 produced before 2022 and used in the state; [THIS SUBPARAGRAPH 28 DOES NOT APPLY TO GAS SUBJECT TO AS 43.55.011(o);] 29 (B) oil and gas produced [DURING A CALENDAR YEAR] 30 from leases or properties in the state outside the Cook Inlet sedimentary basin, 31 no part of which is north of 68 degrees North latitude [, IS THE GROSS
01 VALUE AT THE POINT OF PRODUCTION OF THE OIL AND GAS 02 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 03 PRODUCER FROM THOSE LEASES OR PROPERTIES, LESS THE 04 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 05 CALENDAR YEAR APPLICABLE TO THE OIL AND GAS PRODUCED 06 BY THE PRODUCER FROM THOSE LEASES OR PROPERTIES, AS 07 ADJUSTED UNDER AS 43.55.170]; this subparagraph does not apply to gas 08 (i) produced before 2022 and used in the state; or 09 (ii) oil and gas subject to AS 43.55.011(p) [SUBJECT 10 TO AS 43.55.011(o)]; 11 (C) oil produced before 2022 [DURING A CALENDAR 12 YEAR] from a lease or property in the Cook Inlet sedimentary basin [IS THE 13 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 14 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 15 PRODUCER FROM THAT LEASE OR PROPERTY, LESS THE 16 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 17 CALENDAR YEAR APPLICABLE TO THE OIL PRODUCED BY THE 18 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 19 UNDER AS 43.55.170]; 20 (D) gas produced before 2022 [DURING A CALENDAR 21 YEAR] from a lease or property in the Cook Inlet sedimentary basin [IS THE 22 GROSS VALUE AT THE POINT OF PRODUCTION OF THE GAS 23 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 24 PRODUCER FROM THAT LEASE OR PROPERTY, LESS THE 25 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 26 CALENDAR YEAR APPLICABLE TO THE GAS PRODUCED BY THE 27 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 28 UNDER AS 43.55.170]; 29 (E) gas produced before 2022 [DURING A CALENDAR 30 YEAR] from a lease or property in the state outside the Cook Inlet 31 sedimentary basin and used in the state [IS THE GROSS VALUE AT THE
01 POINT OF PRODUCTION OF THAT GAS TAXABLE UNDER 02 AS 43.55.011(e) AND PRODUCED BY THE PRODUCER FROM THAT 03 LEASE OR PROPERTY, LESS THE PRODUCER'S LEASE 04 EXPENDITURES UNDER AS 43.55.165 FOR THE CALENDAR YEAR 05 APPLICABLE TO THAT GAS PRODUCED BY THE PRODUCER FROM 06 THAT LEASE OR PROPERTY, AS ADJUSTED UNDER AS 43.55.170]; 07 (F) oil and gas subject to AS 43.55.011(p) produced from 08 leases or properties in the state; 09 (G) oil and gas produced from a lease or property no part 10 of which is north of 68 degrees North latitude, other than oil or gas 11 described in (B), (C), (D), (E), or (F) of this paragraph; 12 (2) AS 43.55.011(g), the monthly production tax value of the taxable 13 (A) oil and gas produced during a month from leases or 14 properties in the state that include land north of 68 degrees North latitude is the 15 gross value at the point of production of the oil and gas taxable under 16 AS 43.55.011(e) and produced by the producer from those leases or properties, 17 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 18 calendar year applicable to the oil and gas produced by the producer from 19 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 20 does not apply to gas subject to AS 43.55.011(o); 21 (B) oil and gas produced during a month from leases or 22 properties in the state outside the Cook Inlet sedimentary basin, no part of 23 which is north of 68 degrees North latitude, is the gross value at the point of 24 production of the oil and gas taxable under AS 43.55.011(e) and produced by 25 the producer from those leases or properties, less 1/12 of the producer's lease 26 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 27 gas produced by the producer from those leases or properties, as adjusted under 28 AS 43.55.170; this subparagraph does not apply to gas subject to 29 AS 43.55.011(o); 30 (C) oil produced during a month from a lease or property in the 31 Cook Inlet sedimentary basin is the gross value at the point of production of
01 the oil taxable under AS 43.55.011(e) and produced by the producer from that 02 lease or property, less 1/12 of the producer's lease expenditures under 03 AS 43.55.165 for the calendar year applicable to the oil produced by the 04 producer from that lease or property, as adjusted under AS 43.55.170; 05 (D) gas produced during a month from a lease or property in 06 the Cook Inlet sedimentary basin is the gross value at the point of production 07 of the gas taxable under AS 43.55.011(e) and produced by the producer from 08 that lease or property, less 1/12 of the producer's lease expenditures under 09 AS 43.55.165 for the calendar year applicable to the gas produced by the 10 producer from that lease or property, as adjusted under AS 43.55.170; 11 (E) gas produced during a month from a lease or property 12 outside the Cook Inlet sedimentary basin and used in the state is the gross 13 value at the point of production of that gas taxable under AS 43.55.011(e) and 14 produced by the producer from that lease or property, less 1/12 of the 15 producer's lease expenditures under AS 43.55.165 for the calendar year 16 applicable to that gas produced by the producer from that lease or property, as 17 adjusted under AS 43.55.170. 