ALASKA DEPARTMENT OF REVENUE
TAX DIVISION

Alaska Department of Revenue - Tax Division - Annual Report

2015
Annual Report



Printed or viewed on 6/25/17

Key Contacts


This annual report covers fiscal year 2015, which ended June 30, 2015.


The purpose of this report is to provide an overview of programs administered by the Tax Division and
statistics of revenue collections and other information related to those programs.


Key Contacts

Ken Alper
Director

Juneau
(907) 465-8221
Brandon S Spanos
Deputy Director

Anchorage
(907) 269-6736
Anna Kim
Chief of Revenue Operations

Juneau
(907) 465-4773
Accounting and Collections
Pamela G Verschoor
Juneau
(907) 465-3776
Appeals
Hollie A Kovach
Anchorage
(907) 269-6640
Charitable Gaming
Katrina E Mitchell
Juneau
(907) 465-3410
Corporate Income Tax
Robynn J Wilson
Anchorage
(907) 269-6634
Economic Research
John Tichotsky
Anchorage
(907) 269-8902
Excise Taxes
Kelly A Mazzei
Anchorage
(907) 269-1018
Fisheries Taxes
Tom Sutton
Juneau
(907) 465-3695
Imaging and Data Management
John E Doogan
Juneau
(907) 465-6112
Information Technology
Jared R Phillips
Juneau
(907) 465-2369
Oil & Gas Production Tax
Jenny L Rogers
Anchorage
(907) 269-1015
Oil & Gas Production Tax Credits
Destin M Greeley
Anchorage
(907) 269-6642
Oil & Gas Property Tax
Jim H Greeley
Anchorage
(907) 269-1029

Anchorage Office
Alaska Department of Revenue
Tax Division
Robert B. Atwood Building
550 W Seventh Ave, Suite 500
Anchorage, AK 99501-3556
907-269-6620 Voice
907-269-6644 Fax
Juneau Office
Alaska Department of Revenue
Tax Division
11th Floor, State Office Building
PO Box 110420
Juneau, AK 99811-0420
907-465-2320 Voice
907-465-2375 Fax


Table of Contents



Overview



Mission Statement

The mission of the Tax Division is to collect taxes, inform stakeholders, and regulate charitable gaming. The programs administered by the Tax Division generate a significant portion of General Fund revenue used for funding state government and programs throughout Alaska. These programs include:


Corporate Income Tax


Excise Taxes
Alcoholic Beverages
Commercial Passenger Vessel
Motor Fuel
Tire Fee
Tobacco
Vehicle Rental


Fisheries Taxes
Common Property Fishery
Dive Fishery Management
Fisheries Business
Fishery Resource Landing
Salmon Enhancement
Seafood Development
Seafood Marketing


Oil and Gas Taxes
Conservation Surcharge
Production
Property
Other Taxes
Electric Cooperative
Large Passenger Vessel Gambling
Mining License
Regulatory Cost Charges
Telephone Cooperative


Other Programs
Charitable Gaming
Revenue Forecasting
Salmon Price and Production Reporting


Statement of Revenues

Statement of Revenues


STATEMENT OF TOTAL REVENUES COLLECTED
Fiscal Year 2015

REVENUESFY 2015Percentage
of Total
Oil & Gas Production Tax$524,009,35243.94 %
Corporate Income Tax$244,912,47020.54 %
Oil & Gas Property Tax$125,194,43410.5 %
Tobacco Tax$65,241,4325.47 %
Fisheries Business Tax$44,407,1093.72 %
Motor Fuel Tax$41,877,7833.51 %
Mining License Tax$38,655,2093.24 %
Alcoholic Beverages Tax$37,606,3883.15 %
Commercial Passenger Vessel Excise Tax$17,201,8361.44 %
Vehicle Rental Tax$9,698,7550.81 %
Seafood Marketing Assessment$9,474,1120.79 %
Fishery Resource Landing Tax$8,376,6280.7 %
Salmon Enhancement Tax$7,742,1770.65 %
Large Passenger Vessel Gambling Tax$6,611,7860.55 %
Charitable Gaming$2,588,6600.22 %
Regional Seafood Development Tax$2,361,5610.2 %
Telephone Cooperative Tax$2,191,2580.18 %
Electric Cooperative Tax$2,008,2780.17 %
Tire Fee$1,515,8050.13 %
Dive Fishery Management Assessment$472,7910.04 %
Common Property Fishery Assessment$320,6560.03 %
Total$1,192,468,480


Tax Returns Filed

Tax Returns Filed



Total Tax Returns Filed 28,726

REVENUESFY 2015Percentage
of Total
Returns
Corporate Income Tax17,14259.67 %
Motor Fuel Tax3,25311.32 %
Charitable Gaming2,6119.09 %
Alcoholic Beverages Tax9063.15 %
Salmon Enhancement Tax8202.85 %
Fisheries Business Tax7532.62 %
Tobacco Tax7142.49 %
Mining License Tax6162.14 %
Vehicle Rental Tax4521.57 %
Seafood Marketing Assessment3771.31 %
Tire Fee2971.03 %
Regional Seafood Development Tax1890.66 %
Commercial Passenger Vessel Excise Tax1540.54 %
Oil & Gas Property Tax1510.53 %
Fishery Resource Landing Tax990.34 %
Oil & Gas Production Tax860.3 %
Dive Fishery Management Assessment560.19 %
Electric Cooperative Tax210.07 %
Telephone Cooperative Tax110.04 %
Large Passenger Vessel Gambling Tax100.03 %
Common Property Fishery Assessment80.03 %
Total28,726


Program Detail – Charitable Gaming

Charitable Gaming

Charitable Gaming



AS 05.15

Description

Municipalities and qualified nonprofit organizations are eligible to conduct gaming activities as set out in the Alaska Gaming Reform Act. The purpose of these activities is to derive public benefit in the form of money for these entities.

Qualified organizations include: civic or service organizations; religious, charitable, fraternal, veterans, labor, political, or educational organizations; police or fire departments and companies; dog mushers’ associations, outboard motor associations, and fishing derby and nonprofit trade associations. Gaming activities include primarily the sale of pull-tabs, bingo and raffles.

The Charitable Gaming Program issues permits and licenses to conduct gaming activities, collects fees and taxes, conducts audits, investigates complaints, and provides educational outreach to municipalities and qualified organizations.

Permits are issued annually with fees ranging from $20 to $100. Licenses are issued annually with fees ranging from $500 to $2,500. A 3% tax on pull-tabs sold by distributors is collected on a monthly basis. A 1% fee on net proceeds is collected annually from permittees if their gross receipts exceed $20,000.

Returns

Monthly, quarterly, and annual returns are filed by permittees and licensees conducting gaming depending on the amount of gross receipts and the type of permit/license. Manufacturers and distributors file monthly reports. Operators must file monthly reports to permittees.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits permit and license fees, pull-tab taxes, and net proceeds fees into the General Fund.

History

1960 – The Alaska Legislature legalized gaming and gave oversight for all gaming activities to the Department of Revenue.

1984 – The department authorized pull-tabs by regulation.

1988 – The Legislature legalized operators, authorized pull-tabs, and increased prize limits.

1989 – Under administrative order, gaming functions transferred to the Department of Commerce, Community and Economic Development.

1993 – Under administrative order, gaming functions transferred back to the Department of Revenue, and organized as a separate gaming program.

House Bill 168 significantly changed various aspects of the statutes governing charitable gaming in Alaska. Third-party vendors were brought under statutory control, which allows permittees to contract with them directly to sell pull-tabs and the department was authorized to issue Multiple-Beneficiary Permits (MBP). MBPs enable two to six permittees to conduct gaming activities jointly. Minimum payments increased from 15% to 30% of adjusted gross income for pull-tab games and require a minimum of 10% of adjusted gross income for all other activities.

1995 – The Legislature legalized cruise ship gambling activities in Alaska waters during the 1995 season. The gaming statutes required that cruise ships pay a fee to game in Alaska, and this generated more than $500,000 in revenue during the 1995 season. This law expired after 1995.

1996 – The Legislature authorized three new gaming activities – the “Sled Dog Race Classic,” “Deep Freeze Classic, and “Snow Machine Classic.” The Legislature also created the “McGrath Kuskokwim River Ice Classic,” and “Creamer’s Field Goose Classic.” The Legislature prohibited the donation of net proceeds from pull-tabs and bingo activities to registered lobbyists and certain political organizations.

2014 – The Legislature made a change relating to games of chance and contests of skill to allow the department to issue permits for bull moose derbies. It also expanded the definition of “ice classic” to include the “Snow Town Ice Classic.” The change was made through HB 268 (CH 22 SLA 14).



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Pull Tab Tax

$2,082,493 $2,045,558 $1,968,587 $2,068,951

   Net Proceeds Fees

385,937 353,163 339,874 373,421

   License and Permit Fees

120,230 149,615 143,985 144,475

   Total Tax

$2,588,660

$2,548,336

$2,452,446

$2,586,847


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

2,611 2,991 2,846 2,975

   Number of Taxpayers

1,156 1,301 1,543 1,658

  Applications

Fiscal Year

2015 2014 2013 2012

   Permittees

1,102 1,241 1,171 1,275

   Operators

23 24 29 28

   Multiple-Beneficiary Permittees

15 18 17 16

   Distributors

9 9 9 8

   Manufacturers

7 9 9 7
  Reports

Fiscal Year

2015 2014 2013 2012

   Permittees

2,272 2,601 2,440 2,553

   Operators

115 120 151 147

   Multiple-Beneficiary Permittees

75 72 90 90

   Distributors

85 116 90 100

   Manufacturers

64 82 75 85


Program Detail – Corporate Taxes

Corporate Taxes

Corporate Income Tax



Description

Alaska levies a corporate income tax on Alaska taxable income.

For purposes of computing taxable income, Alaska, like many states, adopts the federal Internal Revenue Code (IRC) by reference, unless excluded or modified by specific Alaska statutes.

For a corporation doing business only in Alaska, its taxable income is federal taxable income with certain Alaska modifications.

A corporation that does business both inside and outside Alaska apportions a percentage of the corporation’s total income to Alaska using a formula. The Alaska percentage or “apportionment factor” is an average of three factors: property, payroll, and sales, inside and outside the state.

When a corporation is part of a group of corporations that operates as a unit to conduct a business, the taxpayer must apportion to Alaska a percentage of the combined incomes of all of the corporations in the “unitary” or “combined” group.

For unitary groups that are not oil and gas companies, Alaska adopts “water’s edge combination.” The combined group generally includes only those corporations with significant U.S. activity.

Oil and gas companies combine on a worldwide basis. Also, oil companies use a “modified” apportionment formula of property, sales, and extraction. The extraction factor is the production of oil and gas in Alaska divided by production everywhere.

Rate

Alaska taxes corporate income at graduated rates ranging from 0% to 9.4% divided over 10 tax brackets.

Returns and Payments

Corporations file returns annually, with the Alaska return due 30 days after the federal tax return is due. Alaska honors the federal filing extensions.

Corporations must make quarterly estimated payments and the total tax is generally due the 15th day of the fourth month after the end of the tax year. There are no extensions to pay the tax. Estimated payments of more than $100,000 and payments accompanying a return greater than $150,000 must be made online or by wire transfer.

* Effective for tax years beginning after Dec. 31, 2015.

Exemptions

Generally, Alaska follows the IRC when determining an entity’s taxable status.

Alaska adopts the flow-through federal provisions that exempt S-Corporations from tax. Federally, S-Corporations are treated as partnerships and S-Corporation shareholders report their proportionate share of the corporation’s earnings.

Certain small corporations are exempt from corporate income tax. These are corporations that have less than $50 million in assets and that meet certain industry requirements.

LLCs

Alaska treats Limited Liability Companies (LLCs) as partnerships if they file as partnerships federally.

Electric and telephone cooperatives pay tax under AS 10.25 and are exempt from the corporate income tax.

Credits

Under Alaska’s blanket adoption of the IRC, taxpayers can claim 18% of all federal incentive credits. Federal credits that refund other federal taxes are not allowed. Multistate taxpayers apportion their total federal incentive credits.

Alaska-specific credits include the Education, Minerals Exploration Incentive, LNG Storage Facility, and Veteran Employment Tax Credit, and Film Production Tax Credits.

For specific information concerning these credits, see the Corporate Income Tax Credits section directly below this section.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits most corporate net income tax collections into the General Fund. For oil and gas corporations only, the division deposits collections from assessments into the Constitutional Budget Reserve Fund.

History

1949 – The Territorial Legislature enacts the Alaska Net Income Tax Act. It is 10% of the federal income tax liability on income earned in Alaska. The tax applies to individuals and corporations.

1959 – Alaska adopts the Uniform Division of Income for Tax Purposes Act (UDITPA) within AS 43.20. This is a model statute that was developed by the states to address concerns of the U.S. Congress that states were collectively taxing more than 100% of the earnings of multistate corporations. UDITPA requires multistate corporations to apportion a percentage of their total income to the state by the apportionment formula of property payroll and sales. The standard UDITPA formula apportions 100% of the corporation’s income among the states where the taxpayer does business.

1970 – Alaska enacts the Multistate Tax Compact in AS 43.19, and becomes one of the early members of the Multistate Tax Commission. The Compact incorporates the standard three-factor apportionment formula of UDITPA. A main purpose of the Compact and the Commission is to promote the enactment of UDITPA, and the uniform application of UDITPA apportionment formula by the states. Uniform application of UDITPA promotes the full reporting of income by taxpayers and avoids the taxation of the same income by more than one state.

1975 – The Alaska Legislature repeals the original tax and makes major revisions. Alaska enacts its own tax rates rather than basing the tax on the federal tax liability. Alaska adopts the federal Internal Revenue Code (“IRC”) by reference, unless excluded, or modified by other Alaska statutes. The tax rate was 5.4% of Alaska taxable income with a surtax of 4% based on federal surtax exemptions. For 1975, the surtax exemption was $50,000.

1978 – The Legislature finds that the standard three-factor apportionment formula does not fairly reflect Alaska income for oil and gas corporations. Alaska enacts AS 43.21, and requires oil and gas companies to calculate Alaska taxable income using separate accounting. The oil and gas companies challenge AS 43.21.

1980 – The Legislature repeals the parts of AS 43.20 that impose the individual income tax and retains the exemption for S-Corporations.

1981 – In an effort to stem the growing amount of disputed oil and gas income taxes and related litigation, the Legislature seeks a compromise tax method. The Legislature repeals separate accounting under AS43.21, and enacts AS 43.20.072 (later renumbered AS 43.20.144) the current “modified” apportionment formula for oil and gas corporations. The modified formula drops the payroll factor and adds the “extraction factor.” The Legislature also enacts the current graduated tax rate structure with a maximum rate of 9.4%.

1987 – The Legislature enacts the Alaska Education Credit.

1991 – The Legislature enacts “water’s edge combination” with AS 43.20.073. Water’s edge apportionment does not apply to oil and gas taxpayers, who continue to report on a worldwide combined basis.

1998 – The Department of Revenue wins the OSG Bulkships case. The Alaska Supreme Court holds that AS 43.20 does not adopt the IRC Section 883 by reference. Federally, Section 883 exempts from tax foreign corporations that operate ships and aircraft, and avoids double taxation. The Court says that formulary apportionment in AS 43.19 also avoids double taxation and therefore AS 43.19 is an exception to Section 883. During the next session, the Legislature specifically adopts Section 883 and grants explicit tax exemption to the foreign corporations operating cargo ships, cruise ships, and aircraft in Alaska.

