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Revised Date: 10/12/2020
Printed or viewed on 11/27/20
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This annual report covers fiscal year 2019, which ended June 30, 2019.
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
Summer 1967 - Nugget Mining Co. - Located on the mouth of Ophir Creek on Niukluk River on the Seward Peninsula
The Tax Division's Mission
The mission of the Tax Division is to collect taxes, inform stakeholders, and regulate charitable gaming. Many of 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: Charitable Gaming
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
Regional Seafood Development
Salmon Enhancement
Seafood Marketing
Oil and Gas Taxes
Production
Property
Conservation Surcharges | Other Taxes
Salmon Price and Production Reporting
Electric Cooperative
Large Passenger Vessel Gambling
Mining License
Regulatory Cost Charges
Telephone Cooperative
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The Department of Revenue’s Tax Division has completed another successful year in fiscal year 2019.
We are now in a stable phase with our Tax Revenue Management System (TRMS) which has been fully implemented for all of our tax programs. This software continues to provide many benefits to our division – simplification, efficiencies, and the ability of our customers to access their online information themselves. We are now able to refocus our efforts to our core business of managing and auditing the tax programs we steward on behalf of the State of Alaska.
The most recent tax implementation was in FY 2017 with the legalization of marijuana and subsequent taxation. This tax program too has stabilized but we have continued to streamline our cash collections process. In FY 2019, we implemented improvements to the security of our cash counting room. This is a critical part of our work, as we processed over $14 million in cash in FY 2019. The security for our employees and the monies are of utmost importance to us.
In FY 2019, the division was successful in getting legislation passed that would allow for fingerprinting of all Tax Division employees. This was needed in order for our compliance with IRS rules and Publication 1075. The program will be implemented in FY 2020.
In FY 2019, 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 2019:- Continued to provide critical resources in support of analyzing a natural gas project.
- Distributed shared taxes and fees of approximately $52.6 million to 132 communities throughout Alaska.
Legislative Changes in FY 2019 by Tax Type
The 2019 Legislative Session only yielded one bill that impacted the Tax Division.
Alcohol Tax
The Legislature passed Senate Bill 16 which waived the alcohol excise tax security bond requirement for manufacturer licensees who had timely filed their monthly tax returns and paid the taxes for the most recent three consecutive years. The legislation did not change the alcohol tax rate or any tax provisions. This legislation was signed into law in July 2019.
  1 2 1 Includes the oil and gas production tax and the oil conservation surcharges.
2 Includes oil and gas and other corporate income tax.
STATEMENT OF TOTAL REVENUE COLLECTED
| REVENUE | FY 2019 | Percentage
of Total |
|---|
Oil and Gas Production1 | $753,291,029 | 47.95 % | Oil and Gas Corporate Income1 | $217,687,775 | 13.86 % | Oil and Gas Property1,2 | $121,500,545 | 7.73 % | Other Corporate Income | $114,832,684 | 7.31 % | Tobacco3 | $59,677,134 | 3.80 % | Mining License1 | $47,962,981 | 3.05 % | Motor Fuel4 | $45,703,285 | 2.91 % | Fisheries Business4 | $45,365,281 | 2.89 % | Alcoholic Beverages5 | $40,778,419 | 2.60 % | Commercial Passenger Vessel4 | $22,961,920 | 1.46 % | Marijuana6 | $19,082,542 | 1.21 % | Fishery Resource Landing4 | $12,484,156 | 0.79 % | Vehicle Rental | $11,392,345 | 0.73 % | Regulatory Cost Charges | $10,718,554 | 0.68 % | Large Passenger Vessel Gambling | $10,062,533 | 0.64 % | Seafood Marketing Assessment | $10,042,140 | 0.64 % | Oil Conservation Surcharge | $8,232,195 | 0.52 % | Salmon Enhancement | $6,559,454 | 0.42 % | Regional Seafood Development | $3,621,453 | 0.23 % | Gaming | $2,557,983 | 0.16 % | Telephone Cooperative4 | $2,545,874 | 0.16 % | Electric Cooperative4 | $1,972,158 | 0.13 % | Tire Fees | $1,339,233 | 0.09 % | Dive Fishery Management | $751,454 | 0.05 % | Common Property Fishery Assessment | $0 | 0 % | | Total | $1,571,123,127 | 100% |
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 and 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 Reduction Fund and Marijuana Education Treatment Fund.
