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Printed or viewed on 5/25/18
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This annual report covers fiscal year 2017, which ended June 30, 2017.
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
Cover:
Fhoki Kayamori took this photograph in Yakutat, sometime between 1913 and 1939. It’s titled, “A small tractor being loaded onto a cannery tender, perhaps The Rustler,” according to a description of the photograph on file with the Alaska State Library, Historical Collections.
Alaska State Library, Historical Collections, Fhoki Kayamori, Photographs, ca. 1912-1941, ASL-PCA-55 Collection, Fhoki Kayamori, ASL-P55-430.
The Tax Division's Mission
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
Marijuana
Motor Fuel
Tire Fees
Tobacco
Vehicle Rental
Fisheries Taxes
Common Property Fishery
Dive Fishery Management
Fisheries Business
Fishery Resource Landing
Salmon Enhancement
Seafood Development
Seafood Marketing
Oil & 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 |
The Year 2017 in Retrospect
The Department of Revenue’s Tax Division has had another successful fiscal year in 2017 despite ongoing fiscal and other challenges.
Fiscal year 2017 was the first full fiscal year after full implementation of the division’s Tax Revenue Management System. The new software system has provided the division with multiple efficiencies, cost benefits and improvements. One of the major improvements is an online portal – Revenue Online – where taxpayers can access their tax accounts, file returns and reports, or make a payment day or night. Legislative changes to the Oil and Gas Production Tax will require major changes to the software but the software is functioning as designed, and is saving the state money since we are now able to do more with less staff.
The first legal marijuana sales in Alaska took place in FY 2017 and the division collected its first year of marijuana tax revenue. Total collections for FY 2017 were $1.7 million, the majority of which was paid in cash. The FY 2017 collections did not meet projections because licensing took longer than expected. The division safely and successfully processed all the cash in house without adding new employees – in fact the division lost additional positions in FY 2017 as a result of continued budget cuts.
In FY 2017, the division continued to work with the Governor’s Office, legislators and other state departments to formulate policy and long-term fiscal planning for the state. Following are some highlights of the division’s major accomplishments during FY 2017:
- Assisted both Gov. Bill Walker and the Alaska Legislature in addressing the significant budget issues the state is facing. Assisted in drafting an income tax bill that passed the House but not the Senate. Assisted the administration with Permanent Fund restructuring legislation. Provided information and testimony on tax bills as well as proposed changes to motor fuel tax rates.
- Provided assistance and testimony on critical legislation to affect changes in Alaska's Oil and Gas Production Tax and tax credits as part of the governor's overall plan to make Alaska more competitive as an oil production state.
- Continued to provide critical resources in support of developing a natural gas project.
- Distributed shared taxes and fees of approximately $45.9 million to 123 communities throughout Alaska.
- Reviewed, approved and issued the final film tax credit that was qualified under the original program. The film tax credit program was repealed in 2015.
Legislative Changes in FY 2017 By Tax Type
All Tax Programs
With the passage of House Bill 111 and beginning Jan. 1, 2018, the interest rate for delinquent tax and refunds is 5.25 percentage points above the rate charged to Federal Reserve member banks. This new interest rate is compounded quarterly and is extended to all taxes administered by the Department of Revenue under Title 43 of the Alaska Statutes.
Corporate Income Tax
HB 111 will allow a taxpayer to apply as a credit against their corporate income tax under AS 43.20 an Alternative Tax Credit for Oil and Gas Exploration earned by the taxpayer under AS 43.55.025 for exploration expenditures incurred for work performed on or after July 1, 2016. This credit is in addition to the Exploration Incentive Credit authorized by AS 27.30.
Oil and Gas Production Tax
HB 111, signed into law by Gov. Bill Walker on July 27, 2017, relates to changes to the applicability of certain credits earned under the Oil and Gas Production Tax, limitations on purchases of certain tax credit certificates, the addback of the gross value deduction before determining the carryforward of the annual loss, carryback of a credit to satisfy a tax liability for an amended return, issuance of conditional tax credit certificates, the Oil and Gas Tax Credit Fund, interest for delinquent taxes and overpayments, and the addition of a new carryforward provision for unused lease expenses with an erosion of value over time if not used.
 
STATEMENT OF TOTAL REVENUE COLLECTED
| REVENUES | FY 2017 | Percentage
of Total | Oil & Gas Production1 | $482,789,730 | 47.4 % | Oil and Gas Property1,2 | $120,804,810 | 11.86 % | Other Corporate Income | $85,354,827 | 8.38 % | Tobacco3 | $67,554,668 | 6.63 % | Motor Fuel4 | $45,944,439 | 4.51 % | Mining License1 | $41,525,192 | 4.08 % | Alcoholic Beverages5 | $40,096,840 | 3.94 % | Fisheries Business4 | $38,330,171 | 3.76 % | Commercial Passenger Vessel4 | $18,567,290 | 1.82 % | Vehicle Rental | $11,997,733 | 1.18 % | Fishery Resource Landing4 | $9,968,676 | 0.98 % | Seafood Marketing Assessment | $9,566,525 | 0.94 % | Regulatory Cost Charges | $9,316,459 | 0.91 % | Large Passenger Vessel Gambling | $8,169,456 | 0.8 % | Oil Conservation Surcharge | $8,048,264 | 0.79 % | Salmon Enhancement | $5,382,662 | 0.53 % | Gaming | $2,498,590 | 0.25 % | Oil & Gas Corporate Income1 | $2,420,122 | 0.24 % | Telephone Cooperative4 | $2,386,181 | 0.23 % | Regional Seafood Development | $1,999,249 | 0.2 % | Electric Cooperative4 | $1,983,534 | 0.19 % | Marijuana6 | $1,749,497 | 0.17 % | Tire Fees | $1,421,219 | 0.14 % | Dive Fishery Management | $551,492 | 0.05 % | Common Property Fishery Assessment | $13,262 | < 0.01 % | | Total | $1,018,440,888 | |
