00                      CS FOR SENATE BILL NO. 227(RES)                                                                   
01 "An Act relating to taxes; relating to the Multistate Tax Compact; relating to                                          
02 apportionment of income to the state; establishing an income tax on certain entities                                    
03 producing or transporting oil or gas in the state; relating to highly digitized businesses;                             
04 imposing an education tax on net earnings from self-employment and wages; relating to                                   
05 the administration and enforcement of the education tax; relating to the oil and gas                                    
06 production tax; establishing an infrastructure maintenance surcharge on oil; and                                        
07 providing for an effective date."                                                                                       
08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
09    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
10 to read:                                                                                                                
11       LEGISLATIVE INTENT. It is the intent of the legislature that the revenue from                                     
12            (1)  the education head tax levied under AS 43.45.011, added by sec. 14 of this                              
13 Act, be appropriated each year by the legislature to the public education fund under                                    

01 AS 14.17.300; and                                                                                                       
02            (2)  the infrastructure maintenance surcharge on oil levied under AS 43.55.320,                              
03 added by sec. 33 of this Act, be appropriated by the legislature each year for maintenance and                          
04 operation costs incurred by the state along the pipeline corridor.                                                      
05    * Sec. 2. AS 37.18.010 is amended to read:                                                                         
06 Sec. 37.18.010. Alaska Tax Credit Certificate Bond Corporation. The                                                   
07 Alaska Tax Credit Certificate Bond Corporation is established in the Department of                                      
08 Revenue. The corporation is a public corporation and government instrumentality                                         
09 managed by a board of directors. The purpose of the corporation is to finance under                                     
10       AS 43.55.028                                                                                                      
11                 (1)  the purchase of                                                                                    
12 (A)  transferable tax credit certificates issued under former                                                       
13            AS 43.55.023;                                                                                                
14 (B)  production tax credit certificates issued under former                                                         
15            AS 43.55.025; and                                                                                            
16 (2)  the payment of refunds and payments claimed under AS 43.20.046,                                                    
17       43.20.047, or 43.20.053.                                                                                          
18    * Sec. 3. AS 43.19.010 is amended to read:                                                                         
19 Sec. 43.19.010. Compact. The Multistate Tax Compact is hereby enacted into                                            
20 law and entered into with all jurisdictions legally joining in it, in the form substantially                            
21       as follows:                                                                                                       
22                             ARTICLE I.                                                                                  
23                             PURPOSES.                                                                                   
24            The purposes of this compact are to:                                                                         
25 1. Facilitate proper determination of state and local tax liability of multistate                                       
26 taxpayers, including the equitable apportionment of tax bases and settlement of                                         
27       apportionment disputes.                                                                                           
28 2. Promote uniformity or compatibility in significant components of tax                                                 
29       systems.                                                                                                          
30 3. Facilitate taxpayer convenience and compliance in the filing of tax returns                                          
31       and in other phases of tax administration.                                                                        

01            4. Avoid duplicative taxation.                                                                               
02                             ARTICLE II.                                                                                 
03                            DEFINITIONS.                                                                                 
04            As used in this compact:                                                                                     
05            1. "State" means a state of the United States, the District of Columbia, the                                 
06       Commonwealth of Puerto Rico, or any territory or possession of the United States.                                 
07            2. "Subdivision" means any governmental unit or special district of a state.                                 
08            3. "Taxpayer" means any corporation, partnership, firm, association,                                         
09       governmental unit or agency or person acting as a business entity in more than one                                
10       state.                                                                                                            
11 4. "Income tax" means a tax imposed on or measured by net income including                                              
12 any tax imposed on or measured by an amount arrived at by deducting expenses from                                       
13 gross income, one or more forms of which expenses are not specifically and directly                                     
14       related to particular transactions.                                                                               
15 5. "Capital stock tax" means a tax measured in any way by the capital of a                                              
16       corporation considered in its entirety.                                                                           
17 6. "Gross receipts tax" means a tax, other than a sales tax, which is imposed on                                        
18 or measured by the gross volume of business, in terms of gross receipts or in other                                     
19 terms, and in the determination of which no deduction is allowed which would                                            
20       constitute the tax an income tax.                                                                                 
21 7. "Sales tax" means a tax imposed with respect to the transfer for a                                                   
22 consideration of ownership, possession or custody of tangible personal property or the                                  
23 rendering of services measured by the price of the tangible personal property                                           
24 transferred or services rendered and which is required by state or local law to be                                      
25 separately stated from the sales price by the seller, or which is customarily separately                                
26 stated from the sales price, but does not include a tax imposed exclusively on the sale                                 
27       of a specifically identified commodity or article or class of commodities or articles.                            
28 8. "Use tax" means a nonrecurring tax, other than a sales tax, which (a) is                                             
29 imposed on or with respect to the exercise or enjoyment of any right or power over                                      
30 tangible personal property incident to the ownership, possession or custody of that                                     
31 property or the leasing of that property from another including any consumption,                                        

01       keeping, retention, or other use of tangible personal property and (b) is complementary                           
02       to a sales tax.                                                                                                   
03 9. "Tax" means an income tax, capital stock tax, gross receipts tax, sales tax,                                         
04 use tax, and any other tax which has a multistate impact, except that the provisions of                                 
05 Articles III, IV and V of this compact shall apply only to the taxes specifically                                       
06 designated therein and the provisions of Article IX of this compact shall apply only in                                 
07       respect to determinations pursuant to Article IV.                                                                 
08                             ARTICLE III.                                                                                
09                    ELEMENTS OF INCOME TAX LAWS.                                                                         
10              TAXPAYERS OPTION, STATE AND LOCAL TAXES.                                                                   
11 1. Any taxpayer subject to an income tax whose income is subject to                                                     
12 apportionment and allocation for tax purposes pursuant to the laws of a party state or                                  
13 pursuant to the laws of subdivisions in two or more party states may elect to apportion                                 
14 and allocate the taxpayer's income in the manner provided by the laws of such state or                                  
15 by the laws of such states and subdivisions without reference to this compact, or may                                   
16 elect to apportion and allocate in accordance with Article IV. This election for any tax                                
17 year may be made in all party states or subdivisions thereof or in any one or more of                                   
18 the party states or subdivisions thereof without reference to the election made in the                                  
19 others. For the purposes of this paragraph, taxes imposed by subdivisions shall be                                      
20 considered separately from state taxes and the apportionment and allocation also may                                    
21 be applied to the entire tax base. In no instance wherein Article IV is employed for all                                
22 subdivisions of a state may the sum of all apportionments and allocations to                                            
23 subdivisions within a state be greater than the apportionment and allocation that would                                 
24 be assignable to that state if the apportionment or allocation were being made with                                     
25       respect to a state income tax.                                                                                    
26                    TAXPAYER OPTION, SHORT FORM.                                                                         
27 2. Each party state or any subdivision thereof which imposes an income tax                                              
28 shall provide by law that any taxpayer required to file a return, whose only activities                                 
29 within the taxing jurisdiction consist of sales and do not include owning or renting real                               
30 estate or tangible personal property, and whose dollar volume of gross sales made                                       
31 during the tax year within the state or subdivision, as the case may be, is not in excess                               

01 of $100,000 may elect to report and pay any tax due on the basis of a percentage of                                     
02 such volume, and shall adopt rates which shall produce a tax which reasonably                                           
03 approximates the tax otherwise due. The Multistate Tax Commission, not more than                                        
04 once in five years, may adjust the $100,000 figure in order to reflect such changes as                                  
05 may occur in the real value of the dollar, and such adjusted figure, upon adoption by                                   
06 the commission, shall replace the $100,000 figure specifically provided herein. Each                                    
07 party state and subdivision thereof may make the same election available to taxpayers                                   
08       additional to those specified in this paragraph.                                                                  
09                             COVERAGE.                                                                                   
10 3. Nothing in this Article relates to the reporting or payment of any tax other                                         
11       than an income tax.                                                                                               
12                             ARTICLE IV.                                                                                 
13                         DIVISION OF INCOME.                                                                             
14            1. As used in this Article, unless the context otherwise requires:                                           
15            (a)  "Apportionable income" means:                                                                       
16 (i)  all income that is apportionable under the Constitution of the                                                 
17       United States and is not allocated under the laws of this state, including:                                   
18 (A)  ["BUSINESS INCOME" MEANS] income arising from                                                                  
19 transactions and activity in the regular course of the taxpayer's trade or                                              
20            business; and                                                                                            
21 (B)  [INCLUDES] income arising from tangible and intangible                                                     
22 property if the acquisition, management, employment, development, or                                                
23 [AND] disposition of the property is or was related to the operation                                                
24 [CONSTITUTE INTEGRAL PARTS] of the taxpayer's [REGULAR] trade or                                                        
25            business; and                                                                                            
26 (ii)  any income that would be allocable to this state under the                                                    
27 Constitution of the United States, but that is apportioned rather than allocated                                    
28       pursuant to the laws of this state [OPERATIONS].                                                              
29 (b)  "Commercial domicile" means the principal place from which the trade or                                            
30       business of the taxpayer is directed or managed.                                                                  
31 (c)  "Compensation" means wages, salaries, commissions and any other form                                               

01       of remuneration paid to employees for personal services.                                                          
02 (d)  "Financial organization" means any bank, trust company, savings bank,                                              
03 industrial bank, land bank, safe deposit company, private banker, savings and loan                                      
04 association, credit union, cooperative bank, small loan company, sales finance                                          
05       company, investment company, or any type of insurance company.                                                    
06            (e)  "Non-apportionable [NONBUSINESS] income" means all income other                                     
07       than apportionable [BUSINESS] income.                                                                         
08            (f)  "Public utility" means any business entity (1) which owns or operates any                               
09       plant, equipment, property, franchise, or license for the transmission of                                         
10 communications, transportation of goods or persons, except by pipe line, or the                                         
11 production, transmission, sale, delivery, or furnishing of electricity, water or steam;                                 
12 and (2) whose rates of charges for goods or services have been established or                                           
13       approved by a federal, state or local government or governmental agency.                                          
14 (g)  "sales" means all gross receipts of the taxpayer that are not allocated                                        
15 under paragraphs of this Article, and that are received from transactions and                                       
16 activity in the regular course of the taxpayer's trade or business; except that sales                               
17 of a taxpayer from hedging transactions and from the maturity, redemption,                                          
18       exchange, loan, or other disposition of cash or securities, shall be excluded.                                
19 (h)  "State" means any state of the United States, the District of Columbia, the                                        
20 Commonwealth of Puerto Rico, any territory or possession of the United States, and                                      
21       any foreign country or political subdivision thereof.                                                             
22 (i)  "This state" means the state in which the relevant tax return is filed or, in                                      
23 the case of application of this Article to the apportionment and allocation of income                                   
24 for local tax purposes, the subdivision or local taxing district in which the relevant tax                              
25       return is filed.                                                                                                  
26 2. Any taxpayer having income from business activity which is taxable both                                              
27 within and outside this state, other than activity as a financial organization or public                                
28 utility or the rendering of purely personal services by an individual, shall allocate and                               
29 apportion net income as provided in this Article. If a taxpayer has income from                                         
30 business activity as a public utility but derives the greater percentage of income from                                 
31 activities subject to this Article, the taxpayer may elect to allocate and apportion the                                

