HB 204: "An Act relating to a product development tax credit for certain salmon and herring products; and providing for an effective date."
00 HOUSE BILL NO. 204 01 "An Act relating to a product development tax credit for certain salmon and herring 02 products; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.75.035(a) is amended to read: 05 (a) A taxpayer that is a fisheries business may claim a [SALMON] product 06 development tax credit of 50 percent of qualified investment in new property first 07 placed into service in a shore-based plant or on a vessel in the state in the tax year. 08 * Sec. 2. AS 43.75.035(b) is amended to read: 09 (b) The amount of the tax credit applied against taxes under this section may 10 not 11 (1) exceed 50 percent of the taxpayer's tax liability incurred under this 12 chapter for processing of salmon or herring during the tax year; or 13 (2) be claimed for property first placed into service after December 31, 14 2020 [2015].
01 * Sec. 3. AS 43.75.035(c) is amended to read: 02 (c) If the property for which a tax credit is claimed is installed on a vessel, the 03 amount of qualified investment under (a) of this section is determined by multiplying 04 the investment cost of the qualified investment property by a fraction, the numerator 05 of which is the weight of raw salmon or raw herring processed on the vessel by the 06 taxpayer in the state in the tax year in which the property is first placed into service, 07 and the denominator of which is the weight of raw salmon or raw herring processed 08 on the vessel by the taxpayer in and outside of the state in the tax year in which the 09 property is first placed into service. 10 * Sec. 4. AS 43.75.035(d) is amended to read: 11 (d) An unused credit under this section may be carried forward and applied 12 against the tax liability incurred on salmon or herring in the following three tax years. 13 * Sec. 5. AS 43.75.035(g) is amended to read: 14 (g) If, during a tax year, property for which a credit was claimed under this 15 section is disposed of by the taxpayer, ceases to be qualified investment property, or is 16 removed from service in the state, the tax due under this chapter is increased by the 17 recapture percentage of the aggregate decrease in the credit allowed under this section 18 for all prior tax years that would have resulted solely from reducing to zero the credit 19 allowed for the qualified investment property under this section. The amount of tax 20 credit attributable to the qualified investment that is carried forward from prior tax 21 years is terminated as of the first day of the tax year in which the qualified investment 22 property is disposed of by the taxpayer, ceases to be qualified investment property, or 23 is removed from service in the state. For purposes of this subsection, 24 (1) the recapture percentage during the year in which the property is 25 first placed into service or during the first year following the year in which the 26 property is first placed into service is 100 percent; 27 (2) the recapture percentage during the second year following the year 28 in which the property is first placed into service is 75 percent; 29 (3) the recapture percentage during the third year following the year in 30 which the property is first placed into service is 50 percent; 31 (4) the recapture percentage during the fourth or subsequent year
01 following the year in which the property is first placed into service is zero percent; 02 (5) qualified investment property used on a vessel is considered to 03 have been removed from the state on the first day of a tax year in which the proportion 04 of raw salmon or raw herring processed in the state on the vessel is less than 50 05 percent of total weight of raw salmon or raw herring processed on the vessel in and 06 outside of the state. 07 * Sec. 6. AS 43.75.035(i) is amended to read: 08 (i) The department shall develop and implement procedures by which a 09 taxpayer that is a fisheries business may submit the taxpayer's proposed investment to 10 the department and request a preliminary determination of whether the investment 11 qualifies for the [SALMON] product development tax credit under this section. A 12 preliminary determination by the department that the taxpayer's submission qualifies 13 for the credit is binding, unless the department determines that the taxpayer has made 14 a material misrepresentation in the taxpayer's submission. 15 * Sec. 7. AS 43.75.035(j) is amended to read: 16 (j) In this section, 17 (1) "first placed into service" means the moment when property is first 18 used for its intended purpose; 19 (2) "new property" means property whose original use commences 20 with the taxpayer and does not include property first used by another person; 21 (3) "qualified investment" means the investment cost to purchase or 22 convert [IN] depreciable tangible personal property with a useful life of three years or 23 more to be used predominantly to perform an ice making, processing, packaging, or 24 product finishing function that is a significant component in enhancing salmon or 25 herring product quality or in producing value-added salmon and herring products 26 beyond gutting of the salmon or herring; in this paragraph, "property" 27 (A) includes 28 (i) filleting, skinning, portioning, mincing, forming, 29 extruding, stuffing, injecting, mixing, marinating, preserving, drying, 30 smoking, brining, packaging, blast freezing, scaling, or pin bone 31 removal equipment;
01 (ii) new parts necessary for, or costs associated with, 02 converting [TO CONVERT] an existing can seamer to pop-top can 03 production or converting an existing can seamer to can salmon or 04 herring without bones and skin or to produce smaller cans; 05 (iii) conveyors used specifically in the act of producing 06 a value-added salmon or herring product; [AND] 07 (iv) ice making machines; 08 (v) new canning equipment for herring products; 09 (vi) equipment used to increase the utilization or 10 recovery of salmon and herring byproduct or waste, including 11 machinery that recovers salmon or herring meat from salmon or 12 herring bones after filleting; and 13 (vii) machinery that processes edible salmon or 14 herring fish powder from the salmon or herring waste stream; 15 (B) does not include 16 (i) vehicles, forklifts, conveyors not used specifically in 17 the act of producing a value-added salmon or herring product, cranes, 18 pumps, or other equipment used to transport salmon, herring, or 19 salmon or herring products, knives, gloves, tools, supplies and 20 materials, equipment, other than ice making machines, that is not 21 processing, packaging, or product finishing equipment, or other 22 equipment the use of which is incidental to the production, packaging, 23 or finishing of value-added salmon or herring products; or 24 (ii) the overhaul, retooling, or modification of new or 25 existing property, except for new parts to convert an existing can 26 seamer to pop-top can production; 27 (4) "tax liability" means the liability for all taxes under this chapter 28 before all credits allowed by this chapter; 29 (5) "useful life" means the useful life of the property that is or would 30 be applicable for purposes of depreciation; 31 (6) "value-added salmon or herring product" means the product of a
01 salmon or herring that is processed beyond heading, gutting, or separation in a 02 manner that materially enhances the value of the salmon or herring product, such as 03 shelf-stable, retort pouched, smoked, pickled, or filleted salmon, ikura, leather, or 04 jerky; "value-added salmon or herring product" does not include a salmon, herring, 05 or salmon or herring product that 06 (A) has been subjected to only one or more of heading, gutting, 07 freezing, packaging, quality assurance practices, or value retention practices; 08 (B) is salmon skeins or other unprocessed salmon or herring 09 products whether fresh or frozen; 10 (C) is canned, except for canned herring, and salmon 11 products in a pop-top can; or 12 (D) is produced out of the state. 13 * Sec. 8. This Act takes effect immediately under AS 01.10.070(c).