TAX COMPACT; SALES TAX; OIL & GAS TAX

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HOUSE BILL NO. 284

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - SECOND SESSION

BY THE HOUSE RULES COMMITTEE BY REQUEST OF THE GOVERNOR

Introduced: 1/28/26
Referred: Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to the Multistate Tax Compact; relating to apportionment of income to 1
the state; establishing a state sales and use tax; relating to taxes levied by cities and 2
boroughs; relating to the corporate income tax; authorizing the Department of Revenue 3
to enter into the Streamlined Sales and Use Tax Agreement or substantially similar 4
agreement; relating to the oil and gas production tax; establishing an infrastructure 5
maintenance surcharge on oil; establishing a pipeline corridor maintenance fund; and 6
providing for an effective date." 7
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 8
* Section 1. AS 28.10.021(a) is amended to read: 9
(a) The owner of a vehicle subject to registration shall apply for registration 10
under this chapter by properly completing the form prescribed by the commissioner 11
under AS 28.05.041. Before the issuance of a certificate of registration by the 12
department, the owner shall 13
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(1) pay all registration fees and taxes required under this chapter , 1
[AND] federal heavy vehicle use taxes required under 26 U.S.C. 4481 (Internal 2
Revenue Code of 1954), and a tax levied under AS 43.44.010; 3
(2) unless the owner qualifies as a self -insurer under AS 28.20.400 or 4
is exempted from obtaining liability insurance under AS 28.22.011, certify to the 5
department the existence of a motor vehicle liability policy that complies with 6
AS 28.22.011 for the vehicle being registered; in this paragraph, "certify" means to 7
indicate by check-off on the vehicle registration form prescribed by the department the 8
existence of a policy of insurance, if a policy is required at that time, and the intention 9
to continue the policy or obtain a policy as required by this subsection; and 10
(3) comply with other applicable statutes and regulations. 11
* Sec. 2. AS 29.10.200(56) is amended to read: 12
(56) AS 29.45.650 [AS 29.45.650(c), (d), (e), (f), (i), (j), (k), AND (l)] 13
(sales and use tax); 14
* Sec. 3. AS 29.10.200(57) is amended to read: 15
(57) AS 29.45.700 [AS 29.45.700(d), (e), (g), AND (h)] (sales and use 16
tax); 17
* Sec. 4. AS 29.10.200 is amended by adding a new paragraph to read: 18
(68) AS 29.45.655 (specific taxes on property and services). 19
* Sec. 5. AS 29.35.110(a) is amended to read: 20
(a) Borough revenues received through taxes levied [COLLECTED] on an 21
areawide basis by the borough may be expended on general administrative costs and 22
on areawide functions only. Borough revenues received through taxes levied 23
[COLLECTED] on a nonareawide basis may be expended on general administrative 24
costs and functions that render service only to the area outside all cities in the 25
borough. 26
* Sec. 6. AS 29.35.170 is amended to read: 27
Sec. 29.35.170. Assessment and collection of taxes. (a) A borough shall 28
assess and collect property and other [, SALES, AND USE] taxes , except a local 29
sales or use tax under AS 29.45.650, that are levied in its boundaries, subject to 30
AS 29.45. 31
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(b) Taxes, other than a local sales or use tax under AS 29.45.650, levied by 1
a city shall be collected by a borough and returned in full to the levying city. This 2
subsection applies to home rule and general law municipalities. 3
* Sec. 7. AS 29.45.650 is repealed and reenacted to read: 4
Sec. 29.45.650. Local sales and use tax. (a) Except as provided in 5
AS 04.21.010(c) and AS 29.45.750, a borough may levy a local sales tax on the sale of 6
personal property and on services provided in the borough. 7
(b) A borough levying a local sales tax may levy a use tax equal to the local 8
sales tax on the storage, use, or consumption of personal property and on the use of 9
services in the borough. 10
(c) A tax levied under this section shall be levied only on a purchaser. 11
(d) A tax levied under this section shall be subject to exemptions, definitions, 12
sourcing rules, and regulations under AS 43.44 and shall be administered and 13
collected by the state under AS 43.44. 14
* Sec. 8. AS 29.45 is amended by adding a new section to read: 15
Sec. 29.45.655. Specific taxes on property and services. Unless otherwise 16
prohibited by law, a municipality may levy and collect specific sales or excise taxes on 17
single categories of personal property or services, including 18
(1) bed taxes; 19
(2) car rental taxes: 20
(3) alcoholic beverages taxes; 21
(4) taxes on tobacco products, electronic smoking products, and 22
nicotine products; 23
(5) motor fuel taxes; 24
(6) fish taxes; and 25
(7) taxes on marijuana and marijuana products. 26
* Sec. 9. AS 29.45.660(a) is amended to read: 27
(a) If the borough levies [AND COLLECTS] only a local sales tax and use 28
tax, the assembly shall provide a notice substantially in the form set out in 29
AS 29.45.020. In providing notice under this subsection, the assembly shall substitute 30
for the millage equivalency its estimate of the equivalent sales tax rate for each of the 31
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categories of financial assistance set out in AS 29.45.020. Notice shall be provided 1
(1) by posting on a continuously available online public notice 2
system or by publishing in a newspaper of general circulation in the borough a copy 3
of the notice at least once each week for a period of three successive weeks, with 4
publication to occur not later than 45 days after the final adoption of the borough's 5
budget; or 6
(2) if there is no newspaper of general circulation in the borough or a 7
continuously available online public notice system, by posting a copy of the notice 8
for at least 20 days in at least two public places in the borough, with posting to occur 9
not later than 45 days after the final adoption of the borough's budget. 10
* Sec. 10. AS 29.45.700 is repealed and reenacted to read: 11
Sec. 29.45.700. Power of levy. A city may levy a local sales and use tax in the 12
manner and subject to the same limitation provided for boroughs under AS 29.45.650 13
and 29.45.660. 14
* Sec. 11. AS 29.45.810(a) is amended to read: 15
(a) A party to a contract approved by the legislature as a result of submission 16
of a proposed contract developed under AS 43.82 or as a result of acts by the 17
legislature in implementing the purposes of AS 43.82, and the property, gas, products, 18
and activities associated with the approved qualified project that is subject to the 19
contract, are exempt, as specified in the contract, from all taxes identified in the 20
contract that would be levied [AND COLLECTED] by a municipality under state law 21
as a consequence of the participation by the party in the approved qualified project. 22
* Sec. 12. AS 36.10.005(a) is amended to read: 23
(a) The legislature finds that 24
(1) because of its unique climate and its distance from the contiguous 25
states, the state has historically suffered from unique social, seasonal, geographic, and 26
economic conditions that result in an unstable economy; 27
(2) the unstable economy is a hardship on the residents of the state and 28
is aggravated by the large numbers of seasonal and transient nonresident workers; 29
(3) the rate of unemployment among residents of the state is one of the 30
highest in the nation; 31
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(4) the state has one of the highest ratios of nonresident to resident 1
workers in the nation; 2
(5) the state has a compelling interest in reducing the level of 3
unemployment among its residents; 4
(6) the construction industry in the state accounts for a substantial 5
percentage of the available employment; 6
(7) construction workers receive a greater percentage of all 7
unemployment benefits paid by the state than is typical of other states; 8
(8) historically, the rate of unemployment in the construction industry 9
in the state is higher than the rate of unemployment in other industries in the state; 10
(9) it is appropriate for the state to consider the welfare of its residents 11
when it funds construction activity; 12
(10) it is in the public interest for the state to allocate public funds for 13
capital projects in order to reduce unemployment among its resident construction 14
workers; 15
(11) the influx of nonresident construction workers contributes to or 16
causes the high unemployment rate among resident construction workers because 17
nonresident workers compete with residents for the limited number of available 18
construction jobs; 19
(12) nonresident workers displace a substantial number of qualified, 20
available, and unemployed Alaska workers on jobs on state funded public works 21
projects; 22
(13) the state has a special interest in seeing that the benefits of state 23
construction spending accrue to its residents; 24
(14) the natural resources of land owned by the state belong to the 25
citizens of the state; 26
(15) Alaskans have chosen to use the majority of the royalties derived 27
from the state's natural resources to fund state government; 28
(16) the vast majority of the state's revenue is derived from natural 29
resource income rather than from other forms of taxation; 30
(17) because the state has no personal income tax [OR SALES TAX], 31
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nonresident workers use services provided by the state but do not contribute fairly to 1
the costs of those services; and 2
(18) Alaskans, more than the residents of other states, suffer 3
economically when nonresidents displace qualified residents since resident workers 4
contribute local taxes as well as their share of the royalties from natural resources. 5
* Sec. 13. AS 43.05.230(c) is amended to read: 6
(c) The department may permit the proper officer of a municipality, the 7
United States or of a state, territory or possession of the United States or of Canada or 8
of a province or territory of Canada, or the officer's authorized representative, to 9
inspect tax returns or reports filed with the department, or may furnish to the officer or 10
representative a copy of the tax return, if the other jurisdiction grants substantially 11
similar privileges to the department or its representative or to counsel for the state, and 12
if the department determines that the other jurisdiction provides adequate safeguards 13
for the confidentiality of the returns and reports, and that the returns and reports will 14
be used for tax purposes only. The department may also permit the division 15
responsible for employment and training services of the state Department of Labor and 16
Workforce Development to inspect tax returns or reports filed with the department or 17
may furnish a copy of the tax returns for tax purposes only. 18
* Sec. 14. AS 43.05.499(11) is amended to read: 19
(11) "taxpayer" means a person required to pay or collect a tax, 20
including a person required to pay a seafood marketing assessment under AS 16.51. 21
* Sec. 15. AS 43.19.010 is amended to read: 22
Sec. 43.19.010. Compact. The Multistate Tax Compact is hereby enacted into 23
law and entered into with all jurisdictions legally joining in it, in the form substantially 24
as follows: 25
ARTICLE I. 26
PURPOSES. 27
The purposes of this compact are to: 28
1. Facilitate proper determination of state and local tax liability of multistate 29
taxpayers, including the equitable apportionment of tax bases and settlement of 30
apportionment disputes. 31
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2. Promote uniformity or compatibility in significant components of tax 1
systems. 2
3. Facilitate taxpayer convenience and compliance in the filing of tax returns 3
and in other phases of tax administration. 4
4. Avoid duplicative taxation. 5
ARTICLE II. 6
DEFINITIONS. 7
As used in this compact: 8
1. "State" means a state of the United States, the District of Columbia, the 9
Commonwealth of Puerto Rico, or any territory or possession of the United States. 10
2. "Subdivision" means any governmental unit or special district of a state. 11
3. "Taxpayer" means any corporation, partnership, firm, association, 12
governmental unit or agency or person acting as a business entity in more than one 13
state. 14
4. "Income tax" means a tax imposed on or measured by net income including 15
any tax imposed on or measured by an amount arrived at by deducting expenses from 16
gross income, one or more forms of which expenses are not specifically and directly 17
related to particular transactions. 18
5. "Capital stock tax" means a tax measured in any way by the capital of a 19
corporation considered in its entirety. 20
6. "Gross receipts tax" means a tax, other than a sales tax, which is imposed on 21
or measured by the gross volume of business, in terms of gross receipts or in other 22
terms, and in the determination of which no deduction is allowed which would 23
constitute the tax an income tax. 24
7. "Sales tax" means a tax imposed with respect to the transfer for a 25
consideration of ownership, possession or custody of tangible personal property or the 26
rendering of services measured by the price of the tangible personal property 27
transferred or services rendered and which is required by state or local law to be 28
separately stated from the sales price by the seller, or which is customarily separately 29
stated from the sales price, but does not include a tax imposed exclusively on the sale 30
of a specifically identified commodity or article or class of commodities or articles. 31
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8. "Use tax" means a nonrecurring tax, other than a sales tax, which (a) is 1
imposed on or with respect to the exercise or enjoyment of any right or power over 2
tangible personal property incident to the ownership, possession or custody of that 3
property or the leasing of that property from another including any consumption, 4
keeping, retention, or other use of tangible personal property and (b) is complementary 5
to a sales tax. 6
9. "Tax" means an income tax, capital stock tax, gross receipts tax, sales tax, 7
use tax, and any other tax which has a multistate impact, except that the provisions of 8
Articles III, IV and V of this compact shall apply only to the taxes specifically 9
designated therein and the provisions of Article IX of this compact shall apply only in 10
respect to determinations pursuant to Article IV. 11
ARTICLE III. 12
ELEMENTS OF INCOME TAX LAWS. 13
TAXPAYERS OPTION, STATE AND LOCAL TAXES. 14
1. Any taxpayer subject to an income tax whose income is subject to 15