2006 – A voter initiative that subjects cruise ship operators to Alaska corporate income tax passes in August 2006. Prior to the initiative, cruise ship operators were exempt from taxation through the department’s adoption of IRC Section 883.

2008 – The Legislature amends the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska, and by a state-operated vocational technical education and training school.

The Legislature authorizes tax credits for qualified film production expenditures incurred in Alaska. Tax credits may be sold, transferred, exchanged, or conveyed, and must be used within three years after being granted by the Alaska Department of Commerce, Community, and Economic Development. The maximum of credits claimed by all taxpayers over the life of the credit program may not exceed $100 million.

2010 – The Legislature amends the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expands contributions eligible for the credit to include contributions made for construction and maintenance of facilities by state-operated vocational education schools and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expires Dec. 31, 2013. On Jan. 1, 2014, the maximum credit allowed will revert to $150,000.

The Legislature expands the Gas Exploration and Development Credit, increasing it from 10% to 25% effective Jan. 1, 2010. The utilization limit was raised from 50% to 75% of the tax liability.

The Legislature authorizes tax credits for expenditures to establish gas storage in Alaska. The available credit is $1.50 per 1,000 cubic feet of gas storage capacity, with a maximum credit available of $15 million or 25% of costs incurred to establish the facility. This is a refundable tax credit.

2011 – The Legislature enacted legislation extending the date that the $5 million annual Education Credit limit expires from Dec. 31, 2013, to Dec. 31, 2020. It is then scheduled to return to $150,000. In addition, the Legislature expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

The Legislature enacted the Veteran Employment Tax Credit, providing a credit of $3,000 for hiring a disabled veteran, or $2,000 for hiring a veteran who is not disabled.

The Legislature enacted the LNG (Liquefied Natural Gas) Storage Facility Tax Credit, granting a credit for costs incurred to establish an LNG storage facility in Alaska. The available credit is equal to 50% of the costs incurred, not to exceed $15 million. This is a refundable tax credit.

The Legislature passed legislation exempting certain small corporations from the corporate income tax. For tax years beginning after Dec. 31, 2011, corporations that have assets less than $50 million and that meet certain other requirements are exempt from paying corporate income tax. Certain industries are excluded from the exemption.

2013 – The Legislature passed Senate Bill 7 that related to the taxable corporate income and the ability of certain film productions to receive tax credits. In addition, tax brackets for corporations under AS 43.20.011 were amended.

The Legislature enacted SB 83 that retroactively exempts income received by regional aquaculture associations, and income received by salmon hatchery permit holders from the sale of salmon, salmon eggs or from a cost recovery fishery from corporate income tax beginning June 30, 2007, by amending AS 43.20.012.

The Legislature passed legislation exempting certain small corporations from the corporate income tax. For tax years beginning after Dec. 31, 2011, corporations that have assets less than $50 million and that meet certain other requirements are exempt from paying corporate income tax. Certain industries are excluded from the exemption.

2014 – The Legislature passed House Bill 278 (CH 15 SLA 14) further expanding qualifying Education Tax Credits to include cash contributions to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research, and educational support purposes. In addition, tax credits are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.

The Legislature passed House Bill 287 enacting the Qualified In-State Oil Refinery Infrastructure Expenditures Tax Credit that grants a credit of the lesser of 40% of qualified infrastructure expenditures incurred in the state during the year, or $10 million for each in-state refinery incurring qualified expenditures.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Oil & Gas Tax (General Fund)

$86,539,119 $313,757,578 $433,729,976 $542,237,061

   Oil & Gas Penalties and Interest (General Fund)

8,227,905 (6,134,956) 833,672 26,578,144

   Oil & Gas General Fund Total

94,767,025 307,622,622 434,563,648 568,815,205

   Oil & Gas Constitutional Budget Reserve Total

13,922,197 28,943,370 106,805,732 2,956,805

   Oil & Gas Total Collections

108,689,221 336,565,992 541,369,380 571,772,010

   Non-Oil & Gas Tax

134,839,359 102,386,908 109,509,223 96,583,641

   Non-Oil & Gas Penalties and Interest

1,383,890 (2,517,717) 2,976,911 1,908,541

   Non-Oil & Gas Total Collections

136,223,249 99,869,191 112,486,134 98,492,182

   Total Tax

$244,912,470

$436,435,183

$653,855,514

$670,264,192


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

17,142 12,938 16,502 14,035

   Number of Taxpayers

15,089 11,792 12,104 11,916





Corporate Income Tax Credits


Credit for the In-State Manufacture of Urea, Ammonia, or Gas-to-Liquid Products – Effective July 1, 2017, a taxpayer may claim a credit equal to the percentage of royalty paid under AS 38.05.135 on certain deliveries of gas, the percentage equal to the percentage of the ownership interest held by the taxpayer in the in-state processing facility. The credit is not refundable and may not be carried forward to the other tax years.





Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Film Production A taxpayer may take a credit for certain expenses incurred in producing films in Alaska. The credit is administered by the Department of Revenue. This credit may be transferred.





Gas Exploration and Development A taxpayer may take a corporate income tax credit for 25% of qualifying expenditures incurred in exploration and development of natural gas reserves in Alaska, except for the North Slope. The credit may be applied against 75% of the tax liability.





LNG Storage Facility Tax Credit A person may claim a credit for costs incurred to establish a LNG (Liquefied Natural Gas) storage facility in Alaska. The available credit is equal to 50% of the costs incurred, not to exceed $15 million. This is a refundable tax credit, subject to AS 43.55.028.





Minerals Exploration Incentive A taxpayer may claim a credit for eligible costs of exploration activities related to determining existence, location, extent, or quality of a locatable mineral or coal deposit. An approved exploration incentive credit may not exceed $20 million and must be applied within 15 tax years after the credit is approved. Application of the credit is limited to the lesser of 50% of the taxpayer’s mining license tax liability or 50% of its corporate tax liability.





Qualified In-State Oil Refinery Infrastructure Expenditures Tax Credit A taxpayer that owns an in-state refinery may claim a credit, calculated as 40% of qualifed expenditures. The credit may not exceed $10 million for each refinery. The credit is refundable, subject to AS 43.55.028.





Qualified Oil and Gas Service Industry Expenditure Credit A taxpayer may claim a credit for qualified oil and gas service industry expenditures incurred in the state. The credit is calculated ast 10% of qualifed expenditures, the credit not to exceed $10 million. An unused credit may be carried forward for five years.





Veteran Employment Tax Credit A taxpayer may take a credit for the employment of a veteran. The available credit is $3,000 for hiring a disabled veteran or $2,000 for a veteran who is not disabled.




Program Detail – Excise Taxes

Excise Taxes

Alcoholic Beverages Tax



AS 43.60

Description

Alaska levies a tax on alcoholic beverages sold in Alaska. The tax is collected primarily from wholesalers and distributors of alcoholic beverages.

Returns

Taxpayers file returns and pay tax monthly. The returns and payment are due by the last day of the month following the month of sale.

Exemptions

Sales to facilities operated by one of the uniformed services of the United States are exempt if they fall within the guidelines of 4 USC 107.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits all alcoholic beverage tax revenue into the General Fund. The Department of Administration separately accounts for 50% of the tax collected and deposits it into the Alcohol and Other Drug Abuse Treatment and Prevention Fund.

History

The alcoholic beverage tax dates back to 1933 when the Territorial Legislature enacted a tax on beer and wine at a rate of $0.05 per gallon. Taxpayers filed alcoholic beverage tax returns monthly.

1937 – The Territorial Legislature enacted a tax on liquor at a rate of $0.50 cents per gallon. At the same time, the rate for wine increased to $0.15 per gallon.

Since 1937, the Territorial Legislature and then Alaska Legislature have made minor changes to the alcoholic beverage tax statutes. In addition, between 1937 and 1983, the Legislature increased Alaska’s tax rates to correspond with rate changes made by other states.

2002 – The Legislature significantly increased the tax rates on all three alcoholic beverages effective Oct. 1, 2002. However, this legislation allows breweries meeting the qualifications of 26 USC. 5051(a)(2) (small breweries) to pay tax at the lower rate of $0.35 cents per gallon on the first 60,000 barrels of beer (malt beverages) sold in Alaska. At the same time, the Legislature created the Alcohol and Other Drug Abuse Treatment and Prevention Fund, and directed that 50% of the alcoholic beverage tax be deposited into that fund for alcohol and drug abuse treatment programs.

Between 1937 and 2002, alcoholic beverage tax rates have changed as follows:

Per Gallon
YearLiquorWineBeer (Malt Beverages)Beer (Small Breweries)
1933-$0.05$0.05-
1937$0.50$0.15--
1941$1.00---
1945$1.60---
1946$2.00---
1947$3.00$0.25$0.10-
1957$3.50$0.50$0.25-
1961$4.00$0.60--
1983$5.60$0.85$0.35-
2002$12.80$2.50$1.07$0.35



Click here for data with additional years.

  Gallons

Fiscal Year

2015 2014 2013 2012

   Liquor

1,676,579 1,640,739 1,640,194 1,572,282

   Beer, Malt Beverage and Cider

10,184,405 10,364,001 10,632,745 10,687,432

   Wine

2,376,214 2,310,985 2,382,470 2,314,903

   Beer, Small Brewery

3,947,554 3,856,606 3,615,276 3,405,102


  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Liquor

$19,385,984 $20,120,677 $21,001,209 $20,139,046

   Beer, Malt Beverage and Cider

10,902,805 10,837,519 11,373,704 11,562,357

   Wine

5,971,367 5,594,883 5,874,936 5,788,517

   Beer, Small Brewery

1,399,148 1,277,276 1,287,948 1,193,074

   Penalties, Interest and Refunds

(52,916) 3,121 53,293 9,804

   Total Tax

$37,606,388

$37,833,475

$39,591,090

$38,692,797

   Treatment and Prevention Fund

19,935,848 19,529,322 19,772,471 19,330,107

   General Fund

17,670,540 18,304,153 19,818,619 19,362,690

  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

906 922 870 815

   Number of Taxpayers

61 61 61 55


Excise Taxes

Commercial Passenger Vessel Excise Tax



AS 43.52.200 – 295

Description

Alaska imposes an excise tax on travel on commercial passenger vessels (CPVs), typically cruise ships that have 250 or more berths and provide overnight accommodations in the state’s marine waters. Passengers traveling on qualified commercial passenger vessels are liable for the tax.

Rate

The commercial passenger vessel excise tax rate is $34.50 per passenger, per voyage.

Returns

Cruise ship companies and commercial passenger vessel owners file returns and pay taxes monthly. The due date is the last day of the month following the month in which the voyages ended.

Exceptions

The CPV excise tax does not apply to passengers onboard a commercial passenger vessel that does not anchor or moor in state marine waters with the intent to allow passengers to disembark.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits all proceeds from the CPV excise tax into the Commercial Vessel Passenger (CVP) tax account in the General Fund. Subject to appropriation by the Legislature from this account, the division distributes $5 per passenger to each of the first seven ports of call in Alaska. The tax is further reduced by any municipal taxes imposed on each passenger that were in effect prior to Dec. 17, 2007.

History

2006 – The CPV excise tax was enacted by 2006 Primary Election Ballot Measure No. 2. The measure was approved by voters at the primary election of Aug. 26, 2006. The results of the election were certified Sept. 18, 2006, and the initiative’s provisions became effective Dec. 17, 2006.

2010 – During the 2010 legislative session, the CPV tax was reduced from $46 to $34.50 per passenger. The tax was further reduced by any municipal taxes imposed on a passenger that were in effect prior to Dec. 17, 2007. This legislation increased the number of ports of call that may receive $5 per passenger from five to seven, and removed the provision that prohibited a port of call from sharing in the CPV revenue if it imposed its own tax. The legislation also repealed the Regional Cruise Ship Impact Fund. In addition, the 2010 amendment changed the definition of a voyage by adding, “on the state's marine water” following “more than 72 hours.” These changes were effective for the 2011 cruise season.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$17,201,836 $18,350,089 $17,174,502 $16,372,480

   Shared with Municipalities

(15,051,450) (15,858,558) (14,394,385) (14,165,215)

   Regional Cruise Ship Impact Fund (State)

0 0 0 0

   Retained in General Fund

$2,150,386 $2,491,531 $2,780,117 $2,207,265


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

154 132 132 133

   Number of Taxpayers

12 10 12 11



Excise Taxes

Motor Fuel Tax



AS 43.40

Description

Alaska levies a motor fuel tax on motor fuel sold, transferred, or used within Alaska. The Department of Revenue’s Tax Division collects motor fuel taxes primarily from wholesalers and distributors that hold “qualified dealer” licenses issued by the division.

Rates

Fuel TypeRate/Gallon
Highway$0.08
Marine$0.05
Aviation Gasoline$0.047
Jet Fuel$0.032

Returns

Taxpayers file returns and make payments monthly. There are four separate returns: diesel, gasoline, aviation, and gasohol. The due date is the last day of the month following the month of sale or taxable use. Taxpayers may deduct 1% of the tax due, limited to a maximum of $100 per return, as a credit for timely filing to cover the expense of accounting and filing the monthly return.

Refunds

Consumers may claim a refund for the full tax rate if the consumer paid the full tax rate at the time of purchase and then used the fuel for exempt purposes. Consumers may also claim a partial refund of the tax if a higher rate was paid at the time of purchase or if the consumer used the fuel for partially exempt purposes.

Resellers, usually retailers, may claim a refund for the full tax if the reseller paid the tax, and then sold the fuel for exempt use and did not collect the tax.

Exemptions

In addition to sales between qualified dealers, the following sales and uses are exempt from motor fuel tax: heating, federal, state, and local government agencies, foreign flights (jet fuel), exports, charitable institutions, bunker fuel (residual fuel oil or #6 fuel oil).

Disposition of Revenue

The division deposits revenue derived from motor fuel taxes into the General Fund. Revenue from each category of fuel is accounted for separately in the division’s tax accounting system. For example, proceeds from tax on motor fuel used in boats and watercraft are deposited in a special watercraft fuel tax account and proceeds from tax on motor fuel used in highway vehicles are deposited in a special highway fuel tax account within the General Fund.

The division shares with the respective municipalities 60% of taxes attributable to aviation fuel sales at municipally owned or operated airports. All other proceeds of the taxes on aviation fuel are deposited into a special aviation fuel tax account.

History

The motor fuel tax dates back to 1945 when the Territorial Legislature imposed a tax of $0.01 per gallon on all motor fuel. Over time, the Alaska Legislature enacted separate tax rates for each of the fuel types as they exist today. The Legislature has also changed tax rates through the years.

1994 – The Legislature enacted a tax decrease for bunker fuel. The tax rate decreases from $0.05 to $0.01 per gallon on bunker fuel sales exceeding 4.1 million gallons. The tax decrease expired on June 30, 1998.

1997 – The Legislature repealed the gasohol exemption. The Legislature enacted a provision that reduces the tax on gasohol from $0.08 to $0.02 per gallon in areas and at times when the use of gasohol is required. However, gasohol has not been required since the winter of 2002-2003 and gasohol is currently taxed at the full tax rate of $0.08 per gallon.

Legislation was also passed that fully exempted gasohol blended with at least 10% alcohol derived from wood or seafood waste. The legislation expired on June 30, 2004.