18 * Sec. 16. AS 43.55.160(e) is amended to read: 19 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 20 would otherwise be deductible by a producer in a calendar year but whose deduction 21 would cause an annual production tax value calculated under (a)(1) of this section of 22 taxable oil or gas produced during the calendar year to be less than zero may be used 23 to establish a carried-forward annual loss under AS 43.55.023(b). However, the 24 department shall provide by regulation a method to ensure that, for a period for which 25 a producer's tax liability is limited by AS 43.55.011(j), (k), [OR] (o), or (p), any 26 adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise 27 be deductible by a producer for that period but whose deduction would cause a 28 production tax value calculated under (a)(1)(C), (D), [OR] (E), or (F) of this section to 29 be less than zero are accounted for as though the adjusted lease expenditures had first 30 been used as deductions in calculating the production tax values of oil or gas subject to 31 any of the limitations under AS 43.55.011(j), (k), [OR] (o), or (p) that have positive
01 production tax values so as to reduce the tax liability calculated without regard to the 02 limitation to the maximum amount provided for under the applicable provision of 03 AS 43.55.011(j), (k), [OR] (o), or (p). Only the amount of those adjusted lease 04 expenditures remaining after the accounting provided for under this subsection may be 05 used to establish a carried-forward annual loss under AS 43.55.023(b). In this 06 subsection, "producer" includes "explorer." 07 * Sec. 17. AS 43.75.130(f) is amended to read: 08 (f) For purposes of this section, tax revenue collected under AS 43.75.015 09 from a person entitled to a credit under AS 43.75.035, [OR] 43.75.036, or 10 AS 43.98.030 shall be calculated as if the person's tax were collected without applying 11 the credit; tax revenue collected does not include the amount of a tax credit recaptured 12 under AS 43.75.035(g) or 43.75.036(g). 13 * Sec. 18. AS 43.77.060(e) is amended to read: 14 (e) For purposes of this section, tax revenue collected under AS 43.77.010 15 from a person entitled to a credit under AS 43.77.035, [OR] 43.77.045, or 16 AS 43.98.030 shall be calculated as if the person's tax had been collected without 17 applying the credits. 18 * Sec. 19. AS 43.98.030(a) is amended to read: 19 (a) The [IN COOPERATION WITH THE FILM OFFICE IN THE 20 DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC 21 DEVELOPMENT, THE] department shall provide a transferable film production tax 22 credit certificate to a producer, as defined in AS 44.25.190 [AS 44.33.239], for 23 qualified production expenditures under AS 44.25.100 - 44.25.190. The department 24 shall publish the name and contact information for each person provided a 25 transferable tax credit certificate under this subsection [AS 44.33.231 - 26 44.33.239]. 27 * Sec. 20. AS 43.98.030(b) is amended to read: 28 (b) A tax credit certificate provided under (a) of this section may be sold, 29 assigned, exchanged, conveyed, or otherwise transferred in whole or in part. 30 * Sec. 21. AS 43.98.030(c) is amended to read: 31 (c) A taxpayer acquiring a transferable tax credit certificate may use the
01 credit or a portion of the credit to offset taxes imposed under AS 21.09.210, 02 AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75, and AS 43.77. 03 Except as provided in (e) of this section, any [AS 43.20 (ALASKA NET INCOME 04 TAX ACT). ANY] portion of the credit not used may be used at a later period or 05 transferred under (b) of this section. 06 * Sec. 22. AS 43.98.030(e) is amended to read: 07 (e) A transferable film production tax credit certificate provided under (a) 08 of this section, whether sold, assigned, exchanged, conveyed, or otherwise transferred, 09 in whole or in part, must be used within six [THREE] years after being provided by 10 the department. 11 * Sec. 23. AS 43.98.030(f) is amended to read: 12 (f) The total amount [NUMBER] of tax credits provided in the aggregate 13 under this section may not exceed 14 (1) $100,000,000 for productions qualified under AS 44.25.120 15 before July 1, 2013; and 16 (2) $200,000,000 for productions qualified under AS 44.25.120 17 after June 30, 2013, and before July 1, 2023. 