SCS CSHB 111(RES): "An Act relating to the oil and gas production tax and credits against the oil and gas production tax; relating to certain tax credits under the tax on corporations and the refund of those credits; relating to the applicability of certain credits earned under the oil and gas production tax to the tax on corporations; relating to interest applicable to delinquent taxes; relating to lease expenditures; and providing for an effective date."
00 SENATE CS FOR CS FOR HOUSE BILL NO. 111(RES) 01 "An Act relating to the oil and gas production tax and credits against the oil and gas 02 production tax; relating to certain tax credits under the tax on corporations and the 03 refund of those credits; relating to the applicability of certain credits earned under the 04 oil and gas production tax to the tax on corporations; relating to interest applicable to 05 delinquent taxes; relating to lease expenditures; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 43.05.225 is amended to read: 08 Sec. 43.05.225. Interest. Unless otherwise provided, 09 (1) a delinquent tax under this title 10 (A) [UNDER THIS TITLE,] before January 1, 2014, bears 11 interest in each calendar quarter at the rate of five percentage points above the 12 annual rate charged member banks for advances by the 12th Federal Reserve 13 District as of the first day of that calendar quarter, or at the annual rate of 11
01 percent, whichever is greater, compounded quarterly as of the last day of that 02 quarter; 03 (B) [UNDER THIS TITLE,] on and after January 1, 2014, and 04 before January 1, 2018 [EXCEPT AS PROVIDED IN (C) OF THIS 05 PARAGRAPH], bears interest in each calendar quarter at the rate of three 06 percentage points above the annual rate charged member banks for advances 07 by the 12th Federal Reserve District as of the first day of that calendar quarter; 08 (C) [UNDER AS 43.55,] on and after January 1, 2018 [2017, 09 (i) FOR THE FIRST THREE YEARS AFTER A TAX 10 BECOMES DELINQUENT], bears interest in each calendar quarter at 11 the rate of three [SEVEN] percentage points above the annual rate 12 charged member banks for advances by the 12th federal reserve district 13 as of the first day of that calendar quarter, compounded quarterly as of 14 the last day of that quarter; [AND 15 (ii) AFTER THE FIRST THREE YEARS AFTER A 16 TAX BECOMES DELINQUENT, DOES NOT BEAR INTEREST;] 17 (2) the interest rate is 12 percent a year for 18 (A) delinquent fees payable under AS 05.15.095(c); and 19 (B) unclaimed property that is not timely paid or delivered, as 20 allowed by AS 34.45.470(a). 21 * Sec. 2. AS 43.20.044(a) is amended to read: 22 (a) A taxpayer may apply as a credit against the tax levied under this chapter 23 (1) the exploration incentive credit authorized by AS 27.30; 24 (2) the alternative tax credit for oil and gas exploration authorized 25 by AS 43.55.025. 26 * Sec. 3. AS 43.20.046(e) is amended to read: 27 (e) Subject to AS 43.20.057 [THE REQUIREMENTS IN AS 43.55.028(j)], 28 the department may [USE AVAILABLE MONEY IN THE OIL AND GAS TAX 29 CREDIT FUND ESTABLISHED IN AS 43.55.028 TO] make a [THE] refund applied 30 for under (d) of this section in whole or in part if the department finds that, after 31 application of all available tax credits, the claimant's total tax liability under this
01 chapter for the calendar year in which the claim is made is zero. 02 * Sec. 4. AS 43.20.047(e) is amended to read: 03 (e) Subject to AS 43.20.057 [THE REQUIREMENTS IN AS 43.55.028(j)], 04 the department may [USE MONEY AVAILABLE IN THE OIL AND GAS TAX 05 CREDIT FUND ESTABLISHED IN AS 43.55.028 TO] make a refund or payment 06 under (d) of this section in whole or in part if the department finds that, after 07 application of all available tax credits, the claimant's total tax liability under this 08 chapter for the calendar year in which the claim is made is zero. 09 * Sec. 5. AS 43.20.053(e) is amended to read: 10 (e) Subject to AS 43.20.057 [THE REQUIREMENTS IN AS 43.55.028(j)], 11 the department may [USE MONEY AVAILABLE IN THE OIL AND GAS TAX 12 CREDIT FUND ESTABLISHED IN AS 43.55.028 TO] make a refund or payment 13 under (d) of this section in whole or in part if the department finds that, after 14 application of all available tax credits, the claimant's total tax liability under this 15 chapter for the calendar year in which the claim is made is zero. 16 * Sec. 6. AS 43.20 is amended by adding a new section to read: 17 Sec. 43.20.057. Credit refunds and payments. (a) Subject to appropriation 18 for a purpose described in this section, the department may make a refund or payment 19 claimed under AS 43.20.046, 43.20.047, or 43.20.053. 