REVENUE DISTRIBUTIONS
OTHER THAN TO THE GENERAL FUND
| FUNDS | FY 2019 | Percentage
of Total |
|---|
| Constitutional Budget Reserve Fund |
|---|
Oil and Gas Production | $166,021,182 | 94.07 % | Oil and Gas Corporate Income | $5,530,585 | 3.13 % | Mining License | $2,888,219 | 1.64 % | Oil and Gas Property | $2,041,681 | 1.16 % | |
| Total CBRF | $176,481,667 | | Alcohol and Other Drug Abuse Treatment and Prevention Fund | $20,385,319 | | School Fund | $17,119,232 | | Tobacco Use Education and Cessation Fund | $2,484,442 | | Recidivism Reduction Fund | $9,396,335 | | Marijuana Education Treatment Fund | $4,168,832 | |
 
Total Tax Returns Filed
| TAX TYPE | FY 2019 | Percentage
of Total
Returns |
|---|
| Corporate Income | 18,232 | 51.75 % | | Charitable Gaming | 4,507 | 12.79 % | | Motor Fuel | 2,979 | 8.46 % | | Marijuana | 2,137 | 6.07 % | | Salmon Enhancement | 1,484 | 4.21 % | | Fisheries Business | 1,143 | 3.24 % | | Alcoholic Beverages | 1,079 | 3.06 % | | Seafood Marketing Assessment | 691 | 1.96 % | | Regional Seafood Development | 544 | 1.54 % | | Tobacco | 542 | 1.54 % | | Vehicle Rental | 537 | 1.52 % | | Mining License | 411 | 1.17 % | | Tire Fees | 289 | 0.82 % | | CPV Excise | 190 | 0.54 % | | Oil and Gas Property | 167 | 0.47 % | | Oil and Gas Production | 133 | 0.38 % | | Dive Fishery Management Assessment | 66 | 0.19 % | | Fishery Resource Landing | 62 | 0.18 % | | Electric Cooperative | 17 | 0.05 % | | LPV Gambling | 11 | 0.03 % | | Telephone Cooperative | 8 | 0.02 % | | Common Property Fishery Assessment | 2 | < 0.01 % | | Total | 35,231 | 100% |
Regulatory Cost Charge returns are not reported, they are filed with the RCA.
Electronic Filings Versus Paper
FY 2019
| Tax Type | Electronic | Paper |
|---|
| Alcoholic Beverages | 1,079 | 0 | | Charitable Gaming | 4,507 | 0 | | Commercial Passenger Vessel Excise | 190 | 0 | | Common Property Fishery Assessment | 2 | 0 | | Corporate Income | 15,617 | 2,615 | | Dive Fishery | 66 | 0 | | Electric Cooperative | 16 | 1 | | Fisheries Business | 1,131 | 12 | | Fisheries Landing | 62 | 0 | | Large Passenger Vessel Gambling | 11 | 0 | | Marijuana | 2,137 | 0 | | Mining License | 300 | 111 | | Motor Fuel | 2,979 | 0 | | Oil and Gas Production | 133 | 0 | | Oil and Gas Property | 167 | 0 | | Regional Seafood Development | 538 | 6 | | Salmon Enhancement | 1,466 | 18 | | Seafood Marketing Assessment | 689 | 2 | | Telephone Cooperative | 8 | 0 | | Tire Fees | 287 | 2 | | Tobacco | 531 | 11 | | Vehicle Rental | 521 | 16 | | Total | 32,437 | 2,794 |
Click here for data with additional years.
Alternative Credit for Exploration – AS 43.55.025(a)(1)-(4) – Taxpayers who incur qualified exploration expenditures are eligible for this credit against oil and gas production tax. Credits earned for certain work performed on or after July 1, 2016, may be taken against corporate income tax.