01       taxpayer's entire net income as provided in this Article.                                                         
02 3. For purposes of allocation and apportionment of income under this Article, a                                         
03 taxpayer is taxable in another state if (1) in that state the taxpayer is subject to a net                              
04 income tax, a franchise tax measured by net income, a franchise tax for the privilege                                   
05 of doing business, or a corporate stock tax, or (2) that state has jurisdiction to subject                              
06 the taxpayer to a net income tax regardless of whether, in fact, the state does or does                                 
07       not.                                                                                                              
08 4. Rents and royalties from real or tangible personal property, capital gains,                                          
09 interest, dividends or patent or copyright royalties, to the extent that they constitute                                
10 nonapportionable [NONBUSINESS] income, shall be allocated as provided in                                            
11       paragraphs 5 through 8 of this Article.                                                                           
12 5.(a) Net rents and royalties from real property located in this state are                                              
13       allocable to this state.                                                                                          
14 (b)  Net rents and royalties from tangible personal property are allocable to this                                      
15 state: (1) if and to the extent that the property is utilized in this state, or (2) in their                            
16 entirety if the taxpayer's commercial domicile is in this state and the taxpayer is not                                 
17       organized under the laws of or taxable in the state in which the property is utilized.                            
18 (c)  The extent of utilization of tangible personal property in a state is                                              
19 determined by multiplying the rents and royalties by a fraction, the numerator of                                       
20 which is the number of days of physical location of the property in the state during the                                
21 rental or royalty period in the taxable year and the denominator of which is the number                                 
22 of days of physical location of the property everywhere during all rental or royalty                                    
23 periods in the taxable year. If the physical location of the property during the rental or                              
24 royalty period is unknown or unascertainable by the taxpayer, tangible personal                                         
25 property is utilized in the state in which the property was located at the time the rental                              
26       or royalty payer obtained possession.                                                                             
27 6.(a) Capital gains and losses from sales of real property located in this state                                        
28       are allocable to this state.                                                                                      
29 (b)  Capital gains and losses from sales of tangible personal property are                                              
30 allocable to this state if (1) the property had a situs in this state at the time of the sale,                          
31 or (2) the taxpayer's commercial domicile is in this state and the taxpayer is not                                      

01       taxable in the state in which the property had a situs.                                                           
02            (c)  Capital gains and losses from sales of intangible personal property are                                 
03       allocable to this state if the taxpayer's commercial domicile is in this state.                                   
04            7. Interest and dividends are allocable to this state if the taxpayer's commercial                           
05       domicile is in this state.                                                                                        
06 8.(a) Patent and copyright royalties are allocable to this state: (1) if and to the                                     
07 extent that the patent or copyright is utilized by the payer in this state, or (2) if and to                            
08 the extent that the patent or copyright is utilized by the payer in a state in which the                                
09       taxpayer is not taxable and the taxpayer's commercial domicile is in this state.                                  
10 (b)  A patent is utilized in a state to the extent that it is employed in production,                                   
11 fabrication, manufacturing, or other processing in the state or to the extent that a                                    
12 patented product is produced in the state. If the basis of receipts from patent royalties                               
13 does not permit allocation to states or if the accounting procedures do not reflect states                              
14 of utilization, the patent is utilized in the state in which the taxpayer's commercial                                  
15       domicile is located.                                                                                              
16 (c)  A copyright is utilized in a state to the extent that printing or other                                            
17 publication originates in the state. If the basis of receipts from copyright royalties does                             
18 not permit allocation to states or if the accounting procedures do not reflect states of                                
19 utilization, the copyright is utilized in the state in which the taxpayer's commercial                                  
20       domicile is located.                                                                                              
21 9. All apportionable [BUSINESS] income shall be apportioned to this state by                                        
22 multiplying the income by a fraction, the numerator of which is the property factor                                     
23       plus the payroll factor plus the sales factor, and the denominator of which is three.                             
24 10. The property factor is a fraction, the numerator of which is the average                                            
25 value of the taxpayer's real and tangible personal property owned or rented and used in                                 
26 this state during the tax period and the denominator of which is the average value of                                   
27 all the taxpayer's real and tangible personal property owned or rented and used during                                  
28       the tax period.                                                                                                   
29 11. Property owned by the taxpayer is valued at its original cost. Property                                             
30 rented by the taxpayer is valued at eight times the net annual rental rate. Net annual                                  
31 rental rate is the annual rental rate paid by the taxpayer less any annual rental rate                                  

01       received by the taxpayer from subrentals.                                                                         
02 12. The average value of property shall be determined by averaging the values                                           
03 at the beginning and ending of the tax period but the tax administrator may require the                                 
04 averaging of monthly values during the tax period if reasonably required to reflect                                     
05       properly the average value of the taxpayer's property.                                                            
06 13. The payroll factor is a fraction, the numerator of which is the total amount                                        
07 paid in this state during the tax period by the taxpayer for compensation and the                                       
08 denominator of which is the total compensation paid everywhere during the tax period.                                   
09            14. Compensation is paid in this state if:                                                                   
10            (a)  the individual's service is performed entirely within the state;                                        
11 (b)  the individual's service is performed both inside and outside the state, but                                       
12 the service performed outside the state is incidental to the individual's service within                                
13       this state; or                                                                                                    
14 (c)  some of the service is performed in the state and (1) the base of operations                                       
15 or, if there is no base of operations, the place from which the service is directed or                                  
16 controlled is in the state, or (2) the base of operations or the place from which the                                   
17 service is directed or controlled is not in any state in which some part of the service is                              
18       performed, but the individual's residence is in this state.                                                       
19 15. The sales factor is a fraction, the numerator of which is the total sales of                                        
20 the taxpayer in this state during the tax period, and the denominator of which is the                                   
21       total sales of the taxpayer everywhere during the tax period.                                                     
22            16. Sales of tangible personal property are in this state if:                                                
23 (a)  the property is delivered or shipped to a purchaser, other than the United                                         
24 States Government, within this state regardless of the f.o.b. point or other conditions                                 
25       of the sale; or                                                                                                   
26 (b)  the property is shipped from an office, store, warehouse, factory, or other                                        
27 place of storage in this state and (1) the purchaser is the United States Government or                                 
28       (2) the taxpayer is not taxable in the state of the purchaser.                                                    
29 17.(a) Sales, other than sales described in Section 16 [OF TANGIBLE                                             
30 PERSONAL PROPERTY], are in this state if the taxpayer's market for the sales is                                     
31       in this state. The taxpayer's market for sales is in this state:                                              

01                 (1)  in the case of sale, rental, lease, or license of real property, if                            
02       and to the extent the property is located in this state;                                                      
03                 (2)  in the case of rental, lease, or license of tangible personal                                  
04       property, if and to the extent the property is located in this state;                                         
05                 (3)  in the case of sale of a service, if and to the extent the service is                          
06       delivered to a location in this state; and                                                                    
07                 (4)  in the case of intangible property,                                                            
08                      (i)  that is rented, leased, or licensed, if and to the extent the                             
09            property is used in this state, provided that intangible property utilized in                            
10 marketing a good or service to a consumer is "used in this state" if that                                           
11            good or service is purchased by a consumer who is in this state; and                                     
12 (ii)  that is sold, if and to the extent the property is used in                                                    
13            this state, provided that:                                                                               
14 (A)  a contract right, government license, or similar                                                               
15 intangible property that authorizes the holder to conduct a                                                         
16 business activity in a specific geographic area is "used in this state"                                             
17                 if the geographic area includes all or part of this state;                                          
18 (B)  sales from intangible property sales that are                                                                  
19 contingent on the productivity, use, or disposition of the intangible                                               
20 property shall be treated as a sale of the rental, lease, or licensing                                              
21                 of such intangible property under subsection (a)(4)(i); and                                         
22 (C)  all other sales of intangible property shall be                                                                
23 excluded from the numerator and denominator of the sales factor.                                                    
24 [: (a)  THE INCOME-PRODUCING ACTIVITY IS PERFORMED IN                                                                   
25                 THIS STATE; OR]                                                                                         
26 (b)  If the state or states of assignment under subsection (a) cannot be                                            
27       determined, the state or states of assignment shall be reasonably approximated.                               
28 (c)  If the taxpayer is not taxable in a state to which a sale is assigned                                          
29 under subsection (a) or (b), or if the state of assignment cannot be determined                                     
30 under subsection (a) or reasonably approximated under subsection (b), such a                                        
31       sale shall be excluded from the denominator of the sales factor.                                              

01 (d)  The tax administrator may adopt regulations as necessary or                                                    
02 appropriate to carry out the purposes of this section [THE INCOME-                                                  
03 PRODUCING ACTIVITY IS PERFORMED BOTH IN AND OUTSIDE THIS                                                                
04 STATE AND A GREATER PROPORTION OF THE INCOME-PRODUCING                                                                  
05 ACTIVITY IS PERFORMED IN THIS STATE THAN IN ANY OTHER STATE,                                                            
06       BASED ON COSTS OF PERFORMANCE].                                                                                   
07 18. If the allocation and apportionment provisions of this Article do not fairly                                        
08 represent the extent of the taxpayer's business activity in this state, the taxpayer may                                
09 petition for or the tax administrator may require, in respect to all or any part of the                                 
10       taxpayer's business activity, if reasonable:                                                                      
11            (a)  separate accounting;                                                                                    
12            (b)  the exclusion of any one or more of the factors;                                                        
13 (c)  the inclusion of one or more additional factors which will fairly represent                                        
14       the taxpayer's business activity in this state; or                                                                
15 (d)  the employment of any other method to effectuate an equitable allocation                                           
16       and apportionment of the taxpayer's income.                                                                       
17                             ARTICLE V.                                                                                  
18                 ELEMENTS OF SALES AND USE TAX LAWS.                                                                     
19                             TAX CREDIT.                                                                                 
20 1. Each purchaser liable for a use tax on tangible personal property shall be                                           
21 entitled to full credit for the combined amount or amounts of legally imposed sales or                                  
22 use taxes paid by the purchaser with respect to the same property to another state and                                  
23 any subdivision thereof. The credit shall be applied first against the amount of any use                                
24 tax due the state, and any unused portion of the credit shall then be applied against the                               
25       amount of any use tax due a subdivision.                                                                          
26              EXEMPTION CERTIFICATES, VENDORS MAY RELY.                                                                  
27 2. Whenever a vendor receives and accepts in good faith from a purchaser a                                              
28 resale or other exemption certificate or other written evidence of exemption authorized                                 
29 by the appropriate state or subdivision taxing authority, the vendor shall be relieved of                               
30       liability for a sales or use tax with respect to the transaction.                                                 
31                             ARTICLE VI.                                                                                 

