AS Title 43, Chapter 56: Oil and Gas Exploration, Production, and Pipeline Transportation Property Taxes

Chapter 56. Oil and Gas Exploration, Production, and Pipeline Transportation Property Taxes. Sec. 43.56.010. Levy of tax. (a) An annual tax of 20 mills is levied each tax year beginning January 1, 1974, on the full and true value of taxable property taxable under this chapter. (b) A municipality may levy and collect a tax under AS 29.45.080 at the rate of taxation that applies to other property taxed by the municipality. The tax shall be levied at a rate no higher than the rate applicable to other property taxable by the municipality. A municipality may not exempt from taxation property authorized to be taxed under this chapter. Exemptions shall be limited to those in AS 29.45.030 , 29.45.050, and AS 43.56.020 . (c) If the total value of assessed property of a municipality taxing under AS 29.45.080 (c) exceeds the product of the percentage, as determined in AS 29.45.080 (f), of the average per capita assessed full and true value of property in the state, to be determined by the department and reported to each municipality by January 15 of each year, multiplied by the number of residents of the taxing municipality, the department shall designate the portion of the tax base against which the local tax may be applied. (d) A tax paid to a municipality under AS 29.45.080 or former AS 29.53.045 on or before June 30 of the tax year shall be credited against the tax levied under (a) of this section for that tax year. If, however, a tax is not paid to a municipality until after June 30 of the taxable year, the department upon application shall refund to the taxpayer the amount of tax paid to the municipality under AS 29.45.080 or former AS 29.53.045 . The credit or refund of taxes paid to a municipality may not exceed the total amount of tax levied by the department upon the taxpayer for the tax year, under (a) of this section. Sec. 43.56.018. Property tax education credit. [See delayed repeal note.] (a) The owner of property taxable under this chapter is allowed a credit against the tax due under this chapter for (1) contributions of cash or equipment accepted for direct instruction, research, and educational support purposes, including library and museum acquisitions, and contributions to endowment, by an Alaska university foundation or by a nonprofit, public or private, Alaska two-year or four-year college accredited by a national or regional accreditation association; (2) contributions of cash or equipment accepted for secondary school level vocational education courses, programs, and facilities by a school district in the state; (3) contributions of cash or equipment accepted for vocational education courses, programs, and facilities by a state-operated vocational technical education and training school; (4) contributions of cash or equipment accepted for a facility by a nonprofit, public or private, Alaska two-year or four-year college accredited by a national or regional accreditation association; (5) contributions of cash or equipment accepted for Alaska Native cultural or heritage programs and educational support, including mentoring and tutoring, provided by a nonprofit agency for public school staff and for students who are in grades kindergarten through 12 in the state; (6) contributions of cash or equipment accepted for education, research, rehabilitation, and facilities by an institution that is located in the state and that qualifies as a coastal ecosystem learning center under the Coastal America Partnership established by the federal government; (7) contributions of cash or equipment accepted for the Alaska higher education investment fund under AS 37.14.750 ; (8) contributions of cash or equipment accepted for the operation of a nonprofit educational resource center that supports academic achievement in grades nine through 12 by coordinating curricula and statewide competition in the subject areas of economics, science, social science, literature, music, art, mathematics, writing, speech, and interview skills and by providing student scholarships; (9) expenditures made to operate a child care facility in the state for the children of the property owner's employees; (10) contributions of cash or equipment accepted by a child care facility in the state operated by a nonprofit corporation and attended by one or more children of the property owner's employees; and (11) a payment to an employee of the property owner made by the owner for the purpose of offsetting the employee's child care costs incurred in the state. (b) The amount of the credit is 50 percent of contributions. (c) Each public college and university shall include in its annual operating budget request contributions received and how the contributions were used. (d) A contribution claimed as a credit under this section may not (1) be the basis for a credit claimed under another provision of this title; and (2) when combined with contributions that are the basis for credits taken during the taxpayer's tax year under AS 21.96.070 , AS 43.20.014 , AS 43.55.019 , AS 43.65.018 , AS 43.75.018 , or AS 43.77.045 , result in the total amount of credits exceeding $3,000,000; if the taxpayer is a member of an affiliated group, then the total amount of credits may not exceed $3,000,000 for the affiliated group; in this paragraph, “affiliated group” has the meaning given in AS 43.20.145 . (e) The credit under this section may not reduce a person's tax liability under this chapter to below zero for any tax year. An unused credit or portion of a credit not used under this section for a tax year may not be sold, traded, transferred, or applied in a subsequent tax year. (f) To qualify for a credit under this section, equipment must be appraised consistent with regulations adopted by the department to determine the value of the contribution for purposes of this section. (g) Beginning January 1, 2030, and every five years thereafter, the department shall