The credit 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 the Alaska Department of Natural Resources and submit certain data 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 transferable and eligible for state repurchase.
The credit is set to expire for Middle Earth Wells on Dec. 31, 2021. It expired for Middle Earth Seismic on Dec. 31, 2017, and the North Slope and Cook Inlet areas on June 30, 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.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
LNG Storage Facility Tax Credit – AS 43.20.047 – The LNG (Liquefied Natural Gas) Storage Facility Tax Credit is a nontransferable, refundable credit for the costs incurred to establish a storage facility for LNG. The credit is for 50% of the costs incurred, not to exceed $15 million. The credit applies to facilities with a minimum storage capacity of 25,000 gallons of LNG that are public utilities regulated by the Regulatory Commission of Alaska. A facility must have been placed into service after Jan. 1, 2011, and start commercial operations before Jan. 1, 2020. The credit is refundable, subject to AS 43.55.028.
Minerals Exploration Incentive – AS 27.30.030 – The credit is for 100% of eligible costs of mineral and coal exploration activities, and is applicable to the corporate income tax, mining license tax and mineral production royalty. The credit may not exceed $20 million and must be applied within 15 years after the credit is approved.
For corporate income tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of the total corporate income tax liability.
For the mining license tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of total mining license tax liability.
For the mineral royalty, the credit is limited to 50% of the royalty liability from the mining operation where the exploration activity occurred.
Qualified In-State Oil Refinery Infrastructure Expenditures Tax Credit – AS 43.20.053 – The In-State Refinery Tax Credit began on Jan. 1, 2015, and is a credit for qualified infrastructure expenditures for in-state oil refineries incurred after Dec. 31, 2014, and before Jan. 1, 2020. The credit may not exceed 40% of total qualifying expenditures or $10 million per tax year per refinery, whichever amount is less. The credit can be applied against corporate income tax liability and carried forward for up to five years. It is also a refundable credit. The authorizing statute will sunset on Dec. 31, 2019.
Qualified Oil and Gas Service Industry Expenditure Credit – AS 43.20.049 – A taxpayer may claim a credit for 10% of qualified oil and gas service industry expenditures that are for in-state manufacture or in-state modification of oil and gas tangible personal property. The credit, which may be up to $10 million, is applied to corporate income tax liabilities. The credit is not transferable, but an unused credit may be carried forward for five years. If the taxpayer takes the credit, the taxpayer may not also deduct the expenditures.
Urea/Ammonia/Gas-to-Liquid Facility Credit – AS 43.20.052 – This credit allows an in-state company that produces urea, ammonia, or gas-to-liquids products to apply a credit to its corporate income tax based on natural gas purchased from state leases. The credit is equal to the amount of state royalty paid on natural gas purchased for the qualifying project.
The credit is not transferable or eligible for state purchase, it cannot be carried forward to future years, and it cannot be used to reduce a tax liability below zero. The credit is scheduled to be repealed on Jan. 1, 2024.
Veteran Employment Tax Credit – AS 43.20.048 – This credit is for corporate income taxpayers who employ qualified veterans in the state. The credit is $3,000 for hiring a disabled veteran, and $2,000 for a veteran who is not disabled, for at least 1,560 hours during 12 consecutive months after the employment date. For seasonal employment, the credit is $1,000 for hiring a veteran for at least 500 hours during the three consecutive months after the employment date.
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Click here for data with additional years.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
Salmon and Herring Product Development – AS 43.75.035 – This credit is for eligible capital expenditures to expand value-added processing of Alaska salmon and herring. The credit is 50% of qualified investments up to 50% of the fisheries business tax liability incurred for processing salmon and herring during the tax year. The credit is not transferable, but it may be carried forward for three years. The statute is scheduled to sunset on Dec. 31, 2020. Herring products were added to the credit in 2014.
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Click here for data with additional years.