18 * Sec. 24. AS 43.98.030 is amended by adding new subsections to read: 19 (g) A person acquiring two or more film production tax credit certificates 20 provided under (a) of this section may combine the unused amounts of the credits for 21 sale, assignment, exchange, conveyance, or other transfer. At the request of a person 22 holding a film production tax credit, the department shall replace a certificate that 23 represents the full amount of tax credit available with multiple certificates that each 24 represent a portion of the total tax credit available for the purpose of sale, assignment, 25 exchange, conveyance, or other transfer under this subsection, or, on request, shall 26 provide one tax credit certificate that represents the combined value of multiple tax 27 credit certificates. A tax credit certificate provided by the department under this 28 subsection must state the expiration date and the amount of each credit that is included 29 in the certificate. Combining or splitting unused amounts of credits under this 30 subsection does not change or extend the time period in which each credit that is 31 included in the combination or split must be used.
01 (h) Subject to appropriation, the department may purchase a transferable film 02 production tax credit certificate for 75 percent of the amount of each credit that is 03 included in the certificate. 04 * Sec. 25. AS 44.25 is amended by adding new sections to read: 05 Article 3. Film Office. 06 Sec. 44.25.100. Film office. The film office is created in the Department of 07 Revenue. The film office shall administer the Alaska film production incentive 08 program. 09 Sec. 44.25.105. Duties. (a) The film office shall make available to the 10 legislature, within 30 days after the start of each regular session, a report of the 11 activities conducted by the film office under AS 44.25.100 - 44.25.190. The report 12 must include 13 (1) the number of applications received under AS 44.25.120; 14 (2) the number of applications approved by the film office; 15 (3) the number of, and amount of, tax credits disbursed under 16 AS 44.25.110; 17 (4) the total amount of expenditures that were paid by productions 18 qualifying for the film production tax credit that were not qualified expenditures; 19 (5) the total amount of qualified expenditures that were paid by 20 productions qualifying for the film production tax credit to Alaska businesses; 21 (6) the total amount of qualified expenditures that were paid by 22 productions qualifying for the film production tax credit to Alaska residents as wages; 23 (7) the total amount of qualified expenditures that were paid by 24 productions qualifying for the film production tax credit for wages paid to individuals 25 who were not residents; 26 (8) the total number of residents employed by productions qualifying 27 for the film production tax credit; 28 (9) the total number of individuals employed by productions qualifying 29 for the film production tax credit who were not residents; 30 (10) the number of productions qualifying for the film production tax 31 credit that used a third party to sell, assign, exchange, convey, or otherwise transfer, in
01 whole or in part, a tax credit certificate received by the production; in this paragraph, 02 "third party" means a person other than the producer or an employee of the producer 03 of the production qualifying for the film production tax credit; and 04 (11) the number of purchases of transferable film production tax credit 05 certificates purchased under AS 43.98.030(h) and the total amount of film production 06 tax credits shown on the certificates purchased by the Department of Revenue. 07 (b) The film office shall design a logo that represents the film office and must 08 be included in a film qualifying for a film production tax credit under AS 44.25.100 - 09 44.25.190. 10 (c) The film office shall provide an on-site liaison to a film production that is 11 subject to the maximum application fee under AS 44.25.120(d). The liaison shall assist 12 the producer in meeting the requirements of AS 44.25.100 - 44.25.190 and ensure that 13 the production is in the best interests of the state as described in the application filed 14 under AS 44.25.120 and approved under AS 44.25.150. 15 Sec. 44.25.110. Alaska film production incentive program. Subject to 16 appropriations for the purpose, the film office shall administer the Alaska film 17 production incentive program to provide a tax credit under AS 43.98.030 for certain 18 film production expenditures incurred in the state. 19 Sec. 44.25.115. Eligibility. (a) A film production is eligible for a tax credit 20 under AS 43.98.030, if the 21 (1) producer has $75,000 or more in qualified expenditures in a 22 consecutive 36-month period under AS 44.25.130; 23 (2) Alaska Film Incentive Review Commission determines that the 24 production is not contrary to the best interests of the state; and 25 (3) production is approved by the film office. 26 (b) In determining under (a) of this section whether a production is not 27 contrary to the best interests of the state, the Alaska Film Incentive Review 28 Commission shall consider the effect of the production on 29 (1) both the immediate and long-term prospects for the film industry in 30 the state; 31 (2) both the immediate and long-term prospects for the employment of