adjust the dollar limit on credits under (d) of this section for inflation, using 100 percent of the change over the preceding five calendar years in the Consumer Price Index for all urban consumers for urban Alaska, compiled by the Bureau of Labor Statistics, United States Department of Labor. (h) In this section, (1) “school district” has the meaning given in AS 43.20.014 ; (2) “vocational education” has the meaning given in AS 43.20.014 . Sec. 43.56.019. Alaska veterans' memorial endowment fund contribution credit. [Repealed, § 25 ch 46 SLA 2002.] Sec. 43.56.020. Exemptions. (a) The following are exempt from local taxes levied or authorized under AS 43.56.010 (b): (1) property rights attached to or inherent in the right to explore for or produce oil or gas; (2) oil or gas leases or properties, whether producing or not; (3) oil or gas in place; (4) oil or gas produced or extracted in the state; (5) the value of intangible drilling expenses and exploration expenses; (6) an interest in property described in AS 43.55.017 (a). (b) There is exempt from state taxes levied or authorized under AS 43.56.010 (a), before the construction commencement date, property that is committed by contract or other agreement for use in this state primarily for the production or pipeline transportation of gas or unrefined oil, or in the operation or maintenance of facilities for the production or pipeline transportation of gas or unrefined oil. (c) In (a)(2) of this section, “properties” means mineral interests in oil and gas and working interests, royalty interests, and overriding royalty interests in oil and gas leases. (d) Taxable property of a natural gas pipeline project owned or financed by the Alaska Gasline Development Corporation or a joint venture, partnership, or other entity that includes the Alaska Gasline Development Corporation is exempt from state taxes levied or authorized under AS 43.56.010 (a) and municipal taxes levied or authorized under AS 43.56.010 (b) before the commencement of commercial operations of that natural gas pipeline project. In this subsection, “commencement of commercial operations” means the first flow of natural gas in the project that generates revenue to the owners of the natural gas pipeline project. Sec. 43.56.030. In place of other taxes. Except for those taxes imposed under AS 43.55 , the taxes levied or authorized under AS 43.56.010 (b) are in place of (1) all other ad valorem taxes or other taxes imposed by a municipality on property subject to tax under this chapter or exempted from taxation by AS 43.56.020 ; and (2) all other taxes imposed by a municipality on or with respect to the property subject to tax under this chapter or exempted from taxation by AS 43.56.020 , including, but not limited to, (A) taxes on the retail sale or use of the property except for the retail sales tax on the first $1,000 of each sale; (B) taxes on the sale or use of gas or unrefined oil; (C) taxes on the sale or use of services used in or associated with the property or in its maintenance or operation except for the sales tax on the first $1,000 of each sale; (D) taxes on or measured by gross or net income from the property, including income from the exploration for, production of, or pipeline transportation of gas or unrefined oil or property; and (E) any license, excise, fee, charge or other tax on or pertaining to the property or services. Sec. 43.56.040. State Assessment Review Board. The State Assessment Review Board is created within the department. The board consists of five persons appointed by the governor to serve at the pleasure of the governor, each of whom must be knowledgeable of assessment procedures. Each board member is subject to confirmation by a majority of the members of the legislature in joint session. Sec. 43.56.050. Per diem and expenses. Members of the board shall receive per diem and expenses authorized by law for boards and commissions. Sec. 43.56.060. Assessment. (a) The department shall assess property for the tax levied under AS 43.56.010 (b) and AS 29.45.080 on property used or committed by contract or other agreement for use for the pipeline transportation of gas or unrefined oil or for the production of gas or unrefined oil at its full and true value as of January 1 of the assessment year. (b) The department shall assess property for the taxes levied under AS 43.56.010 (a) at its full and true value as of January 1 of the assessment year except that in the case of taxable property used or committed by contract or other agreement for the pipeline transportation of gas or unrefined oil or for the production of gas or unrefined oil to be transported by that pipeline, the first assessment date shall be the construction commencement date. If the construction commencement date is used as the assessment date, the tax payable shall be prorated on the basis of the assessment year remaining. (c) The full and true value of taxable property used or committed by contract or other agreement for use in the exploration for gas or unrefined oil, or in the operation or maintenance of facilities for the exploration for gas or unrefined oil, is the estimated price that the property would bring in an open market and under the then prevailing market conditions in a sale between a willing seller and a willing buyer both conversant with the property and with prevailing general price levels. (d) The full and true value of taxable property used or committed by contract or other agreement for the production of gas or unrefined oil or in the operation or maintenance of facilities for the production of gas or unrefined oil is: (1) on the construction commencement date the actual cost incurred or accrued with respect to the property as of the date of assessment; (2) determined on each January 1 thereafter on the basis of replacement cost less depreciation based on the economic life of proven reserves. (e) The full and true value of taxable property used or committed by contract or other agreement for