20 (b) The department shall adopt regulations to carry out the purposes of this 21 section, including standards and procedures to allocate available money among claims 22 for refunds and payments under AS 43.20.046, 43.20.047, and 43.20.053 when the 23 total amount of the applications for purchase and claims for refund exceeds the 24 amount of available money appropriated for the purposes described in this section. 25 The regulations adopted by the department 26 (1) may not, when allocating available money under this section, 27 distinguish an application for a claim for a refund or payment under AS 43.20.046, 28 43.20.047, or 43.20.053; and 29 (2) must, when allocating available money under this section, grant a 30 preference, between two claimants, to the claimant with a higher percentage of 31 resident workers in the claimant's workforce, including workers employed by the
01 claimant's direct contractors, in the state in the previous calendar year; in this 02 paragraph, "resident worker" has the meaning given in AS 43.40.092(b). 03 (c) If a claimant has an outstanding liability to the state directly related to the 04 claimant's oil or gas exploration, development, or production and the department has 05 not previously reduced the amount paid to that claimant for refund because of that 06 outstanding liability, the department may pay only that portion of a refund that 07 exceeds the outstanding liability. After notifying the claimant, the department may 08 apply the amount by which the department reduced payment for a refund because of 09 an outstanding liability to satisfy the outstanding liability. Satisfaction of an 10 outstanding liability under this subsection does not affect the claimant's ability to 11 contest that liability. The department may enter into contracts or agreements with 12 another department to which the outstanding liability is owed. In this subsection, 13 "outstanding liability" means an amount of tax, interest, penalty, fee, rental, royalty, or 14 other charge for which the state has issued a demand for payment that has not been 15 paid when due and, if contested, has not been finally resolved against the state. 16 * Sec. 7. AS 43.55.023(c) is amended to read: 17 (c) A credit or portion of a credit under this section 18 (1) may not be used to reduce a person's tax liability under 19 AS 43.55.011(e) for any calendar year below zero; 20 (2) may, if [, AND ANY UNUSED CREDIT OR PORTION OF A 21 CREDIT] not used under this subsection, [MAY] be applied in a later calendar year; 22 (3) may, regardless of when the credit was earned, be used to 23 satisfy an outstanding tax, interest, penalty, fee, or other charge related to the tax 24 due under this chapter, including an amount assessed as a result of an amended 25 return under AS 43.55.075(b), that has not been subject to an administrative 26 proceeding or litigation. 27 * Sec. 8. AS 43.55.023(d) is amended to read: 28 (d) A person that is entitled to take a tax credit under this section that wishes 29 to transfer the unused credit to another person [OR OBTAIN A CASH PAYMENT 30 UNDER AS 43.55.028] may apply to the department for a transferable tax credit 31 certificate. An application under this subsection must be in a form prescribed by the
01 department and must include supporting information and documentation that the 02 department reasonably requires. The department shall grant or deny an application, or 03 grant an application as to a lesser amount than that claimed and deny it as to the 04 excess, not later than 120 days after the latest of (1) March 31 of the year following 05 the calendar year in which the qualified capital expenditure or carried-forward annual 06 loss for which the credit is claimed was incurred; (2) the date the statement required 07 under AS 43.55.030(a) or (e) was filed for the calendar year in which the qualified 08 capital expenditure or carried-forward annual loss for which the credit is claimed was 09 incurred; or (3) the date the application was received by the department. If, based on 10 the information then available to it, the department is reasonably satisfied that the 11 applicant is entitled to a credit, the department shall issue the applicant a transferable 12 tax credit certificate for the amount of the credit. A certificate issued under this 13 subsection does not expire. 