2023 Alaska Statutes › Title 43. Revenue and Taxation › Chapter 55. Oil and Gas Production Tax and Oil Surcharge › Article 1. Oil and Gas Production Tax. › Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of tax credit certificates.

(a) The oil and gas tax credit fund is established as a separate fund of the state. The purpose of the fund is to purchase transferable tax credit certificates issued under AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to pay refunds and payments claimed under AS 43.20.046, 43.20.047, or 43.20.053. The oil and gas tax credit fund established under this subsection may not be used to purchase a tax credit certificate for a credit earned under this chapter for activity occurring on or after July 1, 2017.
(b) The oil and gas tax credit fund consists of
(1) money appropriated to the fund, including any appropriation of the percentage provided under (c) of this section of all revenue from taxes levied by AS 43.55.011 that is not required to be deposited in the constitutional budget reserve fund established in art. IX, sec. 17(a), Constitution of the State of Alaska, less the amount described in (r) of this section; and
(2) earnings on the fund.
(c) The applicable percentage for a fiscal year under (b)(1) of this section is determined with reference to the average price or value forecast by the department for Alaska North Slope oil sold or otherwise disposed of on the United States West Coast during the fiscal year for which the appropriation of revenue from taxes levied by AS 43.55.011 is made. If that forecast is
(1) $60 a barrel or higher, the applicable percentage is 10 percent;
(2) less than $60 a barrel, the applicable percentage is 15 percent.
(d) The department shall manage the fund.
(e) The department, on the written application of a person to whom a transferable tax credit certificate has been issued under AS 43.55.023(d) or former AS 43.55.023(m) for an expenditure incurred before July 1, 2017, or to whom a production tax credit certificate has been issued under AS 43.55.025(f) for an expenditure incurred before July 1, 2017, may use either available money in the oil and gas tax credit fund or, subject to appropriation by the legislature, money disbursed to the commissioner, or both, to purchase, in whole or in part, the certificate. The department may not purchase with money from the oil and gas tax credit fund a total of more than $70,000,000 in tax credit certificates from a person in a calendar year. The total amount of purchases made by the department with money from the oil and gas tax credit fund from a person in a year may not exceed the assumed payment amount for each year, as calculated under (l) of this section without the discount provided in (m) of this section. Before purchasing a certificate or part of a certificate, the department shall find that
(1) the calendar year of the purchase is not earlier than the first calendar year for which the credit shown on the certificate would otherwise be allowed to be applied against a tax;
(2) the application is not the result of the division of a single entity into multiple entities that would reasonably be expected to apply as a single entity if the $70,000,000 limitation in this subsection did not exist;
(3) the applicant's total tax liability under AS 43.55.011(e), after application of all available tax credits, for the calendar year in which the application is made is zero;
(4) the applicant's average daily production of oil and gas taxable under AS 43.55.011(e) during the calendar year preceding the calendar year in which the application is made was not more than 50,000 BTU equivalent barrels; and
(5) the purchase is consistent with this section and regulations adopted under this section.
(f) Money in the fund remaining at the end of a fiscal year does not lapse and remains available for expenditure in successive fiscal years.
(g) The department shall adopt regulations to carry out the purposes of this section, including standards and procedures to allocate available money among applications for purchases under this chapter and claims for refunds and payments under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the applications for purchase and claims for refund exceed the amount of available money in the fund. The regulations adopted by the department
(1) may not, when allocating available money in the fund under this section, distinguish an application for the purchase of a credit certificate issued under former AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046, 43.20.047, or 43.20.053;
(2) must, when allocating available money in the fund under this section, grant a preference, between two applicants, to the applicant with a higher percentage of resident workers in the applicant's workforce, including workers employed by the applicant's direct contractors, in the state in the previous calendar year; in this paragraph, “resident worker” has the meaning given in AS 43.40.092(b);
(3) must, for a purchase from money in the fund, provide for the purchase of the amount equal to the first 50 percent of the credit repurchase limit for each person under (e) of this section at a rate of 100 percent of the value of the certificate or portion of the certificate requested to be purchased and the amount equal to the next 50 percent of the credit repurchase limit for each person under (e) of this section at a rate of 75 percent of the value of the certificate or portion of the certificate requested to be purchased.
(h) Nothing in this section creates a dedicated fund.
(i) In this section,
(1) “money disbursed to the commissioner” means money disbursed to the commissioner from the Alaska Tax Credit Certificate Bond Corporation reserve fund established in AS 37.18.040;
(2) “qualified capital expenditure” has the meaning given in AS 43.55.023;
(3) “true interest cost” means the true interest cost of the bonds anticipated to be issued under AS 37.18.