01                          THE COMMISSION.                                                                                
02                   ORGANIZATION AND MANAGEMENT.                                                                          
03 1.(a) The Multistate Tax Commission is hereby established. It shall be                                                  
04 composed of one "member" from each party state who shall be the head of the state                                       
05 agency charged with the administration of the types of taxes to which this compact                                      
06 applies. If there is more than one such agency the state shall provide by law for the                                   
07 selection of the commission member from the heads of the relevant agencies. State                                       
08 law may provide that a member of the commission be represented by an alternate but                                      
09 only if there is on file with the commission written notification of the designation and                                
10 identity of the alternate. The attorney general of each party state or the designee of the                              
11 attorney general, or other counsel if the laws of the party state specifically provide,                                 
12 shall be entitled to attend the meetings of the commission, but shall not vote. Such                                    
13 attorneys general, designees, or other counsel shall receive all notices of meetings                                    
14       required under paragraph 1(e) of this Article.                                                                    
15 (b)  Each party state shall provide by law for the selection of representatives                                         
16 from its subdivisions affected by this compact to consult with the commission member                                    
17       from that state.                                                                                                  
18 (c)  Each member shall be entitled to one vote. The commission shall not act                                            
19 unless a majority of the members are present, and no action shall be binding unless                                     
20       approved by a majority of the total number of members.                                                            
21            (d)  The commission shall adopt an official seal to be used as it may provide.                               
22 (e)  The commission shall hold an annual meeting and such other regular                                                 
23 meetings as its bylaws may provide and such special meetings as its executive                                           
24 committee may determine. The commission bylaws shall specify the dates of the                                           
25 annual and any other regular meetings, and shall provide for the giving of notice of                                    
26 annual, regular and special meetings. Notices of special meetings shall include the                                     
27       reasons therefor and an agenda of the items to be considered.                                                     
28 (f)  The commission shall elect annually, from among its members, a chairman,                                           
29 a vice-chairman and a treasurer. The commission shall appoint an executive director                                     
30 who shall serve at its pleasure, and it shall fix the duties and compensation of the                                    
31 executive director. The executive director shall be secretary of the commission. The                                    

01       commission shall make provision for the bonding of such of its officers and employees                             
02       as it may deem appropriate.                                                                                       
03 (g)  Irrespective of the civil service, personnel or other merit system laws of                                         
04 any party state, the executive director shall appoint or discharge such personnel as                                    
05 may be necessary for the performance of the functions of the commission and shall fix                                   
06 their duties and compensation. The commission bylaws shall provide for personnel                                        
07       policies and programs.                                                                                            
08            (h)  The commission may borrow, accept or contract for the services of                                       
09       personnel from any state, the United States, or any other governmental entity.                                    
10 (i)  The commission may accept for any of its purposes and functions any and                                            
11 all donations and grants of money, equipment, supplies, materials and services,                                         
12 conditional or otherwise, from any governmental entity, and may utilize and dispose                                     
13       of the same.                                                                                                      
14 (j)  The commission may establish one or more offices for the transacting of its                                        
15       business.                                                                                                         
16 (k)  The commission shall adopt bylaws for the conduct of its business. The                                             
17 commission shall publish its bylaws in convenient form, and shall file a copy of the                                    
18 bylaws and any amendments thereto with the appropriate agency or officer in each of                                     
19       the party states.                                                                                                 
20 (l)  The commission annually shall make to the governor and legislature of                                              
21 each party state a report covering its activities for the preceding year. Any donation or                               
22 grant accepted by the commission or services borrowed shall be reported in the annual                                   
23 report of the commission, and shall include the nature, amount and conditions, if any,                                  
24 of the donation, gift, grant or services borrowed and the identity of the donor or                                      
25       lender. The commission may make additional reports as it may deem desirable.                                      
26                            COMMITTEES.                                                                                  
27 2.(a) To assist in the conduct of its business when the full commission is not                                          
28 meeting, the commission shall have an executive committee of seven members,                                             
29 including the chairman, vice-chairman, treasurer and four other members elected                                         
30 annually by the commission. The executive committee, subject to the provisions of                                       
31 this compact and consistent with the policies of the commission, shall function as                                      

01       provided in the bylaws of the commission.                                                                         
02 (b)  The commission may establish advisory and technical committees,                                                    
03 membership on which may include private persons and public officials, in furthering                                     
04 any of its activities. Such committees may consider any matter of concern to the                                        
05 commission, including problems of special interest to any party state and problems                                      
06       dealing with particular types of taxes.                                                                           
07            (c)  The commission may establish such additional committees as its bylaws                                   
08       may provide.                                                                                                      
09                              POWERS.                                                                                    
10 3. In addition to powers conferred elsewhere in this compact, the commission                                            
11       shall have power to:                                                                                              
12 (a)  Study state and local tax systems and particular types of state and local                                          
13       taxes.                                                                                                            
14 (b)  Develop and recommend proposals for an increase in uniformity or                                                   
15 compatibility of state and local tax laws with a view toward encouraging the                                            
16       simplification and improvement of state and local tax law and administration.                                     
17 (c)  Compile and publish information as in its judgment would assist the party                                          
18 states in implementation of the compact and taxpayers in complying with state and                                       
19       local tax laws.                                                                                                   
20 (d)  Do all things necessary and incidental to the administration of its functions                                      
21       pursuant to this compact.                                                                                         
22                              FINANCE.                                                                                   
23 4.(a) The commission shall submit to the governor or designated officer or                                              
24 officers of each party state a budget of its estimated expenditures for such period as                                  
25       may be required by the laws of that state for presentation to the legislature thereof.                            
26 (b)  Each of the commission's budgets of estimated expenditures shall contain                                           
27 specific recommendations of the amounts to be appropriated by each of the party                                         
28 states. The total amount of appropriations requested under any such budget shall be                                     
29 apportioned among the party states as follows: one-tenth in equal shares; and the                                       
30 remainder in proportion to the amount of revenue collected by each party state and its                                  
31 subdivisions from income taxes, capital stock taxes, gross receipts, taxes, sales and use                               

01 taxes. In determining such amounts, the commission shall employ such available                                          
02 public sources of information as, in its judgment, present the most equitable and                                       
03 accurate comparisons among the party states. Each of the commission's budgets of                                        
04 estimated expenditures and requests for appropriations shall indicate the sources used                                  
05 in obtaining information employed in applying the formula contained in this                                             
06       paragraph.                                                                                                        
07 (c)  The commission shall not pledge the credit of any party state. The                                                 
08 commission may meet any of its obligations in whole or in part with funds available to                                  
09 it under paragraph 1(i) of this Article: provided that the commission takes specific                                    
10 action setting aside such funds prior to incurring any obligation to be met in whole or                                 
11 in part in such manner. Except where the commission makes use of funds available to                                     
12 it under paragraph 1(i), the commission shall not incur any obligation prior to the                                     
13       allotment of funds by the party states adequate to meet the same.                                                 
14 (d)  The commission shall keep accurate accounts of all receipts and                                                    
15 disbursements. The receipts and disbursements of the commission shall be subject to                                     
16 the audit and accounting procedures established under its bylaws. All receipts and                                      
17 disbursements of funds handled by the commission shall be audited yearly by a                                           
18 certified or licensed public accountant and the report of the audit shall be included in                                
19       and become part of the annual report of the commission.                                                           
20 (e)  The accounts of the commission shall be open at any reasonable time for                                            
21 inspection by duly constituted officers of the party states and by any persons                                          
22       authorized by the commission.                                                                                     
23 (f)  Nothing contained in this Article shall be construed to prevent commission                                         
24 compliance with laws relating to audit or inspection of accounts by or on behalf of any                                 
25       government contributing to the support of the commission.                                                         
26                             ARTICLE VII.                                                                                
27                   UNIFORM REGULATIONS AND FORMS.                                                                        
28 1. Whenever any two or more party states, or subdivisions of party states, have                                         
29 uniform or similar provisions of law relating to an income tax, capital stock tax, gross                                
30 receipts tax, sales or use tax, the commission may adopt uniform regulations for any                                    
31 phase of the administration of such law, including assertion of jurisdiction to tax, or                                 

01       prescribing uniform tax forms. The commission may also act with respect to the                                    
02       provisions of Article IV of this compact.                                                                         
03            2. Prior to the adoption of any regulation, the commission shall:                                            
04 (a)  As provided in its bylaws, hold at least one public hearing on due notice to                                       
05 all affected party states and subdivisions thereof and to all taxpayers and other persons                               
06 who have made timely request of the commission for advance notice of its regulation-                                    
07       making proceedings.                                                                                               
08            (b)  Afford all affected party states and subdivisions and interested persons an                             
09       opportunity to submit relevant written data and views, which shall be considered fully                            
10       by the commission.                                                                                                
11 3. The commission shall submit any regulations adopted by it to the                                                     
12 appropriate officials of all party states and subdivisions to which they might apply.                                   
13 Each such state and subdivision shall consider any such regulations for adoption in                                     
14       accordance with its own laws and procedures.                                                                      
15                            ARTICLE VIII.                                                                                
16                         INTERSTATE AUDITS.                                                                              
17 1. This Article shall be in force only in those party states that specifically                                          
18       provide therefor by statute.                                                                                      
19 2. Any party state or subdivision thereof desiring to make or participate in an                                         
20 audit of any accounts, books, papers, records or other documents may request the                                        
21 commission to perform the audit on its behalf. In responding to the request, the                                        
22 commission shall have access to and may examine, at any reasonable time, such                                           
23 accounts, books, papers, records, and other documents and any relevant property or                                      
24 stock of merchandise. The commission may enter into agreements with party states or                                     
25 their subdivisions for assistance in performance of the audit. The commission shall                                     
26 make charges, to be paid by the state or local government or governments for which it                                   
27 performs the service, for any audits performed by it in order to reimburse itself for the                               
28       actual costs incurred in making the audit.                                                                        
29 3. The commission may require the attendance of any person within the state                                             
30 where it is conducting an audit or part thereof at a time and place fixed by it within                                  
31 such state for the purpose of giving testimony with respect to any account, book,                                       

01 paper, document, other record, property or stock of merchandise being examined in                                       
02 connection with the audit. If the person is not within the jurisdiction, the person may                                 
03 be required to attend for such purpose at any time and place fixed by the commission                                    
04 within the state of which the person is a resident: provided that such state has adopted                                
05       this Article.                                                                                                     
06 4. The commission may apply to any court having power to issue compulsory                                               
07 process for orders in aid of its powers and responsibilities pursuant to this Article and                               
08 any and all such courts shall have jurisdiction to issue such orders. Failure of any                                    
09 person to obey any such order shall be punishable as contempt of the issuing court. If                                  
10 the party or subject matter on account of which the commission seeks an order is                                        
11 within the jurisdiction of the court to which application is made, such application may                                 
12 be to a court in the state or subdivision on behalf of which the audit is being made or a                               
13 court in the state in which the object of the order being sought is situated. The                                       
14 provisions of this paragraph apply only to courts in a state that has adopted this                                      
15       Article.                                                                                                          
16 5. The commission may decline to perform any audit requested if it finds that                                           
17 its available personnel or other resources are insufficient for the purpose or that, in the                             
18 terms requested, the audit is impracticable of satisfactory performance. If the                                         
19 commission, on the basis of its experience, has reason to believe that an audit of a                                    
20 particular taxpayer, either at a particular time or on a particular schedule, would be of                               
21 interest to a number of party states or their subdivisions, it may offer to make the audit                              
22 or audits, the offer to be contingent on sufficient participation therein as determined by                              
23       the commission.                                                                                                   
24 6. Information obtained by any audit pursuant to this Article shall be                                                  
25 confidential and available only for tax purposes to party states, their subdivisions or                                 
26 the United States. Availability of information shall be in accordance with the laws of                                  
27 the states or subdivisions on whose account the commission performs the audit, and                                      
28 only through the appropriate agencies or officers of such states or subdivisions.                                       
29 Nothing in this Article shall be construed to require any taxpayer to keep records for                                  
30       any period not otherwise required by law.                                                                         
31 7. Other arrangements made or authorized pursuant to laws for cooperative                                               