14 * Sec. 9. AS 43.55.023(e) is amended to read: 15 (e) A person to which a transferable tax credit certificate is issued under (d) of 16 this section may transfer the certificate to another person, and a transferee may further 17 transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and 18 notwithstanding any action the department may take with respect to the applicant 19 under (g) of this section, the owner of a certificate may apply the credit or a portion of 20 the credit shown on the certificate 21 (1) [ONLY] against a tax levied by AS 43.55.011(e); however [. 22 HOWEVER], a credit shown on a transferable tax credit certificate may not be applied 23 under this paragraph to reduce a transferee's total tax liability under 24 AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80 25 percent of the tax that would otherwise be due without applying that credit; any [. 26 ANY] portion of a credit not used under this paragraph [SUBSECTION] may be 27 applied in a later period; or 28 (2) regardless of when the credit was earned, to satisfy an 29 outstanding tax, interest, penalty, fee, or other charge related to the tax due 30 under this chapter, including an amount assessed as a result of an amended 31 return under AS 43.55.075(b), that has not been subject to an administrative
01 proceeding or litigation. 02 * Sec. 10. AS 43.55.024 is amended by adding a new subsection to read: 03 (k) In a calendar year for which a tax credit under (j) of this section is used to 04 reduce a producer's tax liability below the amount due under AS 43.55.011(e), a tax 05 credit under (c) or (i) of this section may be used to reduce the producer's tax liability 06 for that year below the amount calculated under AS 43.55.011(f), but not below zero. 07 The department may not restrict the order in which the credits under (c), (i), and (j) of 08 this section are applied when calculating tax liability under this chapter. 09 * Sec. 11. AS 43.55.025(a) is amended to read: 10 (a) Subject to the terms and conditions of this section, a credit against the 11 [PRODUCTION] tax levied by AS 43.55.011(e) or AS 43.20 is allowed for 12 exploration expenditures that qualify under (b) of this section in an amount equal to 13 one of the following: 14 (1) 30 percent of the total exploration expenditures that qualify only 15 under (b) and (c) of this section; 16 (2) 30 percent of the total exploration expenditures that qualify only 17 under (b) and (d) of this section; 18 (3) 40 percent of the total exploration expenditures that qualify under 19 (b), (c), and (d) of this section; 20 (4) 40 percent of the total exploration expenditures that qualify only 21 under (b) and (e) of this section; 22 (5) 80, 90, or 100 percent, or a lesser amount described in (l) of this 23 section, of the total exploration expenditures described in (b)(1) and (2) of this section 24 and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this 25 section; 26 (6) the lesser of $25,000,000 or 80 percent of the total exploration 27 drilling expenditures described in (m) of this section and that qualify under (b) and 28 (c)(1), (c)(2)(A), and (c)(2)(C) of this section; or 29 (7) the lesser of $7,500,000 or 75 percent of the total seismic 30 exploration expenditures described in (n) of this section and that qualify under (b) of 31 this section.
01 * Sec. 12. AS 43.55.025(f) is amended to read: 02 (f) For a production tax credit under this section, 03 (1) an explorer shall, in a form prescribed by the department and, 04 except for a credit under (k) of this section, within six months of the completion of the 05 exploration activity, claim the credit and submit information sufficient to demonstrate 06 to the department's satisfaction that the claimed exploration expenditures qualify under 07 this section; in addition, the explorer shall submit information necessary for the 08 commissioner of natural resources to evaluate the validity of the explorer's compliance 09 with the requirements of this section; 10 (2) an explorer shall agree, in writing, 11 (A) to notify the Department of Natural Resources, within 30 12 days after completion of seismic or geophysical data processing, completion of 13 well drilling, or filing of a claim for credit, whichever is the latest, for which 14 exploration costs are claimed, of the date of completion and submit a report to 15 that department describing the processing sequence and providing a list of data 16 sets available; 17 (B) to provide to the Department of Natural Resources, within 18 30 days after the date of a request, unless a longer period is provided by the 19 Department of Natural Resources, specific data sets, ancillary data, and reports 20 identified in (A) of this paragraph; in this subparagraph, 21 (i) a seismic or geophysical data set includes the data 22 for an entire seismic survey, irrespective of whether the survey area 23 covers nonstate land in addition to state land or land in a unit in 24 addition to land outside a unit; 25 (ii) well data include all analyses conducted on physical 26 material, and well logs collected from the well, results, and copies of 27 data collected and data analyses for the well, including well logs; 28 sample analyses; testing geophysical and velocity data including 29 seismic profiles and check shot surveys; testing data and analyses; age 30 data; geochemical analyses; and tangible material; 31 (C) that, notwithstanding any provision of AS 38, information