apportionment and allocation for tax purposes pursuant to the laws of a party state or 16
pursuant to the laws of subdivisions in two or more party states may elect to apportion 17
and allocate the taxpayer's income in the manner provided by the laws of such state or 18
by the laws of such states and subdivisions without reference to this compact, or may 19
elect to apportion and allocate in accordance with Article IV. This election for any tax 20
year may be made in all party states or subdivisions thereof or in any one or more of 21
the party states or subdivisions thereof without reference to the election made in the 22
others. For the purposes of this paragraph, taxes imposed by subdivisions shall be 23
considered separately from state taxes and the apportionment and allocation also may 24
be applied to the entire tax base. In no instance wherein Article IV is employed for all 25
subdivisions of a state may the sum of all apportionments and allocations to 26
subdivisions within a state be greater than the apportionment and allocation that would 27
be assignable to that state if the apportionment or allocation were being made with 28
respect to a state income tax. 29
TAXPAYER OPTION, SHORT FORM. 30
2. Each party state or any subdivision thereof which imposes an income tax 31
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shall provide by law that any taxpayer required to file a return, whose only activities 1
within the taxing jurisdiction consist of sales and do not include owning or renting real 2
estate or tangible personal property, and whose dollar volume of gross sales made 3
during the tax year within the state or subdivision, as the case may be, is not in excess 4
of $100,000 may elect to report and pay any tax due on the basis of a percentage of 5
such volume, and shall adopt rates which shall produce a tax which reasonably 6
approximates the tax otherwise due. The Multistate Tax Commission, not more than 7
once in five years, may adjust the $100,000 figure in order to reflect such changes as 8
may occur in the real value of the dollar, and such adjusted figure, upon adoption by 9
the commission, shall replace the $100,000 figure specifically provided herein. Each 10
party state and subdivision thereof may make the same election available to taxpayers 11
additional to those specified in this paragraph. 12
COVERAGE. 13
3. Nothing in this Article relates to the reporting or payment of any tax other 14
than an income tax. 15
ARTICLE IV. 16
DIVISION OF INCOME. 17
1. As used in this Article, unless the context otherwise requires: 18
(a) "Apportionable income" means: 19
(i) all income that is apportionable under the Constitution of the 20
United States and is not allocated under the laws of this state, including: 21
(A) ["BUSINESS INCOME" MEANS] income arising from 22
transactions and activity in the regular course of the taxpayer's trade or 23
business; and 24
(B) [INCLUDES] income arising from tangible and intangible 25
property if the acquisition, management, employment, development, or 26
[AND] disposition of the property is or was related to the operation 27
[CONSTITUTE INTEGRAL PARTS] of the taxpayer's [REGULAR] trade or 28
business; and 29
(ii) any income that would be allocable to this state under the 30
Constitution of the United States, but that is apportioned rather than allocated 31
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pursuant to the laws of this state [OPERATIONS]. 1
(b) "Commercial domicile" means the principal place from which the trade or 2
business of the taxpayer is directed or managed. 3
(c) "Compensation" means wages, salaries, commissions and any other form 4
of remuneration paid to employees for personal services. 5
(d) "Financial organization" means any bank, trust company, savings bank, 6
industrial bank, land bank, safe deposit company, private banker, savings and loan 7
association, credit union, cooperative bank, small loan company, sales finance 8
company, investment company, or any type of insurance company. 9
(e) "Non-apportionable [NONBUSINESS] income" means all income other 10
than apportionable [BUSINESS] income. 11
(f) "Public utility" means any business entity (1) which owns or operates any 12
plant, equipment, property, franchise, or license for the transmission of 13
communications, transportation of goods or persons, except by pipe line, or the 14
production, transmission, sale, delivery, or furnishing of electricity, water or steam; 15
and (2) whose rates of charges for goods or services have been established or 16
approved by a federal, state or local government or governmental agency. 17
(g) "sales" means all gross receipts of the taxpayer that are not allocated 18
under paragraphs of this Article, and that are received from transactions and 19
activity in the regular course of the taxpayer's trade or business; except that sales 20
of a taxpayer from hedging transactions and from the maturity, redemption, 21
exchange, loan, or other disposition of cash or securities, shall be excluded. 22
(h) "State" means any state of the United States, the District of Columbia, the 23
Commonwealth of Puerto Rico, any territory or possession of the United States, and 24
any foreign country or political subdivision thereof. 25
(i) "This state" means the state in which the relevant tax return is filed or, in 26
the case of application of this Article to the apportionment and allocation of income 27
for local tax purposes, the subdivision or local taxing district in which the relevant tax 28
return is filed. 29
2. Any taxpayer having income from business activity which is taxable both 30
within and outside this state, other than activity as a financial organization or public 31
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utility or the rendering of purely personal services by an individual, shall allocate and 1
apportion net income as provided in this Article. If a taxpayer has income from 2
business activity as a public utility but derives the greater percentage of income from 3
activities subject to this Article, the taxpayer may elect to allocate and apportion the 4
taxpayer's entire net income as provided in this Article. 5
3. For purposes of allocation and apportionment of income under this Article, a 6
taxpayer is taxable in another state if (1) in that state the taxpayer is subject to a net 7
income tax, a franchise tax measured by net income, a franchise tax for the privilege 8
of doing business, or a corporate stock tax, or (2) that state has jurisdiction to subject 9
the taxpayer to a net income tax regardless of whether, in fact, the state does or does 10
not. 11
4. Rents and royalties from real or tangible personal property, capital gains, 12
interest, dividends or patent or copyright royalties, to the extent that they constitute 13
nonapportionable [NONBUSINESS] income, shall be allocated as provided in 14
paragraphs 5 through 8 of this Article. 15
5.(a) Net rents and royalties from real property located in this state are 16
allocable to this state. 17
(b) Net rents and royalties from tangible personal property are allocable to this 18
state: (1) if and to the extent that the property is utilized in this state, or (2) in their 19
entirety if the taxpayer's commercial domicile is in this state and the taxpayer is not 20
organized under the laws of or taxable in the state in which the property is utilized. 21
(c) The extent of utilization of tangible personal property in a state is 22
determined by multiplying the rents and royalties by a fraction, the numerator of 23
which is the number of days of physical location of the property in the state during the 24
rental or royalty period in the taxable year and the denominator of which is the number 25
of days of physical location of the property everywhere during all rental or royalty 26
periods in the taxable year. If the physical location of the property during the rental or 27
royalty period is unknown or unascertainable by the taxpayer, tangible personal 28
property is utilized in the state in which the property was located at the time the rental 29
or royalty payer obtained possession. 30
6.(a) Capital gains and losses from sales of real property located in this state 31
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are allocable to this state. 1
(b) Capital gains and losses from sales of tangible personal property are 2
allocable to this state if (1) the property had a situs in this state at the time of the sale, 3
or (2) the taxpayer's commercial domicile is in this state and the taxpayer is not 4
taxable in the state in which the property had a situs. 5
(c) Capital gains and losses from sales of intangible personal property are 6
allocable to this state if the taxpayer's commercial domicile is in this state. 7
7. Interest and dividends are allocable to this state if the taxpayer's commercial 8
domicile is in this state. 9
8.(a) Patent and copyright royalties are allocable to this state: (1) if and to the 10
extent that the patent or copyright is utilized by the payer in this state, or (2) if and to 11
the extent that the patent or copyright is utilized by the payer in a state in which the 12
taxpayer is not taxable and the taxpayer's commercial domicile is in this state. 13
(b) A patent is utilized in a state to the extent that it is employed in production, 14
fabrication, manufacturing, or other processing in the state or to the extent that a 15
patented product is produced in the state. If the basis of receipts from patent royalties 16
does not permit allocation to states or if the accounting procedures do not reflect states 17
of utilization, the patent is utilized in the state in which the taxpayer's commercial 18
domicile is located. 19
(c) A copyright is utilized in a state to the extent that printing or other 20
publication originates in the state. If the basis of receipts from copyright royalties does 21
not permit allocation to states or if the accounting procedures do not reflect states of 22
utilization, the copyright is utilized in the state in which the taxpayer's commercial 23
domicile is located. 24
9. All apportionable [BUSINESS] income shall be apportioned to this state by 25
multiplying the income by a fraction, the numerator of which is the property factor 26
plus the payroll factor plus the sales factor, and the denominator of which is three. 27
10. The property factor is a fraction, the numerator of which is the average 28
value of the taxpayer's real and tangible personal property owned or rented and used in 29
this state during the tax period and the denominator of which is the average value of 30
all the taxpayer's real and tangible personal property owned or rented and used during 31
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the tax period. 1
11. Property owned by the taxpayer is valued at its original cost. Property 2
rented by the taxpayer is valued at eight times the net annual rental rate. Net annual 3
rental rate is the annual rental rate paid by the taxpayer less any annual rental rate 4
received by the taxpayer from subrentals. 5
12. The average value of property shall be determined by averaging the values 6
at the beginning and ending of the tax period but the tax administrator may require the 7
averaging of monthly values during the tax period if reasonably required to reflect 8
properly the average value of the taxpayer's property. 9
13. The payroll factor is a fraction, the numerator of which is the total amount 10
paid in this state during the tax period by the taxpayer for compensation and the 11
denominator of which is the total compensation paid everywhere during the tax period. 12
14. Compensation is paid in this state if: 13
(a) the individual's service is performed entirely within the state; 14
(b) the individual's service is performed both inside and outside the state, but 15
the service performed outside the state is incidental to the individual's service within 16
this state; or 17
(c) some of the service is performed in the state and (1) the base of operations 18
or, if there is no base of operations, the place from which the service is directed or 19
controlled is in the state, or (2) the base of operations or the place from which the 20
service is directed or controlled is not in any state in which some part of the service is 21
performed, but the individual's residence is in this state. 22
15. The sales factor is a fraction, the numerator of which is the total sales of 23
the taxpayer in this state during the tax period, and the denominator of which is the 24
total sales of the taxpayer everywhere during the tax period. 25
16. Sales of tangible personal property are in this state if: 26
(a) the property is delivered or shipped to a purchaser, other than the United 27
States Government, within this state regardless of the f.o.b. point or other conditions 28
of the sale; or 29
(b) the property is shipped from an office, store, warehouse, factory, or other 30
place of storage in this state and (1) the purchaser is the United States Government or 31
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(2) the taxpayer is not taxable in the state of the purchaser. 1
17.(a) Sales, other than sales described in Section 16 [OF TANGIBLE 2
PERSONAL PROPERTY], are in this state if the taxpayer's market for the sales is 3
in this state. The taxpayer's market for sales is in this state: 4
(1) in the case of sale, rental, lease, or license of real property, if 5
and to the extent the property is located in this state; 6
(2) in the case of rental, lease, or license of tangible personal 7
property, if and to the extent the property is located in this state; 8
(3) in the case of sale of a service, if and to the extent the service is 9
delivered to a location in this state; and 10
(4) in the case of intangible property, 11
(i) that is rented, leased, or licensed, if and to the extent the 12
property is used in this state, provided that intangible property utilized in 13
marketing a good or service to a consumer is "used in this state" if that 14
good or service is purchased by a consumer who is in this state; and 15
(ii) that is sold, if and to the extent the property is used in 16
this state, provided that: 17
(A) a contract right, government license, or similar 18
intangible property that authorizes the holder to conduct a 19
business activity in a specific geographic area is "used in this state" 20
if the geographic area includes all or part of this state; 21
(B) sales from intangible property sales that are 22
contingent on the productivity, use, or disposition of the intangible 23
property shall be treated as a sale of the rental, lease, or licensing 24
of such intangible property under subsection (a)(4)(i); and 25
(C) all other sales of intangible property shall be 26
excluded from the numerator and denominator of the sales factor. 27
