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SENATE BILL NO. 114
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY THE SENATE RULES COMMITTEE
Introduced: 3/24/23
Referred: Finance
A BILL
FOR AN ACT ENTITLED
1 "An Act establishing an income tax on certain entities producing or transporting oil or
2 gas in the state; relating to the oil and gas production tax; and providing for an effective
3 date."
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
5 * Section 1. AS 43.20 is amended by adding a new section to read:
6 Sec. 43.20.019. Tax on income attributable to a qualified entity. (a) If an
7 entity has qualified taxable income over $4,000,000 in a tax year, the entity shall pay a
8 tax of 9.4 percent on the qualified taxable income over $4,000,000.
9 (b) The tax under this section does not apply to a corporation paying tax under
10 AS 43.20.011.
11 (c) The department may aggregate the qualified taxable income of two or
12 more entities for the purpose of determining the tax due under this section if the
13 department determines that, without the provisions of this section, the qualified
14 taxable income would reasonably be expected to be attributed to a single entity.
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1 (d) In this section,
2 (1) "entity" means a
3 (A) sole proprietorship;
4 (B) partnership; or
5 (C) entity that has elected to file federal returns under 26
6 U.S.C. 1361 - 1379 (Internal Revenue Code);
7 (2) "qualified taxable income" means income from the production of
8 oil or gas from a lease or property in the state or from the transportation of oil or gas
9 by pipeline in the state before deductions for
10 (A) dividends and gifts; and
11 (B) wages, salaries, bonuses, or other similar payments to
12 owners, partners, members, or shareholders of the entity.
13 * Sec. 2. AS 43.55.011(e) is amended to read:
14 (e) There is levied on the producer of oil or gas a tax for all oil and gas
15 produced each calendar year from each lease, [OR] property, or unit in the state, as
16 applicable under (q) of this section, less any oil and gas the ownership or right to
17 which is exempt from taxation or constitutes a landowner's royalty interest or for
18 which a tax is levied by AS 43.55.014. Except as otherwise provided under (f), (j), (k),
19 (o), and (p) of this section, for oil and gas produced
20 (1) before January 1, 2014, the tax is equal to the sum of
21 (A) the annual production tax value of the taxable oil and gas
22 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and
23 (B) the sum, over all months of the calendar year, of the tax
24 amounts determined under (g) of this section;
25 (2) on and after January 1, 2014, and before January 1, 2022, the tax is
26 equal to the annual production tax value of the taxable oil and gas as calculated under
27 AS 43.55.160(a)(1) multiplied by 35 percent;
28 (3) on and after January 1, 2022, the tax for
29 (A) oil is equal to the annual production tax value of the
30 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent;
31 (B) gas is equal to 13 percent of the gross value at the point of
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1 production of the taxable gas; if the gross value at the point of production of
2 gas produced from a lease or property is less than zero, that gross value at the
3 point of production is considered zero for purposes of this subparagraph.
4 * Sec. 3. AS 43.55.011(f) is amended to read:
5 (f) The levy of tax under (e) of this section for
6 (1) oil and gas produced before January 1, 2022, from leases or
7 properties that include land north of 68 degrees North latitude, other than gas subject
8 to (o) of this section, may not be less than
9 (A) four 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 more than $25;
13 (B) three 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 $20 but not over $25;
17 (C) two 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 $17.50 but not over $20;
21 (D) one 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 over $15 but not over $17.50; or
25 (E) zero percent of the gross value at the point of production
26 when the average price per barrel for Alaska North Slope crude oil for sale on
27 the United States West Coast during the calendar year for which the tax is due
28 is $15 or less; and
29 (2) oil produced from leases or properties on and after January 1,
30 2022, or from units on and after January 1, 2023, [FROM LEASES OR
31 PROPERTIES] that include land north of 68 degrees North latitude, may not be less
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1 than
2 (A) four 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 more than $25;
6 (B) three 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 $20 but not over $25;
10 (C) two 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 $17.50 but not over $20;
14 (D) one 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 over $15 but not over $17.50; or
18 (E) zero 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 $15 or less.
22 * Sec. 4. AS 43.55.011(o) is amended to read:
23 (o) Notwithstanding other provisions of this section, for a calendar year, the
24 tax levied under (e) of this section for each 1,000 cubic feet of gas for gas produced
25 from a lease, [OR] property, or unit outside the Cook Inlet sedimentary basin and
26 used in the state, other than gas subject to (p) of this section, may not exceed the
27 amount of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this
28 section.
29 * Sec. 5. AS 43.55.011 is amended by adding a new subsection to read:
30 (q) On and after January 1, 2023, the tax under (e) of this section is levied by
31 unit if the unit includes land north of 68 degrees North latitude.