pipeline transportation of gas or unrefined oil or in the operation or maintenance of facilities for the pipeline transportation of gas or unrefined oil is: (1) on the construction commencement date and until January 1 following the date the pipeline begins to transport gas or unrefined oil, the actual cost incurred or accrued with respect to the property as of the date of assessment; (2) determined on each January 1 thereafter with due regard to the economic value of the property based on the estimated life of the proven reserves of gas or unrefined oil then technically, economically, and legally deliverable into the transportation facility; however, if the proven reserves of gas or unrefined oil then technically, economically, and legally deliverable indicate an economic life materially shorter than the estimated physical life of the transportation facility, the full and true value is the actual cost reduced by an annual allowance for depreciation on a straight line basis over an economic life based on the actual elapsed life from the commencement of full operation to the date of assessment plus the estimated remaining life of the proven reserves of gas and unrefined oil then technically, economically, and legally deliverable into the transportation facility as of the date of the assessment; (3) on the assessment date next following inability to use or construct all or a substantial part of the facility for a period of 90 or more consecutive days because of natural disaster or legal prohibition, or other events beyond the control of a person having ownership or control of the property, adjusted to take into account any diminution in value. (f) For purposes of this section, “actual cost” and “replacement cost” do not include interest capitalized before or during the period of construction nor the value of intangible drilling expenses. In the case of taxable property under construction, “actual cost” for purposes of this section means the costs incurred or accrued with respect to the property as of the date of assessment. (g) The department may enter into agreements with a municipality for the cooperative or joint administration of the assessing authority conferred on the department by this section. Sec. 43.56.070. Returns. (a) The department may require by notice every person having ownership or control of an interest in property taxable under this chapter to submit a return in the form prescribed by the department, based on property values existing on January 1 of each year, except as otherwise provided in this chapter. (b) The department by written notice may require a person to provide additional information within 30 days of the notice. Sec. 43.56.080. Investigation. (a) The department may make an investigation of property on which a return has been filed or of taxable property upon which no return has been filed. In either case, the department may make its own valuation of the taxable property, which is prima facie evidence of full and true value. (b) An employee or agent of the department may enter any premise necessary for the investigation during reasonable hours and may examine property and appropriate records. The owner of the taxable property upon request shall furnish to the employee or agent of the department reasonable assistance required for the investigation. If refused entry, the department may seek a court order to compel entry. (c) For the purpose of the investigation the owner of the taxable property or a representative of the owner may be required to appear for examination under oath by the department. Sec. 43.56.090. Assessment roll. The department shall prepare annually the assessment roll for taxation under this chapter. The roll must contain: (1) a description of all taxable property; (2) the assessed value of all taxable property; (3) the names and addresses of persons owning property subject to assessment and taxation. Sec. 43.56.100. Assessment notice. (a) On or before March 1 of each year, the department shall send to every owner of taxable property named in the assessment roll a notice of assessment, showing the assessed value of the property. Notice of assessment is effective on the date of mailing. (b) The department shall send to a municipality a copy of the notice of assessment on any taxable property that is assessed under the provisions of this chapter and that is located in the municipality and on which a tax is authorized under AS 43.56.010 (b). Sec. 43.56.110. Appeal to the department. (a) An owner of taxable property or a municipality receiving an assessment notice may object to the assessment by advising the department in writing of the objections to the assessment within 20 days of the effective date of the notice. (b) The department shall provide by regulation for notices of appeals to interested persons and municipalities. (c) Following an objection the department may adjust the assessment and the assessment roll. An adjustment based on an objection from an owner of taxable property or a municipality shall be made within 30 days of the effective date of the notice of assessment. Sec. 43.56.120. Appeal to the board. (a) After a ruling by the department on an appeal made under AS 43.56.110 , the owner or a municipality may further appeal to the board. The appeal must be filed in writing within 50 days of the effective date of the notice of assessment. (b) The board shall provide by regulation for notices of appeals to interested persons and municipalities. Sec. 43.56.130. Hearings of the board. (a) The board shall hear appeals filed under AS 43.56.120 (a). (b) A majority of the board constitutes a quorum required to transact business. (c) The board shall provide by regulation for notices of hearings to interested persons and municipalities. (d) If an appellant fails to appear at the hearing, the board may proceed with the hearing in the absence of the appellant. (e) The appellant bears the burden of proof at the hearing. (f) The only grounds for adjustment of assessed