01 provided under this paragraph will be held confidential by the Department of 02 Natural Resources, 03 (i) in the case of well data, until the expiration of the 04 24-month period of confidentiality described in AS 31.05.035(c), at 05 which time the Department of Natural Resources will release the 06 information after 30 days' public notice unless, in the discretion of the 07 commissioner of natural resources, it is necessary to protect 08 information relating to the valuation of unleased acreage in the same 09 vicinity, or unless the well is on private land and the owner, including 10 the lessor but not the lessee, of the oil and gas resources has not given 11 permission to release the well data; 12 (ii) in the case of seismic or other geophysical data, 13 other than seismic data acquired by seismic exploration subject to (k) of 14 this section, for 10 years following the completion date, at which time 15 the Department of Natural Resources will release the information after 16 30 days' public notice, except as to seismic or other geophysical data 17 acquired from private land, unless the owner, including a lessor but not 18 a lessee, of the oil and gas resources in the private land gives 19 permission to release the seismic or other geophysical data associated 20 with the private land; 21 (iii) in the case of seismic data obtained by seismic 22 exploration subject to (k) of this section, only until the expiration of 30 23 days' public notice issued on or after the date the production tax credit 24 certificate is issued under (5) of this subsection; 25 (3) if more than one explorer holds an interest in a well or seismic 26 exploration, each explorer may claim an amount of credit that is proportional to the 27 explorer's cost incurred; 28 (4) the department may exercise the full extent of its powers as though 29 the explorer were a taxpayer under this title, in order to verify that the claimed 30 expenditures are qualified exploration expenditures under this section; and 31 (5) if the department is satisfied that the explorer's claimed
01 expenditures are qualified under this section and that all data required to be submitted 02 under this section have been submitted, the department shall issue to the explorer a 03 production tax credit certificate for the amount of credit to be allowed against 04 [PRODUCTION] taxes levied by AS 43.55.011(e) and AS 43.20; for a production 05 tax credit under (a)(4) of this section, the department shall grant or deny an 06 application, or grant an application as to a lesser amount than that claimed and 07 deny it as to the excess, not later than 120 days after the date that the department 08 has received the application and all data required to be submitted under this 09 section; notwithstanding any contrary provision of AS 38, AS 40.25.100, or 10 AS 43.05.230, the following information is not confidential: 11 (A) the explorer's name; 12 (B) the date of the application; 13 (C) the location of the well or seismic exploration; 14 (D) the date of the department's issuance of the certificate; and 15 (E) the date on which the information required to be submitted 16 under this section will be released. 17 * Sec. 13. AS 43.55.025(h) is amended to read: 18 (h) A producer that purchases a production tax credit certificate may apply the 19 credits against its production tax levied by AS 43.55.011(e). Regardless of the price 20 the producer paid for the certificate, the producer may receive a credit against its 21 production tax liability for the full amount of the credit, but for not more than the 22 amount for which the certificate is issued. A production tax credit or production tax 23 credit certificate allowed under this section 24 (1) may not be applied more than once; 25 (2) may be applied 26 (A) in a later calendar year; or 27 (B) regardless of when the credit was earned, to satisfy an 28 outstanding tax, interest, penalty, fee, or other charge related to the tax 29 due under this chapter, including an amount assessed as a result of an 30 amended return under AS 43.55.075(b), that has not been subject to an 31 administrative proceeding or litigation.