CDQ – AS 43.77.040 – The CDQ Credit is a nontransferable credit for contributions to an Alaska nonprofit corporation that is dedicated to fisheries industry-related expenditures. The credit is available only for fishery resources harvested under a CDQ. The credit is 100% of a taxpayer’s contribution amount, up to the 45.45% of the taxpayer’s tax liability on fishery resources harvested under a Community Development Quota. The authorizing statute is scheduled to sunset Jan. 1, 2021.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department 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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Click here for data with additional years.
Alternative Credit for Exploration – AS 43.55.025(a)(1)-(4) – Taxpayers who incur qualified exploration expenditures are eligible for this credit against oil and gas production tax. Credits earned for certain work performed on or after July 1, 2016, may be taken against corporate income tax.
The credit is 30% or 40%, depending on the qualifications of the exploration project. Taxpayers must obtain pre-approval from the Alaska Department of Natural Resources and submit certain data 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 transferable and eligible for state repurchase.
The credit is set to expire for Middle Earth Wells on Dec. 31, 2021. It expired for Middle Earth Seismic on Dec. 31, 2017, and the North Slope and Cook Inlet areas on June 30, 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 who incurred lease expenditures that were not deductible in calculating production tax values generated a "loss carry forward" and they may have applied for a tax credit. The credit, which was transferable and applicable to oil and gas production tax, expired Dec. 31, 2017.
For the North Slope, the credit rate was 35% in 2016-2017, and 45% in 2014-2015. For Cook Inlet, and Middle Earth (all areas other than Cook Inlet and the North Slope), it was 15% in 2017, and 25% in 2014-2016.
Only half of the 2017 loss was eligible for purchase under AS 43.55.028.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, and then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 will allow a deduction of 75% of the contribution, not 100% as in prior years. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million as in prior years.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
Frontier Basin Credit – AS 43.55.025(a)(6) and (7) – The Frontier Basin Credit provides a tax credit for exploration wells and seismic projects within six specific areas designated in AS 43.55.025(o), also called the “Frontier Basins.”
The credit for exploration wells expired on July 1, 2016, and expenses incurred prior to that time were eligible for the credit so long as the exploration well was spudded by June 30, 2017; the credit for seismic exploration projects expired June 30, 2016.
The first two exploration wells drilled inside each of the six frontier basins were eligible for an 80% credit for up to $25 million of qualified expenditures. For seismic projects, the first project performed inside each of the six frontier basins was eligible to receive a 75% credit for up to $7.5 million of qualified expenditures.
The credit became effective Jan. 1, 2013, and was amended in 2016. Many requirements had to be met with the Alaska Department of Natural Resources to qualify for the credit, including pre-qualifications. The credit itself was allowed to be applied against a producer’s tax liability in the year in which it was incurred and also before the certificate was issued. The credit certificate was allowed to be transferred, applied to tax liability, or cashed out with the state under AS 43.55.028 by the original applicant.
Per Barrel Credit – AS 43.55.024(i) and (j) – The Per Barrel Credit is a production tax credit for each barrel of oil production on the North Slope. It cannot be transferred or carried forward, and is not eligible for cash repurchase. The credit does not expire.
For “new areas” that qualify for a GVR, under AS 43.55.024(i), the credit is $5 per taxable barrel. Those areas are defined in AS 43.55.160(f) and (g). The $5 per barrel credit may not reduce the producer’s liability for that production below zero.
For areas that do not qualify for a GVR, under AS 43.55.024(j), the credit ranges from $0 to $8 per taxable barrel based on the average GVPP per barrel produced in the tax year. The credit operates on a sliding scale ranging from $0 per barrel when the GVPP is more than $150 per barrel, to $8 per barrel when the GVPP is less than $80 per barrel. The sliding scale credit cannot be used to reduce tax liability to below the minimum tax under AS 43.55.011 (f).
Qualified Capital Expenditure Credit and Well Lease Expenditure Credit – AS 43.55.023(a) and 43.55.023(l) – These are transferable credits for qualified oil and gas capital expenditures in the state outside the North Slope. Credits that were earned for expenses incurred prior to July 1, 2017, were eligible for repurchase by the State of Alaska. The credits can be taken in lieu of Exploration Credits under AS 43.55.025, but are in addition to any net-operating loss credits under AS 43.55.23(b).