The Legislature expanded the foreign flight exemption to include flights originating from foreign countries in addition to the existing exemption for flights with a foreign destination. The legislation included a permanent exemption for bunker fuel (residual fuel oil known as #6 fuel oil), which nullified the 1994 bunker fuel tax rate reduction.

1998 – The Legislature authorized taxpayers to take a “bad debt” credit for sales deemed to be worthless and for sales to persons who filed bankruptcy. The provision expired July 1, 2008.

2003 – The Legislature enacted legislation that made it easier for the state to issue motor fuel excise tax refunds for credit card purchases made by federal, state, and local government agencies.

2004 – The provision that exempted gasohol blended with at least 10% alcohol derived from wood or seafood waste from the motor fuel tax expired on June 30, 2004. Currently all gasohol is taxed at the rate of $0.08 per gallon.

2008 – In special session, the Legislature suspended the motor fuel tax on all fuel types effective Sept. 1, 2008, through Aug. 31, 2009.

2009 – Motor fuel distributors were required to file monthly reports of all fuel sales during the period of suspension. The motor fuel tax was reinstated effective Sept. 1, 2009.



Note:
For the Motor Fuel tax type, the gallons noted may not compute if calculated as gallons x tax rate = tax collected. Gallons are reported here if they were included on a tax return for a period that falls within the reported fiscal year. Tax collections, however, are based on the net amount received within the fiscal year and may include payments or refunds for tax periods prior to the reported fiscal year.



Click here for data with additional years.

  Gallons

Fiscal Year

2015 2014 2013 2012

   Highway Fuel

374,209,493 379,572,822 378,672,128 367,035,083

   Marine Fuel

107,101,975 102,770,420 112,801,467 107,911,855

   Jet Fuel

127,544,195 130,031,397 129,292,793 122,194,835

   Aviation Gasoline

10,195,669 9,973,348 10,026,550 11,358,555


  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Highway Fuel

$31,958,656 $32,997,249 $31,816,999 $30,640,300

   Marine Fuel

5,076,030 4,833,280 5,560,885 5,864,080

   Jet Fuel

4,371,630 3,732,799 4,161,673 3,893,422

   Aviation Gasoline

496,319 448,979 480,195 534,871

   Penalties and Interest

116,949 73,545 37,080 47,673

   Total Receipts

42,019,584 42,085,852 42,056,832 40,980,346

   Aviation Tax Shared

(141,801) (155,296) (162,346) (145,658)

   Total Tax

$41,877,783

$41,930,556

$41,894,486

$40,834,688

  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

3,253 3,339 3,414 3,418

   Number of Taxpayers

119 243 247 254


Excise Taxes

Tire Fee



AS 43.98.025

Description

Alaska imposes a tire fee on all new tires sold in Alaska for motor vehicles designed for use on a highway. An additional tire fee is imposed on the sale of tires with metal studs weighing more than 1.1 grams each (heavy studs). The additional tire fee also applies to the installation of heavy studs in new or used tires.

The Department of Revenue’s Tax Division collects tire fees primarily from businesses that sell new tires.

Rate

A $2.50 tire fee applies to each new tire, and an additional $5 fee applies to each studded tire or stud installation on a tire. Therefore, the total fee for new studded tires is $7.50 per tire.

Returns

Taxpayers are required to file returns and remit fees quarterly. Returns and payment are due the last day of the calendar month following the last day of the calendar quarter of the sale or installation.

Taxpayers may retain 5% of the amount collected, limited to a maximum of $600 per quarter, to cover expenses associated with collecting and remitting fees.

Exemptions

The following tires and services are exempt if the purchaser provides the tire seller with a certificate of use:

  • Tires and services sold to federal, state or local government agencies for official use.
  • Tires for resale.

The $2.50 tire fee does not apply to used tires and certain replacements of defective tires.

Disposition of Revenue

The division deposits all revenue from the tire fee into the General Fund.

History

2003 – The Alaska Legislature enacted the tire fee, effective Sept. 26, 2003.

2015 – The Legislature passed Senate Bill 33, which clarified the return filing date as the last day of the calendar month following the last day of the calendar quarter of the sale or installation. In addition, the 5% cap on the amount retained to cover expenses associated with collecting and remitting the fees was reduced from $900 a quarter to $600 a quarter. SB 33 became effective May 12, 2015.



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  Collections Summary

Fiscal Year

2015 2014 2013 2012

   New Tires (Non-Studded)

$1,133,124 $993,281 $1,008,990 $1,048,855

   Studded Tires and Stud Installations

373,883 324,771 373,455 351,003

   Penalties, Interest and Refunds

8,798 3,477 18,435 20,026

   Total Tax

$1,515,805

$1,321,529

$1,400,879

$1,419,884


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

297 273 292 315

   Number of Taxpayers

72 75 81 82



Excise Taxes

Tobacco Tax



AS 43.50

Description

Alaska levies a tax on cigarettes and other tobacco products. The cigarette tax is levied on cigarettes imported into the state for sale or personal consumption. The other tobacco products tax is levied on tobacco products (other than cigarettes) imported into the state for sale. The Department of Revenue’s Tax Division collects tobacco taxes primarily from licensed wholesalers, distributors and retailers.

Rates

Cigarettes – See rates table below. The cigarette tax must be paid through the purchase of cigarette tax stamps. A stamp must be affixed to the bottom of every pack of cigarettes imported into the state for sale or personal consumption.

Cigarette Tax Rates Since July 1, 2007
Mill RateTax Per
Cigarette
Tax Per Pack
(20 cigarettes)
Base Rate (School Fund)38 mills$0.038$0.76
Additional Tax (General Fund)62 mills$0.062$1.24
Total100 mills$0.10$2.00


Non-Participating Manufacturer (NPM) Equity Tax – An additional tax of 12.5 mills ($0.25 per pack of 20 cigarettes) is levied on each cigarette imported or acquired from a manufacturer that did not sign the tobacco Master Settlement Agreement (MSA). All revenue collected from this tax is deposited in the General Fund.

Other Tobacco Products (OTP) – The tax rate on OTP, which includes tobacco products other than cigarettes such as cigars and chewing tobacco, is 75% of the wholesale price. The wholesale price is the established price at which a manufacturer sells tobacco products to a distributor. The division may adjust the wholesale price upon which tax was calculated if the wholesale price was not established in an arm’s-length transaction.

Returns

Taxpayers must pay the cigarette tax by purchasing cigarette tax stamps. The other tobacco products tax is paid at the time a tax return is filed. Tax returns are required to be filed on a monthly basis and are due the last day of the month following the month that cigarette tax stamps were purchased or other tobacco products were imported into the state for sale.

Taxpayers that purchase cigarette tax stamps are entitled to a stamp discount of 3% on the first $1 million and 2% on the second $1 million of cigarette tax stamps purchased in a calendar year. The total stamp discount in each calendar year may not exceed $50,000. Taxpayers who import other tobacco products for sale may deduct 0.4% of the other tobacco products tax due to cover expenses of accounting and filing returns. There is no limit on this deduction.

Exemptions

Sales to authorized military personnel by a military exchange, commissary, or ship store, and sales by an Indian reservation business located within an Indian reservation to members of the reservation are not subject to the tax.

Disposition of Revenue

Cigarette Taxes – Revenue from the base rate is deposited in the School Fund. Revenue from the additional tax is initially deposited into the General Fund. Of the amount deposited in the General Fund, 8.9% of the revenue is deposited into the Tobacco Use Education and Cessation Fund, a subfund of the General Fund.

Cigarette and Tobacco Products License Fees – The division deposits all cigarette and tobacco products license fees into the School Fund, to be used for the rehabilitation, construction, repair, and associated insurance costs of state school facilities.

Other Tobacco Products – The division deposits all revenue from OTP into the General Fund.

History

The tobacco tax dates to 1949 when the Territorial Legislature enacted a tax of $0.03 per pack on cigarettes and $0.02 per ounce on tobacco. There were no exemptions provided in the tax legislation.

1951 – The Territorial Legislature increased the cigarette tax to $0.05 per pack.

1955 – The Territorial Legislature eliminated the tobacco products tax, and, although the cigarette tax rate remained at $0.05, the Legislature converted the rate to a mill rate per cigarette (2.5 mills per cigarette). The Legislature enacted a 1% deduction provision to cover accounting expenses.

The Legislature also created the School Fund and directed all proceeds from the cigarette tax be deposited in this fund.

1961 – The Alaska Legislature increased the cigarette tax to 4 mills per cigarette ($0.08 per pack). The Legislature dedicated revenue from the additional $0.03 to the General Fund.

1977 – The Legislature exempted military sales from the cigarette tax.

1983 – The department adopted regulations exempting sales of cigarettes by Indian reservation businesses to members of the reservation.

1985 – The Legislature increased the cigarette tax to 8 mills per cigarette ($0.16 cents per pack).

1988 – The Legislature enacted the tobacco products tax imposing a tax of 25% of the product wholesale price. The Legislature authorized taxpayers to deduct 1% of the tax to cover accounting expenses.

1989 – The Legislature increased the cigarette tax rate to 14.5 mills ($0.29 per pack of 20).

1997 – Effective Oct. 1, 1997, the Legislature increased the cigarette tax rate to 50 mills or $1 per pack of 20; and the tobacco products tax rate was increased to 75% of wholesale price. The Legislature reduced the deduction percentage to cover accounting expenses from 1% to 0.4%.

1999 – Effective June 3, 1999, Alaska became a signatory to the nationwide tobacco Master Settlement Agreement (MSA). The MSA is an agreement between 46 states, including Alaska, and certain cigarette manufacturers that have voluntarily agreed to reimburse states for costs associated with cigarette smoking. The agreement applies only to “Participating Manufacturers” (those manufacturers who have agreed to participate in the settlement).

The agreement includes language to prevent “Non-Participating Manufacturers” (those manufacturers who have not agreed to participate in the settlement) from deriving short-term profits and from becoming judgment-proof before liability arises. This language requires every Non-Participating Manufacturer to place funds in an escrow account for each cigarette sold in the state. Per the agreement, the State of Alaska is responsible to obtain data to determine the amount required to be placed in an escrow account by each Non-Participating Manufacturer.

2001 – Effective July 1, 2001, the department gained new tools to enforce the nationwide MSA signed by the major cigarette manufacturers and states. It allows the department to share information with other states and entities that may aid in the enforcement of the agreement. It also prohibits tobacco products licensees from importing and selling cigarettes in Alaska made by Non-Participating Manufacturers that fail to comply with the agreement.

2003 – The Legislature required all cigarette manufacturers to certify to the division that they are either a signatory to the tobacco MSA or in compliance with AS 45.53. The division is required to post on its website a list of the compliant cigarette manufacturers and their brands. Only those brands of cigarettes included in the list may be sold in Alaska.

2004 – Effective Jan. 1, 2004, the cigarette tax must be paid through the use of cigarette tax stamps. An Alaska cigarette tax stamp must be affixed to each cigarette pack prior to sale, distribution or consumption. Cigarettes found in the state that do not bear a cigarette tax stamp are contraband and subject to immediate seizure by the department or any other law enforcement agency in the state. Additionally, the sale of cigarettes at less than cost is prohibited.

During a special session in June 2004, the Legislature passed legislation that:

  • Increased the cigarette tax by 30 mills to $0.08 per cigarette or $1.60 per pack of 20 cigarettes, effective Jan. 1, 2005.
  • Levied an additional tax of 12.5 mills or $0.25 per pack of 20 cigarettes on cigarettes imported into the state for sale or personal consumption if the cigarettes were manufactured by a Non-Participating Manufacturer. An NPM is a manufacturer that did not sign the tobacco MSA. Revenue from the entire cigarette tax increase and the additional tax on NPM product is deposited in the General Fund.
  • Required 8.9% of cigarette tax revenue deposited in the General Fund to be deposited into the Tobacco Use Education and Cessation Fund, effective Jan. 1, 2005. Amounts deposited in the fund may be appropriated by the Legislature for tobacco use education and cessation programs.
  • Increased the cigarette tax by 10 mills to $0.09 per cigarette or $1.80 per pack of 20 cigarettes, effective July 1, 2006. The revenue from this increase will be deposited in the General Fund.
  • Increased the cigarette tax by 10 mills to $0.10 per cigarette or $2.00 per pack of 20 cigarettes, effective July 1, 2007. The revenue from this increase will be deposited in the General Fund.

2008 – Effective Aug. 1, 2008, only fire-safe certified cigarettes can be imported into Alaska.

2010 – The Legislature changed the methodology for establishing the minimum price at which cigarettes must be sold.

2014 – House Bill 193 (CH 74 SLA 14) added a new section to AS 43.50.150 granting the department the authority to collect, supervise, and enforce tobacco taxes in a manner that would allow the department to enter into agreements with a municipality to administer tobacco taxes on behalf of the municipality. These agreements may allow the department and a municipality to jointly administer cigarette stamps and audit taxpayers for cigarette/tobacco taxes. The law requires municipalities to reimburse the state for administration costs if the municipality decides to enter into an agreement with the department. The department may also share taxpayer information with municipalities relating to tobacco tax.



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  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Cigarette Tax

$52,790,556 $55,238,631 $57,247,497 $59,630,927

   OTP Tax

12,805,977 12,152,537 12,599,764 12,035,633

   Penalties and Interest

39,543 55,563 81,041 87,812

   License Fee

3,450 3,539 4,950 4,975

   Accounting Expense and Stamp Deduction

(398,094) (552,889) (358,591) (353,722)

   Total Tax

$65,241,432

$66,897,381

$69,574,661

$71,405,625

   General Fund

40,504,473 42,840,508 44,825,681 45,582,170

   School Fund

21,601,325 21,006,793 21,611,515 22,549,956

   Education and Cessation Fund

3,135,635 3,050,080 3,137,465 3,273,499


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

714 900 901 2,447

   Number of Taxpayers

66 78 101 263

  Cigarettes

Fiscal Year

2015 2014 2013 2012

   Total Cigarettes Reported on Tax Returns

549,993,906 552,548,995 576,510,265 601,742,621

   Military and Indian Exempt Cigarettes

(21,912,600) (4,674,586) (4,550,600) (5,004,500)

   Cigarette Credits for Returns

(1,059,675) (1,630,510) (2,426,945) (869,780)

   Taxable Cigarettes

527,021,631 546,243,899 569,532,720 595,868,341
  Value

Fiscal Year

2015 2014 2013 2012

   Other Tobacco Products

$18,572,760 $17,589,890 $17,143,371 $16,503,897

   Military and Indian Exempt OTP

(148,179) (147,589) (155,400) (151,542)

   OTP Credits for Returns

(249,805) (325,857) (301,332) (291,079)

   Taxable OTP Wholesale

$18,174,776 $17,116,444 $16,686,639 $16,061,276


Excise Taxes

Vehicle Rental Tax



AS 43.52

Description

Alaska levies an excise tax on fees and costs charged for the lease or rental of a passenger or recreational vehicle if the lease or rental does not exceed a period of 90 consecutive days.

The person working for the rental/lease agency that provides the leased or rental vehicle collects the tax from the individual renting or leasing the vehicle. The rental/lease agency in turn remits the tax to the Department of Revenue’s Tax Division.

Rate

For passenger vehicles, the rate is 10% of the total fees and costs for renting or leasing. For recreational vehicles, the rate is 3% of the total fees and costs for renting or leasing.

Returns

Vehicle rental/lease agencies file tax returns and remit taxes quarterly. The returns and payments are due the last day of the month following the end of the calendar quarter in which the rental/lease agencies collected the tax.