1 Includes amounts transferred to the Constitutional Budget Reserve Fund.
2 Amount is net of credits for local government property tax paid to municipalities.
3 Includes amounts transferred to the School Fund, Tobacco Use Education and Cessation Fund.
4 Prior to sharing with municipalities.
5 Includes amounts transferred to the Alcohol and Other Drug Abuse Treatment and Prevention Fund.
6 Includes amounts transferred to the Recidivism Fund.
REVENUE DISTRIBUTIONS
OTHER THAN TO THE GENERAL FUND
| REVENUES | FY 2017 | Percentage
of Total | | Constitutional Budget Reserve Fund | Oil & Gas Production | $349,959,189 | 85.13 % | Oil & Gas Corporate Income | $61,792,353 | 15.03 % | Oil & Gas Property | $390,210 | 0.09 % | Mining License | $147,315 | 0.04 % | Corporate Income | -$1,192,401 | < 0.01 % | |
| Total CBRF | $411,096,666 | | School Fund | $21,280,324 | | Alcohol and Other Drug Abuse Treatment and Prevention Fund | $20,023,821 | | Tobacco Use Education and Cessation Fund | $3,081,524 | | Recidivism Fund | $869,683 | |
The amounts directly above are included in the previous table titled, “Statement of Total Revenues Collected.” These amounts were required to be transferred to the designated funds directly above under provisions of the Alaska Constitution or Alaska Statutes.
 
Total Tax Returns Filed 31,054
| REVENUES | FY 2017 | Percentage
of Total
Returns | | Corporate Income | 17,952 | 57.81 % | | Motor Fuel | 2,995 | 9.64 % | | Charitable Gaming | 2,992 | 9.63 % | | Salmon Enhancement | 1,260 | 4.06 % | | Alcoholic Beverages | 1,109 | 3.57 % | | Fisheries Business | 1,062 | 3.42 % | | Seafood Marketing Assessment | 613 | 1.97 % | | Mining License | 566 | 1.82 % | | Tobacco | 525 | 1.69 % | | Vehicle Rental | 509 | 1.64 % | | Regional Seafood Development | 324 | 1.04 % | | Tire Fees | 294 | 0.95 % | | Marijuana | 218 | 0.7 % | | Oil and Gas Property | 174 | 0.56 % | | CPV Excise | 152 | 0.49 % | | Oil and Gas Production | 135 | 0.43 % | | Fishery Resource Landing | 71 | 0.23 % | | Dive Fishery Management Assessment | 60 | 0.19 % | | Electric Cooperative | 19 | 0.06 % | | LPV Gambling | 10 | 0.03 % | | Common Property Fishery Assessment | 7 | 0.02 % | | Telephone Cooperative | 7 | 0.02 % | | Total | 31,054 | |
Electronic Filings Versus Paper
FY 2017
| Tax Type | Electronic | Mail | | Alcoholic Beverages Tax | 1,035 | 74 | | Charitable Gaming | 2,992 | 0 | | Commercial Passenger Vessel Excise Tax | 152 | 0 | | Common Property Fishery Assessment | 5 | 2 | | Corporate Income Tax | 12,365 | 5,584 | | Dive Fisheries | 49 | 11 | | Electric Cooperative | 11 | 8 | | Fisheries Business Tax | 805 | 257 | | Fisheries Landing Tax | 68 | 3 | | Large Passenger Vessel Gambling Tax | 10 | 0 | | Marijuana | 218 | 0 | | Mining License Tax | 233 | 333 | | Motor Fuel Tax | 2,623 | 372 | | Oil & Gas Production Tax | 135 | 0 | | Oil & Gas Property Tax | 174 | 0 | | Regional Seafood Development Tax | 209 | 115 | | Salmon Enhancement Tax | 851 | 409 | | Seafood Marketing Assessment | 463 | 150 | | Telephone Cooperative | 5 | 2 | | Tire Fees | 198 | 96 | | Tobacco Tax | 435 | 90 | | Vehicle Rental Tax | 348 | 161 | | Total | 23,384 | 7,667 |
Data with additional years.
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 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 Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
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 qualified 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 as 10% of qualified expenditures, with 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.
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Data with additional 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 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 Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
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.
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Data with additional years.
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 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 Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
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.
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Data with additional years.
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 who 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 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 – 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.
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.
Film Production Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
Frontier Basin Credits – AS 43.55.025(a)(6) and (7) were 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 Expenditures – 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.
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Data with additional 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 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 Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
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.
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Data with additional 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 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 Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
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.
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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 who 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 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 – 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.
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.
Film Production Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.
Frontier Basin Credits – AS 43.55.025(a)(6) and (7) were 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 Expenditures – 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 qualified 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 as 10% of qualified expenditures, with 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.
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.
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