Before Jan. 1, 2017, companies could have qualified for a credit of 20% of eligible capital expenditures, or 40% of qualified well lease expenditures. As of Jan. 1, 2017, the Qualified Capital Expenditure Credit was reduced from 20% to 10% and the Well Lease Expenditure Credit was reduced from 40% to 20%.
On Jan. 1, 2018, both credits were repealed for Cook Inlet. There is no expiration date for Middle Earth (all areas not included in Cook Inlet or the North Slope).
Small Producer – AS 43.55.024(c) – The Small-Producer Credit is a nontransferable credit for oil and gas produced by small producers, defined as having average taxable oil and gas production of less than 100,000 Btu-equivalent barrels per day.
For producers that had commercial production prior to April 1, 2006, the credit expired on Dec. 31, 2016. For producers that did not have commercial production prior to April 1, 2006, the credit is available until the ninth calendar year following the start of commercial production if the production started before May 1, 2016.
If the taxpayer produces less than 50,000 Btu-equivalent barrels per day, the taxpayer may take up to a $12 million credit per year.
For production between 50,000 and 100,000 Btu-equivalent barrels per day, the credit is prorated. The credit is zero for producers with 100,000 or more Btu-equivalent barrels per day.
The credit may not be carried forward or transferred. The credit may only be used against tax liability, and only if the producer has a positive tax liability before the application of credits.
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Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
Municipal Property Taxes Paid – AS 43.56.010 – Taxpayers receive a credit against state oil and gas property tax for property taxes paid to municipalities on AS 43.56 property. The credit is limited to the amount of state tax due.
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Click here for data with additional years.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
Minerals Exploration Incentive – AS 27.30.030 – The credit is for 100% of eligible costs of mineral and coal exploration activities, and is applicable to the corporate income tax, mining license tax and mineral production royalty. The credit may not exceed $20 million and must be applied within 15 years after the credit is approved.
For corporate income tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of the total corporate income tax liability.
For the mining license tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of total mining license tax liability.
For the mineral royalty, the credit is limited to 50% of the royalty liability from the mining operation where the exploration activity occurred.
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Alternative Credit for Exploration – AS 43.55.025(a)(1)-(4) – Taxpayers who incur qualified exploration expenditures are eligible for this credit against oil and gas production tax. Credits earned for certain work performed on or after July 1, 2016, may be taken against corporate income tax.
The credit 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 the Alaska Department of Natural Resources and submit certain data 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 transferable and eligible for state repurchase.
The credit is set to expire for Middle Earth Wells on Dec. 31, 2021. It expired for Middle Earth Seismic on Dec. 31, 2017, and the North Slope and Cook Inlet areas on June 30, 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.
Alternative Credit for Exploration – AS 43.55.025(a)(1)-(4) – Taxpayers who incur qualified exploration expenditures are eligible for this credit against oil and gas production tax. Credits earned for certain work performed on or after July 1, 2016, may be taken against corporate income tax.
The credit is 30% or 40%, depending on the qualifications of the exploration project. Taxpayers must obtain pre-approval from the Alaska Department of Natural Resources and submit certain data 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 transferable and eligible for state repurchase.
The credit is set to expire for Middle Earth Wells on Dec. 31, 2021. It expired for Middle Earth Seismic on Dec. 31, 2017, and the North Slope and Cook Inlet areas on June 30, 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 who incurred lease expenditures that were not deductible in calculating production tax values generated a "loss carry forward" and they may have applied for a tax credit. The credit, which was transferable and applicable to oil and gas production tax, expired Dec. 31, 2017.
For the North Slope, the credit rate was 35% in 2016-2017, and 45% in 2014-2015. For Cook Inlet, and Middle Earth (all areas other than Cook Inlet and the North Slope), it was 15% in 2017, and 25% in 2014-2016.
Only half of the 2017 loss was eligible for purchase under AS 43.55.028.