01 * Sec. 14. AS 43.55.025(i) is amended to read: 02 (i) For a production tax credit under this section, 03 (1) a credit may not be applied to reduce a taxpayer's tax liability under 04 (A) AS 43.55.011(e) below zero for a calendar year; 05 (B) AS 43.20 below zero for a tax year; and 06 (2) an amount of the production tax credit in excess of the amount that 07 may be applied for a calendar or tax year under this subsection may be carried 08 forward and applied against the taxpayer's tax liability under AS 43.55.011(e) in one 09 or more later calendar years or under AS 43.20 in one or more later tax years. 10 * Sec. 15. AS 43.55.028(e) is amended to read: 11 (e) Subject to appropriation for a purpose described in this section, for a 12 credit earned before January 1, 2018, the [THE] department, on the written 13 application of a person to whom a transferable tax credit certificate has been issued 14 under AS 43.55.023(d) or former AS 43.55.023(m) or to whom a production tax credit 15 certificate has been issued under AS 43.55.025(f), may [USE AVAILABLE MONEY 16 IN THE OIL AND GAS TAX CREDIT FUND TO] purchase, in whole or in part, the 17 certificate. [THE DEPARTMENT MAY NOT PURCHASE A TOTAL OF MORE 18 THAN $70,000,000 IN TAX CREDIT CERTIFICATES FROM A PERSON IN A 19 CALENDAR YEAR.] Before purchasing a certificate or part of a certificate, the 20 department shall find that 21 (1) the calendar year of the purchase is not earlier than the first 22 calendar year for which the credit shown on the certificate would otherwise be allowed 23 to be applied against a tax; 24 (2) [THE APPLICATION IS NOT THE RESULT OF THE 25 DIVISION OF A SINGLE ENTITY INTO MULTIPLE ENTITIES THAT WOULD 26 REASONABLY BE EXPECTED TO APPLY AS A SINGLE ENTITY IF THE 27 $70,000,000 LIMITATION IN THIS SUBSECTION DID NOT EXIST; 28 (3)] the applicant's total tax liability under AS 43.55.011(e), after 29 application of all available tax credits, for the calendar year in which the application is 30 made is zero; 31 (3) [(4)] the applicant's average daily production of oil and gas taxable
01 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 02 the application is made was not more than 50,000 BTU equivalent barrels; and 03 (4) [(5)] the purchase is consistent with this section and regulations 04 adopted under this section. 05 * Sec. 16. AS 43.55.028(g) is amended to read: 06 (g) The department shall adopt regulations to carry out the purposes of this 07 section, including standards and procedures to allocate available money among 08 applications for the purchase of credit certificates [PURCHASES UNDER THIS 09 CHAPTER AND CLAIMS FOR REFUNDS AND PAYMENTS UNDER 10 AS 43.20.046, 43.20.047, OR 43.20.053] when the total amount of the applications for 11 purchase exceeds [AND CLAIMS FOR REFUND EXCEED] the amount of 12 [AVAILABLE] money appropriated for the purposes described in this section [IN 13 THE FUND]. The regulations adopted by the department 14 [(1) MAY NOT, WHEN ALLOCATING AVAILABLE MONEY IN 15 THE FUND UNDER THIS SECTION, DISTINGUISH AN APPLICATION FOR 16 THE PURCHASE OF A CREDIT CERTIFICATE ISSUED UNDER FORMER 17 AS 43.55.023(m) OR A CLAIM FOR A REFUND OR PAYMENT UNDER 18 AS 43.20.046, 43.20.047, OR 43.20.053; 19 (2)] must, when allocating [AVAILABLE] money [IN THE FUND] 20 under this section, grant a preference, between two applicants, to the applicant with a 21 higher percentage of resident workers in the applicant's workforce, including workers 22 employed by the applicant's direct contractors, in the state in the previous calendar 23 year. In [; IN] this subsection [PARAGRAPH], "resident worker" has the meaning 24 given in AS 43.40.092(b) [; 25 (3) MUST PROVIDE FOR THE PURCHASE OF THE AMOUNT 26 EQUAL TO THE FIRST 50 PERCENT OF THE CREDIT REPURCHASE LIMIT 27 FOR EACH PERSON UNDER (e) OF THIS SECTION AT A RATE OF 100 28 PERCENT OF THE VALUE OF THE CERTIFICATE OR PORTION OF THE 29 CERTIFICATE REQUESTED TO BE PURCHASED AND THE AMOUNT EQUAL 30 TO THE NEXT 50 PERCENT OF THE CREDIT REPURCHASE LIMIT FOR 31 EACH PERSON UNDER (e) OF THIS SECTION AT A RATE OF 75 PERCENT OF
