SCS HB 194(FIN) am S(efd fld S): "An Act establishing an income tax on certain entities producing or transporting oil or gas in the state; approving and ratifying the sale of royalty oil by the State of Alaska to Marathon Petroleum Supply and Trading Company LLC."
00 SENATE CS FOR HOUSE BILL NO. 194(FIN) am S(efd fld S) 01 "An Act establishing an income tax on certain entities producing or transporting oil or 02 gas in the state; approving and ratifying the sale of royalty oil by the State of Alaska to 03 Marathon Petroleum Supply and Trading Company LLC." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 43.20 is amended by adding a new section to read: 06 Sec. 43.20.019. Tax on income attributable to a qualified entity. (a) Each 07 taxable year, a tax is imposed on the entire taxable income derived from sources in the 08 state of every qualified entity. The tax is computed as follows: 09 If the taxable income is: Then the tax is: 10 Less than $1,000,000 zero 11 $1,000,000 but less than $2,000,000 5 percent of the 12 taxable income over $1,000,000 13 $2,000,000 but less than $3,000,000 $50,000 plus 6 percent of the 14 taxable income over $2,000,000
01 $3,000,000 but less than $4,000,000 $110,000 plus 7 percent of the 02 taxable income over $3,000,000 03 $4,000,000 but less than $5,000,000 $180,000 plus 8 percent of the 04 taxable income over $4,000,000 05 $5,000,000 or more $260,000 plus 9.4 percent of the 06 taxable income over $5,000,000. 07 (b) For purposes of calculating taxable income under this section, 08 (1) taxable income of a qualified entity is determined under 09 AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by 10 26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that section read on January 1, 11 2026; 12 (2) notwithstanding AS 43.20.021 and AS 43.20.036, the taxpayer may 13 not apply as a credit or deduction against tax liability a credit or deduction allowed as 14 to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the taxpayer 15 may take a credit or deduction allowed for a C corporation under (1) of this 16 subsection. 17 (c) The tax under this section does not apply to a corporation subject to tax 18 under AS 43.20.011 or to an entity that is part of a unitary business with a corporation 19 subject to tax under AS 43.20.011. 20 (d) For the purpose of determining the tax due under this section, the 21 department shall 22 (1) aggregate the taxable income of two or more entities if the 23 department determines that, without the provisions of this section, the taxable income 24 would reasonably be expected to be attributed to a single entity; 25 (2) except as provided in (c) of this section, include in the calculation 26 of taxable income of the qualified entity income that is attributable to an entity that is 27 part of a unitary business with the qualified entity paying tax under this section; and 28 (3) adopt regulations to prevent evasion of taxes imposed under this 29 section. 30 (e) When providing a tax return under AS 43.20.030, a qualified entity shall 31 provide the information necessary, as directed by the department, for the department
01 to determine the income of the qualified entity as if the qualified entity were taxable 02 under AS 43.20.011. 03 (f) For purposes of calculating income under this section, a qualified entity 04 may deduct from income a payment to the shareholder, owner, member, or partner of 05 the qualified entity, if 06 (1) the shareholder, owner, member, or partner is a taxpayer under this 07 chapter; 08 (2) the payment does not include a transfer of property; and 09 (3) the payment is included in the shareholder's, owner's, member's, or 10 partner's income for purposes of this chapter. 11 (g) In this section, 12 (1) "qualified entity" means a 13 (A) sole proprietorship; 14 (B) partnership; 15 (C) limited liability company; or 16 (D) entity that has elected to file federal returns under 26 17 U.S.C. 1361 - 1379 (Internal Revenue Code); 18 (2) "taxable income" means income 19 (A) from the production of oil or gas from a lease or property 20 in the state or from the transportation of oil or gas by pipeline in the state; and 21 (B) of an entity that is part of a unitary business with a carrier 22 or producer paying tax under this section as provided under (d)(2) of this 23 section. 24 * Sec. 2. AS 43.20.030(a) is amended to read: 25 (a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer 26 [CORPORATION] as a partner, is required to make a return under the provisions of 27 the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 28 days after the federal return is required to be filed, a return setting out 29 (1) the amount of tax due under this chapter, less credits claimed 30 against the tax; and 31 (2) other information for the purpose of carrying out the provisions of
01 this chapter that the department requires. 02 * Sec. 3. AS 43.20.031(i) is amended to read: 03 (i) A taxpayer that [CORPORATION WHICH] is a member of a group of unitary 04 corporations or entities that [WHICH] collectively has income from business activity taxable 05 both inside and outside the state, or income from other sources both inside and outside the 06 state, shall determine its income from sources in this state by use of the combined method of 07 accounting. 08 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 ROYALTY OIL SALE CONTRACT WITH MARATHON PETROLEUM SUPPLY 11 AND TRADING COMPANY LLC APPROVED AND RATIFIED. In accordance with 12 AS 38.06.055, the legislature approves and ratifies the Agreement for the Sale of Royalty Oil 13 between and among the State of Alaska, Marathon Petroleum Supply and Trading Company 14 LLC, a Delaware Limited Liability Company, and Marathon Petroleum Corporation, a 15 Delaware Corporation, attached as Exhibit 1 to the "Final Best Interest Finding and 16 Determination for the Sale of Alaska North Slope Royalty Oil to Marathon Petroleum Supply 17 and Trading Company LLC" dated December 19, 2025. 18 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 APPLICABILITY. The tax established under AS 43.20.019, added by sec. 1 of this 21 Act, applies to a qualified entity for a tax year beginning on or after January 1, 2026. In this 22 section, "qualified entity" has the meaning given in AS 43.20.019(g). 23 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 TRANSITION: PAYMENT OF TAX. A person subject to the tax levied under 26 AS 43.20.019, added by sec. 1 of this Act, before the effective date of sec. 1 of this Act, shall 27 pay the balance of the tax due for a tax year ending before January 1, 2027, by January 1, 28 2027. Until January 1, 2027, the Department of Revenue shall waive interest that would 29 otherwise accrue under AS 43.05.225 and civil and criminal penalties accruing under 30 AS 43.05.220, 43.05.245, and 43.05.290 that are a result of the retroactivity of secs. 1 - 3 of 31 this Act.
01 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 RETROACTIVITY OF REGULATIONS. Notwithstanding a contrary provision of 04 AS 44.62.240, if the Department of Revenue expressly designates in the regulation that the 05 regulation applies retroactively to a specific date, a regulation adopted by the department to 06 implement, interpret, make specific, or otherwise carry out secs. 1 - 3 of this Act applies 07 retroactively to that date. 08 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 RETROACTIVITY. Sections 1 - 3 and 5 - 7 of this Act are retroactive to January 1, 11 2026.