01       audit by or on behalf of the party states or any of their subdivisions are not superseded                         
02       or invalidated by this Article.                                                                                   
03            8. In no event shall the commission make any charge against a taxpayer for an                                
04       audit.                                                                                                            
05            9. As used in this Article, "tax," in addition to the meaning ascribed to it in                              
06       Article II, means any tax or license fee imposed in whole or in part for revenue                                  
07       purposes.                                                                                                         
08                             ARTICLE IX.                                                                                 
09                            ARBITRATION.                                                                                 
10 1. Whenever the commission finds a need for settling disputes concerning                                                
11 apportionments and allocations by arbitration, it may adopt a regulation placing this                                   
12       Article in effect, notwithstanding the provisions of Article VII.                                                 
13 2. The commission shall select and maintain an arbitration panel composed of                                            
14 officers and employees of state and local governments and private persons who shall                                     
15       be knowledgeable and experienced in matters of tax law and administration.                                        
16 3. Whenever a taxpayer who has elected to employ Article IV, or whenever the                                            
17 laws of the party state or subdivision thereof are substantially identical with the                                     
18 relevant provisions of Article IV, the taxpayer, by written notice to the commission                                    
19 and to each party state or subdivision thereof that would be affected, may secure                                       
20 arbitration of an apportionment or allocation, if the taxpayer is dissatisfied with the                                 
21 final administrative determination of the tax agency of the state or subdivision with                                   
22 respect thereto on the ground that it would subject the taxpayer to double or multiple                                  
23 taxation by two or more party states or subdivisions thereof. Each party state and                                      
24 subdivision thereof hereby consents to the arbitration as provided herein, and agrees to                                
25       be bound thereby.                                                                                                 
26 4. The arbitration board shall be composed of one person selected by the                                                
27 taxpayer, one by the agency or agencies involved, and one member of the                                                 
28 commission's arbitration panel. If the agencies involved are unable to agree on the                                     
29 person to be selected by them, such person shall be selected by lot from the total                                      
30 membership of the arbitration panel. The two persons selected for the board in the                                      
31 manner provided by the foregoing provisions of this paragraph shall jointly select the                                  

01 third member of the board. If they are unable to agree on the selection, the third                                      
02 member shall be selected by lot from among the total membership of the arbitration                                      
03 panel. No member of a board selected by lot shall be qualified to serve if the member                                   
04 is an officer or employee or is otherwise affiliated with any party to the arbitration                                  
05 proceeding. Residence within the jurisdiction of a party to the arbitration proceeding                                  
06       shall not constitute affiliation within the meaning of this paragraph.                                            
07 5. The board may sit in any state or subdivision party to the proceeding, in the                                        
08 state of the taxpayer's incorporation, residence or domicile, in any state where the                                    
09 taxpayer does business, or in any place that it finds most appropriate for gaining                                      
10       access to evidence relevant to the matter before it.                                                              
11 6. The board shall give due notice of the times and places of its hearings. The                                         
12 parties shall be entitled to be heard, to present evidence, and to examine and cross-                                   
13       examine witnesses. The board shall act by majority vote.                                                          
14 7. The board shall have power to administer oaths, take testimony, subpoena                                             
15 and require the attendance of witnesses and the production of accounts, books, papers,                                  
16 records, and other documents, and issue commissions to take testimony. Subpoenas                                        
17 may be signed by any member of the board. In case of failure to obey a subpoena, and                                    
18 upon application by the board, any judge of a court of competent jurisdiction of the                                    
19 state in which the board is sitting or in which the person to whom the subpoena is                                      
20 directed may be found may make an order requiring compliance with the subpoena,                                         
21 and the court may punish failure to obey the order as a contempt. The provisions of                                     
22       this paragraph apply only in states that have adopted this Article.                                               
23 8. Unless the parties otherwise agree the expenses and other costs of the                                               
24 arbitration shall be assessed and allocated among the parties by the board in such                                      
25 manner as it may determine. The commission shall fix a schedule of compensation for                                     
26 members of arbitration boards and of other allowable expenses and costs. No officer                                     
27 or employee of a state or local government who serves as a member of a board shall be                                   
28 entitled to compensation therefor unless the member is required on account of the                                       
29 service as a board member to forego the regular compensation attaching to the public                                    
30       employment, but any such board member shall be entitled to expenses.                                              
31 9. The board shall determine the disputed apportionment or allocation and any                                           

01       matters necessary thereto. The determinations of the board shall be final for purposes                            
02       of making the apportionment or allocation, but for no other purpose.                                              
03 10. The board shall file with the commission and with each tax agency                                                   
04 represented in the proceeding: the determination of the board; the board's written                                      
05 statement of its reasons therefor; the record of the board's proceedings; and any other                                 
06       documents required by the arbitration rules of the commission to be filed.                                        
07            11. The commission shall publish the determinations of boards together with                                  
08       the statements of the reasons therefor.                                                                           
09            12. The commission shall adopt and publish rules of procedure and practice                                   
10 and shall file a copy of such rules and of any amendment thereto with the appropriate                                   
11       agency or officer in each of the party states.                                                                    
12 13. Nothing contained herein shall prevent at any time a written compromise of                                          
13 any matter or matters in dispute, if otherwise lawful, by the parties to the arbitration                                
14       proceedings.                                                                                                      
15                             ARTICLE X.                                                                                  
16                  ENTRY INTO FORCE AND WITHDRAWAL.                                                                       
17 1. This compact shall enter into force when enacted into law by any seven                                               
18 states. Thereafter, this compact shall become effective as to any other state upon its                                  
19 enactment thereof. The commission shall arrange for notification of all party states                                    
20       whenever there is a new enactment of the compact.                                                                 
21 2. Any party state may withdraw from this compact by enacting a statute                                                 
22 repealing the same. No withdrawal shall affect any liability already incurred by or                                     
23       chargeable to a party state prior to the time of such withdrawal.                                                 
24 3. No proceeding commenced before an arbitration board prior to the                                                     
25 withdrawal of a state and to which the withdrawing state or any subdivision thereof is                                  
26 a party shall be discontinued or terminated by the withdrawal, nor shall the board                                      
27 thereby lose jurisdiction over any of the parties to the proceeding necessary to make a                                 
28       binding determination therein.                                                                                    
29                             ARTICLE XI.                                                                                 
30                EFFECT ON OTHER LAWS AND JURISDICTION.                                                                   
31            Nothing in this compact shall be construed to:                                                               

01 (a)  Affect the power of any state or subdivision thereof to fix rates of taxation,                                     
02       except that a party state shall be obligated to implement Article III 2 of this compact.                          
03 (b)  Apply to any tax or fixed fee imposed for the registration of a motor                                              
04 vehicle or any tax on motor fuel, other than a sales tax: provided that the definition of                               
05 "tax" in Article VIII 9 may apply for the purposes of that Article and the commission's                                 
06       powers of study and recommendation pursuant to Article VI 3 may apply.                                            
07 (c)  Withdraw or limit the jurisdiction of any state or local court or                                                  
08 administrative officer or body with respect to any person, corporation or other entity                                  
09 or subject matter, except to the extent that such jurisdiction is expressly conferred by                                
10       or pursuant to this compact upon another agency or body.                                                          
11            (d)  Supersede or limit the jurisdiction of any court of the United States.                                  
12                             ARTICLE XII.                                                                                
13                   CONSTRUCTION AND SEVERABILITY.                                                                        
14 This compact shall be liberally construed so as to effectuate the purposes                                              
15 thereof. The provisions of this compact shall be severable and if any phrase, clause,                                   
16 sentence, or provision of this compact is declared to be contrary to the constitution of                                
17 any state or of the United States or the applicability thereof to any government,                                       
18 agency, person or circumstance is held invalid, the validity of the remainder of this                                   
19 compact and the applicability thereof to any government, agency, person or                                              
20 circumstance shall not be affected thereby. If this compact shall be held contrary to the                               
21 constitution of any state participating therein, the compact shall remain in full force                                 
22 and effect as to the remaining party states and in full force and effect as to the state                                
23       affected as to all severable matters.                                                                             
24    * Sec. 4. AS 43.20 is amended by adding a new section to read:                                                     
25 Sec. 43.20.019. Tax on income attributable to a qualified entity. (a) Each                                            
26 taxable year, a tax is imposed on the entire taxable income derived from sources in the                                 
27       state of every qualified entity. The tax is computed as follows:                                                  
28          If the taxable income is:    Then the tax is:                                                                  
29          Less than $1,000,000         zero                                                                              
30          $1,000,000 but less than $2,000,000 5 percent of the                                                           
31                                          taxable income over $1,000,000                                                 

01          $2,000,000 but less than $3,000,000 $50,000 plus 6 percent of the                                              
02                                          taxable income over $2,000,000                                                 
03          $3,000,000 but less than $4,000,000 $110,000 plus 7 percent of the                                             
04                                          taxable income over $3,000,000                                                 
05          $4,000,000 but less than $5,000,000 $180,000 plus 8 percent of the                                             
06                                          taxable income over $4,000,000                                                 
07          $5,000,000 or more           $260,000 plus 9.4 percent of the                                                  
08                                          taxable income over $5,000,000.                                                
09            (b)  For purposes of calculating taxable income under this section,                                          
10 (1)  taxable income of a qualified entity is determined under                                                           
11 AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by                                  
12 26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that section read on January 1,                                        
13       2026;                                                                                                             
14 (2)  notwithstanding AS 43.20.021 and AS 43.20.036, the taxpayer may                                                    
15 not apply as a credit or deduction against tax liability a credit or deduction allowed as                               
16 to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the taxpayer                                      
17 may take a credit or deduction allowed for a C corporation under (1) of this                                            
18       subsection.                                                                                                       
19 (c)  The tax under this section does not apply to a corporation subject to tax                                          
20 under AS 43.20.011 or to an entity that is part of a unitary business with a corporation                                
21       subject to tax under AS 43.20.011.                                                                                
22 (d)  For the purpose of determining the tax due under this section, the                                                 
23       department shall                                                                                                  
24 (1)  aggregate the taxable income of two or more entities if the                                                        
25 department determines that, without the provisions of this section, the taxable income                                  
26       would reasonably be expected to be attributed to a single entity; and                                             
27 (2)  except as provided in (c) of this section, include in the calculation                                              
28 of taxable income of the qualified entity income that is attributable to an entity that is                              
29       part of a unitary business with the qualified entity paying tax under this section.                               
30            (e)  In this section,                                                                                        
31                 (1)  "qualified entity" means a                                                                         