Exemptions

Vehicle rental tax does not apply to:

  • Rentals or leases to federal, state, local, or foreign government agencies or employees on official business.
  • Trucks with a gross vehicle weight rating greater than 8,500 pounds used for moving personal property and for vehicles provided to customers by automobile dealers as replacement transportation during warranty, recall, or service contract repairs.
  • Taxi cabs, which are excluded from the tax under AS 43.52.099. Specifically, taxi cabs do not meet the definition of a “passenger vehicle.”

There is no exemption certificate required for taxi cabs. Similarly, rental trucks and replacement transportation do not meet the “passenger vehicle” definition. However, there is an exemption certificate required for those transactions.

Disposition of Revenue

The division deposits all revenue from the vehicle rental tax into a special vehicle rental account in the General Fund. The Alaska Legislature may appropriate the balance in the vehicle rental tax account for tourism development and marketing.

History

2003 – The Legislature enacted the vehicle rental tax on Aug. 20, 2003. The tax became effective Jan. 1, 2004.

2004 – The Legislature exempted the rental of taxicabs by taxicab drivers from the vehicle rental tax. Effective May 8, 2004, and retroactive to Jan. 1, 2004, the division refunded any tax collected or remitted for taxi cab rentals between Jan. 1 and May 8, 2004.

2006 – The Legislature exempted trucks rented by individuals for moving personal property and for vehicles provided to customers by automobile dealers as replacement transportation during warranty, recall, or service contract repairs, effective Jan. 27, 2006.

2013 – Effective May 10, 2013, the Legislature excluded motorcycles and motor-driven cycles as defined by AS 28.90.990 from the tax.

2014 – House Bill 193 (CH 74 SLA 14) added a new subsection to AS 43.52.080 allowing the department to share taxpayer information with a municipality relating to vehicle rental tax, as long as the municipality grants similar privileges to the department, it provides adequate safeguards for taxpayer confidentiality; and it uses the information for tax purposes.



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  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Passenger Vehicle Rental

$9,215,480 $7,878,448 $8,002,079 $8,132,668

   Recreational Vehicle Rental

432,722 396,337 360,782 359,002

   Penalties, Interest and Refunds

50,554 8,712 20,130 37,963

   Total Tax

$9,698,755

$8,283,497

$8,382,991

$8,529,633


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

452 429 411 464

   Number of Taxpayers

114 123 116 118



Program Detail – Fisheries Taxes

Fisheries Taxes

Common Property Fishery Assessment



AS 16.10.455

Description

The common property fishery assessment is a cost recovery fisheries assessment that the Alaska Legislature authorized in 2006. It allows hatcheries to establish a common property fishery and recoup costs through an assessment on fishery resources taken in the terminal harvest area. The program was first used in 2012 for the Hidden Falls Hatchery in Southeast Alaska.

Rate

A person subject to the common property fishery assessment under AS 16.10.455 shall pay an assessment at a rate determined by the Department of Revenue annually, on the value of the salmon taken in a terminal harvest area that is subject to a common property fishery assessment.

Returns

Buyers are responsible for the collection of the common property fishery assessment and filing an annual return for each business location. The due date is Oct. 31 of the year in which the common property fishery was conducted.

A buyer making a bonus or other additional payment to a person after Oct. 31 for salmon purchased in the previous reporting period shall collect the assessment and file a return of the bonus or additional payment made. The buyer shall file the return no later than the last day of the month following the month in which a bonus or additional payment was made.

History

2006 – The Legislature adopted the common property fishery assessment.

2012 – The program was first used in 2012 for the Hidden Falls Hatchery in Southeast Alaska.

2014 – The Legislature passed Senate Bill 71 (CH 69 SLA 14) that changed the methodology for determining the value of salmon for the common property fishery assessment.



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  Collections Summary

Fiscal Year

2015 2014 2013

   Total Tax

$320,656

$1,055,835

$1,309,148


  Filing Information

Fiscal Year

2015 2014 2013

   Number of Returns

8 8 8

   Number of Taxpayers

7 7 7



Fisheries Taxes

Dive Fishery Management Assessment



AS 43.76.150

Description

The dive fishery management assessment is an elective assessment on the value of fisheries resources taken using dive gear. The assessment only applies to designated management areas and species, and is assessed at a rate elected by a vote of permit holders.

Rate

Southeast Alaska region commercial dive fishermen elected the following rates for the Southeast Alaska administrative area (Management Area A):

  • Geoduck 7%
  • Sea Cucumber 5%
  • Sea Urchin 7%

Returns

Buyers file returns and pay the tax quarterly. The due date is the last day of the month following the calendar quarter of purchase. Buyers file returns for bonus payments made to fishermen after the close of the fishing season. Returns for these payments are due with additional taxes by the last day of the month following the bonus payment.

Fishermen selling to unlicensed buyers, or exporting from the region, file returns and pay taxes annually. The due date is March 31, following the year of sale or export.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits all revenue derived from the dive fishery management assessment into Alaska's General Fund. Under AS 43.76.200, the Alaska Legislature may appropriate dive fishery management assessment revenue to the Alaska Department of Fish and Game for the purpose of funding the regional dive fishery development association.

History

1997 – The Legislature enacted the dive fishery management assessment statute effective June 1997.

1999 – The Southeast Regional Dive Fishery Association elected a dive fishery management assessment on geoducks, sea cucumbers and sea urchins harvested in the Southeast Alaska administrative area (Management Area A). The assessment, effective April 1999, set rates of 5% for geoduck and sea cucumber, and 7% for sea urchin.

2004 – The Legislature authorized three additional rates: 2%, 4% and 6%. Geoduck fishermen subsequently elected to increase the geoduck assessment to 7% from Nov. 1, 2004, through Oct. 31, 2006.

2005 – The Legislature authorized an annual filing due date of March 31 for dive fishermen who export or sell to unlicensed buyers, effective Jan. 1, 2005.

2006 – Geoduck fishermen elected to continue the 7% assessment on geoducks after Oct. 31, 2006 (Area A). The assessment, effective April 1999, set rates of 5% for geoduck and sea cucumber, and 7% for sea urchin.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$472,791 $539,638 $772,526 $682,534


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

56 52 52 60

   Number of Taxpayers

17 19 16 19



Fisheries Taxes

Fisheries Business Tax



AS 43.75

Description

Alaska levies a fisheries business tax (also known as the “raw fish tax”) on fisheries businesses and people who process fisheries resources in, or export unprocessed fisheries resources from Alaska. The tax is based on the price paid to commercial fishermen for the raw resource, or the fair market value when there is no arms-length transaction prior to processing or export. The Department of Revenue's Tax Division collects fisheries business taxes from processors and people who export unprocessed fishery resources from Alaska.

Rate

Fisheries business tax rates are based on the location and type of processing activity and whether a fishery resource is classified as “established” or “developing” by the Alaska Department of Fish and Game. Rates are as follows:

Processing Activity

EstablishedRate
Floating5.0%
Salmon Cannery4.5%
Shore-Based3.0%

Developing

Rate
Floating3.0%
Shore-Based1.0%

Returns

Fisheries businesses file calendar-year returns that are due with payment on March 31 of the following year. After filing the calendar-year return, taxpayers file returns to report post-season bonus payments made to fishermen. Returns for these payments are due with additional taxes by the last day of the month following the month of bonus payments.

Exclusion

Commercial fishermen who process fish on board their vessels are excluded from the tax if they sell to a licensed processor.

Credits

The following credits are available for use against the liability of this specific tax: Education, Scholarship Contributions ("Winn Brindle"), and Salmon Product Development Tax Credits. For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue
The division deposits all revenue derived from the fisheries business tax into the state’s General Fund. The Alaska Legislature may appropriate revenue from the tax for revenue sharing described below:

Processing Activity Inside Municipality

The division shares 50% of tax collected with the incorporated city or organized borough where the processing took place. If an incorporated city is within an organized borough, the division divides the 50% shareable amount equally between the incorporated city and the organized borough.

Processing Activity Outside Municipality


The division shares 50% of tax collected from processing activities outside an incorporated city or an organized borough through an allocation program administered by the Alaska Department of Commerce, Community and Economic Development.

History

1899 – The U.S. Congress adopted a “salmon case" tax to fund fisheries-related activities in pre-Territorial Alaska. The Organic Act passed in 1912 established an organized territorial government in Alaska. In 1913, the First Territorial Legislature adopted the “salmon pack” tax that applied to salmon canneries based on canned salmon ($0.07 per case); and the “cold storage” tax that applied to other fisheries and was based on business receipts. Between 1913 and 1949, the Territorial Legislature amended the tax several times by changing tax rates and expanding the tax base to include different fisheries.

1949 – The Territorial Legislature restructured the fisheries business tax to be based on the value of the fisheries rather than volumes (case or business receipts). The new “raw fish” tax applied to salmon (4%), crab and clams (2%), and other fishery products (1%) processed in canneries.

1951 – The Territorial Legislature enacted a fishery business license requirement with a $25 license fee, a tax on floating processors at 4% of value and increased the tax rate for salmon canneries to 6%.

1962 – The Alaska Legislature adopted provisions for sharing taxes (10%) and requiring calendar-year returns for all businesses.

1967 – The tax rate on salmon canneries was amended to 3% and provisions were adopted requiring security for a fishery business license under certain conditions.

1979 – The Legislature adopted the modern tax structure with different tax rates for established and developing species, as well as increasing the shared tax percentage to 20%.

1981 – The shared tax percentage was increased to 50%.

1986 – The Legislature authorized a Fisheries Business Tax Credit of up to 50% of fisheries business taxes for capital expenditures associated with constructing and improving shore-side processing operations. The tax credit program was effective for 1987 through 1989 with a carryforward provision through 1991. Taxpayers claimed approximately $47.5 million of credits under this program. The Legislature also enacted the A.W. “Winn” Brindle Scholarship Credit allowing a credit of up to 5% of fisheries business taxes due.

1987 – The Legislature enacted the Alaska Education Tax Credit program allowing a tax credit on educational contributions of up to $100,000 against fisheries business taxes due.

1990 – The Legislature enacted provisions for a civil penalty for processing without a license. The division may progressively assess penalties in increments of up to $5,000 for each infraction to a maximum of $25,000 for the fifth and subsequent assessments. The Legislature also enacted a provision that authorized sharing of 50% of taxes sourced from processing activities in the unorganized borough, effective July 1992.

1991 – The Legislature restructured the Alaska Education Credit and increased the maximum amount to $150,000.

1993 – The Alaska Department of Labor and Workforce Development Surety Bond Program transferred to the Department of Revenue under Executive Order 85, effective July 1, 1994.

1995 – The Legislature reduced the amount of surety bonding for small processors from $10,000 to $2,000.

2001 – The Legislature modified the tax payment security requirements necessary to obtain a fisheries business tax license. The Legislature also expanded the existing requirement for a whole-salmon exporter to include any exporter of any unprocessed fisheries resource. Under the legislation, exporters of unprocessed fish can obtain fisheries business licenses by posting a $50,000 surety bond and paying their taxes monthly.

2002 – The Legislature authorized credits of up to 50% for contributions of not more than $100,000 and 75% of the next $100,000 in contributions made to the Alaska Veterans’ Memorial Endowment Fund. The tax credit expired July 1, 2003.

2003 – The Legislature authorized a Salmon Product Development/Utilization (SPDU) Credit that allows tax credits against fisheries business taxes for expenditures promoting the value-added processing of salmon products and the utilization of salmon waste in Alaska. The amount of the tax credit cannot exceed 50% of the taxpayer’s fisheries business liability for processing of salmon during the tax year.

Effective June 11, 2003, and retroactive to Jan. 1, 2003, the SPDU legislation sunset date was Dec. 31, 2005. Unused credits earned may be carried forward for three years.

The Legislature authorized the monthly payment of the fisheries taxes in lieu of existing forms of security or prepayment as a prerequisite to being licensed. Fisheries businesses that elect the monthly payment option must post a $50,000 bond or have $100,000 equity in real property in the state. The provisions of this legislation took effect Sept. 8, 2003.

2004 – Legislation authorized a new direct marketing fisheries business license, and a tax structure set at the shore-based rate of 1% of the value of developing fish species and 3% of the value of established fish species. The provisions of this legislation took effect Jan. 1, 2005.

2005 – Effective May 18, 2005, the Legislature modified the surety and tax payment requirements for obtaining a fisheries business license. The Legislature reduced the amount of surety bonding for small primary fish buyers from $10,000 to $2,000. The legislation also added requisites for obtaining a fisheries business license.

Before being issued a license, a fisheries business must have fully paid (including penalties and interest) taxes administered by the division, seafood marketing assessments, employment security contributions, federal Occupational Safety and Health penalties, and municipal fishery taxes.

2006 – The Legislature extended the Salmon Product Development Credit for expenditures made through Dec. 31, 2008. The Salmon Utilization Credit, established in 2003, was not extended beyond the sunset date of Dec. 31, 2005.

2008 – The Legislature amended the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska and by a state-operated vocational technical education and training school.

The Legislature extended the Salmon Product Development Tax Credit program by three years. The legislation extended the ending date for placing specified property in service to qualify for the credit from Dec. 31, 2008, to Dec. 31, 2011. This legislation expanded the list of qualified property to include conveyors used for producing value-added salmon products and requires that the Department of Revenue develop and implement procedures for predetermining if investments qualify for the Salmon Product Development Tax Credit.

2010 – The Legislature amended the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expanded contributions eligible for the credit to include contributions made for the construction and maintenance of facilities by state-operated vocational education schools, and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expired Dec. 31, 2013. The maximum credit allowed was to revert to $150,000 on Jan. 1, 2014. That date was extended in 2011 (see below).

The Legislature extended the Salmon Product Development Tax Credit program by four years. The legislation extended the last date for placing qualified property in service from Dec. 31, 2011, to Dec. 31, 2015. The legislation also expanded the list of qualified property to include ice-making machines.

The Legislature authorized the Department of Revenue to withhold or suspend a fisheries business license if a fisheries business fails to pay the permit buyback fee imposed by the federal National Marine Fisheries Service under 16 U.S.C. 1861a.

2011 – The Legislature extended the date that the $5 million annual Education Credit limit expires from Jan. 1, 2014, to Jan. 1, 2021. It is then scheduled to return to $150,000. The Legislature also expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

2014 – The Legislature passed House Bill 278 (CH 15 SLA 14) and changed AS 43.75 to further expand qualifying Education Tax Credits to include cash contributions to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state-approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.

HB 306 (CH 69 SLA 14) amended AS 43.75 and repealed certain existing tax credits (the Winn Brindle Scholarship Credit, Education Credit, Salmon Development Credit, and Film Production Credit) over the next five to six years if the Legislature does not reauthorize the credits before their sunset dates.

The Legislature passed Senate Bill 71 (CH 69 SLA 14) that renamed the Salmon Product Development Credit to the Product Development Credit. The revised statute included herring products for credit, as well as salmon products for credit. The credit on salmon and herring expenditures are for promoting the development of salmon and herring products and was extended to Dec. 31, 2020.