01 Alaska residents; 02 (3) both the immediate and long-term prospects for the economy of the 03 state; 04 (4) the public perception of state policy on the utilization and 05 development of the natural resources of the state; and 06 (5) the immediate and long-term prospects for the fiscal health of the 07 state. 08 Sec. 44.25.120. Qualification for film production tax credit. (a) A film 09 producer may apply for the film production tax credit under AS 43.98.030 by 10 submitting an application to the film office on a form provided by the film office. The 11 application must include 12 (1) a script or synopsis of the production; 13 (2) the names of the producer, director, and proposed cast; 14 (3) estimated start, completion, and filming dates; and 15 (4) other information the film office may require to determine the 16 producer's qualification for a credit and the estimated amount of the credit. 17 (b) If the Alaska Film Incentive Review Commission approves an application 18 submitted under (a) of this section, the film office shall issue a notice of qualification 19 to the producer. The notice of qualification must include a determination by the film 20 office of the estimated film production tax credit for which the production qualifies. 21 (c) Information submitted in an application under (a) of this section is 22 confidential and is not subject to inspection or copying under AS 40.25.110 - 23 40.25.125. 24 (d) At the time an application is submitted under (a) of this section, a film 25 producer shall submit an application fee equal to 0.2 percent of the estimated total 26 qualified expenditures to be incurred in the state, except that the application fee may 27 not be less than $200 or more than $5,000. The application fee is not subject to refund. 28 Sec. 44.25.125. Award of film production tax credit. (a) Subject to 29 AS 43.98.030(f) and to (i) of this section, the film office shall determine the amount of 30 the tax credit under AS 43.98.030 available to a producer who has obtained a notice of 31 qualification under AS 44.25.120(b), based on the qualified expenditures of the
01 production under AS 44.25.130. After the film office determines the amount of the tax 02 credit, the tax credit shall be submitted to the Alaska Film Incentive Review 03 Commission for approval. 04 (b) Except as provided in (k) of this section, the base amount of a tax credit 05 awarded under this section is equal to 30 percent of the qualified expenditures of a 06 production. 07 (c) In determining the amount of the tax credit and subject to approval by the 08 Alaska Film Incentive Review Commission, the applicable percentage provided by (b) 09 of this section shall be increased by the film office based on the following criteria: 10 (1) an additional 20 percent of qualified expenditures that are wages 11 paid to Alaska residents; 12 (2) an additional six percent of qualified expenditures made in a rural 13 area; and 14 (3) an additional two percent of qualified expenditures made in the 15 state between October 1 and March 30. 16 (d) After completion of the production, the producer shall provide the film 17 office with a production cost report detailing the qualified expenditures of the 18 production, with verification by an independent certified public accountant, licensed in 19 the state and approved by the film office, that the costs claimed in the report are 20 qualified expenditures under AS 44.25.130 and that there is no outstanding balance for 21 a qualified expenditure that is due to a person in the state. The independent certified 22 public accountant providing verification under this subsection may not engage in the 23 sale, assignment, exchange, conveyance, or other transfer of a tax credit certificate that 24 includes a credit based on the qualified expenditures that are verified by that 25 independent certified public accountant. If the independent certified public accountant 26 providing verification under this subsection subsequently engages in the sale, 27 assignment, exchange, conveyance, or other transfer of a credit for which a qualified 28 expenditure was verified by that independent certified public accountant, the film 29 office may require the producer providing the production cost report to have the 30 qualified expenditures verified by an independent certified public accountant licensed 31 in the state that is not engaged in the sale, assignment, exchange, conveyance, or other