01 THE VALUE OF THE CERTIFICATE OR PORTION OF THE CERTIFICATE 02 REQUESTED TO BE PURCHASED]. 03 * Sec. 17. AS 43.55.028(j) is amended to read: 04 (j) If an applicant [OR CLAIMANT] has an outstanding liability to the state 05 directly related to the applicant's [OR CLAIMANT'S] oil or gas exploration, 06 development, or production and the department has not previously reduced the amount 07 paid to that applicant [OR CLAIMANT] for a certificate [OR REFUND] because of 08 that outstanding liability, the department may purchase only that portion of a 09 certificate [OR PAY ONLY THAT PORTION OF A REFUND] that exceeds the 10 outstanding liability. After notifying the applicant [OR CLAIMANT], the department 11 may apply the amount by which the department reduced its purchase of a certificate 12 [OR PAYMENT FOR A REFUND] because of an outstanding liability to satisfy the 13 outstanding liability. Satisfaction of an outstanding liability under this subsection does 14 not affect the applicant's ability to contest that liability. The department may enter into 15 contracts or agreements with another department to which the outstanding liability is 16 owed. In this subsection, "outstanding liability" means an amount of tax, interest, 17 penalty, fee, rental, royalty, or other charge for which the state has issued a demand 18 for payment that has not been paid when due and, if contested, has not been finally 19 resolved against the state. 20 * Sec. 18. AS 43.55.029(a) is amended to read: 21 (a) An explorer or producer that has applied for a production tax credit under 22 AS 43.55.023(a) or (l) [AS 43.55.023(a), (b), OR (l)] or 43.55.025(a) may make a 23 present assignment of the production tax credit certificate expected to be issued by the 24 department to a third-party assignee. The assignment may be made either at the time 25 the application is filed with the department or not later than 30 days after the date of 26 filing with the department. Once a notice of assignment in compliance with this 27 section is filed with the department, the assignment is irrevocable and cannot be 28 modified by the explorer or producer without the written consent of the assignee 29 named in the assignment. If a production tax credit certificate is issued to the explorer 30 or producer, the notice of assignment remains effective and shall be filed with the 31 department by the explorer or producer together with any application for the
01 department to purchase the certificate under AS 43.55.028(e). 02 * Sec. 19. AS 43.55.160(d) is amended to read: 03 (d) Irrespective of whether a producer produces taxable oil or gas during a 04 calendar year or month, the producer is considered to have generated a positive 05 production tax value if a calculation described in (a) of this section yields a positive 06 number because the producer's adjusted lease expenditures for a calendar year under 07 AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a 08 payment or credit under AS 43.55.170. An explorer that has taken a tax credit under 09 former AS 43.55.023(b) or that has obtained a transferable tax credit certificate under 10 AS 43.55.023(d) for the amount of a tax credit under former AS 43.55.023(b) is 11 considered a producer, subject to the tax levied under AS 43.55.011(e), to the extent 12 that the explorer generates a positive production tax value as the result of the 13 explorer's receiving a payment or credit under AS 43.55.170. 14 * Sec. 20. AS 43.55.160(e) is amended to read: 15 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 16 incurred to produce oil or gas from leases or properties north of 68 degrees 17 North latitude that would otherwise be deductible by a producer in a calendar year 18 but whose deduction would cause an annual production tax value calculated under 19 (a)(1) or (h) of this section of taxable oil or gas produced during the calendar year to 20 be less than zero may be used to establish a carried-forward annual loss under 21 AS 43.55.165(a)(3) [AS 43.55.023(b)]. However, the department shall provide by 22 regulation a method to ensure that, for a period for which a producer's tax liability is 23 limited by AS 43.55.011(o) [AS 43.55.011(j), (k), (o), OR (p)], any adjusted lease 24 expenditures under AS 43.55.165 and 43.55.170 that would otherwise be deductible 25 by a producer for that period but whose deduction would cause a production tax value 26 calculated under (a)(1)(E) [(a)(1)(C), (D), (E), OR (F), OR (h)(3)] of this section to be 27 less than zero are accounted for as though the adjusted lease expenditures had first 28 been used as deductions in calculating the production tax values of oil or gas subject to 29 any of the limitations under AS 43.55.011(o) [AS 43.55.011(j), (k), (o), OR (p)] that 30 have positive production tax values so as to reduce the tax liability calculated without 31 regard to the limitation to the maximum amount provided for under the applicable