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1 * Sec. 6. AS 43.55.020(a) is amended to read:
2 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay
3 the tax as follows:
4 (1) for oil and gas produced before January 1, 2014, an installment
5 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied
6 as allowed by law, is due for each month of the calendar year on the last day of the
7 following month; except as otherwise provided under (2) of this subsection, the
8 amount of the installment payment is the sum of the following amounts, less 1/12 of
9 the tax credits that are allowed by law to be applied against the tax levied by
10 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may
11 not be less than zero:
12 (A) for oil and gas not subject to AS 43.55.011(o) or (p)
13 produced from leases or properties in the state outside the Cook Inlet
14 sedimentary basin, other than leases or properties subject to AS 43.55.011(f),
15 the greater of
16 (i) zero; or
17 (ii) the sum of 25 percent and the tax rate calculated for
18 the month under AS 43.55.011(g) multiplied by the remainder obtained
19 by subtracting 1/12 of the producer's adjusted lease expenditures for the
20 calendar year of production under AS 43.55.165 and 43.55.170 that are
21 deductible for the oil and gas under AS 43.55.160 from the gross value
22 at the point of production of the oil and gas produced from the leases or
23 properties during the month for which the installment payment is
24 calculated;
25 (B) for oil and gas produced from leases or properties subject
26 to AS 43.55.011(f), the greatest of
27 (i) zero;
28 (ii) zero percent, one percent, two percent, three
29 percent, or four percent, as applicable, of the gross value at the point of
30 production of the oil and gas produced from the leases or properties
31 during the month for which the installment payment is calculated; or
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1 (iii) the sum of 25 percent and the tax rate calculated for
2 the month under AS 43.55.011(g) multiplied by the remainder obtained
3 by subtracting 1/12 of the producer's adjusted lease expenditures for the
4 calendar year of production under AS 43.55.165 and 43.55.170 that are
5 deductible for the oil and gas under AS 43.55.160 from the gross value
6 at the point of production of the oil and gas produced from those leases
7 or properties during the month for which the installment payment is
8 calculated;
9 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for
10 each lease or property, the greater of
11 (i) zero; or
12 (ii) the sum of 25 percent and the tax rate calculated for
13 the month under AS 43.55.011(g) multiplied by the remainder obtained
14 by subtracting 1/12 of the producer's adjusted lease expenditures for the
15 calendar year of production under AS 43.55.165 and 43.55.170 that are
16 deductible under AS 43.55.160 for the oil or gas, respectively,
17 produced from the lease or property from the gross value at the point of
18 production of the oil or gas, respectively, produced from the lease or
19 property during the month for which the installment payment is
20 calculated;
21 (D) for oil and gas subject to AS 43.55.011(p), the lesser of
22 (i) the sum of 25 percent and the tax rate calculated for
23 the month under AS 43.55.011(g) multiplied by the remainder obtained
24 by 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 and gas under AS 43.55.160 from the gross value
27 at the point of production of the oil and gas produced from the leases or
28 properties during the month for which the installment payment is
29 calculated, but not less than zero; or
30 (ii) four percent of the gross value at the point of
31 production of the oil and gas produced from the leases or properties
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1 during the month, but not less than zero;
2 (2) an amount calculated under (1)(C) of this subsection for oil or gas
3 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by
4 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as
5 applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in
6 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable
7 gas produced during the month for the amount of taxable gas produced during the
8 calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced
9 during the month for the amount of taxable oil produced during the calendar year;
10 (3) an installment payment of the estimated tax levied by
11 AS 43.55.011(i) for each lease or property is due for each month of the calendar year
12 on the last day of the following month; the amount of the installment payment is the
13 sum of
14 (A) the applicable tax rate for oil provided under
15 AS 43.55.011(i), multiplied by the gross value at the point of production of the
16 oil taxable under AS 43.55.011(i) and produced from the lease or property
17 during the month; and
18 (B) the applicable tax rate for gas provided under
19 AS 43.55.011(i), multiplied by the gross value at the point of production of the
20 gas taxable under AS 43.55.011(i) and produced from the lease or property
21 during the month;
22 (4) any amount of tax levied by AS 43.55.011, net of any credits
23 applied as allowed by law, that exceeds the total of the amounts due as installment
24 payments of estimated tax is due on March 31 of the year following the calendar year
25 of production;
26 (5) for oil and gas produced on and after January 1, 2014, and before
27 January 1, 2022, an installment payment of the estimated tax levied by
28 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each
29 month of the calendar year on the last day of the following