01 transfer related to a credit for the qualified expenditures. 02 (e) Subject to (g) of this section, the film office, in cooperation with the 03 Department of Revenue, shall determine the amount of the tax credit based on the 04 information provided by the producer under (d) of this section and, after approval by 05 the Alaska Film Incentive Review Commission, shall award a tax credit in cooperation 06 with the Department of Revenue under AS 43.98.030 if the producer has satisfied all 07 requirements under AS 44.25.100 - 44.25.190. 08 (f) The award of a tax credit under this section is conditioned on the 09 producer's and the production's full compliance with all applicable state laws and 10 regulations. At the request of the film office, a producer shall provide any information 11 necessary for the film office to determine the producer's and production's compliance 12 with this subsection. 13 (g) In determining the amount of a tax credit awarded under this section, the 14 film office shall reduce the amount of the tax credit by any amount the film office 15 considers necessary to allow the state, or a political subdivision of the state, to recover 16 the cost of any damages caused by any act or omission of the producer or production. 17 (h) The film office may withhold the award of a tax credit under this section if 18 the office determines that there are filed, but unresolved, legal actions in the state 19 involving the producer or production. 20 (i) To qualify for the tax credit under AS 43.98.030, a producer shall include, 21 (1) in the end credits of each qualified film, the film office logo 22 designed under AS 44.25.105(b) and the words, "Filmed in Alaska with the Support of 23 the State of Alaska"; or 24 (2) on each DVD or other media produced for distribution, a short 25 Alaska promotional video or advertisement approved by the Alaska Film Incentive 26 Review Commission. 27 (j) The Department of Revenue may not provide a tax credit certificate under 28 AS 43.98.030 to a producer that fails to meet the requirements in (i) of this section. 29 (k) In place of the 30 percent credit applicable to qualified expenditures under 30 (a) of this section, the tax credit for expenditures for services performed in the state, 31 including all salaries, wages, compensation, and related benefits, by producers,
01 directors, writers, and principal actors that fail to meet the eligibility requirements for 02 a permanent fund dividend in AS 43.23.005(a)(2) - (7), and all entities representing 03 producers, directors, writers, and principal actors that fail to meet the eligibility 04 requirements for a permanent fund dividend in AS 43.23.005(a)(2) - (7), is five 05 percent. The amount of the five percent credit may be increased by adding an amount 06 equal to 50 percent of the qualified expenditures paid to residents of the state under 07 AS 44.25.130(a)(10) and 50 percent of the qualified expenditures paid under 08 AS 44.25.130(a)(11) - (13) and (15). In this subsection, "principal actors" means the 09 five highest compensated actors or entities representing the five highest compensated 10 actors in the production. 11 Sec. 44.25.130. Determination of qualified expenditures. (a) Expenditures 12 made by a production company licensed to do business in the state in connection with 13 a film production approved by the film office that shall be considered qualified 14 expenditures must be directly related to the production and be incurred in the state. 15 Only expenditures that are ordinary, reasonable, and not in excess of fair market value 16 and that are for real or tangible property, fees, services, or state or municipal taxes 17 shall be considered. Expenditures may include 18 (1) costs of set construction and operation; 19 (2) costs of wardrobes, make-up, accessories, and related services; 20 (3) costs associated with photography and sound synchronization; 21 (4) costs of lighting and related services and materials; 22 (5) costs of editing and related services; 23 (6) rental of facilities and equipment; 24 (7) leasing of vehicles; 25 (8) costs of food and lodging; 26 (9) costs of digital or tape editing, film processing, transfer of film to 27 tape or digital format, transfer of digital media to film or tape, sound mixing, and 28 special and visual effects; 29 (10) the total aggregate expenditures for services performed in the 30 state, including all salaries, wages, compensation, and related benefits provided to 31 producers, directors, writers, actors, and other personnel that are directly attributable
