SB 92: "An Act establishing an income tax on certain entities producing or transporting oil or gas in the state; and providing for an effective date."
00 SENATE BILL NO. 92 01 "An Act establishing an income tax on certain entities producing or transporting oil or 02 gas in the state; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.20 is amended by adding a new section to read: 05 Sec. 43.20.019. Tax on income attributable to a qualified entity; energy 06 and electrical grid projects or upgrades fund. (a) If an entity has qualified taxable 07 income over $5,000,000 in a tax year, the entity shall pay a tax of 9.4 percent on the 08 qualified taxable income over $5,000,000. 09 (b) The tax under this section does not apply to a corporation paying tax under 10 AS 43.20.011. 11 (c) The department shall aggregate the qualified taxable income of two or 12 more entities for the purpose of determining the tax due under this section if the 13 department determines that, without the provisions of this section, the qualified 14 taxable income would reasonably be expected to be attributed to a single entity.
01 (d) The energy and electrical grid projects or upgrades fund is established in 02 the general fund. The Department of Administration shall separately account for the 03 tax collected under this section and deposit the tax into the energy and electrical grid 04 projects or upgrades fund. 05 (e) In this section, 06 (1) "entity" means a 07 (A) sole proprietorship; 08 (B) partnership; or 09 (C) entity that has elected to file federal returns under 26 10 U.S.C. 1361 - 1379 (Internal Revenue Code); 11 (2) "qualified taxable income" means income from the production of 12 oil or gas from a lease or property in the state or from the transportation of oil or gas 13 by pipeline in the state before deductions for 14 (A) dividends and gifts; and 15 (B) wages, salaries, bonuses, or other similar payments to 16 owners, partners, members, or shareholders of the entity. 17 * Sec. 2. AS 43.20.030(a) is amended to read: 18 (a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer 19 [CORPORATION] as a partner, is required to make a return under the provisions of 20 the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 21 days after the federal return is required to be filed, a return setting out 22 (1) the amount of tax due under this chapter, less credits claimed 23 against the tax; and 24 (2) other information for the purpose of carrying out the provisions of 25 this chapter that the department requires. 26 * Sec. 3. AS 43.20.031(i) is amended to read: 27 (i) A taxpayer that [CORPORATION WHICH] is a member of a group of 28 unitary corporations or entities that [WHICH] collectively has income from business 29 activity taxable both inside and outside the state, or income from other sources both 30 inside and outside the state, shall determine its income from sources in this state by 31 use of the combined method of accounting.
01 * Sec. 4. AS 43.20.145(a) is amended to read: 02 (a) A taxpayer [CORPORATION] that is a member of an affiliated group 03 shall file a return using the water's edge combined reporting method. A return under 04 this section must include the following entities [CORPORATIONS] if the entities 05 [CORPORATIONS] are part of a unitary business with the taxpayer [FILING 06 CORPORATION]: 07 (1) an affiliated corporation that is eligible to be included in a federal 08 consolidated return under 26 U.S.C. 1501 - 1505 (Internal Revenue Code) if the 09 corporation's property, payroll, and sales factors in the United States average 10 (A) 20 percent or more; or 11 (B) under 20 percent, if the corporation does not meet the 12 requirements of 26 U.S.C. 861(c); 13 (2) a domestic international sales corporation; in this paragraph, 14 "domestic international sales corporation" has the meaning given in 26 U.S.C. 992(a); 15 (3) a foreign sales corporation; in this paragraph, "foreign sales 16 corporation" has the meaning given to the term "FSC" in 26 U.S.C. 922(a); 17 (4) a corporation, regardless of the place where the corporation was 18 incorporated, if the corporation's property, payroll, and sales factors in the United 19 States average 20 percent or more; 20 (5) a corporation that is incorporated in or does business in a country 21 that does not impose an income tax, or that imposes an income tax at a rate lower than 22 90 percent of the United States income tax rate on the income tax base of the 23 corporation in the United States, if 24 (A) 50 percent or more of the sales, purchases, or payments of 25 income or expenses, exclusive of payments for intangible property, of the 26 corporation are made directly or indirectly to one or more members of a group 27 of corporations filing under the water's edge combined reporting method; 28 (B) the corporation does not conduct significant economic 29 activity. 30 * Sec. 5. AS 43.20.145(b) is amended to read: 31 (b) When computing taxable income for a taxpayer [CORPORATION] under
01 (a) of this section, the following amounts shall be excluded: 02 (1) 80 percent of dividend income received from foreign corporations; 03 (2) an amount treated as a dividend under 26 U.S.C. 78; 04 (3) 80 percent of the royalties accrued or received from a foreign 05 corporation. 06 * Sec. 6. AS 43.20.145(d) is amended to read: 07 (d) Dividends and royalties taxable to a taxpayer [CORPORATION] using 08 the water's edge combined reporting method are in lieu of an expense attribution for 09 income excluded under (b) of this section. 10 * Sec. 7. AS 43.20.145(e) is amended to read: 11 (e) The department may require a taxpayer [CORPORATION] that files 12 under (a) of this section to file a report under AS 43.20.142 and 43.20.143 prepared 13 without regard to this section if the taxpayer [CORPORATION] or an affiliated 14 entity [CORPORATION] 15 (1) fails to comply with regulations adopted under this chapter, 16 including domestic disclosure spread sheet filing requirements; or 17 (2) does not provide information that is requested by the department 18 that is necessary for the department to audit the taxpayer's corporate return in a 19 reasonable period of time. 20 * Sec. 8. AS 43.20.145(g) is amended to read: 21 (g) An entity [A CORPORATION] that has signed a contract approved by the 22 legislature as a result of submission of a proposed contract developed under AS 43.82 23 or as a result of acts by the legislature in implementing the purposes of AS 43.82, 24 providing for payments in lieu of the tax under this chapter and that has nexus with the 25 state solely as the result of the entity's [CORPORATION'S] participation in the 26 approved qualified project that is subject to the contract is not required to file a return 27 under this section unless required to do so by the contract. 28 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 APPLICABILITY. This Act applies to an entity with qualified taxable income over 31 $5,000,000 for a tax year beginning on or after January 1, 2025.
01 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION: PAYMENT OF TAX. A person subject to tax before the effective 04 date of this Act under AS 43.20.019, added by sec. 1 of this Act, shall pay the balance of the 05 tax due for a tax year ending before January 1, 2026, by January 1, 2026. Until January 1, 06 2026, the Department of Revenue shall waive interest that would otherwise accrue under 07 AS 43.05.225 and civil and criminal penalties accruing under AS 43.05.220, 43.05.245, and 08 43.05.290 that are a result of the retroactivity of this Act. 09 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 RETROACTIVITY OF REGULATIONS. Notwithstanding a contrary provision of 12 AS 44.62.240, if the Department of Revenue expressly designates in the regulation that the 13 regulation applies retroactively to a specific date, a regulation adopted by the department to 14 implement, interpret, make specific, or otherwise carry out this Act applies retroactively to 15 that date. 16 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 RETROACTIVITY. This Act is retroactive to January 1, 2025. 19 * Sec. 13. This Act takes effect immediately under AS 01.10.070(c).