04/20/1993 05:05 PM Senate JUD

 SENATOR TAYLOR introduced  SB 185  (LIMITATIONS PERIOD FOR TAX                
 ASSESSMENTS) as the first order of business.                                  
                                                                               
 ATTORNEY GENERAL CHARLES COLE explained the purpose of SB 185                 
 is to clarify ambiguities which presently exist in Alaska                     
 Statutes relating to the period during which amended                          
 assessments may be made for certain taxes owing to the State                  
 of Alaska.                                                                    
                                                                               
 Section 2 of SB 185 provides that at any time an                              
 administrative consideration is being given to a taxpayer                     
 grievance, the Department of Revenue may increase or decrease                 
 the amount owing under its assessment.  The same provision                    
 would apply to instances in which a claim for credit or refund                
 is filed by the taxpayer.                                                     
                                                                               
 Section 3 of SB 185 provides that the period for collection                   
 of a tax is essentially tolled, and the proceeding must be                    
 begun within six years after the latest of: (a) the assessment                
 of the tax; (b) the final administrative determination of the                 
 grievance if the taxpayer files a grievance, or the final                     
 judicial resolution of an appeal if the taxpayer appeals from                 
 a final adjudicative determination of a grievance.                            
                                                                               
 Speaking to Section 3, Attorney General Cole said at the                      
 present time, the law provides that the tax may be collected                  
 by levy or by a proceeding in court within six years of the                   
 assessment of the tax.  Presently, pending before the Alaska                  
 Supreme Court in appeal is the issue of whether the period                    
 for determining finally a grievance filed by the taxpayer                     
 takes more than six years from the date the return is filed.                  
 Tesoro claims that even though it filed the grievance, and                    
 even though during this entire six-year period of time its                    
 grievance was being adjudicated, the statute was running.                     
 Tesoro claims that when the final determination was made on                   
 the grievance, the six-year period had run and, therefore, it                 
 was too late to collect the tax.                                              
                                                                               
 Attorney General Cole then presented a chronology of the                      
 Tesoro Case.  He said Tesoro claims that the six-year period                  
 had expired following the assessment of the tax, however, the                 
 delay resulted from administrative procedures initiated and                   
 pursued by the taxpayer.  He said there is no reason under                    
 those circumstances that the state should be prejudiced by its                
 statutory resolution of the taxpayer's grievance.                             
                                                                               
 Attorney General Cole questioned what purpose would be served                 
 by the state issuing a levy within five years after the return                
 is filed, because the amount of tax owing by the taxpayer has                 
 not yet been finally determined.  He said in the future this                  
 will not be a problem to the State of Alaska, because if this                 
 amendment which is sought in SB 185 is not passed, the state,                 
 after five years, is going to issues levies and it is going                   
 to levy upon taxpayer property owing assessments, regardless                  
 of whether the amount of the tax has been finally determined.                 
                                                                               
                                                                               
 Attorney General Cole said it is the department's position                    
 that because it is fundamentally fair, because it would be a                  
 needless expenditure of administrative and judicial effort to                 
 seek to collect taxes before the final amount is owing, SB 185                
 should be passed into law.                                                    
                                                                               
 Turning to Section 2, subsection (a), Attorney General Cole                   
 said it is the position of the Department of Law that this is                 
 simply a statement of existing law and that it makes no change                
 in existing law.  However, in a proceeding pending before the                 
 Alaska Supreme Court, Exxon and certain affiliated companies                  
 claim that if it files a grievance asking for an informal or                  
 formal conference during the period that proceeding is taking                 
 place, the department may not issue an amended assessment if                  
 the three years have elapsed.  The department feels that a                    
 clarification is desirable.                                                   
                                                                               
 Attorney General Cole commented that the state is not asking                  
 for anything that is unique in tax law, and he noted that                     
 Texas, the nation's leading oil producer, has a statute very                  
 similar to the proposed legislation.  He questioned why Exxon                 
 is vigorously opposing this proposed legislation when it is                   
 consistent with and similar to the tax laws of Texas where                    
 Exxon recently set up their major headquarters.                               
                                                                               
 Attorney General Cole also pointed out that the three-year                    
 period of time is a limited period of time.  There are many                   
 states which have substantially longer periods of times in                    
 which these assessments must be completed.                                    
                                                                               
 Number 335                                                                    
                                                                               
 RICHARD FINEBERG of Talkeetna said that as a former member of                 
 the administration's litigation team and as a public frequent                 
 critic of the settlement process, that we are dealing with                    
 literally billion of dollars in an area in which we have a                    
 lack of information on the issues.  He said in these areas                    
 where we have heard complexities before, it has been                          
 abundantly clear that one side has a vested interest and that                 
 is not necessarily the public's interest in the stewardship                   
 of the resource.                                                              
                                                                               
 Number 370                                                                    
                                                                               
 SENATOR DONLEY asked if Mr. Fineberg supports the bill.                       
 RICHARD FINEBERG answered that he supports the thrust of the                  
 bill with regard to the particulars, but that he wanted to                    
 point out that we are dealing with very scant information.                    
                                                                               
 Number 390                                                                    
                                                                               
 SENATOR TAYLOR stated SB 185 would held until the following                   
 day in order to give Exxon Corporation an opportunity to                      
 present their testimony to the committee.