01 to services performed in the state; 02 (11) the costs of the use of an Alaska business for processing qualified 03 payroll and related expenditures; 04 (12) costs of music, if performed, composed, or recorded by an Alaska 05 musician, or released or published by an Alaska business; 06 (13) costs of intrastate travel, if provided by an Alaska business; 07 (14) costs relating to the design, construction, improvement, or repair 08 of a film, video, television, or digital production or postproduction facility or related 09 property, infrastructure, or equipment, except commercial exhibition facilities, as 10 determined by the film office; 11 (15) costs of state or municipal taxes levied in Alaska on the lease or 12 rental of passenger or recreational vehicles or the rental of rooms or other lodging; or 13 (16) other similar production expenditures as determined by the film 14 office in cooperation with the Department of Revenue. 15 (b) Production costs that may not be considered qualified expenditures include 16 (1) costs related to the acquisition, determination, transfer, or use of a 17 film production tax credit under AS 43.98.030; 18 (2) postproduction expenditures for marketing and distribution; 19 (3) production financing, depreciation, and amortization costs, and 20 other costs that are not cash or cash equivalent expenditures directly attributable to 21 production costs incurred in the state; 22 (4) amounts that are later reimbursed or reasonably anticipated to be 23 reimbursed, resulting in a reduction in production costs; 24 (5) amounts that are reasonably anticipated to be recovered through 25 subsequent sale or other realization of value by disposal of an asset that has been 26 claimed as a qualified expenditure; 27 (6) amounts that are paid to a person or entity as a result of 28 participation in profits from the exploitation of the production; 29 (7) costs incurred in the purchase of real or tangible property for which 30 a qualified expenditure has, at any time, been claimed. 31 Sec. 44.25.135. Recovery of film production tax credit. (a) The film office
01 may review, audit, and bring legal proceedings to recover any amount of a tax credit 02 awarded under AS 44.25.125 from a producer or production to which a credit was 03 awarded if the film office determines that the film producer or production is liable for 04 damages to the state, or any political subdivision of the state. 05 (b) Legal proceedings may not be brought under (a) of this section more than 06 six years after the date the tax credit was awarded under AS 44.25.125. 07 Sec. 44.25.140. Regulations. The film office may adopt procedures and 08 regulations to carry out its functions under AS 44.25.100 - 44.25.190. 09 Sec. 44.25.145. Alaska Film Incentive Review Commission. (a) The Alaska 10 Film Incentive Review Commission is created in the Department of Revenue. 11 (b) The membership of the commission consists of the 12 (1) commissioner of commerce, community, and economic 13 development; 14 (2) commissioner of natural resources; 15 (3) commissioner of revenue; 16 (4) commissioner of labor and workforce development. 17 (c) A majority of the commission constitutes a quorum. Approval of an 18 application for qualification under AS 44.25.120 and 44.25.150 and the award of film 19 production tax credits under AS 44.25.120 and 44.25.150 require an affirmative vote 20 by three members of the commission. 21 (d) The commission shall employ an executive director and additional staff to 22 support the work of the commission, oversee the film office, and carry out the duties 23 of the film office under AS 44.25.100 - 44.25.190. The commission shall provide 24 general direction to the executive director and staff for the operation of the film office. 25 (e) The commission may consult with individuals knowledgeable about film 26 production and accounting as necessary to perform the duties of the commission. 27 Sec. 44.25.150. Review of qualifications and award of film production tax 28 credits. (a) The executive director shall review each application submitted to the film 29 office under AS 44.25.120 and each production cost report submitted to the film office 30 under AS 44.25.125. 31 (b) After finding that an application submitted under AS 44.25.120 is