2015 – The Legislature passed SB 39, which finalized the repeal of the Film Production Credit.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Established Shore-Based

$33,859,642 $34,375,661 $34,797,124 $36,627,375

   Established Floating

4,412,960 6,498,425 5,578,323 7,053,585

   Established Cannery

5,117,768 10,295,427 6,478,824 5,939,305

   Developing Shore-Based

9,732 37,743 50,442 63,557

   Developing Floating

28 525 493 725

   Prepayments

502,939 1,392,697 521,526 2,405,470

   Penalties and Interest

491,989 418,060 566,989 995,246

   License Fees

12,050 11,000 11,575 12,250

   Total Tax

$44,407,109

$53,029,538

$48,005,296

$53,097,514

   Shared with Municipalities

(21,479,070) (24,912,169) (23,165,321) (24,576,578)

   DCCED Municipal Allocation

(1,611,355) (1,581,457) (1,898,248) (2,075,432)

   Total Retained by State

$21,316,683 $26,535,912 $22,941,727 $26,445,504


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

753 915 923 913

   Number of Taxpayers

347 420 393 433





Fisheries Business Tax Credits


Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Salmon and Herring Product Development – AS 43.75.035 – Taxpayers are allowed tax credits against the fisheries business tax on salmon and herring expenditures, which promote the development of salmon and herring products. The credit on salmon and herring expenditures for promoting salmon and herring products was extended to Dec. 31, 2020.





Scholarship Contributions – AS 43.75.032, 43.77.035 – Taxpayers are allowed a credit of not more than 5% of the business tax liability for contributions made during the tax year to the A.W. “Winn” Brindle memorial education loan account.




Fisheries Taxes

Fishery Resource Landing Tax



AS 43.77

Description

Alaska levies a fishery resource landing tax on fishery resources processed outside of and first landed in Alaska, based on the unprocessed value of the resource. The unprocessed value is determined by multiplying a statewide average price per pound (derived from Alaska Department of Fish and Game data) by the unprocessed weight.

The Department of Revenue’s Tax Division collects the fishery resource landing tax primarily from factory trawlers and floating processors that process fishery resources outside the state’s 3-mile limit and bring their products into Alaska for transshipment.

Rate

Tax rates are based on whether the resource is classified as “established” or “developing” by the Alaska Department of Fish and Game, and are based on the unprocessed value of the fishery resource. The rate for established fisheries is 3% and the rate for developing fisheries is 1%.

Returns

Taxpayers file returns and pay tax on a calendar-year basis with a due date of March 31 of the following year. Taxpayers are required to make quarterly estimated tax payments that are due on the last day of each calendar quarter.

The division grants an automatic extension to file the landing return if it does not provide statewide average prices to taxpayers at least 30 days prior to the due date. If the extension applies, the due date is the last day of the month following the month in which the division issues statewide average prices.

Exemptions

Unprocessed fishery resources landed in the state are exempt from the fishery resource landing tax, but may be subject to the fisheries business tax.

Credits

The following are available for use against the liability of this specific tax: Education, Scholarship Contributions, CDQ, and other tax credits.

For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue

The division deposits all revenue from the fishery resource landing tax into the General Fund. The Alaska Legislature may appropriate revenue from the tax for revenue sharing as described below:

Landings Inside a Municipality – The division shares 50% of taxes from landings within a municipality with the respective municipalities in which the landings occurred. If a municipality is within a borough, the division divides the 50% shareable amount between the municipality and borough.

Landings Outside a Municipality – The division shares 50% of the taxes from landings outside a municipality (unorganized borough) through an allocation program administered by the Alaska Department of Commerce, Community and Economic Development.

History

1993 – The Legislature enacted the fishery resource landing tax effective January 1994. The rate was 3.3% of the unprocessed value of the resource. The Department of Revenue adopted regulations regarding administration of the tax, effective April 1994.

1994 – The American Factory Trawler Association (AFTA) filed litigation challenging the constitutionality of the landing tax.

1995 – The Alaska Supreme Court rejected AFTA’s request based on AFTA’s failure to exhaust administrative remedies with the Department of Revenue.

1996 – The landing tax was restructured to mirror the fishery business tax program. The Legislature revised the tax rate to 3% for established species and 1% for developing species. The 0.3% portion of the previous 3.3% tax rate was incorporated into seafood marketing assessment statutes (AS 16.51). The Legislature also amended the landing tax statutes to provide for tax credits for education and A.W. “Winn” Brindle Scholarship contributions. All changes were retroactive to January 1994, the inception date of the landing tax.

1997 – AFTA dismissed its challenge to the landing tax and in June, and the state issued a formal hearing decision upholding the constitutionality of the tax. Shared tax amounts from calendar year 1994 and 1995 returns, previously held in escrow, were released to municipalities.

1999 – The American Fisheries Act (P.L. 105-277) required a fishery cooperative to execute a contract with each cooperative member that obligated the member to make a payment to the state for pollock harvested in the Alaska pollock fishery that are not landed in Alaska. AS 43.77.015 required that those payments are treated as if they were landing taxes.

2001 – The Legislature amended the landing tax statutes to require the quarterly payment of estimated fishery resource landing taxes, effective calendar year 2002.

2002 – The Legislature authorized credits of up to 50% for contributions of not more than $100,000 and 75% of the next $100,000 in contributions made to the Alaska Veterans’ Memorial Endowment Fund. The tax credit expired July 1, 2003.

2008 – The Legislature amended the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska and by a state-operated vocational technical education and training school.

2010 – The Legislature amended the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expanded contributions eligible for the credit to include contributions made for construction and maintenance of facilities by state-operated vocational education schools and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expires Dec. 31, 2013. The maximum credit allowed was to revert to $150,000 on Jan. 1, 2014. The date was extended in 2011 ( below).

2011 – The Legislature enacted legislation extending the date that the $5 million annual Education Credit limit expires from Jan. 1, 2014, to Jan. 1, 2021. It is then scheduled to return to $150,000. In addition, the Legislature expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

2014 – The Legislature passed House Bill 278 (CH 15 SLA 14) that further expanded qualifying Education Tax Credits to include cash contributions to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research, and educational support purposes. In addition, tax credits are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.

HB 306 (CH 69 SLA 14) amended AS 43.77 and repealed certain existing tax credits (Winn Brindle Scholarship Credit, Education Credit, CDQ Credit, and Film Production Credit) over the next five to six years if the Legislature does not reauthorize the credits before their sunset dates.

The Legislature passed Senate Bill 71 (CH 69 SLA 14) that changed the due date for the Fishery Resource Landing Tax from a set date of April 1 to 30 days after the division publishes the statewide average prices.

2015 – The Legislature passed SB 39 that finalized the repeal of the Film Production Credit.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$8,376,628 $12,583,645 $13,381,669 $12,013,308

   Shared with Municipalities

(3,125,677) (5,148,589) (7,016,532) (4,825,254)

   DCCED Municipal Allocation

(109,137) (302,237) (826,348) (860,942)

   Tax Retained by State

$5,141,814 $7,132,819 $5,538,789 $6,327,112


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

99 78 65 78

   Number of Taxpayers

68 63 50 67





Fishery Resource Landing Tax Credits


CDQ – AS 43.77.040 – Taxpayers that harvest a fishery resource under a community development quota (CDQ) may claim a credit of up to 45.45% of fishery resource landing taxes for contributions to Alaska nonprofit corporations that are dedicated to fisheries industry-related expenditures.





Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Other Taxes – AS 43.77.030 – Taxpayers that paid taxes on fishery resources to another jurisdiction may claim a credit against the fishery resource landing tax. The credit, equal to the amount of taxes paid in the other jurisdiction, may not exceed the fishery resource landing tax.





Scholarship Contributions – AS 43.75.032, 43.77.035 – Taxpayers are allowed a credit of not more than 5% of the business tax liability for contributions made during the tax year to the A.W. “Winn” Brindle memorial education loan account.




Fisheries Taxes

Regional Seafood Development Tax



AS 43.76.350

Description

The seafood development tax is an elective tax levied on certain fishery resources using specific gear types sold in or exported from designated seafood development regions. Fishermen pay seafood development taxes to licensed buyers at the time of sale or to the Department of Revenue’s Tax Division for resources sold to unlicensed buyers or exported from Alaska. Buyers remit taxes collected from fishermen to the division.

Rate

Commercial fishermen harvesting salmon elected tax rates for the following development regions and gear types:

RegionRateEffective
Prince William Sound (Drift Gillnet)1%2005
Bristol Bay (Drift Gillnet)1%2006
Prince William Sound (Set Gillnet)1%2009

Returns

Buyers file returns and pay the tax monthly. The due date is the last day of the month following the month of purchase. Buyers file returns for bonus payments made to fishermen after the close of the fishery season. Returns for these payments are due with additional taxes by the last day of the month following the bonus payment. Fishermen selling to unlicensed buyers or exporting from Alaska file returns and pay taxes annually. The due date is March 31 following the year of sale or export.

Exemptions

Resources harvested under a special harvest area permit (typically, salmon harvested on behalf of salmon hatcheries) are exempt from the seafood development tax.

Disposition of Revenue

The division deposits all seafood development tax revenue into the General Fund. Under AS 43.76.380(d), the Alaska Legislature may appropriate seafood development tax revenue to provide financing for qualified regional seafood development associations.

History

2004 – The Legislature adopted the Seafood Development Tax Act. The act authorized a tax of between 0.5% and 2%, upon election by commercial fishermen harvesting within designated regions, on fishery resources transferred to buyers in or exported from Alaska.

2005 – Commercial salmon drift gillnet fishermen in the Prince William Sound seafood development region elected a 1% tax.

2006 – Commercial salmon drift gillnet fishermen in the Bristol Bay seafood development region elected a 1% tax.

2009 – Commercial salmon set gillnet fishermen in the Prince William Sound seafood development region elected a 1% tax.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$2,361,561 $1,886,066 $1,795,302 $1,915,156


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

189 186 218 244

   Number of Taxpayers

34 36 35 41



Fisheries Taxes

Salmon Enhancement Tax



AS 43.76.350

Description

The seafood development tax is an elective tax levied on certain fishery resources using specific gear types sold in or exported from designated seafood development regions. Fishermen pay seafood development taxes to licensed buyers at the time of sale or to the Department of Revenue’s Tax Division for resources sold to unlicensed buyers or exported from Alaska. Buyers remit taxes collected from fishermen to the division.

Rate

Commercial fishermen harvesting salmon elected tax rates for the following development regions and gear types:

RegionRateEffective
Prince William Sound (Drift Gillnet)1%2005
Bristol Bay (Drift Gillnet)1%2006
Prince William Sound (Set Gillnet)1%2009

Returns

Buyers file returns and pay the tax monthly. The due date is the last day of the month following the month of purchase. Buyers file returns for bonus payments made to fishermen after the close of the fishery season. Returns for these payments are due with additional taxes by the last day of the month following the bonus payment. Fishermen selling to unlicensed buyers or exporting from Alaska file returns and pay taxes annually. The due date is March 31 following the year of sale or export.

Exemptions

Resources harvested under a special harvest area permit (typically, salmon harvested on behalf of salmon hatcheries) are exempt from the seafood development tax.

Disposition of Revenue

The division deposits all seafood development tax revenue into the General Fund. Under AS 43.76.380(d), the Alaska Legislature may appropriate seafood development tax revenue to provide financing for qualified regional seafood development associations.

History

2004 – The Legislature adopted the Seafood Development Tax Act. The act authorized a tax of between 0.5% and 2%, upon election by commercial fishermen harvesting within designated regions, on fishery resources transferred to buyers in or exported from Alaska.

2005 – Commercial salmon drift gillnet fishermen in the Prince William Sound seafood development region elected a 1% tax.

2006 – Commercial salmon drift gillnet fishermen in the Bristol Bay seafood development region elected a 1% tax.

2009 – Commercial salmon set gillnet fishermen in the Prince William Sound seafood development region elected a 1% tax.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$7,742,177 $12,779,417 $8,454,033 $10,060,538


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

820 938 870 891

   Number of Taxpayers

190 212 190 202



Fisheries Taxes

Seafood Marketing Assessment



AS 16.51.120

Description

Alaska levies a seafood marketing assessment on seafood processed or first landed in Alaska. The state also levies the assessment on unprocessed fisheries products exported from Alaska. The Department of Revenue’s Tax Division collects the assessment from seafood processors and fishermen who export fishery resources out of Alaska.

Rate

The seafood marketing assessment is 0.5% of the value of seafood products exported from, processed, or first landed in Alaska.

Returns
Taxpayers file calendar-year returns with payment before April 1 of the following year. Taxpayers file monthly returns for postseason (bonus) payments made to fishermen after the filing of the calendar-year return. Returns for these payments are due with additional assessments by the last day of the month following the bonus payments.

Exemptions

Processors and fishermen who produce less than $50,000 worth of seafood products during a calendar year are exempt from the assessment.

Disposition of Revenue
The division deposits all seafood marketing assessments into the General Fund. The Alaska Legislature may appropriate funds to the Alaska Seafood Marketing Institute (ASMI).

History

1981 – The Legislature enacted an elective seafood marketing assessment of 0.1%, 0.2%, or 0.3% (elected by large processors in Alaska). Processors elected a 0.3% assessment to take effect in calendar year 1982.

1996 – The Legislature amended the seafood marketing assessment statutes to include fishery resources landed in Alaska. The legislation was retroactive to January 1994. Prior to fiscal year 1996, revenue collected from the 0.3% portion of the original 3.3% landing tax rate was accounted for in a separate account designated as (landing tax) seafood marketing assessments.

2004 – The Legislature directed the Alaska Seafood Marketing Institute to hold elections and determine whether to retain the assessment, and to hold a second election to determine whether to increase the assessment from 0.3% to 0.5%. Elections were held as prescribed by law. The vote retained the seafood marketing assessment, increased the rate to 0.5% and eliminated the salmon marketing tax, effective Jan. 1, 2005.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$9,474,112 $10,233,058 $9,563,546 $9,710,180


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

377 448 488 446

   Number of Taxpayers

130 148 139 154



Program Detail – Oil & Gas Taxes

Oil & Gas Taxes

Oil & Gas Production Tax



AS 43.55

Description

Alaska levies an annual tax on oil and gas produced in the state. The tax is based on the net value of oil and gas, which is the value at the point of production multiplied by the taxable volume, less all lease expenditures allowed under AS 43.55.165. Lease expenditures include certain qualified capital and operating expenditures. The most recent major change to the tax was in Senate Bill 21, passed in 2013 and effective Jan. 1, 2014.

Rate
For fiscal year 2015, the production tax rate as revised by SB 21, was 35% of the production tax value of the oil and gas. Tax rates for oil and gas produced from the Cook Inlet are effectively capped at the rate that was imposed on oil and gas produced from each lease or property during the period April 1, 2005, through March 31, 2006. Tax rates for North Slope Gas Used in State are capped at 17.7 cents per Mcf.

Returns

Taxpayers are required to report all values, volumes, transportation costs, expenditures, and credits used to calculate their estimated monthly installment payments in the monthly report. The monthly reports are due the last day of the month following the month of activity. Annually, on March 31, taxpayers submit an annual tax return that also “trues up” any tax liabilities or overpayments made throughout the year.

Exemptions

The tax on oil and gas is levied on all production except for state and federal royalty production. Oil and gas used on a lease or property for drilling, production, or repressuring is not taxed.

Credits

The following credits are available for use against the liability of this specific tax: Exploration Incentive, Assignable Exploration Incentive, Education, Qualified Capital Expenditure, Well Lease Expenditure, Carried-Forward Annual Loss, Transitional Investment Expenditure, New Area Development, Small Producer, Alternative Credit for Exploration, and Cook Inlet Jack-Up Rig Tax Credits. Some of these credits may also be redeemed by the State of Alaska for cash. For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue

All revenue derived from the oil and gas production tax is deposited in the General Fund, except that payments received as a consequence of an assessment or litigation are deposited in the Constitutional Budget Reserve Fund (CBRF).