[: (a) THE INCOME-PRODUCING ACTIVITY IS PERFORMED IN 28
THIS STATE; OR] 29
(b) If the state or states of assignment under subsection (a) cannot be 30
determined, the state or states of assignment shall be reasonably approximated. 31
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(c) If the taxpayer is not taxable in a state to which a sale is assigned 1
under subsection (a) or (b), or if the state of assignment cannot be determined 2
under subsection (a) or reasonably approximated under subsection (b), such a 3
sale shall be excluded from the denominator of the sales factor. 4
(d) The tax administrator may adopt regulations as necessary or 5
appropriate to carry out the purposes of this section [THE INCOME-6
PRODUCING ACTIVITY IS PERFORMED BOTH IN AND OUTSIDE THIS 7
STATE AND A GREATER PROPORTION OF THE INCOME-PRODUCING 8
ACTIVITY IS PERFORMED IN THIS STATE THAN IN ANY OTHER STATE, 9
BASED ON COSTS OF PERFORMANCE]. 10
18. If the allocation and apportionment provisions of this Article do not fairly 11
represent the extent of the taxpayer's business activity in this state, the taxpayer may 12
petition for or the tax administrator may require, in respect to all or any part of the 13
taxpayer's business activity, if reasonable: 14
(a) separate accounting; 15
(b) the exclusion of any one or more of the factors; 16
(c) the inclusion of one or more additional factors which will fairly represent 17
the taxpayer's business activity in this state; or 18
(d) the employment of any other method to effectuate an equitable allocation 19
and apportionment of the taxpayer's income. 20
ARTICLE V. 21
ELEMENTS OF SALES AND USE TAX LAWS. 22
TAX CREDIT. 23
1. Each purchaser liable for a use tax on tangible personal property shall be 24
entitled to full credit for the combined amount or amounts of legally imposed sales or 25
use taxes paid by the purchaser with respect to the same property to another state and 26
any subdivision thereof. The credit shall be applied first against the amount of any use 27
tax due the state, and any unused portion of the credit shall then be applied against the 28
amount of any use tax due a subdivision. 29
EXEMPTION CERTIFICATES, VENDORS MAY RELY. 30
2. Whenever a vendor receives and accepts in good faith from a purchaser a 31
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resale or other exemption certificate or other written evidence of exemption authorized 1
by the appropriate state or subdivision taxing authority, the vendor shall be relieved of 2
liability for a sales or use tax with respect to the transaction. 3
ARTICLE VI. 4
THE COMMISSION. 5
ORGANIZATION AND MANAGEMENT. 6
1.(a) The Multistate Tax Commission is hereby established. It shall be 7
composed of one "member" from each party state who shall be the head of the state 8
agency charged with the administration of the types of taxes to which this compact 9
applies. If there is more than one such agency the state shall provide by law for the 10
selection of the commission member from the heads of the relevant agencies. State 11
law may provide that a member of the commission be represented by an alternate but 12
only if there is on file with the commission written notification of the designation and 13
identity of the alternate. The attorney general of each party state or the designee of the 14
attorney general, or other counsel if the laws of the party state specifically provide, 15
shall be entitled to attend the meetings of the commission, but shall not vote. Such 16
attorneys general, designees, or other counsel shall receive all notices of meetings 17
required under paragraph 1(e) of this Article. 18
(b) Each party state shall provide by law for the selection of representatives 19
from its subdivisions affected by this compact to consult with the commission member 20
from that state. 21
(c) Each member shall be entitled to one vote. The commission shall not act 22
unless a majority of the members are present, and no action shall be binding unless 23
approved by a majority of the total number of members. 24
(d) The commission shall adopt an official seal to be used as it may provide. 25
(e) The commission shall hold an annual meeting and such other regular 26
meetings as its bylaws may provide and such special meetings as its executive 27
committee may determine. The commission bylaws shall specify the dates of the 28
annual and any other regular meetings, and shall provide for the giving of notice of 29
annual, regular and special meetings. Notices of special meetings shall include the 30
reasons therefor and an agenda of the items to be considered. 31
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(f) The commission shall elect annually, from among its members, a chairman, 1
a vice-chairman and a treasurer. The commission shall appoint an executive director 2
who shall serve at its pleasure, and it shall fix the duties and compensation of the 3
executive director. The executive director shall be secretary of the commission. The 4
commission shall make provision for the bonding of such of its officers and employees 5
as it may deem appropriate. 6
(g) Irrespective of the civil service, personnel or other merit system laws of 7
any party state, the executive director shall appoint or discharge such personnel as 8
may be necessary for the performance of the functions of the commission and shall fix 9
their duties and compensation. The commission bylaws shall provide for personnel 10
policies and programs. 11
(h) The commission may borrow, accept or contract for the services of 12
personnel from any state, the United States, or any other governmental entity. 13
(i) The commission may accept for any of its purposes and functions any and 14
all donations and grants of money, equipment, supplies, materials and services, 15
conditional or otherwise, from any governmental entity, and may utilize and dispose 16
of the same. 17
(j) The commission may establish one or more offices for the transacting of its 18
business. 19
(k) The commission shall adopt bylaws for the conduct of its business. The 20
commission shall publish its bylaws in convenient form, and shall file a copy of the 21
bylaws and any amendments thereto with the appropriate agency or officer in each of 22
the party states. 23
(l) The commission annually shall make to the governor and legislature of 24
each party state a report covering its activities for the preceding year. Any donation or 25
grant accepted by the commission or services borrowed shall be reported in the annual 26
report of the commission, and shall include the nature, amount and conditions, if any, 27
of the donation, gift, grant or services borrowed and the identity of the donor or 28
lender. The commission may make additional reports as it may deem desirable. 29
COMMITTEES. 30
2.(a) To assist in the conduct of its business when the full commission is not 31
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meeting, the commission shall have an executive committee of seven members, 1
including the chairman, vice-chairman, treasurer and four other members elected 2
annually by the commission. The executive committee, subject to the provisions of 3
this compact and consistent with the policies of the commission, shall function as 4
provided in the bylaws of the commission. 5
(b) The commission may establish advisory and technical committees, 6
membership on which may include private persons and public officials, in furthering 7
any of its activities. Such committees may consider any matter of concern to the 8
commission, including problems of special interest to any party state and problems 9
dealing with particular types of taxes. 10
(c) The commission may establish such additional committees as its bylaws 11
may provide. 12
POWERS. 13
3. In addition to powers conferred elsewhere in this compact, the commission 14
shall have power to: 15
(a) Study state and local tax systems and particular types of state and local 16
taxes. 17
(b) Develop and recommend proposals for an increase in uniformity or 18
compatibility of state and local tax laws with a view toward encouraging the 19
simplification and improvement of state and local tax law and administration. 20
(c) Compile and publish information as in its judgment would assist the party 21
states in implementation of the compact and taxpayers in complying with state and 22
local tax laws. 23
(d) Do all things necessary and incidental to the administration of its functions 24
pursuant to this compact. 25
FINANCE. 26
4.(a) The commission shall submit to the governor or designated officer or 27
officers of each party state a budget of its estimated expenditures for such period as 28
may be required by the laws of that state for presentation to the legislature thereof. 29
(b) Each of the commission's budgets of estimated expenditures shall contain 30
specific recommendations of the amounts to be appropriated by each of the party 31
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states. The total amount of appropriations requested under any such budget shall be 1
apportioned among the party states as follows: one-tenth in equal shares; and the 2
remainder in proportion to the amount of revenue collected by each party state and its 3
subdivisions from income taxes, capital stock taxes, gross receipts, taxes, sales and use 4
taxes. In determining such amounts, the commission shall employ such available 5
public sources of information as, in its judgment, present the most equitable and 6
accurate comparisons among the party states. Each of the commission's budgets of 7
estimated expenditures and requests for appropriations shall indicate the sources used 8
in obtaining information employed in applying the formula contained in this 9
paragraph. 10
(c) The commission shall not pledge the credit of any party state. The 11
commission may meet any of its obligations in whole or in part with funds available to 12
it under paragraph 1(i) of this Article: provided that the commission takes specific 13
action setting aside such funds prior to incurring any obligation to be met in whole or 14
in part in such manner. Except where the commission makes use of funds available to 15
it under paragraph 1(i), the commission shall not incur any obligation prior to the 16
allotment of funds by the party states adequate to meet the same. 17
(d) The commission shall keep accurate accounts of all receipts and 18
disbursements. The receipts and disbursements of the commission shall be subject to 19
the audit and accounting procedures established under its bylaws. All receipts and 20
disbursements of funds handled by the commission shall be audited yearly by a 21
certified or licensed public accountant and the report of the audit shall be included in 22
and become part of the annual report of the commission. 23
(e) The accounts of the commission shall be open at any reasonable time for 24
inspection by duly constituted officers of the party states and by any persons 25
authorized by the commission. 26
(f) Nothing contained in this Article shall be construed to prevent commission 27
compliance with laws relating to audit or inspection of accounts by or on behalf of any 28
government contributing to the support of the commission. 29
ARTICLE VII. 30
UNIFORM REGULATIONS AND FORMS. 31
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1. Whenever any two or more party states, or subdivisions of party states, have 1
uniform or similar provisions of law relating to an income tax, capital stock tax, gross 2
receipts tax, sales or use tax, the commission may adopt uniform regulations for any 3
phase of the administration of such law, including assertion of jurisdiction to tax, or 4
prescribing uniform tax forms. The commission may also act with respect to the 5
provisions of Article IV of this compact. 6
2. Prior to the adoption of any regulation, the commission shall: 7
(a) As provided in its bylaws, hold at least one public hearing on due notice to 8
all affected party states and subdivisions thereof and to all taxpayers and other persons 9
who have made timely request of the commission for advance notice of its regulation-10
making proceedings. 11
(b) Afford all affected party states and subdivisions and interested persons an 12
opportunity to submit relevant written data and views, which shall be considered fully 13
by the commission. 14
3. The commission shall submit any regulations adopted by it to the 15
appropriate officials of all party states and subdivisions to which they might apply. 16
Each such state and subdivision shall consider any such regulations for adoption in 17
accordance with its own laws and procedures. 18
ARTICLE VIII. 19
INTERSTATE AUDITS. 20
1. This Article shall be in force only in those party states that specifically 21
provide therefor by statute. 22
2. Any party state or subdivision thereof desiring to make or participate in an 23
audit of any accounts, books, papers, records or other documents may request the 24
commission to perform the audit on its behalf. In responding to the request, the 25
commission shall have access to and may examine, at any reasonable time, such 26
accounts, books, papers, records, and other documents and any relevant property or 27
stock of merchandise. The commission may enter into agreements with party states or 28
their subdivisions for assistance in performance of the audit. The commission shall 29
make charges, to be paid by the state or local government or governments for which it 30
performs the service, for any audits performed by it in order to reimburse itself for the 31
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actual costs incurred in making the audit. 1
3. The commission may require the attendance of any person within the state 2
where it is conducting an audit or part thereof at a time and place fixed by it within 3
such state for the purpose of giving testimony with respect to any account, book, 4
paper, document, other record, property or stock of merchandise being examined in 5
connection with the audit. If the person is not within the jurisdiction, the person may 6
be required to attend for such purpose at any time and place fixed by the commission 7
within the state of which the person is a resident: provided that such state has adopted 8
this Article. 9
4. The commission may apply to any court having power to issue compulsory 10
process for orders in aid of its powers and responsibilities pursuant to this Article and 11
any and all such courts shall have jurisdiction to issue such orders. Failure of any 12
person to obey any such order shall be punishable as contempt of the issuing court. If 13
the party or subject matter on account of which the commission seeks an order is 14
within the jurisdiction of the court to which application is made, such application may 15