01 provision of AS 43.55.011(o) [AS 43.55.011(j), (k), (o), OR (p)]. Only the amount of 02 those adjusted lease expenditures remaining after the accounting provided for under 03 this subsection may be used to establish a carried-forward annual loss under 04 AS 43.55.165(a)(3) [AS 43.55.023(b)]. In this subsection, "producer" includes 05 "explorer." 06 * Sec. 21. AS 43.55.165(a), as amended by sec. 29, ch. 4, 4SSLA 2016, is amended to read: 07 (a) For purposes of this chapter, a producer's lease expenditures for a calendar 08 year are 09 (1) costs, other than items listed in (e) of this section, that are 10 (A) incurred by the producer during the calendar year after 11 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 12 within the producer's leases or properties in the state or, in the case of land in 13 which the producer does not own an operating right, operating interest, or 14 working interest, to explore for oil or gas deposits within other land in the 15 state; and 16 (B) allowed by the department by regulation, based on the 17 department's determination that the costs satisfy the following three 18 requirements: 19 (i) the costs must be incurred upstream of the point of 20 production of oil and gas; 21 (ii) the costs must be ordinary and necessary costs of 22 exploring for, developing, or producing, as applicable, oil or gas 23 deposits; and 24 (iii) the costs must be direct costs of exploring for, 25 developing, or producing, as applicable, oil or gas deposits; [AND] 26 (2) a reasonable allowance for that calendar year, as determined under 27 regulations adopted by the department, for overhead expenses that are directly related 28 to exploring for, developing, or producing, as applicable, the oil or gas deposits; and 29 (3) lease expenditures incurred in a previous calendar year, 30 subject to (m) - (p) of this section, that 31 (A) met the requirements of AS 43.55.160(e) in the year in
01 which the lease expenditures were incurred; 02 (B) have not been deducted in the determination of the 03 production tax value of oil and gas under AS 43.55.160(a) or (h) in a 04 previous calendar year; 05 (C) were not the basis of a credit under this title; and 06 (D) were incurred to explore for, develop, or produce an oil 07 or gas deposit located north of 68 degrees North latitude. 08 * Sec. 22. AS 43.55.165(f) is amended to read: 09 (f) For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures 10 incurred to explore for an oil or gas deposit located within land in which an explorer 11 does not own a working interest, the term "producer" in this section includes 12 "explorer." 13 * Sec. 23. AS 43.55.165 is amended by adding new subsections to read: 14 (m) A loss carried forward under (a)(3) of this section shall increase in value 15 at a rate of 10 percent, compounded annually. An increase in value under this 16 subsection begins to accrue on January 1 of the calendar year immediately following 17 the calendar year in which the loss was accrued and no longer accrues on 18 December 31 of the calendar year immediately preceding the calendar year in which a 19 carried-forward annual loss is applied. An increase in value accrued under this 20 subsection has no value except as applied in this section. An increase in value may not 21 accrue 22 (1) for a partial calendar year; 23 (2) for more than seven calendar years, consecutive or nonconsecutive; 24 or 25 (3) on a loss carried forward by a producer that, during the calendar 26 year in which the loss was accrued, had commercial production of oil or gas produced 27 from a lease or property located north of 68 degrees North latitude. 28 (n) A loss carried forward under (a)(3) of this section may be applied only in a 29 calendar year after application of a producer's lease expenditures that are incurred in 30 that calendar year. 31 (o) An increase in value accrued under (m) of this section may be applied only
01 in 02 (1) a calendar year in which the producer applying the increase in 03 value under (m) of this section 04 (A) has production of oil or gas from a lease or property that 05 includes land north of 68 degrees North latitude; and 06 (B) holds a right, title, or interest in the lease or property where 07 the lease expenditure was incurred that accrued the increase in value; and 08 (2) the calendar year commercial production begins on the lease or 09 property where the lease expenditure was incurred that accrued the increase in value or 10 in a later calendar year. 11 (p) During a calendar year in which a taxpayer is subject to the tax under 12 AS 43.55.011(f), the amount of annual carried-forward loss applied in that year is 13 equal to the amount, when combined with the lease expenditures of the current year, 14 necessary to reduce the amount calculated under AS 43.55.011(e) to the equivalent 15 amount of tax due under AS 43.55.011(f). An amount of carried-forward annual loss 16 in excess of the amount described in this subsection may continue to be carried 17 forward. 