CDQ – AS 43.77.040 – The CDQ Credit is a nontransferable credit for contributions to an Alaska nonprofit corporation that is dedicated to fisheries industry-related expenditures. The credit is available only for fishery resources harvested under a CDQ. The credit is 100% of a taxpayer’s contribution amount, up to the 45.45% of the taxpayer’s tax liability on fishery resources harvested under a Community Development Quota. The authorizing statute is scheduled to sunset Jan. 1, 2021.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, and then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 will allow a deduction of 75% of the contribution, not 100% as in prior years. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million as in prior years.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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.
Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for 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 as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
Frontier Basin Credit – AS 43.55.025(a)(6) and (7) – The Frontier Basin Credit provides a tax credit for exploration wells and seismic projects within six specific areas designated in AS 43.55.025(o), also called the “Frontier Basins.”
The credit for exploration wells expired on July 1, 2016, and expenses incurred prior to that time were eligible for the credit so long as the exploration well was spudded by June 30, 2017; the credit for seismic exploration projects expired June 30, 2016.
The first two exploration wells drilled inside each of the six frontier basins were eligible for an 80% credit for up to $25 million of qualified expenditures. For seismic projects, the first project performed inside each of the six frontier basins was eligible to receive a 75% credit for up to $7.5 million of qualified expenditures.
The credit became effective Jan. 1, 2013, and was amended in 2016. Many requirements had to be met with the Alaska Department of Natural Resources to qualify for the credit, including pre-qualifications. The credit itself was allowed to be applied against a producer’s tax liability in the year in which it was incurred and also before the certificate was issued. The credit certificate was allowed to be transferred, applied to tax liability, or cashed out with the state under AS 43.55.028 by the original applicant.
LNG Storage Facility Tax Credit – AS 43.20.047 – The LNG (Liquefied Natural Gas) Storage Facility Tax Credit is a nontransferable, refundable credit for the costs incurred to establish a storage facility for LNG. The credit is for 50% of the costs incurred, not to exceed $15 million. The credit applies to facilities with a minimum storage capacity of 25,000 gallons of LNG that are public utilities regulated by the Regulatory Commission of Alaska. A facility must have been placed into service after Jan. 1, 2011, and start commercial operations before Jan. 1, 2020. The credit is refundable, subject to AS 43.55.028.
Minerals Exploration Incentive – AS 27.30.030 – The credit is for 100% of eligible costs of mineral and coal exploration activities, and is applicable to the corporate income tax, mining license tax and mineral production royalty. The credit may not exceed $20 million and must be applied within 15 years after the credit is approved.
For corporate income tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of the total corporate income tax liability.
For the mining license tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of total mining license tax liability.
For the mineral royalty, the credit is limited to 50% of the royalty liability from the mining operation where the exploration activity occurred.
Municipal Property Taxes Paid – AS 43.56.010 – Taxpayers receive a credit against state oil and gas property tax for property taxes paid to municipalities on AS 43.56 property. The credit is limited to the amount of state tax due.
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 Credit – AS 43.55.024(i) and (j) – The Per Barrel Credit is a production tax credit for each barrel of oil production on the North Slope. It cannot be transferred or carried forward, and is not eligible for cash repurchase. The credit does not expire.
For “new areas” that qualify for a GVR, under AS 43.55.024(i), the credit is $5 per taxable barrel. Those areas are defined in AS 43.55.160(f) and (g). The $5 per barrel credit may not reduce the producer’s liability for that production below zero.
For areas that do not qualify for a GVR, under AS 43.55.024(j), the credit ranges from $0 to $8 per taxable barrel based on the average GVPP per barrel produced in the tax year. The credit operates on a sliding scale ranging from $0 per barrel when the GVPP is more than $150 per barrel, to $8 per barrel when the GVPP is less than $80 per barrel. The sliding scale credit cannot be used to reduce tax liability to below the minimum tax under AS 43.55.011 (f).