be to a court in the state or subdivision on behalf of which the audit is being made or a 16
court in the state in which the object of the order being sought is situated. The 17
provisions of this paragraph apply only to courts in a state that has adopted this 18
Article. 19
5. The commission may decline to perform any audit requested if it finds that 20
its available personnel or other resources are insufficient for the purpose or that, in the 21
terms requested, the audit is impracticable of satisfactory performance. If the 22
commission, on the basis of its experience, has reason to believe that an audit of a 23
particular taxpayer, either at a particular time or on a particular schedule, would be of 24
interest to a number of party states or their subdivisions, it may offer to make the audit 25
or audits, the offer to be contingent on sufficient participation therein as determined by 26
the commission. 27
6. Information obtained by any audit pursuant to this Article shall be 28
confidential and available only for tax purposes to party states, their subdivisions or 29
the United States. Availability of information shall be in accordance with the laws of 30
the states or subdivisions on whose account the commission performs the audit, and 31
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only through the appropriate agencies or officers of such states or subdivisions. 1
Nothing in this Article shall be construed to require any taxpayer to keep records for 2
any period not otherwise required by law. 3
7. Other arrangements made or authorized pursuant to laws for cooperative 4
audit by or on behalf of the party states or any of their subdivisions are not superseded 5
or invalidated by this Article. 6
8. In no event shall the commission make any charge against a taxpayer for an 7
audit. 8
9. As used in this Article, "tax," in addition to the meaning ascribed to it in 9
Article II, means any tax or license fee imposed in whole or in part for revenue 10
purposes. 11
ARTICLE IX. 12
ARBITRATION. 13
1. Whenever the commission finds a need for settling disputes concerning 14
apportionments and allocations by arbitration, it may adopt a regulation placing this 15
Article in effect, notwithstanding the provisions of Article VII. 16
2. The commission shall select and maintain an arbitration panel composed of 17
officers and employees of state and local governments and private persons who shall 18
be knowledgeable and experienced in matters of tax law and administration. 19
3. Whenever a taxpayer who has elected to employ Article IV, or whenever the 20
laws of the party state or subdivision thereof are substantially identical with the 21
relevant provisions of Article IV, the taxpayer, by written notice to the commission 22
and to each party state or subdivision thereof that would be affected, may secure 23
arbitration of an apportionment or allocation, if the taxpayer is dissatisfied with the 24
final administrative determination of the tax agency of the state or subdivision with 25
respect thereto on the ground that it would subject the taxpayer to double or multiple 26
taxation by two or more party states or subdivisions thereof. Each party state and 27
subdivision thereof hereby consents to the arbitration as provided herein, and agrees to 28
be bound thereby. 29
4. The arbitration board shall be composed of one person selected by the 30
taxpayer, one by the agency or agencies involved, and one member of the 31
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commission's arbitration panel. If the agencies involved are unable to agree on the 1
person to be selected by them, such person shall be selected by lot from the total 2
membership of the arbitration panel. The two persons selected for the board in the 3
manner provided by the foregoing provisions of this paragraph shall jointly select the 4
third member of the board. If they are unable to agree on the selection, the third 5
member shall be selected by lot from among the total membership of the arbitration 6
panel. No member of a board selected by lot shall be qualified to serve if the member 7
is an officer or employee or is otherwise affiliated with any party to the arbitration 8
proceeding. Residence within the jurisdiction of a party to the arbitration proceeding 9
shall not constitute affiliation within the meaning of this paragraph. 10
5. The board may sit in any state or subdivision party to the proceeding, in the 11
state of the taxpayer's incorporation, residence or domicile, in any state where the 12
taxpayer does business, or in any place that it finds most appropriate for gaining 13
access to evidence relevant to the matter before it. 14
6. The board shall give due notice of the times and places of its hearings. The 15
parties shall be entitled to be heard, to present evidence, and to examine and cross-16
examine witnesses. The board shall act by majority vote. 17
7. The board shall have power to administer oaths, take testimony, subpoena 18
and require the attendance of witnesses and the production of accounts, books, papers, 19
records, and other documents, and issue commissions to take testimony. Subpoenas 20
may be signed by any member of the board. In case of failure to obey a subpoena, and 21
upon application by the board, any judge of a court of competent jurisdiction of the 22
state in which the board is sitting or in which the person to whom the subpoena is 23
directed may be found may make an order requiring compliance with the subpoena, 24
and the court may punish failure to obey the order as a contempt. The provisions of 25
this paragraph apply only in states that have adopted this Article. 26
8. Unless the parties otherwise agree the expenses and other costs of the 27
arbitration shall be assessed and allocated among the parties by the board in such 28
manner as it may determine. The commission shall fix a schedule of compensation for 29
members of arbitration boards and of other allowable expenses and costs. No officer 30
or employee of a state or local government who serves as a member of a board shall be 31
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entitled to compensation therefor unless the member is required on account of the 1
service as a board member to forego the regular compensation attaching to the public 2
employment, but any such board member shall be entitled to expenses. 3
9. The board shall determine the disputed apportionment or allocation and any 4
matters necessary thereto. The determinations of the board shall be final for purposes 5
of making the apportionment or allocation, but for no other purpose. 6
10. The board shall file with the commission and with each tax agency 7
represented in the proceeding: the determination of the board; the board's written 8
statement of its reasons therefor; the record of the board's proceedings; and any other 9
documents required by the arbitration rules of the commission to be filed. 10
11. The commission shall publish the determinations of boards together with 11
the statements of the reasons therefor. 12
12. The commission shall adopt and publish rules of procedure and practice 13
and shall file a copy of such rules and of any amendment thereto with the appropriate 14
agency or officer in each of the party states. 15
13. Nothing contained herein shall prevent at any time a written compromise of 16
any matter or matters in dispute, if otherwise lawful, by the parties to the arbitration 17
proceedings. 18
ARTICLE X. 19
ENTRY INTO FORCE AND WITHDRAWAL. 20
1. This compact shall enter into force when enacted into law by any seven 21
states. Thereafter, this compact shall become effective as to any other state upon its 22
enactment thereof. The commission shall arrange for notification of all party states 23
whenever there is a new enactment of the compact. 24
2. Any party state may withdraw from this compact by enacting a statute 25
repealing the same. No withdrawal shall affect any liability already incurred by or 26
chargeable to a party state prior to the time of such withdrawal. 27
3. No proceeding commenced before an arbitration board prior to the 28
withdrawal of a state and to which the withdrawing state or any subdivision thereof is 29
a party shall be discontinued or terminated by the withdrawal, nor shall the board 30
thereby lose jurisdiction over any of the parties to the proceeding necessary to make a 31
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binding determination therein. 1
ARTICLE XI. 2
EFFECT ON OTHER LAWS AND JURISDICTION. 3
Nothing in this compact shall be construed to: 4
(a) Affect the power of any state or subdivision thereof to fix rates of taxation, 5
except that a party state shall be obligated to implement Article III 2 of this compact. 6
(b) Apply to any tax or fixed fee imposed for the registration of a motor 7
vehicle or any tax on motor fuel, other than a sales tax: provided that the definition of 8
"tax" in Article VIII 9 may apply for the purposes of that Article and the commission's 9
powers of study and recommendation pursuant to Article VI 3 may apply. 10
(c) Withdraw or limit the jurisdiction of any state or local court or 11
administrative officer or body with respect to any person, corporation or other entity 12
or subject matter, except to the extent that such jurisdiction is expressly conferred by 13
or pursuant to this compact upon another agency or body. 14
(d) Supersede or limit the jurisdiction of any court of the United States. 15
ARTICLE XII. 16
CONSTRUCTION AND SEVERABILITY. 17
This compact shall be liberally construed so as to effectuate the purposes 18
thereof. The provisions of this compact shall be severable and if any phrase, clause, 19
sentence, or provision of this compact is declared to be contrary to the constitution of 20
any state or of the United States or the applicability thereof to any government, 21
agency, person or circumstance is held invalid, the validity of the remainder of this 22
compact and the applicability thereof to any government, agency, person or 23
circumstance shall not be affected thereby. If this compact shall be held contrary to the 24
constitution of any state participating therein, the compact shall remain in full force 25
and effect as to the remaining party states and in full force and effect as to the state 26
affected as to all severable matters. 27
* Sec. 16. AS 43.20.011(e) is repealed and reenacted to read: 28
(e) There is imposed for each taxable year upon the entire taxable income of 29
every corporation derived from sources within the state a tax of zero percent of the 30
taxable income. 31
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* Sec. 17. AS 43.20.143(a) is amended to read: 1
(a) All apportionable [BUSINESS] income of water transportation carriers 2
shall be apportioned to this state in accordance with AS 43.19 (Multistate Tax 3
Compact) as modified by the following: 4
(1) the numerator of the property factor is the sum of the value for 5
property in a fixed location, including buildings and land used in the business, and 6
intrastate equipment and personal property determined according to AS 43.19 7
(Multistate Tax Compact), and the value of interstate mobile property determined on a 8
days-spent-in-ports basis as provided in (4) of this subsection; the denominator of the 9
property factor is determined according to AS 43.19 (Multistate Tax Compact); 10
(2) the numerator of the payroll factor is the sum of the wages and 11
salaries of employees assigned to fixed locations determined according to AS 43.19 12
(Multistate Tax Compact) and the wages and salaries of employees assigned to 13
interstate mobile property determined on a days-spent-in-ports basis as provided in (4) 14
of this subsection; the denominator of the payroll factor is determined in accordance 15
with AS 43.19 (Multistate Tax Compact); 16
(3) the numerator of the sales factor is the sum of all revenues from 17
intrastate activities and revenues from interstate activities determined on a days-spent-18
in-ports basis as provided in (4) of this subsection; the denominator is determined in 19
accordance with AS 43.19 (Multistate Tax Compact); 20
(4) the portions of the numerator of the property, payroll, and sales 21
factors which are directly related to interstate mobile property operations are 22
determined by a ratio which the number of days spent in ports inside the state bears to 23
the total number of days spent in ports inside and outside the state; the term "days 24
spent in ports" does not include periods when ships are tied up because of strikes or 25
withheld from Alaska service for repairs, or because of seasonal reduction of service; 26
days in port are computed by dividing the total number of hours in all ports by 24. 27
* Sec. 18. AS 43.20.144(a) is amended to read: 28
(a) All apportionable [BUSINESS] income of a taxpayer engaged in the 29
production of oil or gas from a lease or property in this state or engaged in the 30
transportation of oil or gas by pipeline in this state shall be apportioned to this state in 31
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accordance with AS 43.19 (Multistate Tax Compact) as modified by this section. 1
* Sec. 19. AS 43.20.144(b) is amended to read: 2
(b) A taxpayer's apportionable [BUSINESS] income to be apportioned under 3
this section to the state shall be the federal taxable income of the taxpayer's 4
consolidated business for the tax period, except that 5
(1) taxes based on or measured by net income that are deducted in the 6
determination of the federal taxable income shall be added back; the tax levied and 7
paid under AS 43.55 may not be added back; 8
(2) intangible drilling and development costs that are deducted as 9
expenses under 26 U.S.C. 263(c) (Internal Revenue Code) in the determination of the 10
federal taxable income shall be capitalized and depreciated as if the option to treat 11
them as expenses under 26 U.S.C. 263(c) (Internal Revenue Code) had not been 12
exercised; 13
(3) depletion deducted on the percentage depletion basis under 26 14
U.S.C. 613 (Internal Revenue Code) in the determination of the federal taxable income 15
shall be recomputed and deducted on the cost depletion basis under 26 U.S.C. 612 16
(Internal Revenue Code); and 17
(4) depreciation shall be computed on the basis of 26 U.S.C. 167 18
(Internal Revenue Code) as that section read on June 30, 1981. 19
* Sec. 20. AS 43.20.144(c) is amended to read: 20
(c) A taxpayer's apportionable [BUSINESS] income shall be apportioned to 21
this state by multiplying the taxpayer's income determined under (b) of this section by 22
the apportionment factor applicable to the taxpayer among the following factors: 23
(1) the apportionment factor of a taxpayer subject to this section but 24
not engaged in the production of oil and gas, or of gas only, as appropriate, from a 25