History

1955 – The Territorial Legislature enacts an oil and gas production tax of 1% of production value.

1967 – A 1% disaster production tax is enacted to provide relief after the Fairbanks flood.

1968 – The Alaska Legislature increases oil and gas production tax from 1% to 3% of production value.

1970 – The Legislature repealed the disaster oil and gas production tax. The Legislature changes the oil production tax to a graduated tax with rates of 3% on the first 300 barrels per day per well, 5% on the next 700 barrels per day per well, 6% on the next 1,500 barrels per day per well and 8% on production exceeding 2,500 barrels per day per well.

1972 – The Legislature establishes a minimum oil production tax based on “cents per barrel” equivalent to percent of value tax on oil with wellhead value of $2.65 per barrel.

1973 – The Legislature revises the “stair step” rate schedule to lower production levels. The Legislature indexes the cents per barrel minimum to the wholesale price index for crude oil published by the U.S. Bureau of Labor Statistics.

1977 – The Legislature raises the nominal gas production tax rate to 10%. The Legislature raises the nominal oil production tax rate to 12.25% and adopts the oil and gas economic limit factors.

1981 – As part of legislation that repealed the separate accounting oil and gas corporation income tax, the nominal tax rate on oil produced prior to 1981 was raised to 15% and fields coming into production after 1981 are taxed at 12.25% for five years after which the rate increases to 15%. The oil economic limit factor is now subject to a rounding rule so that if the calculated factor is greater than or equal to 0.7 during the first 10 years of production, the factor is set to 1.0.

1989 – The Legislature changes the economic limit factor for oil production taxes to include a field size factor in the formula, fixes the production at the economic limit (not rebuttable) at 300 barrels per well per day, and drops the rounding rule. The Legislature fixes production at the economic limit for gas production at 3,000 mcf per well per day.

2002 – The Legislature authorized credits of up to 50% for contributions of not more than $100,000 and 75% of the next $100,000 in contributions made to the Alaska Veterans’ Memorial Endowment Fund. The tax credit expired July 1, 2003.

2003 – To encourage drilling for oil and gas within the state, AS 43.55.025 provided a new tax credit for exploration costs. The minimum credit is 20% and the maximum 40% for qualified expenditures.

2005 – Prudhoe Bay area oil fields are aggregated for purposes of calculating the economic limit factor, effective Feb. 1, 2005.

To expand the tax credit for exploration enacted the previous year, the deadline was extended until July 1, 2010, for qualifying work south of the Brooks Range (for instance, non-North Slope). New rules also changed the 3-mile and 25-mile rules for the Cook Inlet allowing closer distances between potential exploration targets and existing wells and production units.

The Legislature extended and amended the requirements applicable to the credit that may be claimed for certain oil and gas exploration expenses incurred in Cook Inlet against oil and gas production taxes. This legislation also amended the credit against those taxes for certain exploration expenditures from leases or properties in the state. The legislation was signed into law July 21, 2005, with an immediate effective date.

2006 – In August 2006, legislation was passed during a special session that made sweeping revisions to the oil and gas production tax. The Petroleum Production Tax (PPT) established new tax rates on oil and gas production; repealed the economic limit factor; and provided numerous credits for certain qualifying expenditures and taxpayers.

2007 – The Legislature amended PPT legislation in a special session that ended in November 2007. Like the PPT legislation enacted in 2006, the ACES tax is levied on the production tax value of oil and gas produced in the state. The base tax rate under ACES is 25% (it was 22.5% under PPT) and the progressive surcharge tax rate under ACES is 0.4% for every dollar the production tax value per barrel exceeds $30 (it was 0.25% on production tax values exceeding $40 per barrel under PPT). For production tax values greater than $92.50 per barrel, the progressivity rate changes to 0.1% for every additional dollar of production tax value.

2008 – The Legislature amended the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska and by a state-operated vocational technical education and training school.

The Alternative Credit for Exploration was increased from 20% to 30% for certain projects, and an oil and gas tax credit fund was established for the cash purchases of tax credit certificates.

2010 – The Legislature amended the alternative tax credit provisions to add tax credits for drilling exploration wells using a jack-up rig in the Cook Inlet. The first three unaffiliated persons drilling wells that penetrate and evaluate prospects in the pre-Tertiary zone are entitled to credits of 100%, 90% or 80%, respectively, of the first $25 million of exploration expenditures. Other changes include a new 40% tax credit for well lease expenditures incurred south of 68 degrees north latitude, elimination of the splitting of tax credits for lease expenditures incurred in the state south of 68 degrees north latitude after June 30, 2010, and elimination of the future investment requirement for the purchase of transferable tax credit certificates by the state.

The Legislature amended the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expanded contributions eligible for the credit to include contributions made for construction and maintenance of facilities by state-operated vocational education schools and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expires Dec. 31, 2013. The maximum credit allowed was to revert to $150,000 on Jan. 1, 2014. That date was extended in 2011 (see below).

2011 – The Legislature enacted legislation extending the date that the $5 million annual Education Credit limit expires from Jan. 1, 2014, to Jan. 1, 2021. It is then scheduled to return to $150,000. In addition, the Legislature expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

2012 – The Legislature enacted legislation that established a Corporate Income Tax Credit for a liquefied natural gas storage facility to be paid out of the Oil and Gas Credit fund. Also, it established a limitation on tax for oil and gas produced from leases or properties outside the Cook Inlet sedimentary basin that do not include land north of 68 degrees north latitude. The tax limitation is set to expire in 2022. Further, Exploration Tax Credits were established for drilling of exploration wells and seismic exploration expenditures in specific areas. These are referred to as the Middle Earth Basin Credits.

2013 – On May 21, 2013, SB 21 was signed into law. Major provisions of this law are:

  • The production tax rate amended to 35% of the annual PTV in AS 43.55.011(e), and eliminates the progressivity index under AS 43.55.011(g) effective Jan. 1, 2014.

  • Established AS 43.55.160(f), which defined production subject to the grow value reduction (GVR). The GVR is 20% of the Gross Value at the Point of Production (GVPP) for production that qualifies.

  • Establishes AS 43.55.160(g), which is an additional 10% reduction in GVPP for lease or properties qualifying under AS 43.55.160(f), which all leases have greater than a 12.5% royalty.

  • Amends Qualified Capital Expenditure (QCE) Credits for the area north of 68 degrees north latitude. The law eliminates credits for QCEs incurred after Dec. 21, 2013; however, QCE Credits for expenditures incurred south of 68 degrees north latitude remain. Amends qualified capital expenditures incurred south of 68 degrees north latitude are allowed to remain.

  • Changed the timing of applicability of credits so that 100% of credits based on expenditures incurred north of 68 degrees north latitude after Jan. 1, 2013, are available for immediate use.

  • Carry-Forward Annual Loss Credits incurred north of 68 degrees north latitude increase to 45% of excess lease expenditures beginning Jan. 1, 2014, through Dec. 31, 2015, and decrease to 35% of excess lease expenditures beginning Jan. 1, 2016. The credit for annual losses incurred south of 68 degrees north latitude remains at 25%.

  • Establishes new non-transferable tax credits based on oil production for lease or properties north of 68 degrees north latitude beginning Jan. 1, 2014. Under AS 43.55.024(i), established a $5 per barrel credit for oil that qualifies for the GVR under AS 43.55.160(f). The credit ranges from $8 to $0 based on the average GVPP per barrel each month.

  • Extended the sunset date for the Alternative Tax Credit for Oil and Gas Exploration from July 1, 2016, to Jan. 1, 2022, in AS 43.55.025(b) for exploration wells drilled outside of the Cook Inlet sedimentary basin and south of 68 degrees north latitude. This extension does not apply to the Basin Credits for exploration wells in AS 43.55.025(m) or the Basin Credits for seismic exploration in AS 43.55.025(n).

  • Extends the sunset of the tax limitation on production from leases or properties outside of the Cook Inlet Sedimentary Basin and do not include land that is north of 68 degrees north latitude in AS 43.55.011(p) from 2022 to 2027.

  • Reduces the interest on delinquent tax liabilities from 11 percentage points above to 3 percentage points above the rate charged member banks in the 12th Federal Reserve District, and interest is no longer compounded quarterly.


2014 – The Legislature passed SB 138, which is the enabling legislation to allow the State of Alaska to participate as an equity owner in the Alaska Liquefied Natural Gas (AKLNG) project. The goal of AKLNG is to commercialize North Slope natural gas reserves from the Prudhoe Bay and Point Thomson fields. Among the goals of AKLNG is for the state to receive its royalty gas in kind (RIK) and production tax as gas (TAG) in lieu of receiving royalty and tax payments from the producers supplying the gas to the project. The determination to receive the gas molecules in lieu of cash is subject to a best interest finding. The intent is that the state will receive an amount of gas that is commensurate with its equity ownership in AKLNG infrastructure. AKLNG infrastructure includes a gas treatment plant (GTP) located on the North Slope, an 800-mile natural gas pipeline and a natural gas liquefaction facility located in Nikiski. As an equity owner, and a recipient of the RIK and TAG, the State of Alaska will bear the burden of marketing and monetizing its portion of the gas. The legislation includes several changes to the oil and gas production tax statutes, which take effect on and after Jan. 1, 2022. A summary of the significant changes are:

  • The production tax for gas produced on and after Jan. 1, 2022, is equal to 13% of the gross value at the point of production of the taxable gas.

  • The production tax on oil produced on and after Jan. 1, 2022, is 35% of the annual production tax value of the taxable oil. The production tax value of the oil taxable under AS 43.55.011(e)(3) includes the producer’s lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and gas deposits in the state that includes land north of 68 degrees north latitude as adjusted under AS 43.55.170.

  • The minimum tax will only be applicable to oil produced on and after Jan. 1, 2022, from leases or properties that include land north of 68 degrees north latitude.

  • For gas produced on and after Jan. 1, 2022, a producer may make an election to pay the production tax as gas (TAG) for gas produced from oil and gas leases modified under AS 38.05.180(hh) in lieu of the tax otherwise levied for the gas by AS 43.55.011(e).



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Production Tax

$381,552,650 $2,605,881,507 $4,042,470,567 $6,136,664,298

   Conservation Surcharges

8,149,944 8,769,150 7,797,770 9,448,398

   General Fund

389,702,594 2,614,650,656 4,050,268,337 6,146,112,696

   CBR Fund

134,306,758 112,416,140 69,794,551 (5,058,795)

   Total Tax

$524,009,352

$2,727,066,796

$4,120,062,888

$6,141,053,900


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

86 60 57 29

   Number of Taxpayers

64 55 53 19





Oil & Gas Production Tax Credits


Alternative Credit for Exploration – AS 43.55.025 – Taxpayers that incur qualified exploration expenditures are eligible for this credit, which is 30% (20% for work performed prior to July 1, 2008) or 40%, depending on the qualifications of the exploration project. Taxpayers must obtain pre-approval from and submit certain data to the Alaska Department of Natural Resources as part of the application process for exploration well projects. Credit applications under AS 43.55.025 are audited prior to issuance of the credit certificates. Certificates must be eventually issued, but the credit may also be applied to tax prior to the issuance of a certificate. The credit is set to expire for the North Slope and Cook Inlet areas on July 1, 2016. This credit has been available since 2003 – pre-dating the oil and gas tax law revisions of 2006 and 2007. The scope of this credit is more specific than that provided for under AS 43.55.023.





Carried-Forward Annual Loss – AS 43.55.023(b) – Taxpayers that incur lease expenditures that are not deductible in calculating production tax values generate a "loss carry-forward" and they may apply for a tax credit. The credit rate is 25% for non-North Slope losses and North Slope losses prior to Jan. 1, 2014. The carried-forward annual loss for North Slope is 45% in 2014-2015 and 35% for 2016 forward. These credits are transferable.





Cook Inlet Jack-Up Rig Credit AS 43.55.025(a) (5) was passed by the Alaska Legislature in 2010 to incentivize investment in a jack-up rig for use in Cook Inlet. The credit is available to the first three unaffiliated persons that drill an offshore exploration well for oil or gas in Cook Inlet. Credit under this program will be granted for the lesser of 100% of exploration expenditures or $25 million to the first person who drills a qualifying well under the program. Credit for the lesser of 90% of exploration expenditures or $22.5 million is available to the second person, and credit for the lesser of 80% of exploration expenditures or $20 million is available to the third person who drills a qualifying well under the program.

Credit under this program may be granted in the form of a cash reimbursement from the state or it may be applied against tax liabilities. If the drilling under this program results in sustained production of oil or gas, 50% of the amount of the credit received shall be repaid to the state over a 10-year period.





Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Exploration Incentive (Assignable) – AS 41.09.010 – This is a distinct incentive program administered by the Alaska Department of Natural Resources. The credit is available to be claimed against royalty obligations, corporate income tax and production tax. Taxpayers may take a credit up to 50% on state land (or 25% on non-state lands) of eligible oil and gas exploration expenditures. An approved incentive credit under this statute may not exceed $5 million per project and is limited to $30 million per taxpayer.





Exploration Incentive – AS 38.05.180(i) – Lessees of state land drilling an exploratory well or conducting certain seismic exploration on that land are eligible for this credit. The credit is 50% of the cost of the exploration expenditures and may not exceed 50% of the production tax or state royalty against which it is applied. This credit is administered by the Alaska Department of Natural Resources, but may be applied to oil and gas production tax.





Frontier Basin Credits AS 43.55.025(a)(6) and (a)(7) was effective Jan. 1, 2013 to provide tax credits for exploration wells and seismic projects performed after June 30, 2012, and before July 1, 2016, in certain “Frontier Basins” described in AS 43.55.025(p). These sections added credits of 80% of qualifying exploration expenditures up to $25 million for the first two wells in any single basin and 75% of qualifying seismic exploration expenditures up to $7.5 million for the first seismic project in each basin. Many requirements must be met with the Alaska Department of Natural Resources to qualify for the credits, including pre-qualifications. The credit itself may be applied against a producer’s tax liability in the year in which it was incurred and also before the certificate is issued. The credit certificate may be transferred, applied to tax liability, or cashed out with the state under AS 43.55.028 by the original applicant.





New Area Development – AS 43.55.024(a) – Taxpayers that produce in areas outside the Cook Inlet and south of 68 degrees north latitude are eligible for a tax credit of not more than $6 million per year. This credit sunsets the later of 2016 or the ninth calendar year after first year of production. The credit is not certificated and is not transferable.





Per Barrel Credits – AS 43.55.024(i) and (j) – Under AS 43.55.024(i), a $5 per barrel credit is allowed for each barrel of taxable oil produced on the North Slope that qualifies for the Gross Value Reduction (GVR) under AS 43.55.160(f) and (g). Under AS 43.55.024(j), a sliding scale credit of $1 to $8 per barrel is based on the gross value of oil, when prices are below $150 per barrel, that does not qualify for the Gross Value Reduction (GVR) under AS 43.55.160(f) and (g). These credits may be applied against a tax levied by AS 43.55.011(e). The credits are NOT transferable and are NOT available to be issued as a certificate. An unused tax credit or portion of a tax credit under this section may not be carried forward for use in a later calendar year. The credit may not be used to reduce a tax liability for any calendar year below zero.