01                      (A)  sole proprietorship;                                                                          
02                      (B)  partnership;                                                                                  
03                      (C)  limited liability company; or                                                                 
04                      (D)  entity that has elected to file federal returns under 26                                      
05            U.S.C. 1361 - 1379 (Internal Revenue Code);                                                                  
06                 (2)  "taxable income" means income from the production of oil or gas                                    
07       from a lease or property in the state or from the transportation of oil or gas by pipeline                        
08       in the state.                                                                                                     
09    * Sec. 5. AS 43.20.030(a) is amended to read:                                                                      
10 (a)  If a taxpayer [CORPORATION], or a partnership that has a taxpayer                                          
11 [CORPORATION] as a partner, is required to make a return under the provisions of                                        
12 the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30                              
13       days after the federal return is required to be filed, a return setting out                                       
14 (1)  the amount of tax due under this chapter, less credits claimed                                                     
15       against the tax; and                                                                                              
16 (2)  other information for the purpose of carrying out the provisions of                                                
17       this chapter that the department requires.                                                                        
18    * Sec. 6. AS 43.20.031(i) is amended to read:                                                                      
19 (i)  A taxpayer that [CORPORATION WHICH] is a member of a group of                                                  
20 unitary corporations or entities that [WHICH] collectively has income from business                                 
21 activity taxable both inside and outside the state, or income from other sources both                                   
22 inside and outside the state, shall determine its income from sources in this state by                                  
23       use of the combined method of accounting.                                                                         
24    * Sec. 7. AS 43.20.031 is amended by adding a new subsection to read:                                              
25 (j)  For purposes of calculating income under this chapter, a taxpayer may                                              
26 deduct from income a payment to the shareholder, owner, member, or partner of a                                         
27       qualified entity, as that term is defined in AS 43.20.019(e), if                                                  
28 (1)  the shareholder, owner, member, or partner is a taxpayer under this                                                
29       chapter;                                                                                                          
30                 (2)  the payment does not include a transfer of property; and                                           
31 (3)  the payment is included in the shareholder's, owner's, member's, or                                                

01       partner's income for the purposes of this chapter.                                                                
02    * Sec. 8. AS 43.20.143(a) is amended to read:                                                                      
03            (a)  All apportionable [BUSINESS] income of water transportation carriers                                
04       shall be apportioned to this state in accordance with AS 43.19 (Multistate Tax                                    
05       Compact) as modified by the following:                                                                            
06 (1)  the numerator of the property factor is the sum of the value for                                                   
07 property in a fixed location, including buildings and land used in the business, and                                    
08 intrastate equipment and personal property determined according to AS 43.19                                             
09 (Multistate Tax Compact), and the value of interstate mobile property determined on a                                   
10 days-spent-in-ports basis as provided in (4) of this subsection; the denominator of the                                 
11       property factor is determined according to AS 43.19 (Multistate Tax Compact);                                     
12 (2)  the numerator of the payroll factor is the sum of the wages and                                                    
13 salaries of employees assigned to fixed locations determined according to AS 43.19                                      
14 (Multistate Tax Compact) and the wages and salaries of employees assigned to                                            
15 interstate mobile property determined on a days-spent-in-ports basis as provided in (4)                                 
16 of this subsection; the denominator of the payroll factor is determined in accordance                                   
17       with AS 43.19 (Multistate Tax Compact);                                                                           
18 (3)  the numerator of the sales factor is the sum of all revenues from                                                  
19 intrastate activities and revenues from interstate activities determined on a days-spent-                               
20 in-ports basis as provided in (4) of this subsection; the denominator is determined in                                  
21       accordance with AS 43.19 (Multistate Tax Compact);                                                                
22 (4)  the portions of the numerator of the property, payroll, and sales                                                  
23 factors which are directly related to interstate mobile property operations are                                         
24 determined by a ratio which the number of days spent in ports inside the state bears to                                 
25 the total number of days spent in ports inside and outside the state; the term "days                                    
26 spent in ports" does not include periods when ships are tied up because of strikes or                                   
27 withheld from Alaska service for repairs, or because of seasonal reduction of service;                                  
28       days in port are computed by dividing the total number of hours in all ports by 24.                               
29    * Sec. 9. AS 43.20.144(a) is amended to read:                                                                      
30 (a)  All apportionable [BUSINESS] income of a taxpayer engaged in the                                               
31 production of oil or gas from a lease or property in this state or engaged in the                                       

01       transportation of oil or gas by pipeline in this state shall be apportioned to this state in                      
02       accordance with AS 43.19 (Multistate Tax Compact) as modified by this section.                                    
03    * Sec. 10. AS 43.20.144(b) is amended to read:                                                                     
04            (b)  A taxpayer's apportionable [BUSINESS] income to be apportioned under                                
05       this section to the state shall be the federal taxable income of the taxpayer's                                   
06       consolidated business for the tax period, except that                                                             
07                 (1)  taxes based on or measured by net income that are deducted in the                                  
08       determination of the federal taxable income shall be added back; the tax levied and                               
09       paid under AS 43.55 may not be added back;                                                                        
10 (2)  intangible drilling and development costs that are deducted as                                                     
11 expenses under 26 U.S.C. 263(c) (Internal Revenue Code) in the determination of the                                     
12 federal taxable income shall be capitalized and depreciated as if the option to treat                                   
13 them as expenses under 26 U.S.C. 263(c) (Internal Revenue Code) had not been                                            
14       exercised;                                                                                                        
15 (3)  depletion deducted on the percentage depletion basis under 26                                                      
16 U.S.C. 613 (Internal Revenue Code) in the determination of the federal taxable income                                   
17 shall be recomputed and deducted on the cost depletion basis under 26 U.S.C. 612                                        
18       (Internal Revenue Code); and                                                                                      
19 (4)  depreciation shall be computed on the basis of 26 U.S.C. 167                                                       
20       (Internal Revenue Code) as that section read on June 30, 1981.                                                    
21    * Sec. 11. AS 43.20.144(c) is amended to read:                                                                     
22 (c)  A taxpayer's apportionable [BUSINESS] income shall be apportioned to                                           
23 this state by multiplying the taxpayer's income determined under (b) of this section by                                 
24       the apportionment factor applicable to the taxpayer among the following factors:                                  
25 (1)  the apportionment factor of a taxpayer subject to this section but                                                 
26 not engaged in the production of oil and gas, or of gas only, as appropriate, from a                                    
27 lease or property in this state during the tax period is a fraction, the numerator of                                   
28 which is the sum of the property factor under AS 43.19 (Multistate Tax Compact) and                                     
29 the sales factor under (d) of this section for the taxpayer for that tax period, and the                                
30       denominator of which is two;                                                                                      
31 (2)  the apportionment factor of a taxpayer subject to this section but                                                 

01 not engaged in the pipeline transportation of oil or gas in this state during the tax                                   
02 period is a fraction, the numerator of which is the sum of the property factor under (e)                                
03 of this section and the extraction factor under (f) of this section for the taxpayer for the                            
04       tax period, and the denominator of which is two;                                                                  
05 (3)  the apportionment factor of a taxpayer engaged both in the                                                         
06 production of oil or gas from a lease or property in this state and in the pipeline                                     
07 transportation of oil or gas in this state during the tax period is a fraction, the                                     
08 numerator of which is the sum of the sales factor under (d) of this section, the property                               
09 factor under (e) of this section, and the extraction factor under (f) of this section for                               
10       the taxpayer for the tax period, and the denominator of which is three.                                           
11    * Sec. 12. AS 43.20.145(e) is amended to read:                                                                     
12 (e)  The department may require a corporation that files under (a) of this                                              
13 section to file a report under AS 43.20.142, [AND] 43.20.143, and 43.20.148 prepared                            
14       without regard to this section if the corporation or an affiliated 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. 13. AS 43.20 is amended by adding a new section to article 2 to read:                                       
21 Sec. 43.20.148. Highly digitized businesses. (a) All apportionable income of a                                        
22 taxpayer engaged in a highly digitized business in the state shall be apportioned to this                               
23 state in accordance with AS 43.19 (Multistate Tax Compact) as modified by this                                          
24       section.                                                                                                          
25 (b)  The apportionment factor of a taxpayer subject to this section is the sales                                        
26 factor. The sales factor is determined in accordance with AS 43.19 (Multistate Tax                                      
27       Compact).                                                                                                         
28 (c)  A taxpayer is engaged in a highly digitized business in this state when 50                                         
29 percent or more of the taxpayer's sales in this state consist of any combination of sales                               
30       of                                                                                                                
31 (1)  intangible property delivered by electronic transmission in this                                                   

01       state;                                                                                                            
02                 (2)  services delivered by electronic transmission in this state;                                       
03                 (3)  services related to computers, electronic transmissions, or Internet                               
04       technology delivered in this state; or                                                                            
05                 (4)  tangible personal property delivered in this state from Internet                                   
06       sales, if the Internet is the primary mode of customer access in this state.                                      
07            (d)  The department may require a taxpayer to apportion income under this                                    
08       section if the department determines that the taxpayer's business activity in this state                          
09       may be otherwise characterized as a highly digitized business.                                                    
10            (e)  This section does not apply to a                                                                        
11 (1)  public utility allocating and apportioning income under                                                            
12       AS 43.20.146; or                                                                                                  
13                 (2)  utility furnishing telecommunications services.                                                    
14            (f)  In this section,                                                                                        
15 (1)  "delivered" includes delivered to or on behalf of a customer or                                                    
16       delivered through a customer;                                                                                     
17 (2)  "electronic transmission" includes transmission by wire, lines,                                                    
18 cable, fiber optics, electronic signals, satellite transmission, audio or radio waves, or                               
19 similar means, whether or not the provider owns, leases, or otherwise controls the                                      
20       transmission equipment;                                                                                           
21 (3)  "intangible property" includes licenses and sublicenses for data                                                   
22 access, streaming or other electronic transmission of music, videos, books, games, or                                   
23       other digital goods, and remote access software;                                                                  
24 (4)  "Internet sales" includes sales through an Internet website,                                                       
25 application, or other electronic means, including sales made by computer, tablet,                                       
26       telephone, or other similar device.                                                                               
27    * Sec. 14. AS 43.45 is amended by adding new sections to read:                                                     
28                        Chapter 45. Education Tax.                                                                     
29 Sec. 43.45.011. Tax imposed. (a) A tax is imposed on wages and on net                                                 
30       earnings from self-employment of every                                                                            
31                 (1)  resident individual; and                                                                           