lease or property in this state during the tax period is a fraction, the numerator of 26
which is the sum of the property factor under AS 43.19 (Multistate Tax Compact) and 27
the sales factor under (d) of this section for the taxpayer for that tax period, and the 28
denominator of which is two; 29
(2) the apportionment factor of a taxpayer subject to this section but 30
not engaged in the pipeline transportation of oil or gas in this state during the tax 31
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period is a fraction, the numerator of which is the sum of the property factor under (e) 1
of this section and the extraction factor under (f) of this section for the taxpayer for the 2
tax period, and the denominator of which is two; 3
(3) the apportionment factor of a taxpayer engaged both in the 4
production of oil or gas from a lease or property in this state and in the pipeline 5
transportation of oil or gas in this state during the tax period is a fraction, the 6
numerator of which is the sum of the sales factor under (d) of this section, the property 7
factor under (e) of this section, and the extraction factor under (f) of this section for 8
the taxpayer for the tax period, and the denominator of which is three. 9
* Sec. 21. AS 43 is amended by adding a new chapter to read: 10
Chapter 44. Sales and Use Tax. 11
Article 1. Levy and Collection of the Tax. 12
Sec. 43.44.010. Levy of sales and use tax. (a) There is levied a sales tax on 13
the retail sale of personal property and services to a purchaser in the state. The rate of 14
the tax is 15
(1) four percent from April 1 through September 30; and 16
(2) two percent from October 1 through March 31. 17
(b) There is levied a use tax on the use in this state of personal property and 18
services identified in this subsection. The rate of the use tax is equal to the applicable 19
sales tax rate under (a) of this section at the time of the use. The use tax applies to 20
(1) personal property purchased 21
(A) outside the state as a result of a transaction that would have 22
been subject to the sales tax levied under this section had it occurred in the 23
state; or 24
(B) by a purchaser for use in an exempt manner but that was 25
later converted to a use subject to the sales tax levied under this section; or 26
(2) services purchased outside the state that would be subject to the 27
sales tax levied under this section if purchased in the state. 28
Sec. 43.44.020. Liability and collection of sales and use taxes. (a) A tax 29
levied under AS 43.44.010 is imposed on the purchaser. The seller, including a remote 30
seller, shall apply the tax to the sales price and collect the tax from the purchaser. The 31
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seller holds the tax in trust for the state and shall pay the tax to the department. 1
(b) A tax levied under AS 43.44.010(b) is imposed on the user . A seller 2
located outside the state who has a nexus to the state and who sells goods or services 3
subject to the tax levied in AS 43.44.010(b) shall collect the use tax from the 4
purchaser and pay the tax collected to the department. 5
(c) A marketplace facilitator that meets the threshold requirements for a remote 6
seller under AS 43.44.490 is considered the seller for each sale facilitated through its 7
marketplace. A marketplace facilitator shall collect and remit the tax levied under this 8
chapter. 9
(d) Unless the tax has already been paid under (a) of this section, a person in 10
the state who purchases goods or services from a seller located outside the state that 11
does not qualify as a remote seller under this chapter shall pay the sales tax described 12
in AS 43.44.010(a) to the department. 13
(e) Unless the tax has already been paid under (b) of this section, the 14
purchaser of personal property or services subject to the use tax described in 15
AS 43.44.010(b) shall pay the tax to the department at the time the property or service 16
is first used in the state. 17
(f) A seller is liable for a tax the seller is required to collect under this section. 18
If a seller is not required to collect a tax under this section, the purchaser is liable for 19
the tax. Liability for the payment of a tax levied under this chapter is not extinguished 20
until the tax has been paid to the department. 21
(g) If a seller collects a tax in excess of a tax imposed under AS 43.44.010, the 22
seller shall remit the excess to the department. 23
(h) The department shall adopt regulations to prevent evasion of taxes 24
imposed under this chapter and to aid in its administration of the collection of taxes 25
under this chapter. 26
Sec. 43.44.030. Receipt and remittance of local sales and use taxes. (a) The 27
department shall receive municipal sales and use taxes levied under AS 29.45.650 and 28
29.45.700 and remit the proceeds to the municipality. Under AS 43.05 and AS 43.10, 29
the department shall administer, receive, and enforce a sales tax and use tax levied 30
under AS 29.45.650 and 29.45.700. 31
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(b) The department is authorized to establish and collect administrative fees 1
from municipalities associated with the costs incurred from the receipt, audit, 2
enforcement, and remittance of a local sales tax and use tax levied under AS 29.45.650 3
and 29.45.700. 4
Sec. 43.44.040. Sourcing. Notwithstanding AS 43.44.430, the department 5
shall adopt regulations establishing sourcing rules for transactions subject to a tax 6
under this chapter. The regulations may adopt the standards of an agreement 7
authorized under AS 43.44.400. 8
Article 2. Exemptions. 9
Sec. 43.44.100. Exemptions. (a) The following are exempt from a tax levied 10
under this chapter: 11
(1) a sale by, sale to, or use by the United States; 12
(2) a sale by, sale to, or use by the state or an instrumentality of the 13
state, as defined in AS 39.52.960; this paragraph does not apply to a municipal utility 14
sales, an unincorporated community, an Indian tribe included in the list published 15
under 25 U.S.C. 5131, or a foreign government; in this paragraph, "unincorporated 16
community" means a place that is not incorporated as a city and in which 25 or more 17
persons reside as a social unit; 18
(b) The following are exempt from a sales or use tax levied under 19
AS 43.44.010: 20
(1) a purchase made with a voucher or other type of certificate issued 21
under 42 U.S.C. 1786 (Special Supplemental Food Program for Women, Infants, and 22
Children) or a food stamp or other food allotment under 7 U.S.C. 2011 – 2036 (Food 23
Stamp Program); for the purposes of this paragraph, the value of a food stamp 24
allotment paid in the form of a wage subsidy as authorized under AS 47.25.975(b) is 25
not considered to be an allotment issued under 7 U.S.C. 2011 – 2036 (Food Stamp 26
Program); 27
(2) a sale of a state license or permit; 28
(3) services among affiliated persons that report their income under 26 29
U.S.C. (Internal Revenue Code) on a single consolidated return; 30
(4) wages, salaries, commission, tips, and any other forms of 31
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remuneration for personal services, if paid by an employer to an employee; 1
(5) proceeds from investments and other intangible items, including 2
(i) interest on money loaned or deposited; 3
(ii) dividends or interest from stocks, bonds, or 4
securities; 5
(iii) proceeds from the sale of stocks, bonds, or 6
securities; 7
(6) fees for services associated with financial instruments, interests, or 8
deposit accounts; 9
(7) an isolated or occasional sale of personal property; 10
(8) personal or household effects owned or possessed by an individual 11
for a period of six months or longer and brought into the state for the establishment of 12
initial permanent residence in the state and the use by a nonresident of property 13
brought into the state for the nonresident's own nonbusiness use while temporarily in 14
the state; 15
(9) a sale for resale and associated transportation associated with the 16
resale, if the purchaser presents, at the time of sale, an exemption certificate issued 17
under AS 43.44.210; 18
(10) a transaction between the holders of a joint interest or between the 19
partners in a business partnership; 20
(11) fuels sold for use in jet propulsion aircraft; 21
(12) a sale or construction of real property; however, the sale or 22
transportation of personal property that is later converted to real property is taxable 23
under this chapter unless the conversion is part of the construction of real property or 24
construction of an addition to real property; 25
(13) the following health care services and related items: 26
(A) health care services provided by a person licensed or 27
certified to provide those services under AS 08 or by a health care facility as 28
defined in AS 08.68.700(g); 29
(B) drugs, durable medical equipment, mobility enhancing 30
equipment, and prosthetic devices prescribed by a person licensed to prescribe 31
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those goods under AS 08 or obtained from a health care facility as defined in 1
AS 08.68.700(g); 2
(14) the transport, handling, storage, drayage, or packing of property, 3
or other related service on property, if the property is transported in interstate or 4
foreign commerce; 5
(15) the sale of goods or services to a person who uses the goods or 6
services primarily in a trade or business if the cost of the goods or services is 7
(A) deductible by the purchaser under 26 U.S.C. 162 (Internal 8
Revenue Code), as that section read on January 1, 2026; or 9
(B) depreciable by the purchaser under 26 U.S.C. 167 or 168 10
(Internal Revenue Code), as that section read on January 1, 2026; 11
(16) insurance premiums subject to taxation under AS 21; 12
(17) the sale of personal property where the seller is obligated to make 13
delivery to the purchaser at a point outside the state, or to deliver the property for 14
transportation to the purchaser at a point outside the state; 15
(18) the rental or lease of real property for a period of 30 consecutive 16
days or more; and 17
(19) the sale of Internet access. 18
Article 3. Seller's Permit; Exemption Certificate. 19
Sec. 43.44.200. Seller's permit. (a) A person shall obtain a seller's permit 20
from the department before engaging in business in the state. A remote seller shall 21
obtain a seller's permit not later than 30 days after the remote seller exceeds the gross 22
revenue threshold under AS 43.44.490. 23
(b) An applicant for a seller's permit shall apply on a form or in a format 24
prescribed by the department stating 25
(1) the name under which the applicant intends to transact business; 26
(2) every location where the applicant intends to transact business for 27
which the permit is being sought; and 28
(3) any other information the department requires. 29
(c) The department shall issue an eligible applicant a numbered seller's permit. 30
A seller's permit is valid until revoked or suspended and is not assignable. 31
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(d) A seller that makes sales exclusively through a registered marketplace 1
facilitator is not required to register, collect, or remit tax on those sales, and is not 2
subject to bonding or security requirements with respect to those sales. 3
(e) The name, address, and permit number of a person holding a seller's permit 4
is public information and shall be made available by the department 5
Sec. 43.44.210. Exemption certificate. A person selling for resale or a 6
purchaser claiming an exemption for business inputs under AS 43.44.100(b)(15) shall 7
obtain an exemption certificate from the department. The department shall issue an 8
eligible person an exemption certificate that includes 9
(1) a unique identification number assigned by the department; 10
(2) the general character of the property or service sold by the seller or used 11
by the purchaser in the regular course of business; 12
(3) the person's name and principal business address; and 13
(4) the person's signature or electronic signature. 14
Sec. 43.44.220. Revocation or suspension of seller's permit or exemption 15
certificate. (a) The department may revoke or suspend a seller's permit or a person's 16
exemption certificate, or both, if the person fails to comply with a provision of this 17
chapter. 18
(b) A person aggrieved by a revocation or suspension of a seller's permit or 19
exemption certificate under (a) of this section may file an appeal with the department 20
not later than 60 days after revocation or suspension. The appellant may present to the 21
appeals officer arguments and evidence relevant to the revocation or suspension. The 22
department shall give written notice of its decision on an appeal. In its decision, the 23
department may 24
(1) uphold the suspension or revocation; 25
(2) reinstate a suspended permit or certificate: or 26
(3) subject to (c) of this section, issue a new permit or certificate. 27
(c) The department may not issue a new seller's permit or exemption 28
certificate to a person whose permit or certificate has been revoked except on 29
application by the person accompanied by reasonable evidence of the person's 30
intention to comply with this chapter. The department may, as a condition of issuance 31
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of a new permit or certificate, require security in addition to that authorized under 1
AS 43.44.340 in an amount reasonably necessary to ensure compliance with this 2
chapter. 3
(d) A person aggrieved by a final decision of the department under this section 4
may appeal the decision to the superior court as provided by law. 5
Sec. 43.44.230. Improper use of purchase obtained with exemption 6
certificate; penalty. A person who intentionally uses an exemption certificate for 7
property that is used for a purpose other than the purpose claimed is subject to a 8
penalty, payable to the department, of $100 or 100 percent of the tax due, whichever is 9
greater, for each transaction in which an improper use of the exemption certificate has 10
occurred. The penalty is in addition to tax, interest, or other penalties due. 11
Sec. 43.44.240. Commingling exemption certificate property. If a person 12
uses an exemption certificate for the purchase of personal property and commingles 13
that property with property that was not purchased with a exemption certificate but is 14
so similar that the identity of the property in the commingled mass cannot be 15
determined, sales from the mass of commingled property are considered to be sales of 16
the property purchased with the exemption certificate until the quantity of commingled 17
property sold equals the quantity of property originally purchased under the exemption 18
certificate. 19