Qualified Capital Expenditure – AS 43.55.023(a) – Taxpayers that incur qualified capital expenditures for non-North Slope activity may apply for a 20% credit. This credit, when certificated, is transferable. Taxpayers may also apply the 20% credit to their annual oil and gas production tax filings without certification.

In 2010, the Alaska Legislature passed AS 43.55.023(l), which allows credit of 40% of qualified well lease expenditures incurred south of 68 degrees north latitude for oil or gas operations. These credits can be applied against production tax liabilities, transferred to another company, or purchased by the state.





Small Producer – AS 43.55.024(c) – Taxpayers with Alaska oil and gas production less than 100,000 BTU equivalent barrels a day are eligible for a Small Producer Credit. When average oil and gas production is no more than 50,000 barrels per day, the credit is $12 million per year. When production exceeds 50,000 barrels per day, but is less than 100,000 barrels per day, the credit is allocated based on production volumes. This credit sunsets the later of 2016 or the ninth calendar year after the first year of production. The credit is not certificated and is not transferable.





Transitional Investment Expenditure – AS 43.55.023(i) – The TIE Credit is generated by qualified capital expenditures made during the period April 1, 2001, through March 31, 2006. The credit is 20% of those qualified capital expenditures, not to exceed one-tenth of qualified capital expenditures incurred after March 31, 2006, and before Jan. 1, 2008. Producers and explorers without commercial production in Alaska before Jan. 1, 2008, are eligible for this credit. The TIE Credit is not transferable and is available until 2013.




Oil & Gas Taxes

Oil & Gas Property Tax



AS 43.56

Description

Alaska levies an oil and gas property tax on the value of taxable exploration, production, and pipeline transportation property in the state. There are three established procedures for the three distinct classes of property:

  • Exploration Property – Valued on the estimated price that the property would bring in an open market and under the then prevailing market conditions in a sale between a willing seller and a willing buyer, both conversant with the property and with prevailing general price levels;
  • Production Property – Valued on the basis of replacement cost of similar new property, less depreciation based on the economic life of the proven reserves; and
  • Pipeline Transportation Property – Generally valued on its economic value relative to the reserves feeding into the pipeline.

Rate

The state tax rate is 20 mills, or 2%, of the assessed value.

Returns

Taxpayers file annual returns reporting taxable property as of Jan. 1 of the assessment year. Returns are due on or before Jan. 15. Payment is due on or before June 30.

Exemptions

Oil and gas reserves, oil or gas leases, and the lease or rights to explore or produce oil or gas are exempt, as are intangible drilling and exploration expenditures. Certain aircraft, motor vehicles, communication facilities, and buildings may be exempt even though they are associated with oil or gas exploration, production, or pipeline transportation. Oil or gas pipeline transportation systems owned and operated by a public utility are exempt.

Credits

The following are available for use against the liability of this specific tax: Education Credit and municipal property taxes paid. For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits revenue from oil and gas property taxes into the General Fund. Payments received after a tax assessment are deposited into the Constitutional Budget Reserve Fund (CBRF).

History

The Alaska Legislature enacted this tax in 1973 during the first special session of the Eighth Legislature. The state assists local governments by assessing property subject to the tax, ensuring uniform treatment of all taxable property.

2008 – The Legislature amended the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska and by a state-operated vocational technical education and training school.

2010 – The Legislature amended the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expanded contributions eligible for the credit to include contributions made for construction and maintenance of facilities by state-operated vocational education schools and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expires Dec. 31, 2013. On Jan. 1, 2014, the maximum credit allowed will revert to $150,000.

2011 – The Legislature enacted legislation extending the date that the $5 million annual Education Credit limit expires from Jan. 1, 2014, to Jan. 1, 2021. It is then scheduled to return to $150,000. In addition, the Legislature expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

2014 – The Legislature passed House Bill 278 (CH 15 SLA 14) further expanding qualifying Education Tax Credits to include cash contributions to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research, and educational support purposes. In addition, tax credits are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   General Fund

$125,185,585 $128,066,886 $99,260,956 $111,179,244

   CBR Fund

8,849 18,911 21,122 104,235,535

   Total Tax

$125,194,434

$128,085,796

$99,282,078

$215,414,779


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

151 150 937 877

   Number of Taxpayers

151 150 153 147





Oil & Gas Property Tax Credits


Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Film Production A taxpayer may take a credit for certain expenses incurred in producing films in Alaska. The credit is administered by the Department of Revenue. This credit may be transferred.





Municipal Property Taxes Paid Taxpayers receive a credit against state oil and gas property tax for property taxes paid to municipalities on taxable property. The credit is limited to the amount of state tax otherwise due.




Oil & Gas Taxes

Oil Conservation Surcharges



AS 43.55.201 – 300

Description

Conservation surcharges apply to all oil production in Alaska and are in addition to oil and gas production taxes. Surcharges apply to each barrel of oil produced in the state less any oil the ownership or right to which is exempt from taxation.

Rate and Disposition of Revenue

Each taxable barrel (bbl) of oil is subject to the following two surcharges:

  • Conservation surcharge (AS 43.55.201) of $0.01 per barrel. Revenue derived from this surcharge may be appropriated to the response account in the oil and hazardous substance release prevention and response fund. The surcharge is suspended when the balance of the fund is over $50 million per AS 43.55.221.

  • Additional conservation surcharge (AS 43.55.300) or $0.04 per barrel. Revenue derived from this additional surcharge may be appropriated to the oil and hazardous substance release prevention account in the oil and hazardous substance release prevention and response fund.

History

1989 – Following the grounding of the Exxon Valdez, this tax was enacted in order to provide a hazardous substance release emergency fund. A $0.05/bbl hazardous release surcharge is imposed on oil production until the newly created hazardous substance release fund achieves a balance of $50 million.

1994 – The hazardous release surcharge is modified to the so-called “split nickel” with an ongoing charge of $0.03/bbl and an additional charge of $0.02/bbl whenever the hazardous substance release fund balance falls below $50 million.

2006 – The Alaska Legislature set the conservation surcharge rate at $0.01/bbl and the additional conservation surcharge rate at $0.04/bbl.

Fiscal Year 2016 Statistics*

*The oil conservation surcharge is reported on the same return and by the same taxpayers as Alaska’s oil and gas production tax (AS 43.55). The Department of Revenue’s Tax Division has not segregated program cost and staffing related to each individual tax. The division reports the total production tax cost and staffing in the Oil and Gas Production Tax section.

See Oil & Gas Production for Oil Conservation Surcharges data.





Program Detail – Other Programs

Other Programs

Alaska Salmon Price and Production Reports



Click here for Price and Production Report data.

AS 43.80

Description

Alaska requires large processors that sell salmon products at wholesale to provide production and price information to the Department of Revenue’s Tax Division. This information is used to publish average wholesale price information for the Alaska Legislature and the public.

Reports

Processors selling salmon products at wholesale are required to file price reports on salmon for the periods January through April, May through August, and September through December. The tri-annual reports are due by the end of the month following the tri-annual period.

Processors must also file annual reconciliation reports by Jan. 31 of the following year.

Exemptions

Processors excluded from the tax under AS 43.75.017, and processors that sell 1 million pounds or less of salmon products annually are exempt from the report filing requirements.

History

1980 – The Legislature enacted salmon price reporting requirements for salmon canneries. Effective Sept. 10, 1980, the department was required to compute and report to the Legislature the average wholesale prices obtained for canned salmon reported by Alaska salmon canneries during the months of August, September, October, November, and December for the previous five years.

1983 – The Legislature imposed a semi-annual report filing requirement on salmon canneries. Effective July 9, 1983, salmon canneries were required to report prices received for canned salmon for the periods October through March, and April through September. Reports were due by the end of the month following the semi-annual reporting period, and the canneries were required to list products by case and specified can sizes. The legislation required the department to calculate monthly and annual wholesale price averages for each species of salmon in each unit category and to report that information to the Legislature by the 15th day of each legislative session.

1998 – The Legislature expanded the reporting requirement to thermally processed salmon products and limited the reporting requirement to processors selling more than 240,000 pounds of thermally processed salmon products at wholesale during the calendar year.

The legislation replaced the semi-annual filing with a tri-annual filing, and required processors to report all container sizes of thermally processed salmon. Effective Sept. 1, 1998, all salmon canneries were required to report prices received for thermally processed salmon for the periods January through April, May through August, and September through December. The reports were due by the end of the month following the tri-annual reporting period, and all the salmon canneries were required to list thermally processed salmon products by whatever sizes sold.

2000 – The Legislature broadened the reporting requirement to include all processed salmon products and increased the reporting requirement to include only those processors selling more than 1 million pounds of salmon products at wholesale. Effective Sept. 1, 2000, large processors were required to provide areas of production for each salmon product sold at wholesale. The legislation requires salmon processors to file an annual report summarizing yearly activity, and requires the department to provide average wholesale prices paid for salmon products by March 15 of each year.





Other Programs

Electric Cooperative Tax



AS 10.25.540

Description

Alaska levies an electric cooperative tax on kilowatt hours furnished by qualified electric cooperatives recognized under AS 10.25.

Rate

The electric cooperative tax is based on a rate per kilowatt hour (kWh), and on the length of time the cooperative has furnished electricity to consumers as follows: $0.00025 per kWh for cooperatives that have furnished electric energy and power to consumers for less than five years as of Dec. 31 of the preceding calendar year or $0.0005 per kWh for cooperatives that have furnished electric energy and power to consumers for five years or longer as of the preceding calendar year.

Returns

Electric cooperatives file calendar-year returns that are due with payment before March 1 of the following year.

Exemptions

All qualified electric cooperatives are subject to the cooperative tax. Cooperatives pay the electric cooperative tax in lieu of corporate net income and excise taxes.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits all revenue derived from electric cooperative taxes into the General Fund.

Electric cooperative taxes sourced from within municipalities are shared 100% to respective municipalities, less the amount expended by the State of Alaska in their collection.

The state retains electric cooperative taxes sourced from outside municipalities.

History

1959 – The Alaska Legislature enacted the electric cooperative tax as part of the “Electric and Telephone Cooperative Act” that was adopted to promote cooperatives around the state. The due date for filing electric cooperative tax returns was April 1 of the following year.

1960 – The Legislature changed the due date for paying taxes to March 1.

1980 – The Legislature changed the tax base for calculating the electric cooperative tax from gross revenue to kWh. The Legislature adopted the current mill rates. (As far as electrical cooperative tax, one “mill” means one-tenth of one cent, according to AS 10.25.555.)



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  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$2,008,278 $2,001,497 $2,072,147 $2,046,510

   Taxes Shared

(2,001,304) (1,964,614) (2,037,896) (2,016,815)

   Tax Retained by State

$6,974 $36,883 $34,251 $29,696


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

21 16 21 17

   Number of Taxpayers

17 15 21 17



Other Programs

Large Passenger Vessel Gambling Tax



AS 43.35

Description

Alaska imposes a tax on the adjusted gross income of gambling activities aboard large passenger vessels in the state. Gambling activities include the use of playing cards, dice, roulette wheels, coin-operated instruments or machines, or other objects or instruments used for gaming or gambling, and any other gambling activities aboard large passenger vessels in Alaska. The tax is imposed on the operator of gaming or gambling activities.

Rate

The large passenger vessel (LPV) gambling tax rate is 33% of the adjusted gross income. Adjusted gross income means gross income less prizes awarded, and federal and municipal taxes paid or owed on the income.

Returns

Operators of gaming and gambling activities on LPVs file calendar-year returns that are due April 15 of the following year.

Exemptions

There are no exemptions for the LPV gambling tax.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits all proceeds from the LPV gambling tax into the commercial vessel passenger (CVP) tax account in the General Fund.

History

2006 – The LPV gambling tax was enacted by 2006 Primary Election Ballot Measure No. 2. The measure was approved by voters at the Aug. 26, 2006, primary election. The results of the election were certified Sept. 18, 2006, and the initiative’s provisions became effective Dec. 17, 2006.

2010 – The Alaska Legislature created the “large passenger vessel gaming and gambling tax account” as a subaccount of the CVP tax account and directed all proceeds from the LPV gambling tax to be deposited in the new account.



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  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Tax Collections

$6,611,786 $6,656,902 $5,983,333 $5,155,954


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

10 6 10 9

   Number of Taxpayers

9 6 8 8



Other Programs

Mining License Tax



AS 43.65

Description

Alaska levies a mining license tax on mining net income and royalties received in connection with mining properties and activities in Alaska. The Department of Revenue’s Tax Division collects mining license taxes primarily from businesses engaged in coal and hard rock mining.

Rates

Mining Net IncomeRate
$0 - $40,000No Tax
$40,001 - $50,000$1,200 plus 3% over $40,000
$50,001 - $100,000$1,500 plus 5% over $50,000
Over $100,000$4,000 plus 7% over $100,000


Returns

A taxpayer shall file a return either on a calendar-year or fiscal-year basis, in conformance with the basis used in making the return for federal income tax purposes. An entity with a calendar year-end shall file the return on or before April 30 of the following calendar year. An entity with a fiscal year-end shall file the return on or before the last day of the fourth month following the end of the fiscal year.

Exemptions

New qualifying mining operations are exempt from the mining license tax for a period of 3½ years after production begins. Quarry rock, sand and gravel, and marketable earth mining operations are exempt from the mining license tax effective Jan. 1, 2012.

Credits

The following are available for use against the liability of this specific tax: Education, Film, and Minerals Exploration Incentive tax credits.

For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue

The division deposits revenue from the mining license tax into the General Fund. Payments received after a tax assessment are deposited into the Constitutional Budget Reserve Fund (CBRF).

History

The mining license tax dates back to 1913, and first the Territorial Legislature, then the Alaska Legislature, restructured it several times over the years. The original mining license tax, enacted in 1913, imposed a 0.5% tax on mining net income of more than $5,000. There was no tax on net income less than $5,000.

1915 – The Territorial Legislature increased the tax rate to 1%. The tax-free net income base remained at $5,000.

1927 – The tax-free net income base was increased to $10,000 and a three-tier tax rate structure was adopted with rates ranging from 1% to 1.75% for net income of more than $1 million.

1935 – The Territorial Legislature restructured the tax to an eight-tier tax structure with rates ranging from 0.75% to 4% for net income of more than $1 million. The Territorial Legislature decreased tax-free net income to $5,000.

1937 – The tax-free net income base was eliminated and all net income was subject to tax. A nine-tier tax structure was adopted with tax rates ranging from 0.75% to 8% for net income of more than $1 million.

1947 – The mining license tax was restructured by reinstating a tax-free net income base of $1,000 and restructuring the tax rates to a five-tier structure with rates ranging from 4% to 8% for net income of more than $100,000.

1951 – The Territorial Legislature authorized a 3½-year exemption for new mining operations. This exemption does not apply to sand and gravel mining operations.

1953 – The tax-free net income base was increased to $10,000 and rates changed to range 3% to 7% for net income of more than $100,000.

1955 – The rate structure as it exists today was adopted.

1987 – The Alaska Education Tax Credit program was enacted allowing for a tax credit up to $100,000.

1991 – The Alaska Education Tax Credit was restructured and the maximum amount was increased to $150,000.

1995 – The Alaska Legislature authorized the Minerals Exploration Incentive Credit. The credit is limited to $20 million and taxpayers may apply the credit against 50% of mining license liabilities over a 15-year period.