01 complete, the executive director shall review the application and submit the 02 application for approval to the commission along with a recommendation to approve 03 or reject the application. After reviewing the application, the recommendation of the 04 executive director, and additional information an applicant may provide or the 05 commission may request, the commission shall make a decision as to whether the 06 production proposed in the application and the estimated amount of the film 07 production tax credit is in the best interest of the state. The commission may not 08 approve an application for a film production that the commission finds is contrary to 09 the natural resource development policy of the state. The commission shall issue a 10 decision either approving or rejecting the application and qualification of the 11 applicant. A decision of the commission on the qualification of an applicant is in the 12 discretion of the commission and is not subject to appeal except on the issue of 13 whether the decision of the commission is arbitrary or capricious. If appealed, the 14 appeal is subject to AS 44.62 (Administrative Procedure Act). 15 (c) After reviewing the production cost report submitted by a producer under 16 AS 44.25.125, the executive director shall review and verify the information included 17 on the production cost report. The executive director shall determine the amount of the 18 credit for which the producer may qualify and make a recommendation to the 19 commission as to the amount of the credit to be awarded. The commission may 20 approve the credit amount recommended by the executive director, adjust the amount 21 of the credit, deny all or part of the credit, or return the production cost report to the 22 executive director for additional review. The denial of a film production tax credit 23 under this section is subject to appeal under AS 44.62 (Administrative Procedure Act). 24 Sec. 44.25.190. Definitions. In AS 44.25.100 - 44.25.190, 25 (1) "Alaska business" means 26 (A) a person who holds a current Alaska business license; 27 (B) a person who provides goods or services under the name as 28 appearing on the person's current Alaska business license; 29 (C) a person who has maintained a place of business within the 30 state staffed by the person or an employee of the person for a period of six 31 months immediately preceding the date the goods or services were provided;
01 (D) a person who is 02 (i) incorporated or qualified to do business under the 03 laws of the state; 04 (ii) a sole proprietorship, and the proprietor is a resident 05 of the state; 06 (iii) a limited liability company organized under 07 AS 10.50, and all members are residents of the state; or 08 (iv) a partnership under former AS 32.05, AS 32.06, or 09 AS 32.11, and all partners are residents of the state; and 10 (E) if the business is a joint venture, a joint venture composed 11 entirely of ventures that qualify under (A) - (D) of this paragraph; 12 (2) "film" includes television, commercials, and videos; 13 (3) "film office" means the film office created under AS 44.25.100; 14 (4) "producer" means a person who arranges financing for or 15 supervises the production of a film, video, commercial, or television production or 16 pilot; 17 (5) "rural area" means a community in the state with a population of 18 1,500 or less or a community with a population of 10,000 or less that is not connected 19 by road or rail to Anchorage or Fairbanks. 20 * Sec. 26. AS 44.33.231 is repealed and reenacted to read: 21 Sec. 44.33.231. Film production promotion program. (a) The film 22 production promotion program is established in the Department of Commerce, 23 Community, and Economic Development. 24 (b) The purpose of the film production promotion program is to 25 (1) work with organizations in the private sector for the expansion and 26 development of film production industries in the state; 27 (2) promote Alaska as an appropriate location for film production; 28 (3) provide production assistance through connecting film directors, 29 makers, and producers with Alaska location scouts and contractors, including 30 contractors providing assistance with permit applications; and 31 (4) certify Alaska film production internship training programs and
01 promote the employment of program interns by eligible productions. 02 (c) On request, the Department of Commerce, Community, and Economic 03 Development, through the film production promotion program, shall assist the 04 Department of Revenue in the administration of the Alaska film production incentive 05 program (AS 44.25.110). 06 * Sec. 27. AS 44.33.232, 44.33.233, 44.33.234, 44.33.235, 44.33.236, 44.33.237, 44.33.238, 07 and 44.33.239 are repealed. 08 * Sec. 28. AS 43.98.030; AS 44.25.100, 44.25.105, 44.25.110, 44.25.115, 44.25.120, 09 44.25.125, 44.25.130, 44.25.140, 44.25.145, 44.25.150, 44.25.190; and AS 44.33.231(c) are 10 repealed. 11 * Sec. 29. AS 44.25.135 is repealed. 12 * Sec. 30. AS 24.20.271(11) is repealed. 13 * Sec. 31. Sections 3, 4, 5, and 6, ch. 63, SLA 2008, are repealed. 14 * Sec. 32. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 INCENTIVE CREDIT FOR FIRST EPISODIC SCRIPTED TELEVISION 17 PRODUCTION IN THE STATE. (a) Subject to appropriation, the first episodic scripted 18 television production produced after the effective date of this section is entitled to an 19 additional film production tax credit of six percent of the total qualified expenditures incurred 20 in the state. The production is eligible for the film production tax credit in this section after 16 21 episodes have been completed and are ready for television broadcast. 22 (b) The credit in this section shall be administered in the same manner as the film 23 production tax credit under AS 44.25.100 - 44.25.190. 24 (c) In this section, "episodic scripted television production" means a production for 25 television broadcast that is based on a script written before production; "episodic scripted 26 television production" does not include what is commonly referred to as reality television, for 27 which actors in the production do not perform using previously scripted dialogue or actions. 28 * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 TRANSITION. (a) The employee or employees in the film office in the Department of 31 Commerce, Community, and Economic Development shall be transferred to the Department
01 of Revenue on the effective date of this section and shall be the staff authorized for the Alaska 02 Film Incentive Review Commission established by AS 44.25.145, enacted by sec. 25 of this 03 Act. The Alaska Film Incentive Review Commission shall designate an executive director as 04 soon as practicable after the effective date of this section. 05 (b) Subject to AS 43.98.030(f), as amended by sec. 23 of this Act, secs. 28 and 29 of 06 this Act do not prohibit the film office from determining a film production's qualified 07 expenditures, awarding a tax credit, or reviewing a tax credit under the provisions repealed by 08 secs. 28 and 29 of this Act that has received a notice of qualification under AS 44.25.120(b), 09 enacted by sec. 25 of this Act, before July 1, 2023. 10 (c) A film production tax credit may be used to offset taxes imposed under the 11 provisions identified in AS 43.98.030(c), as amended by sec. 21 of this Act, or sold or 12 exchanged for a transferable tax credit certificate under AS 43.98.030(a), as amended by sec. 13 19 of this Act, within three years after being provided by the Department of Revenue, 14 notwithstanding the repeal of AS 43.98.030 in sec. 28 of this Act. 15 (d) A film production tax credit that is being withheld under AS 44.25.125(h), enacted 16 by sec. 25 of this Act, may continue to be withheld by the film office, notwithstanding the 17 repeal of AS 44.25.125 in sec. 28 of this Act. 18 * Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 NOTIFICATION. When the amount of tax credits provided under AS 43.98.030(f), as 21 amended by sec. 23 of this Act, in the aggregate and the estimated amount of tax credits that 22 could be claimed based on notices of qualification issued by the film office under 23 AS 44.25.120(b), enacted by sec. 25 of this Act, together equal $100,000,000 before July 1, 24 2013, or $200,000,000 after June 30, 2013, and before July 1, 2023, the commissioner of 25 revenue shall notify the presiding officers of each house of the legislature and the revisor of 26 statutes in writing. 27 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 NONSEVERABILITY. Notwithstanding AS 01.10.030, the provisions of secs. 1 and 30 19 - 24 of this Act are not severable from each other if a provision in secs. 1 and 17 - 22 is 31 held invalid.
01 * Sec. 36. Sections 7 and 8, ch. 63, SLA 2008, are repealed. 02 * Sec. 37. Section 28 of this Act takes effect on the earlier of the following: 03 (1) July 1, 2023; or 04 (2) the date the commissioner of revenue notifies the presiding officers of each 05 house of the legislature and the revisor of statutes in writing of the $200,000,000 amount after 06 June 30, 2013, and before July 1, 2023, under sec. 34 of this Act. 07 * Sec. 38. Section 29 of this Act takes effect on the earlier of the following: 08 (1) July 1, 2029; or 09 (2) six years after the date the commissioner of revenue notifies the presiding 10 officers of each house of the legislature and the revisor of statutes in writing of the 11 $200,000,000 amount after June 30, 2013, and before July 1, 2023, under sec. 34 of this Act. 12 * Sec. 39. Section 30 of this Act takes effect January 1, 2022. 13 * Sec. 40. Sections 1 and 17 - 36 of this Act take effect July 1, 2013. 14 * Sec. 41. Sections 7 - 12, 15, and 16 of this Act take effect January 1, 2013. 15 * Sec. 42. Except as provided in secs. 37 - 41 of this Act, this Act takes effect immediately 16 under AS 01.10.070(c).