01                 (2)  nonresident and part-year resident individual with income from a                                   
02       source in the state.                                                                                              
03            (b)  For an individual whose wages, net earnings from self-employment, or                                    
04       combined wages and net earnings from self-employment are                                                          
05                 (1)  less than $30,000, the tax is $20 a year;                                                          
06                 (2)  $30,000 or more, but less than $90,000, the tax is $30 a year;                                     
07                 (3)  $90,000 or more, but less than $150,000, the tax is $40 a year;                                    
08                 (4)  $150,000 or more, the tax is $60 a year.                                                           
09            (c)  For purposes of (b) of this section, the wages and the net earnings from                                
10       self-employment of a                                                                                              
11 (1)  resident are the total annual wages and the net earnings from self-                                                
12       employment of the resident;                                                                                       
13 (2)  nonresident or part-year resident are the annual wages and the net                                                 
14 earnings from self-employment of the nonresident or part-year resident that are                                         
15       attributable to a source in the state.                                                                            
16 Sec. 43.45.021. Collection of tax by employer. (a) An employer shall deduct                                           
17 and withhold one-half of the estimated taxes due under AS 43.45.011 from an                                             
18 employee's wages subject to withholding under 26 U.S.C. 3401 - 3406 from each of                                        
19 the third and fourth regular payrolls of the calendar year. If the employee's third and                                 
20 fourth payrolls are insufficient to cover the estimated tax due, the employer shall                                     
21 continue to deduct and withhold from subsequent payrolls until the tax due under this                                   
22 chapter is fully withheld. The employer shall withhold any outstanding amount of tax                                    
23       due under AS 43.45.011 from the final regular payroll of the calendar year.                                       
24 (b)  An employer is liable for the tax required to be withheld from an employee                                         
25 unless the employer can demonstrate that the employer relied on proof provided by the                                   
26 employee that the total tax for the calendar year imposed under AS 43.45.011 had                                        
27 already been withheld under this section or paid under AS 43.45.031. A deduction of                                     
28 the tax may not be made from the wages of an individual who provides proof to the                                       
29 employer that the entire tax imposed under AS 43.45.011 on that individual for the                                      
30 calendar year has already been withheld or paid under AS 43.45.031. The department                                      
31 may impose a civil penalty on an employer in an amount up to five times the amount                                      

01       of tax due from employees but not remitted to the department. The penalty shall be                                
02       imposed in the manner provided by AS 43.05.245.                                                                   
03 (c)  Tax withheld by an employer becomes due and shall be paid by an                                                    
04 employer to the department in accordance with regulations adopted by the department.                                    
05 (d)  An employer shall maintain a record of the amount deducted from the                                                
06 wages of each employee and shall furnish an annual statement of the deductions to                                       
07 each employee and to the department in accordance with regulations adopted by the                                       
08       department.                                                                                                       
09            (e)  The department shall, if it will result in cost savings for the state in the                            
10 administration of the tax, for employers in the administration of the tax, or for both,                                 
11 coordinate collection and reporting of the tax imposed in this chapter with the                                         
12 collection and reporting of employment security contributions by the Department of                                      
13 Labor and Workforce Development, including permitting the Department of Labor                                           
14 and Workforce Development to collect the tax payments and remit them to the                                             
15       department.                                                                                                       
16 Sec. 43.45.031. Payment of tax by self-employed individual. A self-                                                   
17 employed individual shall remit to the department the tax due under AS 43.45.011 in                                     
18 accordance with regulations adopted by the department until the entire tax has been                                     
19       paid.                                                                                                             
20 Sec. 43.45.041. Refund of overpayments. (a) If an individual pays to the                                            
21 department, directly or through withholding by an employer, an amount exceeding the                                     
22 total tax imposed under this chapter during a calendar year and the individual applies                                  
23 for a refund in accordance with regulations adopted by the department, the department                                   
24       shall refund the overpayment to the individual.                                                                   
25 (b)  Interest on an overpayment may not be allowed under AS 43.05.280 if the                                            
26 department refunds the overpayment within 90 days after the date the individual                                         
27       correctly files the refund claim.                                                                                 
28 (c)  The Department of Revenue may adopt regulations to coordinate refunds                                              
29 of overpayments under this section with refunds of employment security contributions                                    
30       under AS 23.20.165.                                                                                               
31 (d)  An individual may apply for a refund under this section only during the                                            

01       calendar year immediately following the calendar year in which the excess was paid.                               
02 Sec. 43.45.051. Report of payments to self-employed individuals. A person                                             
03 required to report a payment to a self-employed individual to the federal government                                    
04 under 26 U.S.C. shall also report that payment to the department in accordance with                                     
05       regulations adopted by the department.                                                                            
06            Sec. 43.45.061. Accounting of tax proceeds. The tax and penalties collected                                
07       by the department under this chapter shall be deposited into the general fund and                                 
08       accounted for separately.                                                                                         
09            Sec. 43.45.099. Definitions. In this chapter,                                                              
10 (1)  "employee" has the meaning given in 26 U.S.C. 3401, as that                                                        
11       section read on January 1, 2026;                                                                                  
12 (2)  "employer" has the meaning given in 26 U.S.C. 3401, as that                                                        
13       section read on January 1, 2026;                                                                                  
14 (3)  "net earnings from self-employment" has the meaning given in 26                                                    
15       U.S.C. 1402, as that section read on January 1, 2026;                                                             
16 (4)  "wages" has the meaning given in 26 U.S.C. 3401, as that section                                                   
17       read on January 1, 2026.                                                                                          
18    * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read:                                                      
19 (e)  There is levied on the producer of oil or gas a tax for all oil and gas                                            
20 produced each calendar year from each lease or property in the state, less any oil and                                  
21 gas the ownership or right to which is exempt from taxation or constitutes a                                            
22 landowner's royalty interest or for which a tax is levied by AS 43.55.014. Except as                                    
23       otherwise provided under (j), (k), (o), and (p) of this section, the tax for                                      
24 (1)  oil is equal to 17.5 percent of the gross value at the point of                                                    
25 production of the taxable oil; if the gross value at the point of production of oil                                     
26 produced from a lease or property is less than zero, that gross value at the point of                                   
27       production is considered zero for purposes of this paragraph;                                                     
28 (2)  gas is equal to 13 percent of the gross value at the point of                                                      
29 production of the taxable gas; if the gross value at the point of production of gas                                     
30 produced from a lease or property is less than zero, that gross value at the point of                                   
31       production is considered zero for purposes of this paragraph.                                                     

01    * Sec. 16. AS 43.55.011(p) is amended to read:                                                                     
02 (p)  For the seven years immediately following the commencement of                                                      
03 commercial production of oil or gas produced from leases or properties in the state                                     
04 that are outside the Cook Inlet sedimentary basin and that do not include land located                                  
05 north of 68 degrees North latitude, where that commercial production began after                                        
06 December 31, 2012, and before January 1, 2027, the levy of tax under (e) of this                                        
07 section for oil and gas is [MAY NOT EXCEED] four percent of the gross value at the                                  
08       point of production.                                                                                              
09    * Sec. 17. AS 43.55.014(b) is amended to read:                                                                     
10 (b)  A production tax levied by this section is equal to 13 percent of the gas                                          
11 otherwise taxable under AS 43.55.011 [AS 43.55.011(e)(3)] produced from each oil                                    
12 and gas lease to which an effective election under (a) of this section applies, when and                                
13 as that gas is produced. The producer shall pay the tax in gas by delivering that 13                                    
14       percent of the gas to the state at the point of production.                                                       
15    * Sec. 18. AS 43.55.020(a) is repealed and reenacted to read:                                                      
16 (a)  Unless otherwise specified under a regulation adopted by the department                                            
17 under (n) of this section, a producer subject to tax under AS 43.55.011 shall pay an                                    
18 installment payment of the estimated tax levied by AS 43.55.011, net of any tax                                         
19 credits applied as allowed by law. The payment is due for each month of the calendar                                    
20 year on the last day of the following month. The amount of the installment payment is                                   
21 the sum of the following amounts, less 1/12 of the tax credits that are allowed by law                                  
22 to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but the                                  
23       amount of the installment payment may not be less than zero:                                                      
24 (1)  for oil produced from leases or properties in the state, 17.5 percent                                              
25 of the gross value at the point of production of the oil produced from the leases or                                    
26 properties during the month for which the installment payment is calculated, but not                                    
27       less than zero;                                                                                                   
28 (2)  for gas produced from a lease or property in the state, 13 percent of                                              
29 the gross value at the point of production of the oil produced from the leases or                                       
30 properties during the month for which the installment payment is calculated, but not                                    
31       less than zero.                                                                                                   

01    * Sec. 19. AS 43.55.020(g) is amended to read:                                                                     
02            (g)  Notwithstanding any contrary provision of AS 43.05.225,                                                 
03 [(1)  BEFORE JANUARY 1, 2014, AN UNPAID AMOUNT OF AN                                                                    
04 INSTALLMENT PAYMENT REQUIRED UNDER (a)(1) - (3) OF THIS SECTION                                                         
05 THAT IS NOT PAID WHEN DUE BEARS INTEREST (A) AT THE RATE                                                                
06 PROVIDED FOR AN UNDERPAYMENT UNDER 26 U.S.C. 6621 (INTERNAL                                                             
07 REVENUE CODE), AS AMENDED, COMPOUNDED DAILY, FROM THE DATE                                                              
08 THE INSTALLMENT PAYMENT IS DUE UNTIL MARCH 31 FOLLOWING THE                                                             
09 CALENDAR YEAR OF PRODUCTION, AND (B) AS PROVIDED FOR A                                                                  
10 DELINQUENT TAX UNDER AS 43.05.225 AFTER THAT MARCH 31;                                                                  
11 INTEREST ACCRUED UNDER (A) OF THIS PARAGRAPH THAT REMAINS                                                               
12 UNPAID AFTER THAT MARCH 31 IS TREATED AS AN ADDITION TO TAX                                                             
13 THAT BEARS INTEREST UNDER (B) OF THIS PARAGRAPH; AN UNPAID                                                              
14 AMOUNT OF TAX DUE UNDER (a)(4) OF THIS SECTION THAT IS NOT PAID                                                         
15 WHEN DUE BEARS INTEREST AS PROVIDED FOR A DELINQUENT TAX                                                                
16       UNDER AS 43.05.225;                                                                                               
17 (2)  ON AND AFTER JANUARY 1, 2014,] an unpaid amount of an                                                              
18 installment payment required under (a) [(a)(3), (5), (6), OR (7)] of this section that is                           
19 not paid when due bears interest (1) [(A)] at the rate provided for an underpayment                                 
20 under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from                                        
21 the date the installment payment is due until March 31 following the calendar year of                                   
22 production, and (2) [(B)] as provided for a delinquent tax under AS 43.05.225 after                                 
23 that March 31; interest accrued under (1) [(A)] of this subsection [PARAGRAPH]                                  
24 that remains unpaid after that March 31 is treated as an addition to tax that bears                                     
25 interest under (2) [(B)] of this paragraph; an unpaid amount of tax due under (a)                               
26 [(a)(4)] of this section that is not paid when due bears interest as provided for a                                     
27       delinquent tax under AS 43.05.225.                                                                                
28    * Sec. 20. AS 43.55.020(h) is amended to read:                                                                     
29            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
30 (1)  an overpayment of an installment payment required under (a)                                                    
31 [(a)(1), (2), (3), (5), (6), OR (7)] of this section bears interest at the rate provided for                            

