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.