value is proof of unequal, excessive, or improper valuation or valuation not determined in accordance with the standards set out in this chapter, based on facts stated in a written appeal timely filed or proved at the hearing. (g) The board shall certify its determinations to the department within seven days of the hearing. (h) [Repealed, § 5 ch 107 SLA 1976.] (i) An owner or municipality may appeal to the superior court for, and is entitled to, trial de novo of the board's action. Sec. 43.56.135. Certification. No later than June 1 of each year, the department shall certify the final assessment roll and mail to the owner of the taxable property or an authorized agent a statement of the amount of tax due. Sec. 43.56.140. Supplementary assessment rolls. The department shall include property omitted from the assessment roll on a supplementary roll, using the procedures set out in this chapter for the original roll. Sec. 43.56.150. Collection and deposit. (a) The tax levied by AS 43.56.010 (a) is payable to the department on or before June 30 of the taxable year. (b) The department may provide for voluntary prepayment and for payment by installments. (c) The tax levied under AS 43.56.010 (a), interest and penalties collected with respect to this levy shall be deposited in the general fund. Sec. 43.56.160. Interest and penalty. When the tax levied by AS 43.56.010 (a) becomes delinquent, a penalty of 10 percent shall be added. Before January 1, 2014, interest on the delinquent taxes, exclusive of penalty, shall be assessed at a rate of eight percent a year. On and after January 1, 2014, interest on the delinquent taxes, exclusive of penalty, shall be assessed at the rate specified in AS 43.05.225 . Sec. 43.56.170. Lien for tax. [Repealed, § 4 ch 84 SLA 1976. For current law, see AS 43.10.035 .] Sec. 43.56.180. Remedy. The remedy of distraint of property set out in AS 43.20.270 applies to the tax levied by AS 43.56.010 (a). However, only property subject to the tax may be distrained. Sec. 43.56.190. Penalties. [Repealed, § 46 ch 113 SLA 1980. For current law, see AS 43.05.290 .] Sec. 43.56.200. Regulations. The board and the department may adopt regulations under AS 44.62 (Administrative Procedure Act) as appropriate to carry out their respective duties under this chapter. Sec. 43.56.210. Definitions. In this chapter, (1) “board” means State Assessment Review Board; (2) “construction commencement date” means the earlier of April 1, 1974 or the date the following occur: (A) there has been issued to the owner or an agent of the owner right-of-way permits, leases, and title and other rights in land, and other approvals, permits, licenses, and certificates, by federal, state and local agencies that a reasonable and prudent person would consider adequate to commence construction of the facilities in the expectation that all other approvals, permits, licenses, and certificates necessary for the completion of facilities will be obtained; (B) all approvals, permits, licenses, and certificates are in full force and effect, unrevoked, and without any modification that might jeopardize the completion or continued construction of the facilities; and (C) no order, judgment, decree, determination, or award of a federal, state, or local court or administrative or regulatory agency enjoining, either temporarily or permanently, the construction or the continuation of construction of the facilities is in effect; (3) “gas” includes all natural gas and all hydrocarbons produced at the wellhead not defined as oil; (4) “intangible drilling expenses” means those expenses defined in 26 U.S.C. 263(c) (Internal Revenue Code) as defined on January 1, 1974; (5) “taxable property” (A) means real and tangible personal property used or committed by contract or other agreement for use within this state primarily in the exploration for, production of, or pipeline transportation of gas or unrefined oil (except for property used solely for the retail distribution or liquefaction of natural gas), or in the operation or maintenance of facilities used in the exploration for, production of, or pipeline transportation of gas or unrefined oil; “taxable property” includes (i) machinery, appliances, supplies, and equipment; (ii) drilling rigs, wells (whether producing or not), gathering lines and transmission lines, pumping stations, compressor stations, power plants, topping plants, and processing units; (iii) roads, tank farms, tanker terminals, docks and other port facilities, and air strips; (iv) aircraft and motor vehicles owned by a person whose principal business in the state is the exploration for, production of, or pipeline transportation of gas or unrefined oil and whose operation of the aircraft or motor vehicle directly relates to the conduct of that business; (v) maintenance equipment and facilities, and maintenance camps and other related facilities; and (vi) communications facilities owned by a person whose principal business in the state is the exploration for, production of, or pipeline transportation of gas or unrefined oil and whose operation of the communications facilities directly relates to the conduct of that business; (B) does not include (i) permanent residences; (ii) office buildings requiring substantial local government services; (iii) oil and gas pipeline systems owned and operated by a public utility that is certificated under AS 42.05.221 and is regulated by the Regulatory Commission of Alaska; (iv) aircraft and motor vehicles, except aircraft and motor vehicles taxable under (A)(iv) of this paragraph; and (v) communications facilities, except communications facilities taxable under (A)(vi) of this paragraph; (6) “unrefined oil” includes crude petroleum oil and other hydrocarbons regardless of gravity that are produced at the wellhead in liquid form and the liquid hydrocarbons known as distillate or condensate recovered or extracted from gas other than gas produced in association with oil and commonly known as casinghead gas.