01       an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended,                                          
02       compounded daily, from the later of the date the installment payment is due or the date                           
03       the overpayment is made, until the earlier of                                                                     
04                      (A)  the date it is refunded or is applied to an underpayment; or                                  
05                      (B)  March 31 following the calendar year of production;                                           
06 (2)  except as provided under (1) of this subsection, interest with                                                     
07 respect to an overpayment is allowed only on any net overpayment of the payments                                        
08 required under (a) of this section that remains after the later of March 31 following the                               
09 calendar year of production or the date that the statement required under                                               
10       AS 43.55.030(a) is filed;                                                                                         
11 (3)  interest is allowed under (2) of this subsection only from a date that                                             
12 is 90 days after the later of March 31 following the calendar year of production or the                                 
13 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed                                
14       if the overpayment was refunded within the 90-day period;                                                         
15 (4)  interest under (2) and (3) of this subsection is paid at the rate and in                                           
16       the manner provided in AS 43.05.225(1).                                                                           
17    * Sec. 21. AS 43.55.020(i) is amended to read:                                                                     
18 (i)  Notwithstanding any contrary provision of AS 43.05.225 or (g) or (h) of                                            
19 this section, if the amount of a tax payment, including an installment payment, due                                     
20 under (a) [(a)(1) - (4)] of this section is affected by the retroactive application of a                            
21 regulation adopted under this chapter, the department shall determine whether the                                       
22 retroactive application of the regulation caused an underpayment or an overpayment of                                   
23       the amount due and adjust the interest due on the affected payment as follows:                                    
24 (1)  if an underpayment of the amount due occurred, the department                                                      
25 shall waive interest that would otherwise accrue for the underpayment before the first                                  
26 day of the second month following the month in which the regulation became                                              
27       effective, if                                                                                                     
28 (A)  the department determines that the producer's                                                                      
29 underpayment resulted because the regulation was not in effect when the                                                 
30            payment was due; and                                                                                         
31 (B)  the producer demonstrates that it made a good faith                                                                

01            estimate of its tax obligation in light of the regulations then in effect when the                           
02            payment was due and paid the estimated tax;                                                                  
03 (2)  if an overpayment of the amount due occurred and the department                                                    
04 determines that the producer's overpayment resulted because the regulation was not in                                   
05 effect when the payment was due, the obligation for a refund for the overpayment does                                   
06       not begin to accrue interest earlier than the following, as applicable:                                           
07                      (A)  except as otherwise provided under (B) of this paragraph,                                     
08            the first day of the second month following the month in which the regulation                                
09            became effective;                                                                                            
10 (B)  90 days after an amended statement under AS 43.55.030(a)                                                           
11 and an application to request a refund of production tax paid is filed, if the                                          
12 overpayment was for a period for which an amended statement under                                                       
13 AS 43.55.030(a) was required to be filed before the regulation became                                                   
14            effective.                                                                                                   
15    * Sec. 22. AS 43.55.020(l) is amended to read:                                                                     
16 (l)  In [FOR OIL AND GAS PRODUCED ON AND AFTER JANUARY 1,                                                           
17 2022, IN] making settlement with the royalty owner for oil and gas that is taxable                                      
18 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable                                       
19 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the                                
20 time the tax becomes due to the amount of the tax paid. If the total deductions of                                      
21 installment payments of estimated tax for a calendar year exceed the actual tax for that                                
22 calendar year, the producer shall, before April 1 of the following year, refund the                                     
23 excess to the royalty owner. In making settlement with the royalty owner for gas that                                   
24 is taxable under AS 43.55.014, the producer may deduct the amount of the gas paid as                                    
25 in-kind tax on taxable royalty gas or may deduct the gross value at the point of                                        
26 production of the gas paid as in-kind tax on taxable royalty gas. Unless otherwise                                      
27 agreed between the producer and the royalty owner, the amount of the tax paid under                                     
28 AS 43.55.011(e) on taxable royalty oil for a calendar year, other than oil the                                          
29 ownership or right to which constitutes a landowner's royalty interest, is considered to                                
30 be the gross value at the point of production of the taxable royalty oil produced during                                
31       the calendar year multiplied by a figure that is a quotient, in which                                             

01                 (1)  the numerator is the producer's total tax liability under                                          
02       AS 43.55.011(e) [AS 43.55.011(e)(3)(A)] for the calendar year of production; and                              
03                 (2)  the denominator is the total gross value at the point of production                                
04       of the oil taxable under AS 43.55.011(e) produced by the producer from all leases and                             
05       properties in the state during the calendar year.                                                                 
06    * Sec. 23. AS 43.55.020 is amended by adding a new subsection to read:                                             
07 (n)  The department shall adopt regulations to determine the monthly tax                                                
08 payments under this section for oil and gas subject to AS 43.55.011(i), (j), (k), (o), and                              
09 (p). The regulations adopted under this subsection shall, when possible, be modeled                                     
10       after AS 43.55.020(a), as that section read on January 1, 2026.                                                   
11    * Sec. 24. AS 43.55.028(a) is amended to read:                                                                     
12 (a)  The oil and gas tax credit fund is established as a separate fund of the state.                                    
13 The purpose of the fund is to purchase transferable tax credit certificates issued under                                
14 former AS 43.55.023 and production tax credit certificates issued under former                                  
15 AS 43.55.025 and to pay refunds and payments claimed under AS 43.20.046,                                                
16 43.20.047, or 43.20.053. The oil and gas tax credit fund established under this                                         
17 subsection may not be used to purchase a tax credit certificate for a credit earned                                     
18       under this chapter for activity occurring on or after July 1, 2017.                                               
19    * Sec. 25. AS 43.55.028(e) is amended to read:                                                                     
20 (e)  The department, on the written application of a person to whom a                                                   
21 transferable tax credit certificate has been issued under former AS 43.55.023(d) or                                 
22 former AS 43.55.023(m) for an expenditure incurred before July 1, 2017, or to whom                                      
23 a production tax credit certificate has been issued under former AS 43.55.025(f) for                                
24 an expenditure incurred before July 1, 2017, may use either available money in the oil                                  
25 and gas tax credit fund or, subject to appropriation by the legislature, money disbursed                                
26 to the commissioner, or both, to purchase, in whole or in part, the certificate. The                                    
27 department may not purchase with money from the oil and gas tax credit fund a total                                     
28 of more than $70,000,000 in tax credit certificates from a person in a calendar year.                                   
29 The total amount of purchases made by the department with money from the oil and                                        
30 gas tax credit fund from a person in a year may not exceed the assumed payment                                          
31 amount for each year, as calculated under (l) of this section without the discount                                      

01       provided in (m) of this section. Before purchasing a certificate or part of a certificate,                        
02       the department shall find that                                                                                    
03                 (1)  the calendar year of the purchase is not earlier than the first                                    
04       calendar year for which the credit shown on the certificate would otherwise be allowed                            
05       to be applied against a tax;                                                                                      
06                 (2)  the application is not the result of the division of a single entity into                          
07       multiple entities that would reasonably be expected to apply as a single entity if the                            
08       $70,000,000 limitation in this subsection did not exist;                                                          
09                 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                   
10 application of all available tax credits, for the calendar year in which the application is                             
11       made is zero;                                                                                                     
12 (4)  the applicant's average daily production of oil and gas taxable                                                    
13 under AS 43.55.011(e) during the calendar year preceding the calendar year in which                                     
14       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
15 (5)  the purchase is consistent with this section and regulations adopted                                               
16       under this section.                                                                                               
17    * Sec. 26. AS 43.55.028(i)(2) is amended to read:                                                                  
18 (2)  "qualified capital expenditure" has the meaning given in former                                                
19       AS 43.55.023;                                                                                                     
20    * Sec. 27. AS 43.55.028(k) is amended to read:                                                                     
21 (k)  The department may negotiate a purchase, refund, or payment under this                                             
22 section to be made from money disbursed to the commissioner. Before making a                                            
23 purchase, refund, or payment, the department shall calculate the maximum amount for                                     
24 a purchase, refund, or payment under (l) of this section. An applicant or claimant that                                 
25 has requested a purchase, refund, or payment by the department from the fund shall                                      
26 provide a notice of interest to the department by the date determined by the                                            
27 commissioner if the applicant or claimant is interested in a purchase, refund, or                                       
28 payment from money disbursed to the commissioner instead. An applicant or claimant                                      
29 that requests a purchase, refund, or payment from the fund on or after July 1, 2018,                                    
30 shall include any notice of interest in a purchase, refund, or payment from money                                       
31 disbursed to the commissioner at the same time that the applicant or claimant requests                                  

01 a purchase, refund, or payment by the department from the fund. The department may                                      
02 not use money disbursed to the commissioner for a purchase, refund, or payment                                          
03 under this section if the applicant or claimant fails to provide the department with a                                  
04 notice of interest in a purchase, refund, or payment from money disbursed to the                                        
05 commissioner. A notice of interest for a purchase, refund, or payment from money                                        
06 disbursed to the commissioner must include all of the requests for purchases, refunds,                                  
07 or payments made by the applicant or claimant and, if applicable, a statement                                           
08 indicating whether the applicant intends to meet a condition in (m)(1), (2), or (3) of                                  
09 this section. An applicant or claimant may not include in a notice of interest a request                                
10 for purchase, refund, or payment from the fund if the request could have been included                                  
11 in a previous notice of interest under this subsection. The department shall make an                                    
12 offer of purchase, refund, or payment with money disbursed to the commissioner to an                                    
13 applicant or claimant that provides the department with a timely notice of interest. The                                
14 department shall make an offer of purchase, refund, or payment from money disbursed                                     
15 to the commissioner at a time based on the anticipated schedule for disbursement of                                     
16 money to the commissioner. The applicant or claimant shall notify the department of                                     
17 acceptance of the offer of purchase, refund, or payment within 10 days after the offer                                  
18 is made. An offer of purchase, refund, or payment must be conditioned on the                                            
19 disbursement of money to the commissioner. A transferable tax credit certificate                                        
20 issued under former AS 43.55.023, production tax credit certificate issued under                                    
21 former AS 43.55.025, or claim for a refund or payment under AS 43.20.046,                                           
22 43.20.047, or 43.20.053 is not eligible for purchase by the department with money                                       
23       disbursed to the commissioner if the applicant or claimant                                                        
24 (1)  fails to provide the department with a notice of interest of an offer                                              
25 of purchase, refund, or payment from money disbursed to the commissioner by the                                         
26       date determined by the commissioner under this subsection; or                                                     
27 (2)  declines an offer of purchase, refund, or payment by the                                                           
28 department with money disbursed to the commissioner for that transferable tax credit                                    
29       certificate, production tax credit certificate, or refund or claim for payment.                                   
30    * Sec. 28. AS 43.55.028(m) is amended to read:                                                                     
31 (m)  For purposes of the calculation in ( l) of this section, the department shall                                      