Article 4. Returns; Security; Credits and Refunds. 20
Sec. 43.44.300. Method of accounting. A seller shall report and pay the sales 21
and use tax under AS 43.44.010 using the same method of accounting that the person 22
uses for federal tax purposes. 23
Sec. 43.44.310. Returns and payment. A person liable for a tax under 24
AS 43.44.010 shall file a return and pay the tax on a monthly basis, on or before the 25
last day of the month following the month in which the tax obligation is incurred. A 26
return filed under this section shall be made on a form and in a format prescribed by 27
the department. 28
Sec. 43.44.320. Methods. (a) The department shall adopt regulations providing 29
for the payment of a tax under AS 43.44.010 based on a rounding method. 30
(b) The department may use sampling principles or methods in conducting a 31
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sales tax or use tax audit. 1
Sec. 43.44.330. Timely filing allowance. (a) A person filing a return under 2
AS 43.44.310 may claim an allowance in the amount of one percent of the tax 3
determined to be payable to the state or $75 a month, whichever is less, if the return is 4
timely filed and the tax is timely paid. 5
(b) The allowance authorized by this section may be deducted on the return. 6
The allowance may not be greater than the tax payable to the state. 7
Sec. 43.44.340. Security; sale of security at auction; bond. (a) The 8
department may require a seller, including a remote seller, to deposit with the 9
department security in a form and amount determined appropriate by the department, 10
but not more than twice the estimated average liability for the period in which the 11
return is required to be filed or $10,000, whichever is less. The department may 12
increase or decrease the amount of security required, subject to the limitations of this 13
section. 14
(b) In addition to remedies under AS 43.10, the department may sell at a 15
public auction property deposited as security to recover a sales tax or use tax amount 16
required to be collected, including interest and penalties. The department shall give 17
notice of the sale not later than 30 days before a sale and shall serve the person who 18
deposited the security personally or by certified mail to the person's last known 19
address. After a sale under this subsection, any surplus above the amount due that is 20
not required as security under this section shall be returned to the person who 21
deposited the security. 22
(c) In lieu of security, the department may require a seller to file a bond issued 23
by a surety company authorized to transact business in the state to guarantee solvency 24
and responsibility. 25
(d) In addition to the other requirements of this section, the department may 26
require a corporate officer, director, or shareholder of a corporation to provide a 27
personal guarantee and assumption of liability for the payment of a tax due under this 28
chapter. 29
Sec. 43.44.350. Taxpayer quitting business; liability of successor. (a) All 30
taxes payable under this chapter are due and payable immediately whenever a 31
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taxpayer quits business, sells, exchanges, or otherwise disposes of the business or 1
disposes of the stock of goods. The taxpayer shall file a return and pay the taxes due 2
not later than 10 days after the taxpayer quits business, sells, exchanges, or otherwise 3
disposes of the business or disposes of the stock of goods. 4
(b) Except as provided in (c) of this section, a person who becomes a 5
successor in a taxpayer's business or stock of goods is liable for the full amount of the 6
tax due unless the taxpayer pays the amount due. Payment of the tax by the successor 7
is considered a payment on the sales price and, if the payment is greater in amount 8
than the sales price, the amount of the difference becomes a debt due to the successor 9
from the taxpayer owing the tax under (a) of this section 10
(c) A successor is not liable for a tax due by a person from whom the 11
successor acquired a business or stock of goods if 12
(1) the successor gives written notice to the department of the 13
acquisition; and 14
(2) an assessment is not issued by the department against the former 15
owner of the business or stock of goods within six months of receipt of the notice from 16
the successor; if an assessment is issued by the department and a copy is not mailed to 17
the successor, the successor is not liable for the tax due. 18
Sec. 43.44.360. Tax as debt. (a) A tax levied under this chapter and related 19
interest and penalties become a personal debt of the person required to file a return 20
from the time the liability arises, regardless of when the time for payment of the 21
liability occurs. 22
(b) If a personal representative of an estate has voluntarily distributed the 23
assets held in that capacity without reserving sufficient assets to pay a tax and related 24
interest and penalties under this chapter, the personal representative is personally 25
liable for any deficiency to the extent permitted by AS 13.16. 26
(c) An officer or employee of a corporation whose duty it is to collect, 27
truthfully account for, and pay to the state a tax levied under this chapter and who fails 28
to pay the tax is liable to the state for the tax and the penalty and interest due on the 29
tax. This subsection applies to a corporate officer, director, or shareholder required by 30
the department to personally guarantee the payment of a tax for a corporation. 31
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Sec. 43.44.370. Deductions for bad debts. (a) A person filing a return under 1
AS 43.44.310 may deduct sales found to be worthless. The bad debt may be deducted 2
when 3
(1) the debt is written off as uncollectable in the person's books and 4
records; and 5
(2) the debt qualifies as a deduction for federal income tax purposes 6
under 26 U.S.C. (Internal Revenue Code). 7
(b) If the amount of bad debt exceeds the amount of taxable sales during the 8
period in which the bad debt is written off, a person may file a refund claim with the 9
department. 10
(c) If a bad debt deducted under (a) of this section is subsequently collected, 11
the person who claimed the deduction shall pay the tax levied under AS 43.44.010 on 12
the amount collected. Any payments made on a debt or account under this subsection 13
are applied 14
(1) first to the taxable price of the property or service and the tax 15
levied under AS 43.44.010 on the property or service; and 16
(2) second to interest, service charges, and any other charges. 17
Sec. 43.44.380. Tax credit for sales or use tax paid to another state. A 18
purchaser liable for a sales or use tax under this chapter is entitled to a full credit for 19
the amount of sales or use tax paid on the same personal property or services to 20
another state. 21
Sec. 43.44.390. Refunds and credits. The department may credit or refund 22
overpayments of taxes, taxes erroneously or illegally assessed or collected, penalties 23
collected without authority, and taxes that are found unjustly assessed, excessive in 24
amount, or otherwise wrongfully collected, as established by regulation. When a 25
refund is allowed to a taxpayer, the refund shall be paid out of the general fund on a 26
warrant issued under a voucher approved by the department. 27
Article 5. General Provisions. 28
Sec. 43.44.400. Streamlined Sales and Use Tax Agreement. (a) The 29
department is authorized to enter into the Streamlined Sales and Use Tax Agreement, 30
approved by the Streamlined Sales Tax Governing Board, Inc., or substantially similar 31
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agreement with one or more states. The department is authorized to act jointly with 1
other states that are members of the Streamlined Sales and Use Tax Agreement, or 2
substantially similar agreement, to establish standards for certification of a certified 3
service provider and certified automated system and to establish performance 4
standards for multistate sellers. 5
(b) If the department enters into the Streamlined Sales and use Tax 6
Agreement, or substantially similar agreement, the department shall adopt regulations 7
consistent with the agreement. 8
(c) The department may take all actions reasonably required to implement the 9
provisions set out in this section. 10
Sec. 43.44.410. Electronic registration, filing, and forms. (a) The 11
department may participate in any electronic sales and use tax registration system 12
made available in cooperation with other states through the Streamlined Sales and use 13
Tax Agreement or substantially similar agreement. 14
(b) The department may use and accept a standard electronic exemption form 15
made available in cooperation with other states through the Streamlined Sales and Use 16
Tax Agreement or substantially similar agreement. 17
(c) The department may prescribe and provide for the use of forms, 18
certificates, permits, and other documents required under this chapter in electronic 19
format, including the use of electronic signatures and authentications, and for 20
electronic filing. 21
Sec. 43.44.420. Field offices. The department may contract with a 22
municipality or other entity for the purpose of collecting a tax under this chapter for 23
that municipality's geographical area of the state. 24
Sec. 43.44.430. Regulations. The department may adopt regulations under 25
AS 44.62 (Administrative Procedure Act) to implement and administer this chapter. 26
Sec. 43.44.490. Definitions. In this chapter, 27
(1) "consideration" means a valuable inducement and includes money, 28
property, and services; 29
(2) "engaging in business" means carrying on or causing to be carried 30
on an activity with the purpose of direct or indirect benefit; 31
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(3) "isolated or occasional sale" includes fundraising activities 1
conducted by a nonprofit organization that do not exceed 60 consecutive days in 2
duration; 3
(4) "marketplace facilitator" means a person that contracts with sellers 4
to facilitate the sale of the seller's product through a physical or electronic marketplace 5
operated by the person and collects the payment from the purchaser; 6
(5) "personal property" means property that can be seen, weighed, 7
measured, felt, or touched, or that is in any other manner perceptible to the senses, and 8
(A) includes electricity, water, gas, steam, Internet services, 9
electronic or digital goods, and prewritten computer software; 10
(B) does not include 11
(i) real property; or 12
(ii) intangible property, such as stocks, bonds, goodwill, 13
trademarks, patents, franchises, or copyrights; 14
(6) "remote seller" means a seller located outside the state who, during 15
the current or immediately preceding calendar year, received gross revenues in excess 16
of $100,000 from sales of goods and services delivered into the state; 17
(7) "retail sale" means a sale for any purpose other than resale in the 18
regular course of business; 19
(8) "sale," "selling," or "purchase" means any exchange, barter, rental, 20
lease, license, or transfer of title or possession of property or services for 21
consideration, including the right to use or consume property or services, regardless of 22
whether conditional or otherwise limited; 23
(9) "sales price" 24
(A) means the total amount of consideration, valued in United 25
States currency, including cash, credit, property, and services, for which 26
personal property or services are sold, whether received in money or otherwise, 27
without deduction of the following: 28
(i) the seller's cost of the property sold; 29
(ii) the cost of materials used, labor or service cost, 30
interest, losses, all costs of transportation to the seller, all taxes 31
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imposed on the seller, and any other expense of the seller; 1
(iii) charges by the seller for any services necessary to 2
complete the sale; 3
(iv) delivery charges; 4
(v) installation charges; 5
(vi) the value of exempt personal property given to the 6
purchaser where taxable and exempt personal property have been 7
bundled together and sold by the seller as a single product or piece of 8
merchandise; 9
(B) does not include 10
(i) discounts, including cash, term, or coupons, that are 11
not reimbursed by a third party and that are allowed by a seller and 12
taken by a purchaser on a sale; 13
(ii) interest, financing, and carrying charges from credit 14
extended on the sale of personal property or services if the amount is 15
separately stated on the invoice, bill of sale, or similar document given 16
to the purchaser; or 17
(iii) taxes, fees or other charges legally imposed by a 18
federal, state, or local government directly on the consumer or the seller 19
that are separately stated on the invoice, bill of sale, or similar 20
document given to the purchaser; 21
(iv) the motor fuel tax levied under AS 43.40 22
(10) "sale for resale" means the sale of personal property to a 23
purchaser whose principal business is the resale of property, whether in the same or an 24
altered form; 25
(11) "services" means an activity engaged in for another person for 26
consideration and that is distinguished from the sale of property; in determining what 27
constitutes a service, the intended use, principal objective, or ultimate objective of the 28
contracting parties is irrelevant; "services" includes 29
(A) activities performed by a person for its member or 30
shareholders; 31
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(B) construction activities and all personal property that will 1
become an ingredient or component part of a construction project; 2
(C) labor; 3
(D) professional services; 4
(E) transportation; 5
(F) telephone or other communications services; 6
(G) entertainment, including cable, subscription, or pay 7
television or other telecommunications service; 8
(H) the supplying of food, lodging, or other accommodations in 9
hotels, restaurants, or elsewhere; 10
(I) admission to exhibitions; 11
(J) the use of a computer, computer time, a computer system, a 12
computer program, a computer network, or any part of a computer system or 13
network; 14
(K) the supplying of equipment for use; and 15
(L) admission to places of entertainment; 16
(12) "use" or "using" includes use, consumption, or storage, other than 17
storage for resale or for use solely outside the state in the ordinary course of business. 18
* Sec. 22. AS 43.44.010(a), added by sec. 21 of this Act, is amended to read: 19
(a) There is levied a sales tax on the retail sale of personal property and 20
services to a purchaser in the state. The rate of the tax is zero percent 21
[(1) FOUR PERCENT FROM APRIL 1 THROUGH SEPTEMBER 22
30; AND 23