2002 – The Legislature authorized credits of up to 50% for contributions of not more than $100,000 and 75% of the next $100,000 in contributions made to the Alaska Veterans’ Memorial Endowment Fund. The tax credit expired July 1, 2003.

2008 – The Legislature amended the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska, as well as by a state-operated vocational technical education and training school.

2010 – The Legislature amended the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expanded contributions eligible for the credit to include contributions made for construction and maintenance of facilities by state-operated vocational education schools and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expired Dec. 31, 2013. On Jan. 1, 2014, the maximum credit allowed reverted to $150,000.

2011 – The Legislature enacted legislation extending the date that the $5 million annual Education Credit limit expires from Jan. 1, 2014, to Jan. 1, 2021. It is then scheduled to return to $150,000. In addition, the Legislature expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

2012 – The Legislature enacted legislation exempting quarry rock, sand and gravel, and marketable earth mining operations from the mining license tax. This legislation had a retroactive effective date of Jan. 1, 2012.

2013 – The Legislature authorized the use of Alaska Film Tax Credits against taxpayers’ mining license tax liability.

2014 – The Legislature passed House Bill 278 (CH 15 SLA 14) that further expanded qualifying Education Tax Credits to include cash contributions to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50 - 50b for direct instruction, research, and educational support purposes. In addition, tax credits are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.



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  Collections Summary

Fiscal Year

2015 2014 2013 2012

   General Fund

$38,584,656 $23,291,213 $46,731,382 $40,642,185

   CBR Fund

70,553 166,087 56,308 53,648

   Tax Collections

38,655,209 23,457,300 46,787,690 40,695,833


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

616 461 514 650

   Number of Taxpayers

468 366 452 551





Mining License Tax Credits


Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Film Production A taxpayer may take a credit for certain expenses incurred in producing films in Alaska. The credit is administered by the Department of Revenue. This credit may be transferred.





Minerals Exploration Incentive A taxpayer may claim a credit for eligible costs of exploration activities related to determining existence, location, extent, or quality of a locatable mineral or coal deposit. An approved exploration incentive credit may not exceed $20 million and must be applied within 15 tax years after the credit is approved. Application of the credit is limited to the lesser of 50% of the taxpayer’s mining license tax liability or 50% of its corporate tax liability.




Other Programs

Other Taxes



Regulatory Cost Charges


Utilities AS 42.05.254(e), Pipeline AS 42.06.286(c)

Description

Alaska levies regulatory cost charges (RCC) on regulated utilities. The charges fund the Regulatory Commission of Alaska (RCA) that regulates utilities and pipeline carriers in Alaska. Regulated utilities collect charges from consumers and remit the collections to the Department of Revenue’s Tax Division.

The RCA is responsible for RCC returns and reports, and the division is responsible for reporting the revenue received.

Rate

Rates are available on the Alaska Regulatory Commission’s website at http://rca.alaska.gov/RCAWeb/RCALibrary/SampleMonthlyRates.aspx.

Returns

Quarterly returns and payment of RCCs are due on the 30th day following the calendar quarter. Utilities and carriers are required to file a copy of the return with the RCA.

Exemptions

Utilities not regulated by RCA are exempt from the RCC program.

Disposition of Revenue

The division deposits all revenue derived from the RCC program into the General Fund. The Alaska Legislature may make appropriations from the General Fund to fund RCA based on regulatory cost charges collected.

History

1992 – The Legislature enacted the RCC program to fund RCA’s costs of regulating utilities. The RCC legislation provided for a sunset date of December 1994. Rates went into effect through regulations that became effective in November 1992.

1994 – In the fall of 1994, RCA promulgated regulations that established RCC rates for FY 1995 on an annualized basis. The regulations took effect in December 1994.

1995 – The Legislature reauthorized the RCC program, effective June 1995. In October 1995, RCA adopted regulations to reestablish quarterly payments.

1999 – The Legislature authorized separate RCC rates for each regulated utility and changed the methodology for calculating rates.

2007 – The RCA implemented online report filing through the its website. RCA assumed responsibility for processing returns and collecting data; the division continued to collect revenue as required by statute.

2012 – The RCA required mandatory electronic filing and service in all docket proceedings effective February 2012, with an opportunity for a waiver.

FY 2016 Statistics

Total RCC collections in FY 2016 were $838,183.





Other Programs

Telephone Cooperative Tax




AS 10.25.550

Description

Alaska levies a telephone cooperative tax on gross revenue of qualified telephone cooperatives under AS 10.25. The Department of Revenue’s Tax Division collects taxes from cooperatives.

Rate

The telephone cooperative tax rate is based on revenue and the length of time in which the cooperative has furnished telephone service to consumers as follows:

  • For telephone cooperatives that have furnished telephone service to customers for less than five years, the tax is 1% of revenue.

  • For telephone cooperatives that have furnished telephone service to customers for five years or longer, the tax is 2% of revenue.

Returns

Telephone cooperatives file calendar-year returns that are due with payment before March 1 of the following year.


Exemptions

All qualified telephone cooperatives are subject to the cooperative tax. Cooperatives pay the telephone cooperative tax in lieu of corporate net income tax.

Disposition of Revenue

The division deposits revenue from the telephone cooperative tax into the General Fund.

Telephone cooperative taxes sourced from within municipalities are shared 100% to respective municipalities, less the amount expended by the State of Alaska for the collection of taxes.

The State of Alaska retains telephone cooperative taxes sourced from outside municipalities.

History

1959 – The Alaska Legislature enacted the telephone cooperative tax as part of the “Electric and Telephone Cooperative Act” to promote cooperatives around the state. The due date for filing telephone cooperative tax returns was April 1 of the following year.

1960 – The Legislature changed the due date for filing returns to “before March 1.”



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Total Tax

$2,191,258

$2,191,094

$2,222,538

$2,067,213

   Taxes Shared

(1,975,119) (1,971,302) (2,071,131) (1,913,065)

   Tax Retained by State

$216,138 $219,793 $151,407 $154,147


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

11 7 6 7

   Number of Taxpayers

7 6 6 7



Description of Credits



Alternative Credit for Exploration – AS 43.55.025 – Taxpayers that incur qualified exploration expenditures are eligible for this credit, which is 30% (20% for work performed prior to July 1, 2008) or 40%, depending on the qualifications of the exploration project. Taxpayers must obtain pre-approval from and submit certain data to the Alaska Department of Natural Resources as part of the application process for exploration well projects. Credit applications under AS 43.55.025 are audited prior to issuance of the credit certificates. Certificates must be eventually issued, but the credit may also be applied to tax prior to the issuance of a certificate. The credit is set to expire for the North Slope and Cook Inlet areas on July 1, 2016. This credit has been available since 2003 – pre-dating the oil and gas tax law revisions of 2006 and 2007. The scope of this credit is more specific than that provided for under AS 43.55.023.



Carried-Forward Annual Loss – AS 43.55.023(b) – Taxpayers that incur lease expenditures that are not deductible in calculating production tax values generate a "loss carry-forward" and they may apply for a tax credit. The credit rate is 25% for non-North Slope losses and North Slope losses prior to Jan. 1, 2014. The carried-forward annual loss for North Slope is 45% in 2014-2015 and 35% for 2016 forward. These credits are transferable.



CDQ – AS 43.77.040 – Taxpayers that harvest a fishery resource under a community development quota (CDQ) may claim a credit of up to 45.45% of fishery resource landing taxes for contributions to Alaska nonprofit corporations that are dedicated to fisheries industry-related expenditures.



Cook Inlet Jack-Up Rig Credit AS 43.55.025(a) (5) was passed by the Alaska Legislature in 2010 to incentivize investment in a jack-up rig for use in Cook Inlet. The credit is available to the first three unaffiliated persons that drill an offshore exploration well for oil or gas in Cook Inlet. Credit under this program will be granted for the lesser of 100% of exploration expenditures or $25 million to the first person who drills a qualifying well under the program. Credit for the lesser of 90% of exploration expenditures or $22.5 million is available to the second person, and credit for the lesser of 80% of exploration expenditures or $20 million is available to the third person who drills a qualifying well under the program.

Credit under this program may be granted in the form of a cash reimbursement from the state or it may be applied against tax liabilities. If the drilling under this program results in sustained production of oil or gas, 50% of the amount of the credit received shall be repaid to the state over a 10-year period.



Credit for the In-State Manufacture of Urea, Ammonia, or Gas-to-Liquid Products – Effective July 1, 2017, a taxpayer may claim a credit equal to the percentage of royalty paid under AS 38.05.135 on certain deliveries of gas, the percentage equal to the percentage of the ownership interest held by the taxpayer in the in-state processing facility. The credit is not refundable and may not be carried forward to the other tax years.



Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes. The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs, and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify. The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits to include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes. In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.



Exploration Incentive (Assignable) – AS 41.09.010 – This is a distinct incentive program administered by the Alaska Department of Natural Resources. The credit is available to be claimed against royalty obligations, corporate income tax and production tax. Taxpayers may take a credit up to 50% on state land (or 25% on non-state lands) of eligible oil and gas exploration expenditures. An approved incentive credit under this statute may not exceed $5 million per project and is limited to $30 million per taxpayer.



Exploration Incentive – AS 38.05.180(i) – Lessees of state land drilling an exploratory well or conducting certain seismic exploration on that land are eligible for this credit. The credit is 50% of the cost of the exploration expenditures and may not exceed 50% of the production tax or state royalty against which it is applied. This credit is administered by the Alaska Department of Natural Resources, but may be applied to oil and gas production tax.



Film Production A taxpayer may take a credit for certain expenses incurred in producing films in Alaska. The credit is administered by the Department of Revenue. This credit may be transferred.



Frontier Basin Credits AS 43.55.025(a)(6) and (a)(7) was effective Jan. 1, 2013 to provide tax credits for exploration wells and seismic projects performed after June 30, 2012, and before July 1, 2016, in certain “Frontier Basins” described in AS 43.55.025(p). These sections added credits of 80% of qualifying exploration expenditures up to $25 million for the first two wells in any single basin and 75% of qualifying seismic exploration expenditures up to $7.5 million for the first seismic project in each basin. Many requirements must be met with the Alaska Department of Natural Resources to qualify for the credits, including pre-qualifications. The credit itself may be applied against a producer’s tax liability in the year in which it was incurred and also before the certificate is issued. The credit certificate may be transferred, applied to tax liability, or cashed out with the state under AS 43.55.028 by the original applicant.



Gas Exploration and Development A taxpayer may take a corporate income tax credit for 25% of qualifying expenditures incurred in exploration and development of natural gas reserves in Alaska, except for the North Slope. The credit may be applied against 75% of the tax liability.



LNG Storage Facility Tax Credit A person may claim a credit for costs incurred to establish a LNG (Liquefied Natural Gas) storage facility in Alaska. The available credit is equal to 50% of the costs incurred, not to exceed $15 million. This is a refundable tax credit, subject to AS 43.55.028.



Minerals Exploration Incentive A taxpayer may claim a credit for eligible costs of exploration activities related to determining existence, location, extent, or quality of a locatable mineral or coal deposit. An approved exploration incentive credit may not exceed $20 million and must be applied within 15 tax years after the credit is approved. Application of the credit is limited to the lesser of 50% of the taxpayer’s mining license tax liability or 50% of its corporate tax liability.



Municipal Property Taxes Paid Taxpayers receive a credit against state oil and gas property tax for property taxes paid to municipalities on taxable property. The credit is limited to the amount of state tax otherwise due.



New Area Development – AS 43.55.024(a) – Taxpayers that produce in areas outside the Cook Inlet and south of 68 degrees north latitude are eligible for a tax credit of not more than $6 million per year. This credit sunsets the later of 2016 or the ninth calendar year after first year of production. The credit is not certificated and is not transferable.



Other Taxes – AS 43.77.030 – Taxpayers that paid taxes on fishery resources to another jurisdiction may claim a credit against the fishery resource landing tax. The credit, equal to the amount of taxes paid in the other jurisdiction, may not exceed the fishery resource landing tax.



Per Barrel Credits – AS 43.55.024(i) and (j) – Under AS 43.55.024(i), a $5 per barrel credit is allowed for each barrel of taxable oil produced on the North Slope that qualifies for the Gross Value Reduction (GVR) under AS 43.55.160(f) and (g). Under AS 43.55.024(j), a sliding scale credit of $1 to $8 per barrel is based on the gross value of oil, when prices are below $150 per barrel, that does not qualify for the Gross Value Reduction (GVR) under AS 43.55.160(f) and (g). These credits may be applied against a tax levied by AS 43.55.011(e). The credits are NOT transferable and are NOT available to be issued as a certificate. An unused tax credit or portion of a tax credit under this section may not be carried forward for use in a later calendar year. The credit may not be used to reduce a tax liability for any calendar year below zero.



Qualified Capital Expenditure – AS 43.55.023(a) – Taxpayers that incur qualified capital expenditures for non-North Slope activity may apply for a 20% credit. This credit, when certificated, is transferable. Taxpayers may also apply the 20% credit to their annual oil and gas production tax filings without certification.

In 2010, the Alaska Legislature passed AS 43.55.023(l), which allows credit of 40% of qualified well lease expenditures incurred south of 68 degrees north latitude for oil or gas operations. These credits can be applied against production tax liabilities, transferred to another company, or purchased by the state.



Qualified In-State Oil Refinery Infrastructure Expenditures Tax Credit A taxpayer that owns an in-state refinery may claim a credit, calculated as 40% of qualifed expenditures. The credit may not exceed $10 million for each refinery. The credit is refundable, subject to AS 43.55.028.



Qualified Oil and Gas Service Industry Expenditure Credit A taxpayer may claim a credit for qualified oil and gas service industry expenditures incurred in the state. The credit is calculated ast 10% of qualifed expenditures, the credit not to exceed $10 million. An unused credit may be carried forward for five years.



Salmon and Herring Product Development – AS 43.75.035 – Taxpayers are allowed tax credits against the fisheries business tax on salmon and herring expenditures, which promote the development of salmon and herring products. The credit on salmon and herring expenditures for promoting salmon and herring products was extended to Dec. 31, 2020.



Scholarship Contributions – AS 43.75.032, 43.77.035 – Taxpayers are allowed a credit of not more than 5% of the business tax liability for contributions made during the tax year to the A.W. “Winn” Brindle memorial education loan account.



Small Producer – AS 43.55.024(c) – Taxpayers with Alaska oil and gas production less than 100,000 BTU equivalent barrels a day are eligible for a Small Producer Credit. When average oil and gas production is no more than 50,000 barrels per day, the credit is $12 million per year. When production exceeds 50,000 barrels per day, but is less than 100,000 barrels per day, the credit is allocated based on production volumes. This credit sunsets the later of 2016 or the ninth calendar year after the first year of production. The credit is not certificated and is not transferable.



Transitional Investment Expenditure – AS 43.55.023(i) – The TIE Credit is generated by qualified capital expenditures made during the period April 1, 2001, through March 31, 2006. The credit is 20% of those qualified capital expenditures, not to exceed one-tenth of qualified capital expenditures incurred after March 31, 2006, and before Jan. 1, 2008. Producers and explorers without commercial production in Alaska before Jan. 1, 2008, are eligible for this credit. The TIE Credit is not transferable and is available until 2013.



Veteran Employment Tax Credit A taxpayer may take a credit for the employment of a veteran. The available credit is $3,000 for hiring a disabled veteran or $2,000 for a veteran who is not disabled.