18 * Sec. 24. AS 43.55.170(c) is amended to read: 19 (c) For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures 20 incurred to explore for an oil or gas deposit located within land in which an explorer 21 does not own a working interest, the term "producer" in this section includes 22 "explorer." 23 * Sec. 25. AS 43.55.023(b), 43.55.028(a), 43.55.028(b), 43.55.028(c), 43.55.028(d), 24 43.55.028(f), 43.55.028(h), 43.55.028(i), and 43.55.029(b)(4) are repealed. 25 * Sec. 26. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 APPLICABILITY: TAX CREDITS UNDER AS 43.55.025 APPLIED AGAINST 28 TAX DUE UNDER AS 43.20. AS 43.20.044(a), as amended by sec. 2 of this Act, and 29 AS 43.55.025(a), (f), and (i), as amended by secs. 11, 12, and 14 of this Act, apply to a tax 30 credit that has been earned under AS 43.55.025, regardless of when the credit was earned. 31 * Sec. 27. The uncodified law of the State of Alaska is amended by adding a new section to
01 read: 02 APPLICABILITY: APPLICATION FOR A PRODUCTION TAX CREDIT UNDER 03 AS 43.55.025(a). AS 43.55.025(f), as amended by sec. 12 of this Act, applies to an 04 application for a production tax credit under AS 43.55.025(a)(4), regardless of when the 05 application was submitted, except that, for the purposes of AS 43.55.025(f), an application 06 received before January 1, 2017, shall be considered received on the effective date of this 07 section. 08 * Sec. 28. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 APPLICABILITY: CREDIT CERTIFICATE CARRYBACK. AS 43.55.023(c), as 11 amended by sec. 7 of this Act, AS 43.55.023(e), as amended by sec. 9 of this Act, and 12 AS 43.55.025(h), as amended by sec. 13 of this Act, apply to a transferable tax credit 13 certificate issued under AS 43.55.023(d) or a production tax credit certificate issued under 14 AS 43.55.025(f), regardless of when the certificate was issued. 15 * Sec. 29. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 APPLICABILITY: LEASE EXPENDITURES. AS 43.55.165(a)(3) and 43.55.165(m) 18 - (p), added by secs. 21 and 23 of this Act, apply to a lease expenditure incurred on or after 19 the effective date of secs. 21 and 23 of this Act. 20 * Sec. 30. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 TRANSITION: INTEREST ON DELINQUENT TAXES. Notwithstanding the 23 effective date of sec. 1 of this Act, a delinquent tax under AS 43.55 bears interest in each 24 calendar quarter of 2017 as provided under AS 43.05.225(1) as that paragraph read on the day 25 before the effective date of sec. 1 of this Act. 26 * Sec. 31. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 TRANSITION: CARRIED-FORWARD ANNUAL LOSSES. (a) Notwithstanding the 29 repeal of AS 43.55.023(b) by sec. 25 of this Act and the amendments to AS 43.55.160(d) and 30 (e), 43.55.165(f), and 43.55.170(c) by secs. 19, 20, 22, and 24 of this Act, a taxpayer who 31 incurs a carried-forward annual loss before the repeal of AS 43.55.023(b) by sec. 25 of this
01 Act that qualifies for a carried-forward annual loss credit under AS 43.55.023(b) may apply 02 for a credit or tax credit certificate under AS 43.55.023(d), subject to the requirements of 03 AS 43.55.160(d) and (e), as those subsections read on the day before the repeal of 04 AS 43.55.023(b) by sec. 25 of this Act. 05 (b) The Department of Revenue may continue to apply and enforce AS 43.55.023(b), 06 as that subsection read on the day before the repeal of AS 43.55.023(b) by sec. 25 of this Act, 07 for a carried-forward annual loss incurred before the repeal of AS 43.55.023(b) by sec. 25 of 08 this Act. 09 * Sec. 32. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITION: PURCHASE OF TRANSFERABLE TAX CREDIT 12 CERTIFICATES. On and after the effective date of secs. 15 - 17 of this Act, the department 13 may, subject to AS 43.55.028(e), (g), and (j), as amended by secs. 15 - 17 of this Act, 14 purchase a transferable tax credit certificate issued under AS 43.55.023(d) or former 15 AS 43.55.023(m) earned for activity occurring before the effective date of secs. 15 - 17 of this 16 Act. 17 * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 TRANSITION: OIL AND GAS CREDIT FUND. Subject to appropriation, the 20 balance of the oil and gas tax credit fund created under AS 43.55.028(a) and repealed by sec. 21 25 of this Act lapses into the general fund. 22 * Sec. 34. Sections 2, 7, 9, 11 - 14, and 26 - 28 of this Act take effect immediately under 23 AS 01.10.070(c). 24 * Sec. 35. Section 21 of this Act takes effect on the effective date of sec. 29, ch. 4, 4SSLA 25 2016. 26 * Sec. 36. Except as provided in secs. 34 and 35 of this Act, this Act takes effect January 1, 27 2018.