(2) TWO PERCENT FROM OCTOBER 1 THROUGH MARCH 31]. 24
* Sec. 23. AS 43.55.011(f) is amended to read: 25
(f) The levy of tax under (e) of this section for 26
(1) oil and gas produced before January 1, 2022, from leases or 27
properties that include land north of 68 degrees North latitude, other than gas subject 28
to (o) of this section, may not be less than 29
(A) four percent of the gross value at the point of production 30
when the average price per barrel for Alaska North Slope crude oil for sale on 31
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the United States West Coast during the calendar year for which the tax is due 1
is more than $25; 2
(B) three percent of the gross value at the point of production 3
when the average price per barrel for Alaska North Slope crude oil for sale on 4
the United States West Coast during the calendar year for which the tax is due 5
is over $20 but not over $25; 6
(C) two percent of the gross value at the point of production 7
when the average price per barrel for Alaska North Slope crude oil for sale on 8
the United States West Coast during the calendar year for which the tax is due 9
is over $17.50 but not over $20; 10
(D) one percent of the gross value at the point of production 11
when the average price per barrel for Alaska North Slope crude oil for sale on 12
the United States West Coast during the calendar year for which the tax is due 13
is over $15 but not over $17.50; or 14
(E) zero percent of the gross value at the point of production 15
when the average price per barrel for Alaska North Slope crude oil for sale on 16
the United States West Coast during the calendar year for which the tax is due 17
is $15 or less; and 18
(2) oil produced on and after January 1, 2022, from leases or properties 19
that include land north of 68 degrees North latitude, may not be less than 20
(A) six [FOUR] percent of the gross value at the point of 21
production when the average price per barrel for Alaska North Slope crude oil 22
for sale on the United States West Coast during the calendar year for which the 23
tax is due is more than $25; 24
(B) three percent of the gross value at the point of production 25
when the average price per barrel for Alaska North Slope crude oil for sale on 26
the United States West Coast during the calendar year for which the tax is due 27
is over $20 but not over $25; 28
(C) two percent of the gross value at the point of production 29
when the average price per barrel for Alaska North Slope crude oil for sale on 30
the United States West Coast during the calendar year for which the tax is due 31
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is over $17.50 but not over $20; 1
(D) one percent of the gross value at the point of production 2
when the average price per barrel for Alaska North Slope crude oil for sale on 3
the United States West Coast during the calendar year for which the tax is due 4
is over $15 but not over $17.50; or 5
(E) zero percent of the gross value at the point of production 6
when the average price per barrel for Alaska North Slope crude oil for sale on 7
the United States West Coast during the calendar year for which the tax is due 8
is $15 or less. 9
* Sec. 24. AS 43.55.011(f), as amended by sec. 23 of this Act, is amended to read: 10
(f) The levy of tax under (e) of this section for 11
(1) oil and gas produced before January 1, 2022, from leases or 12
properties that include land north of 68 degrees North latitude, other than gas subject 13
to (o) of this section, may not be less than 14
(A) four percent of the gross value at the point of production 15
when the average price per barrel for Alaska North Slope crude oil for sale on 16
the United States West Coast during the calendar year for which the tax is due 17
is more than $25; 18
(B) three percent of the gross value at the point of production 19
when the average price per barrel for Alaska North Slope crude oil for sale on 20
the United States West Coast during the calendar year for which the tax is due 21
is over $20 but not over $25; 22
(C) two percent of the gross value at the point of production 23
when the average price per barrel for Alaska North Slope crude oil for sale on 24
the United States West Coast during the calendar year for which the tax is due 25
is over $17.50 but not over $20; 26
(D) one percent of the gross value at the point of production 27
when the average price per barrel for Alaska North Slope crude oil for sale on 28
the United States West Coast during the calendar year for which the tax is due 29
is over $15 but not over $17.50; or 30
(E) zero percent of the gross value at the point of production 31
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when the average price per barrel for Alaska North Slope crude oil for sale on 1
the United States West Coast during the calendar year for which the tax is due 2
is $15 or less; and 3
(2) oil produced on and after January 1, 2022, from leases or properties 4
that include land north of 68 degrees North latitude, may not be less than 5
(A) four [SIX] percent of the gross value at the point of 6
production when the average price per barrel for Alaska North Slope crude oil 7
for sale on the United States West Coast during the calendar year for which the 8
tax is due is more than $25; 9
(B) three percent of the gross value at the point of production 10
when the average price per barrel for Alaska North Slope crude oil for sale on 11
the United States West Coast during the calendar year for which the tax is due 12
is over $20 but not over $25; 13
(C) two percent of the gross value at the point of production 14
when the average price per barrel for Alaska North Slope crude oil for sale on 15
the United States West Coast during the calendar year for which the tax is due 16
is over $17.50 but not over $20; 17
(D) one percent of the gross value at the point of production 18
when the average price per barrel for Alaska North Slope crude oil for sale on 19
the United States West Coast during the calendar year for which the tax is due 20
is over $15 but not over $17.50; or 21
(E) zero percent of the gross value at the point of production 22
when the average price per barrel for Alaska North Slope crude oil for sale on 23
the United States West Coast during the calendar year for which the tax is due 24
is $15 or less. 25
* Sec. 25. AS 43.55.020(a) is amended to read: 26
(a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 27
the tax as follows: 28
(1) for oil and gas produced before January 1, 2014, an installment 29
payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 30
as allowed by law, is due for each month of the calendar year on the last day of the 31
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following month; except as otherwise provided under (2) of this subsection, the 1
amount of the installment payment is the sum of the following amounts, less 1/12 of 2
the tax credits that are allowed by law to be applied against the tax levied by 3
AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 4
not be less than zero: 5
(A) for oil and gas not subject to AS 43.55.011(o) or (p) 6
produced from leases or properties in the state outside the Cook Inlet 7
sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 8
the greater of 9
(i) zero; or 10
(ii) the sum of 25 percent and the tax rate calculated for 11
the month under AS 43.55.011(g) multiplied by the remainder obtained 12
by subtracting 1/12 of the producer's adjusted lease expenditures for the 13
calendar year of production under AS 43.55.165 and 43.55.170 that are 14
deductible for the oil and gas under AS 43.55.160 from the gross value 15
at the point of production of the oil and gas produced from the leases or 16
properties during the month for which the installment payment is 17
calculated; 18
(B) for oil and gas produced from leases or properties subject 19
to AS 43.55.011(f), the greatest of 20
(i) zero; 21
(ii) zero percent, one percent, two percent, three 22
percent, or four percent, as applicable, of the gross value at the point of 23
production of the oil and gas produced from the leases or properties 24
during the month for which the installment payment is calculated; or 25
(iii) the sum of 25 percent and the tax rate calculated for 26
the month under AS 43.55.011(g) multiplied by the remainder obtained 27
by subtracting 1/12 of the producer's adjusted lease expenditures for the 28
calendar year of production under AS 43.55.165 and 43.55.170 that are 29
deductible for the oil and gas under AS 43.55.160 from the gross value 30
at the point of production of the oil and gas produced from those leases 31
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or properties during the month for which the installment payment is 1
calculated; 2
(C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 3
each lease or property, the greater of 4
(i) zero; or 5
(ii) the sum of 25 percent and the tax rate calculated for 6
the month under AS 43.55.011(g) multiplied by the remainder obtained 7
by subtracting 1/12 of the producer's adjusted lease expenditures for the 8
calendar year of production under AS 43.55.165 and 43.55.170 that are 9
deductible under AS 43.55.160 for the oil or gas, respectively, 10
produced from the lease or property from the gross value at the point of 11
production of the oil or gas, respectively, produced from the lease or 12
property during the month for which the installment payment is 13
calculated; 14
(D) for oil and gas subject to AS 43.55.011(p), the lesser of 15
(i) the sum of 25 percent and the tax rate calculated for 16
the month under AS 43.55.011(g) multiplied by the remainder obtained 17
by subtracting 1/12 of the producer's adjusted lease expenditures for the 18
calendar year of production under AS 43.55.165 and 43.55.170 that are 19
deductible for the oil and gas under AS 43.55.160 from the gross value 20
at the point of production of the oil and gas produced from the leases or 21
properties during the month for which the installment payment is 22
calculated, but not less than zero; or 23
(ii) four percent of the gross value at the point of 24
production of the oil and gas produced from the leases or properties 25
during the month, but not less than zero; 26
(2) an amount calculated under (1)(C) of this subsection for oil or gas 27
subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 28
carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 29
applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in 30
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 31
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gas produced during the month for the amount of taxable gas produced during the 1
calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced 2
during the month for the amount of taxable oil produced during the calendar year; 3
(3) an installment payment of the estimated tax levied by 4
AS 43.55.011(i) for each lease or property is due for each month of the calendar year 5
on the last day of the following month; the amount of the installment payment is the 6
sum of 7
(A) the applicable tax rate for oil provided under 8
AS 43.55.011(i), multiplied by the gross value at the point of production of the 9
oil taxable under AS 43.55.011(i) and produced from the lease or property 10
during the month; and 11
(B) the applicable tax rate for gas provided under 12
AS 43.55.011(i), multiplied by the gross value at the point of production of the 13
gas taxable under AS 43.55.011(i) and produced from the lease or property 14
during the month; 15
(4) any amount of tax levied by AS 43.55.011, net of any credits 16
applied as allowed by law, that exceeds the total of the amounts due as installment 17
payments of estimated tax is due on March 31 of the year following the calendar year 18
of production; 19
(5) for oil and gas produced on and after January 1, 2014, and before 20
January 1, 2022, an installment payment of the estimated tax levied by 21
AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 22
month of the calendar year on the last day of the following month; except as otherwise 23
provided under (6) of this subsection, the amount of the installment payment is the 24
sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 25
applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 26
of the installment payment may not be less than zero: 27
(A) for oil and gas not subject to AS 43.55.011(o) or (p) 28
produced from leases or properties in the state outside the Cook Inlet 29
sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 30
the greater of 31
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(i) zero; or 1
(ii) 35 percent multiplied by the remainder obtained by 2
subtracting 1/12 of the producer's adjusted lease expenditures for the 3
calendar year of production under AS 43.55.165 and 43.55.170 that are 4
deductible for the oil and gas under AS 43.55.160 from the gross value 5
at the point of production of the oil and gas produced from the leases or 6
properties during the month for which the installment payment is 7
calculated; 8
(B) for oil and gas produced from leases or properties subject 9
to AS 43.55.011(f), the greatest of 10
(i) zero; 11
(ii) zero percent, one percent, two percent, three 12
percent, or four percent, as applicable, of the gross value at the point of 13
production of the oil and gas produced from the leases or properties 14
during the month for which the installment payment is calculated; or 15
(iii) 35 percent multiplied by the remainder obtained by 16
subtracting 1/12 of the producer's adjusted lease expenditures for the 17
calendar year of production under AS 43.55.165 and 43.55.170 that are 18
deductible for the oil and gas under AS 43.55.160 from the gross value 19
at the point of production of the oil and gas produced from those leases 20
or properties during the month for which the installment payment is 21
calculated, except that, for the purposes of this calculation, a reduction 22
from the gross value at the point of production may apply for oil and 23
gas subject to AS 43.55.160(f) or (g); 24
(C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 25
each lease or property, the greater of 26
(i) zero; or 27
(ii) 35 percent multiplied by the remainder obtained by 28
subtracting 1/12 of the producer's adjusted lease expenditures for the 29
calendar year of production under AS 43.55.165 and 43.55.170 that are 30
deductible under AS 43.55.160 for the oil or gas, respectively, 31
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produced from the lease or property from the gross value at the point of 1
production of the oil or gas, respectively, produced from the lease or 2
property during the month for which the installment payment is 3
calculated; 4
(D) for oil and gas subject to AS 43.55.011(p), the lesser of 5
(i) 35 percent multiplied by the remainder obtained by 6