Qualified Capital Expenditure Credit and Well Lease Expenditure Credit – AS 43.55.023(a) and 43.55.023(l) – These are transferable credits for qualified oil and gas capital expenditures in the state outside the North Slope. Credits that were earned for expenses incurred prior to July 1, 2017, were eligible for repurchase by the State of Alaska. The credits can be taken in lieu of Exploration Credits under AS 43.55.025, but are in addition to any net-operating loss credits under AS 43.55.23(b).
Before Jan. 1, 2017, companies could have qualified for a credit of 20% of eligible capital expenditures, or 40% of qualified well lease expenditures. As of Jan. 1, 2017, the Qualified Capital Expenditure Credit was reduced from 20% to 10% and the Well Lease Expenditure Credit was reduced from 40% to 20%.
On Jan. 1, 2018, both credits were repealed for Cook Inlet. There is no expiration date for Middle Earth (all areas not included in Cook Inlet or the North Slope).
Qualified In-State Oil Refinery Infrastructure Expenditures Tax Credit – AS 43.20.053 – The In-State Refinery Tax Credit began on Jan. 1, 2015, and is a credit for qualified infrastructure expenditures for in-state oil refineries incurred after Dec. 31, 2014, and before Jan. 1, 2020. The credit may not exceed 40% of total qualifying expenditures or $10 million per tax year per refinery, whichever amount is less. The credit can be applied against corporate income tax liability and carried forward for up to five years. It is also a refundable credit. The authorizing statute will sunset on Dec. 31, 2019.
Qualified Oil and Gas Service Industry Expenditure Credit – AS 43.20.049 – A taxpayer may claim a credit for 10% of qualified oil and gas service industry expenditures that are for in-state manufacture or in-state modification of oil and gas tangible personal property. The credit, which may be up to $10 million, is applied to corporate income tax liabilities. The credit is not transferable, but an unused credit may be carried forward for five years. If the taxpayer takes the credit, the taxpayer may not also deduct the expenditures.
Salmon and Herring Product Development – AS 43.75.035 – This credit is for eligible capital expenditures to expand value-added processing of Alaska salmon and herring. The credit is 50% of qualified investments up to 50% of the fisheries business tax liability incurred for processing salmon and herring during the tax year. The credit is not transferable, but it may be carried forward for three years. The statute is scheduled to sunset on Dec. 31, 2020. Herring products were added to the credit in 2014.
Small Producer – AS 43.55.024(c) – The Small-Producer Credit is a nontransferable credit for oil and gas produced by small producers, defined as having average taxable oil and gas production of less than 100,000 Btu-equivalent barrels per day.
For producers that had commercial production prior to April 1, 2006, the credit expired on Dec. 31, 2016. For producers that did not have commercial production prior to April 1, 2006, the credit is available until the ninth calendar year following the start of commercial production if the production started before May 1, 2016.
If the taxpayer produces less than 50,000 Btu-equivalent barrels per day, the taxpayer may take up to a $12 million credit per year.
For production between 50,000 and 100,000 Btu-equivalent barrels per day, the credit is prorated. The credit is zero for producers with 100,000 or more Btu-equivalent barrels per day.
The credit may not be carried forward or transferred. The credit may only be used against tax liability, and only if the producer has a positive tax liability before the application of credits.
Urea/Ammonia/Gas-to-Liquid Facility Credit – AS 43.20.052 – This credit allows an in-state company that produces urea, ammonia, or gas-to-liquids products to apply a credit to its corporate income tax based on natural gas purchased from state leases. The credit is equal to the amount of state royalty paid on natural gas purchased for the qualifying project.
The credit is not transferable or eligible for state purchase, it cannot be carried forward to future years, and it cannot be used to reduce a tax liability below zero. The credit is scheduled to be repealed on Jan. 1, 2024.
Veteran Employment Tax Credit – AS 43.20.048 – This credit is for corporate income taxpayers who employ qualified veterans in the state. The credit is $3,000 for hiring a disabled veteran, and $2,000 for a veteran who is not disabled, for at least 1,560 hours during 12 consecutive months after the employment date. For seasonal employment, the credit is $1,000 for hiring a veteran for at least 500 hours during the three consecutive months after the employment date.
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