01 discount the assumed payment amount each year after the first year by a discount rate.                                  
02 Unless another discount rate in this subsection applies, a discount rate of 10 percent                                  
03 applies to the assumed payment amount for a request for purchase of a transferable tax                                  
04 credit certificate issued under former AS 43.55.023 or a production tax credit                                      
05 certificate issued under former AS 43.55.025. An applicant's agreement to a discount                                
06 rate under (1), (2), or (3) of this subsection is only consideration for the amount that                                
07 the purchase exceeds the amount that would have been purchased in the absence of the                                    
08 agreement. For a refund or claim for payment under AS 43.20.046, 43.20.047, or                                          
09 43.20.053, the discount rate is the true interest cost plus 1.5 percent, but may not                                    
10 exceed 10 percent. For a purchase of a transferable tax credit certificate issued under                                 
11 former AS 43.55.023 or a production tax credit certificate issued under former                                  
12 AS 43.55.025, the discount rate is the true interest cost plus 1.5 percent, but may not                                 
13       exceed 10 percent, in total,                                                                                      
14 (1)  for either a transferable tax credit certificate issued under former                                           
15 AS 43.55.023 for which the applicant submitted data required under former                                           
16 AS 43.55.025(f)(2) or a production tax credit certificate issued under former                                       
17 AS 43.55.025, if the applicant agrees as a condition of the purchase that the 10-year                                   
18 confidentiality period under former AS 43.55.025(f)(2)(C)(ii) that would otherwise                                  
19       apply to the seismic data or other geophysical data is waived by the applicant;                                   
20 (2)  if the applicant, or an entity related to the applicant with the                                                   
21 applicant's consent, and the Department of Natural Resources agree to an overriding                                     
22       royalty interest agreement under AS 44.37.230; or                                                                 
23 (3)  if the applicant commits to incur, not later than 24 months after the                                              
24 purchase of the certificate, qualified capital expenditures in an amount greater than or                                
25       equal to the purchase amount, and                                                                                 
26 (A)  the applicant provides to the department evidence of the                                                           
27            commitment and a plan to                                                                                     
28 (i)  use the qualified capital expenditures for the purpose                                                             
29 of increasing production of oil or gas from leases or properties in the                                                 
30                 state; and                                                                                              
31 (ii)  maximize the hiring of state residents and use of                                                                 

01                 state businesses related to qualified capital expenditures;                                             
02 (B)  the applicant agrees in writing that, if the applicant does not                                                    
03 incur qualified capital expenditures in an amount greater than or equal to the                                          
04 purchase amount within 24 months after the purchase of the certificate, the                                             
05 applicant shall pay the department the lesser of the difference between the                                             
06            purchase amount and the                                                                                      
07                           (i)  amount the applicant would have been paid had this                                       
08                 subsection not applied; or                                                                              
09                           (ii)  actual amount of qualified capital expenditures                                         
10                 incurred by the applicant in the 24-month period; and                                                   
11 (C)  after reviewing documents submitted under (A) and (B) of                                                           
12 this paragraph, the commissioner approves the reduced discount rate for the                                             
13            purchase.                                                                                                    
14    * Sec. 29. AS 43.55.028(o) is amended to read:                                                                     
15 (o)  An applicant or claimant may not use a transferable tax credit certificate                                         
16 issued under former AS 43.55.023, production tax credit certificate issued under                                    
17 former AS 43.55.025, or refund or claim for payment under AS 43.20.046, 43.20.047,                                  
18 or 43.20.053 purchased by the department with money disbursed to the commissioner                                       
19 against tax liability, even if the purchase, refund, or payment amount was less than the                                
20       total amount requested for purchase, refund, or payment.                                                          
21    * Sec. 30. AS 43.55.075(b) is amended to read:                                                                     
22 (b)  A decision of a regulatory agency, court, or other body with authority to                                          
23 resolve disputes that results in a retroactive change to [A LEASE EXPENDITURE,                                          
24 TO AN ADJUSTMENT TO A LEASE EXPENDITURE, TO] costs of transportation                                                    
25 [, TO SALE PRICE], to gross [PREVAILING] value, or to consideration of quality                                      
26 differentials relating to the commingling of oils has a corresponding effect, either an                                 
27 increase or decrease, [AS APPLICABLE,] on the gross [PRODUCTION TAX] value                                          
28 of oil or gas, [OR THE AMOUNT OR AVAILABILITY OF A TAX CREDIT] as                                                   
29 determined under this chapter. [FOR PURPOSES OF THIS SECTION, A CHANGE                                                  
30 TO A LEASE EXPENDITURE INCLUDES A CHANGE IN THE                                                                         
31 CATEGORIZATION OF A LEASE EXPENDITURE AS A QUALIFIED CAPITAL                                                            

01       EXPENDITURE OR AS NOT A QUALIFIED CAPITAL EXPENDITURE.] The                                                       
02       producer shall                                                                                                    
03                 (1)  within 60 days after the change, notify the department in writing;                                 
04       and                                                                                                               
05 (2)  within 120 days after the change, file amended returns covering all                                                
06 periods affected by the change, unless the department agrees otherwise or a stay is in                                  
07 place that affects the filing or payment, regardless of the pendency of appeals of the                                  
08       decision.                                                                                                         
09    * Sec. 31. AS 43.55.180(a) is amended to read:                                                                     
10            (a)  The department shall study                                                                              
11 (1)  the effects of the provisions of this chapter on oil and gas                                                       
12 exploration, development, and production in the state, on investment expenditures for                                   
13 oil and gas exploration, development, and production in the state, on the entry of new                                  
14 producers into the oil and gas industry in the state, on state revenue, and on tax                                      
15 administration and compliance [, GIVING PARTICULAR ATTENTION TO THE                                                     
16 TAX RATES PROVIDED UNDER AS 43.55.011, THE TAX CREDITS PROVIDED                                                         
17 UNDER AS 43.55.023 - 43.55.025, AND THE DEDUCTIONS FOR AND                                                              
18 ADJUSTMENTS TO LEASE EXPENDITURES PROVIDED UNDER AS 43.55.160                                                           
19       - 43.55.170]; and                                                                                                 
20 (2)  the effects of the tax rates under AS 43.55.011(i) on state revenue                                                
21 and on oil and gas exploration, development, and production on private land, and the                                    
22       fairness of those tax rates for private landowners.                                                               
23    * Sec. 32. AS 43.55.201(b) is amended to read:                                                                     
24 (b)  The surcharge imposed by (a) of this section is in addition to the tax                                             
25 imposed by AS 43.55.011 and is due on the last day of the month on oil produced                                         
26 from each lease or property during the preceding month. The surcharge is in addition                                    
27       to the surcharge imposed by AS 43.55.300 - 43.55.310 and 43.55.320.                                           
28    * Sec. 33. AS 43.55 is amended by adding new sections to article 3 to read:                                        
29 Sec. 43.55.320. Infrastructure maintenance surcharge on oil. (a) Every                                                
30 producer of oil shall pay a surcharge of $.15 per barrel of oil produced from each lease                                
31 or property in the state, less any oil the ownership or right to which is exempt from                                   

01       taxation.                                                                                                         
02            (b)  The surcharge imposed by (a) of this section is in addition to the tax                                  
03       imposed by AS 43.55.011 and the surcharges imposed by AS 43.55.201 and                                            
04       43.55.300.                                                                                                        
05            (c)  A tax credit authorized under this chapter may not be applied to reduce a                               
06       producer's liability for the surcharge.                                                                           
07            (d)  The surcharge is due on the last day of the month on oil produced from                                  
08       each lease or property during the preceding month. The surcharge shall be paid at the                             
09       same time and in the same manner as the surcharge imposed under AS 43.55.201.                                     
10 Sec. 43.55.325. Accounting of surcharge proceeds. The surcharge collected                                             
11 by the department under AS 43.55.320 shall be deposited into the general fund and                                       
12       accounted for separately.                                                                                         
13    * Sec. 34. AS 43.55.900(24) is amended to read:                                                                    
14                 (24)  "surcharge" means                                                                                 
15 (A)  when used in AS 43.55.201 - 43.55.299, the surcharge                                                               
16            levied by AS 43.55.201;                                                                                      
17 (B)  when used in AS 43.55.300 - 43.55.310, the surcharge                                                               
18            levied by AS 43.55.300;                                                                                  
19 (C)  when used in AS 43.55.320 - 43.55.325, the surcharge                                                           
20            levied by AS 43.55.320;                                                                                  
21    * Sec. 35. AS 44.37.230(b) is amended to read:                                                                     
22 (b)  The department may enter into an overriding royalty interest agreement in                                          
23 favor of the state with an applicant that requests a purchase by the Department of                                      
24 Revenue under AS 43.55.028 from money disbursed to the commissioner of revenue                                          
25 from the Alaska Tax Credit Certificate Bond Corporation reserve fund established in                                     
26 AS 37.18.040 of a transferable tax credit certificate issued under former                                           
27 AS 43.55.023 or production tax credit certificate issued under former AS 43.55.025.                                 
28 The department may enter into an agreement only if the anticipated net present value                                    
29 from the agreement to the state is equal to or greater than the remainder of the value of                               
30 the tax credit certificate requested for purchase at the proposed reduced discount rate                                 
31 under AS 43.55.028(m)(2), subtracted from the value of the tax credit certificate                                       

01       requested for purchase in the absence of the agreement.                                                           
02    * Sec. 36. AS 31.05.030(n); AS 43.20.044(a)(2); AS 43.55.011(f), 43.55.011(g),                                     
03 43.55.020(k), 43.55.023, 43.55.024, 43.55.025, 43.55.029, 43.55.030(a)(6), 43.55.030(a)(7),                             
04 43.55.030(e), 43.55.030(f)(4), 43.55.075(d)(1), 43.55.160, 43.55.165, 43.55.170,                                        
05 43.55.890(6), 43.55.890(7), 43.55.890(8), 43.55.890(9), 43.55.890(10), and 43.55.895(b)(2)                              
06 are repealed.                                                                                                           
07    * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to                         
08 read:                                                                                                                   
09       APPLICABILITY. (a) The tax established under AS 43.20.019, added by sec. 4 of this                                
10 Act, applies to a qualified entity for a tax year beginning on or after January 1, 2026. In this                        
11 subsection, "qualified entity" has the meaning given in AS 43.20.019(e).                                                
12 (b)  AS 43.20.148, added by sec. 13 of this Act, applies to a taxpayer that is filing a                                 
13 return for a tax year beginning on or after January 1, 2026.                                                            
14    * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to                         
15 read:                                                                                                                   
16 TRANSITION: PAYMENT OF TAX. A person subject to the tax levied under                                                    
17 AS 43.20.019, added by sec. 4 of this Act, before the effective date of sec. 4 of this Act, shall                       
18 pay the balance of the tax due for a tax year ending before January 1, 2027, by January 1,                              
19 2027. Until January 1, 2027, the Department of Revenue shall waive interest that would                                  
20 otherwise accrue under AS 43.05.225 and civil and criminal penalties accruing under                                     
21 AS 43.05.220, 43.05.245, and 43.05.290 that are a result of the retroactivity of secs. 4 - 7 of                         
22 this Act.                                                                                                               
23    * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to                         
24 read:                                                                                                                   
25 RETROACTIVITY OF REGULATIONS. Notwithstanding a contrary provision of                                                   
26 AS 44.62.240, if the Department of Revenue expressly designates in the regulation that the                              
27 regulation applies retroactively to a specific date, a regulation adopted by the department to                          
28 implement, interpret, make specific, or otherwise carry out secs. 4 - 7 of this Act applies                             
29 retroactively to that date.                                                                                             
30    * Sec. 40. The uncodified law of the State of Alaska is amended by adding a new section to                         
31 read:                                                                                                                   

01       RETROACTIVITY. Sections 4 - 7, 38, and 39 of this Act are retroactive to January 1,                               
02 2026.                                                                                                                   
03    * Sec. 41. Sections 4 - 7 and 38 - 40 of this Act take effect immediately under                                    
04 AS 01.10.070(c).                                                                                                        
05    * Sec. 42. Except as provided in sec. 41 of this Act, this Act takes effect January 1, 2027.