subtracting 1/12 of the producer's adjusted lease expenditures for the 7
calendar year of production under AS 43.55.165 and 43.55.170 that are 8
deductible for the oil and gas under AS 43.55.160 from the gross value 9
at the point of production of the oil and gas produced from the leases or 10
properties during the month for which the installment payment is 11
calculated, but not less than zero; or 12
(ii) four percent of the gross value at the point of 13
production of the oil and gas produced from the leases or properties 14
during the month, but not less than zero; 15
(6) an amount calculated under (5)(C) of this subsection for oil or gas 16
subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 17
carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 18
applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in 19
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 20
gas produced during the month for the amount of taxable gas produced during the 21
calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced 22
during the month for the amount of taxable oil produced during the calendar year; 23
(7) for oil and gas produced on or after January 1, 2022, an installment 24
payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 25
as allowed by law, is due for each month of the calendar year on the last day of the 26
following month; except as otherwise provided under (10) of this subsection, the 27
amount of the installment payment is the sum of the following amounts, less 1/12 of 28
the tax credits that are allowed by law to be applied against the tax levied by 29
AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 30
not be less than zero: 31
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(A) for oil produced from leases or properties subject to 1
AS 43.55.011(f), the greatest of 2
(i) zero; 3
(ii) zero percent, one percent, two percent, three 4
percent, [OR] four percent, or, for oil produced on or after January 5
1, 2027, six percent, as applicable, of the gross value at the point of 6
production of the oil produced from the leases or properties during the 7
month for which the installment payment is calculated; or 8
(iii) 35 percent multiplied by the remainder obtained by 9
subtracting 1/12 of the producer's adjusted lease expenditures for the 10
calendar year of production under AS 43.55.165 and 43.55.170 that are 11
deductible for the oil under AS 43.55.160(h)(1) from the gross value at 12
the point of production of the oil produced from those leases or 13
properties during the month for which the installment payment is 14
calculated, except that, for the purposes of this calculation, a reduction 15
from the gross value at the point of production may apply for oil 16
subject to AS 43.55.160(f) or 43.55.160(f) and (g); 17
(B) for oil produced before or during the last calendar year 18
under AS 43.55.024(b) for which the producer could take a tax credit under 19
AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet 20
sedimentary basin, no part of which is north of 68 degrees North latitude, other 21
than leases or properties subject to AS 43.55.011(o) or (p), the greater of 22
(i) zero; or 23
(ii) 35 percent multiplied by the remainder obtained by 24
subtracting 1/12 of the producer's adjusted lease expenditures for the 25
calendar year of production under AS 43.55.165 and 43.55.170 that are 26
deductible for the oil under AS 43.55.160(h)(2) from the gross value at 27
the point of production of the oil produced from the leases or properties 28
during the month for which the installment payment is calculated; 29
(C) for oil and gas produced from leases or properties subject 30
to AS 43.55.011(p), except as otherwise provided under (8) of this subsection, 31
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the sum of 1
(i) 35 percent multiplied by the remainder obtained by 2
subtracting 1/12 of the producer's adjusted lease expenditures for the 3
calendar year of production under AS 43.55.165 and 43.55.170 that are 4
deductible for the oil under AS 43.55.160(h)(3) from the gross value at 5
the point of production of the oil produced from the leases or properties 6
during the month for which the installment payment is calculated, but 7
not less than zero; and 8
(ii) 13 percent of the gross value at the point of 9
production of the gas produced from the leases or properties during the 10
month, but not less than zero; 11
(D) for oil produced from leases or properties in the state, no 12
part of which is north of 68 degrees North latitude, other than leases or 13
properties subject to (B), (C), or (F) of this paragraph, the greater of 14
(i) zero; or 15
(ii) 35 percent multiplied by the remainder obtained by 16
subtracting 1/12 of the producer's adjusted lease expenditures for the 17
calendar year of production under AS 43.55.165 and 43.55.170 that are 18
deductible for the oil under AS 43.55.160(h)(4) from the gross value at 19
the point of production of the oil produced from the leases or properties 20
during the month for which the installment payment is calculated; 21
(E) for gas produced from each lease or property in the state 22
outside the Cook Inlet sedimentary basin, other than a lease or property subject 23
to AS 43.55.011(o) or (p), 13 percent of the gross value at the point of 24
production of the gas produced from the lease or property during the month for 25
which the installment payment is calculated, but not less than zero; 26
(F) for oil subject to AS 43.55.011(k), for each lease or 27
property, the greater of 28
(i) zero; or 29
(ii) 35 percent multiplied by the remainder obtained by 30
subtracting 1/12 of the producer's adjusted lease expenditures for the 31
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calendar year of production under AS 43.55.165 and 43.55.170 that are 1
deductible under AS 43.55.160 for the oil produced from the lease or 2
property from the gross value at the point of production of the oil 3
produced from the lease or property during the month for which the 4
installment payment is calculated; 5
(G) for gas subject to AS 43.55.011(j) or (o), for each lease or 6
property, the greater of 7
(i) zero; or 8
(ii) 13 percent of the gross value at the point of 9
production of the gas produced from the lease or property during the 10
month for which the installment payment is calculated; 11
(8) an amount calculated under (7)(C) of this subsection may not 12
exceed four percent of the gross value at the point of production of the oil and gas 13
produced from leases or properties subject to AS 43.55.011(p) during the month for 14
which the installment payment is calculated; 15
(9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and 16
(7)(A)(ii) of this subsection, the applicable percentage of the gross value at the point 17
of production is determined under AS 43.55.011(f)(1) or (2) but substituting the 18
phrase "month for which the installment payment is calculated" in AS 43.55.011(f)(1) 19
and (2) for the phrase "calendar year for which the tax is due"; 20
(10) an amount calculated under (7)(F) or (G) of this subsection for oil 21
or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 22
carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 23
applicable, for gas, or set out in AS 43.55.011(k) for oil, but substituting in 24
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 25
gas produced during the month for the amount of taxable gas produced during the 26
calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced 27
during the month for the amount of taxable oil produced during the calendar year. 28
* Sec. 26. AS 43.55.023(c) is amended to read: 29
(c) A credit or portion of a credit under this section 30
(1) may not be used to reduce a person's tax liability under 31
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AS 43.55.011(e) for any calendar year below zero; 1
(2) may, if not used under this subsection, be applied in a later 2
calendar year; 3
(3) may, regardless of when the credit was earned, be used to satisfy a 4
tax, interest, penalty, fee, or other charge that 5
(A) is related to the tax due under this chapter for a prior year, 6
except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300 , or 7
43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 8
(B) has not, for the purpose of art. IX, sec. 17(a), Constitution 9
of the State of Alaska, been subject to an administrative proceeding or 10
litigation. 11
* Sec. 27. AS 43.55.023(e) is amended to read: 12
(e) A person to which a transferable tax credit certificate is issued under (d) of 13
this section may transfer the certificate to another person, and a transferee may further 14
transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and 15
notwithstanding any action the department may take with respect to the applicant 16
under (g) of this section, the owner of a certificate may apply the credit or a portion of 17
the credit shown on the certificate 18
(1) against a tax levied by AS 43.55.011(e); however, a credit shown 19
on a transferable tax credit certificate may not be applied under this paragraph to 20
reduce a transferee's total tax liability under AS 43.55.011(e) for oil and gas produced 21
during a calendar year to less than 80 percent of the tax that would otherwise be due 22
without applying that credit; any portion of a credit not used under this paragraph may 23
be applied in a later period; or 24
(2) regardless of when the credit was earned, to satisfy a tax, interest, 25
penalty, fee, or other charge that 26
(A) is related to the tax due under this chapter, except for a 27
surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300 , or 43.55.320 or 28
the tax levied by AS 43.55.011(i) or 43.55.014; 29
(B) is for a calendar year before the year in which the 30
certificate is applied; and 31
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(C) has not, for the purpose of art. IX, sec. 17(a), Constitution 1
of the State of Alaska, been subject to an administrative proceeding or 2
litigation. 3
* Sec. 28. AS 43.55.025(h) is amended to read: 4
(h) A producer that purchases a production tax credit certificate may apply the 5
credits against its production tax levied by AS 43.55.011(e). Regardless of the price 6
the producer paid for the certificate, the producer may receive a credit against its 7
production tax liability for the full amount of the credit, but for not more than the 8
amount for which the certificate is issued. A production tax credit or a portion of a 9
production tax credit or a production tax credit certificate or a portion of a production 10
tax credit certificate allowed under this section 11
(1) may not be applied more than once; 12
(2) may be applied in a later calendar year; 13
(3) may, regardless of when the credit was earned, be applied to satisfy 14
a tax, interest, penalty, fee, or other charge that 15
(A) is related to the tax due under this chapter for a prior year, 16
except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300 , or 17
43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 18
(B) has not, for the purpose of art. IX, sec. 17(a), Constitution 19
of the State of Alaska, been subject to an administrative proceeding or 20
litigation. 21
* Sec. 29. AS 43.55.165(e)(11) is amended to read: 22
(11) surcharges levied under AS 43.55.201, [OR] 43.55.300 , or 23
43.55.320; 24
* Sec. 30. AS 43.55.201(b) is amended to read: 25
(b) The surcharge imposed by (a) of this section is in addition to the tax 26
imposed by AS 43.55.011 and is due on the last day of the month on oil produced 27
from each lease or property during the preceding month. The surcharge is in addition 28
to the surcharge imposed by AS 43.55.300 - 43.55.310 and 43.55.320. 29
* Sec. 31. AS 43.55 is amended by adding new sections to article 3 to read: 30
Sec. 43.55.320. Infrastructure maintenance surcharge on oil. (a) Every 31
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producer of oil shall pay a surcharge of $.15 per barrel of oil produced from each lease 1
or property in the state, less any oil the ownership or right to which is exempt from 2
taxation. 3
(b) The surcharge imposed by (a) of this section is in addition to the tax 4
imposed by AS 43.55.011 and the surcharges imposed by AS 43.55.201 and 5
43.55.300. 6
(c) A tax credit authorized under this chapter may not be applied to reduce a 7
producer's liability for the surcharge. 8
(d) The surcharge is due on the last day of the month on oil produced from 9
each lease or property during the preceding month. The surcharge shall be paid at the 10
same time and in the same manner as the surcharge imposed under AS 43.55.201. 11
Sec. 43.55.325. Pipeline corridor maintenance fund . (a) The pipeline 12
corridor maintenance fund is established in the general fund. 13
(b) The legislature may appropriate to the fund the revenue collected under 14
AS 43.55.320 and other money. 15
(c) Money in the fund may be appropriated for maintenance and operation 16
costs incurred by the state along the pipeline corridor. 17
(d) Nothing in this section creates a dedicated fund. 18
* Sec. 32. AS 43.55.900(24) is amended to read: 19
(24) "surcharge" means 20
(A) when used in AS 43.55.201 - 43.55.299, the surcharge 21
levied by AS 43.55.201; 22
(B) when used in AS 43.55.300 - 43.55.310, the surcharge 23
levied by AS 43.55.300; 24
(C) when used in AS 43.55.320 - 43.55.325, the surcharge 25
levied by AS 43.55.320; 26
* Sec. 33. AS 29.05.210(b)(1) is repealed. 27
* Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 28
read: 29
APPLICABILITY. AS 43.44.010, added by sec. 21 of this Act, applies to purchases 30
made on or after the effective date of sec. 21 of this Act. 31
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* Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 1
read: 2
CONDITIONAL EFFECT. This Act takes effect only if the following legislation is 3
passed by the Thirty-Fourth Alaska State Legislature and enacted into law: 4
(1) version of HB 275 or similar bill; 5
(2) version of HB 274 or similar bill; 6
(3) version of HJR 30 or similar resolution. 7
* Sec. 36. If this Act takes effect under sec. 35 of this Act, 8
(1) secs. 26 - 32 of this Act take effect July 1, 2026; 9
(2) secs. 15, 17 - 20, 23, and 25 of this Act take effect January 1, 2027; 10
(3) sec. 16 of this Act takes effect January 1, 2031; 11
(4) sec. 22 of this Act takes effect January 1, 2034; 12
(5) sec. 24 of this Act takes effect on the earlier of the following: 13
(A) January 1, 2032; or 14
(B) January 1 of the calendar year following the first calendar year in 15
which the average daily throughput of the Trans-Alaska Pipeline System exceeds 16
650,000 barrels per day. 17
* Sec. 37. Except as provided in sec. 36 of this Act, if this Act takes effect under sec. 35 of 18
this Act, it takes effect 12 months after enactment. 19