(j) If an applicant or claimant has an outstanding liability to the state directly related to the applicant's or claimant's oil or gas exploration, development, or production and the department has not previously reduced the amount paid to that applicant or claimant for a certificate or refund because of that outstanding liability, the department may purchase only that portion of a certificate or pay only that portion of a refund that exceeds the outstanding liability, regardless of whether the purchase is made with money from the fund or money disbursed to the commissioner. After notifying the applicant or claimant, the department may apply the amount by which the department reduced its purchase of a certificate or payment for a refund because of an outstanding liability to satisfy the outstanding liability. Satisfaction of an outstanding liability under this subsection does not affect the applicant's ability to contest that liability. The department may enter into contracts or agreements with another department to which the outstanding liability is owed. In this subsection, “outstanding liability” means an amount of tax, interest, penalty, fee, rental, royalty, or other charge for which the state has issued a demand for payment that has not been paid when due and, if contested, has not been finally resolved against the state.
(k) The department may negotiate a purchase, refund, or payment under this section to be made from money disbursed to the commissioner. Before making a purchase, refund, or payment, the department shall calculate the maximum amount for a purchase, refund, or payment under ( l) of this section. An applicant or claimant that has requested a purchase, refund, or payment by the department from the fund shall provide a notice of interest to the department by the date determined by the commissioner if the applicant or claimant is interested in a purchase, refund, or payment from money disbursed to the commissioner instead. An applicant or claimant that requests a purchase, refund, or payment from the fund on or after July 1, 2018, shall include any notice of interest in a purchase, refund, or payment from money disbursed to the commissioner at the same time that the applicant or claimant requests a purchase, refund, or payment by the department from the fund. The department may not use money disbursed to the commissioner for a purchase, refund, or payment under this section if the applicant or claimant fails to provide the department with a notice of interest in a purchase, refund, or payment from money disbursed to the commissioner. A notice of interest for a purchase, refund, or payment from money disbursed to the commissioner must include all of the requests for purchases, refunds, or payments made by the applicant or claimant and, if applicable, a statement indicating whether the applicant intends to meet a condition in (m)(1), (2), or (3) of this section. An applicant or claimant may not include in a notice of interest a request for purchase, refund, or payment from the fund if the request could have been included in a previous notice of interest under this subsection. The department shall make an offer of purchase, refund, or payment with money disbursed to the commissioner to an applicant or claimant that provides the department with a timely notice of interest. The department shall make an offer of purchase, refund, or payment from money disbursed to the commissioner at a time based on the anticipated schedule for disbursement of money to the commissioner. The applicant or claimant shall notify the department of acceptance of the offer of purchase, refund, or payment within 10 days after the offer is made. An offer of purchase, refund, or payment must be conditioned on the disbursement of money to the commissioner. A transferable tax credit certificate issued under AS 43.55.023, production tax credit certificate issued under AS 43.55.025, or claim for a refund or payment under AS 43.20.046, 43.20.047, or 43.20.053 is not eligible for purchase by the department with money disbursed to the commissioner if the applicant or claimant
(1) fails to provide the department with a notice of interest of an offer of purchase, refund, or payment from money disbursed to the commissioner by the date determined by the commissioner under this subsection; or
(2) declines an offer of purchase, refund, or payment by the department with money disbursed to the commissioner for that transferable tax credit certificate, production tax credit certificate, or refund or claim for payment.
(l) The department shall calculate the maximum amount for a purchase, refund, or payment with money disbursed to the commissioner. The maximum amount for a purchase, refund, or payment is the sum of the assumed payment amounts for purchases, refunds, and payments for each year discounted as provided in (m) of this section. The assumed payment amount for each year is the assumed appropriations to the fund multiplied by the assumed proration amount calculated in this subsection. The assumed appropriation to the fund each year is an amount equal to the percentage provided under (c) of this section of the total taxes levied by AS 43.55.011 as forecast by the department before the application of tax credits. The assumed proration amount is that proportion of payments the department would have allocated from the fund, if money had not been disbursed to the commissioner, based on the date of the request for purchase, refund, or payment from the fund. When determining the assumed proration amount under this subsection, the department shall
(1) allocate requests received in the same year together;
(2) prioritize requests for payments from the earliest to the latest year; and
(3) assume that no purchases are made with money disbursed to the commissioner.
(m) For purposes of the calculation in ( l) of this section, the department shall discount the assumed payment amount each year after the first year by a discount rate. Unless another discount rate in this subsection applies, a discount rate of 10 percent applies to the assumed payment amount for a request for purchase of a transferable tax credit certificate issued under AS 43.55.023 or a production tax credit certificate issued under AS 43.55.025. An applicant's agreement to a discount rate under (1), (2), or (3) of this subsection is only consideration for the amount that the purchase exceeds the amount that would have been purchased in the absence of the agreement. For a refund or claim for payment under AS 43.20.046, 43.20.047, or 43.20.053, the discount rate is the true interest cost plus 1.5 percent, but may not exceed 10 percent. For a purchase of a transferable tax credit certificate issued under AS 43.55.023 or a production tax credit certificate issued under AS 43.55.025, the discount rate is the true interest cost plus 1.5 percent, but may not exceed 10 percent, in total,
(1) for either a transferable tax credit certificate issued under AS 43.55.023 for which the applicant submitted data required under AS 43.55.025(f)(2) or a production tax credit certificate issued under AS 43.55.025, if the applicant agrees as a condition of the purchase that the 10-year confidentiality period under AS 43.55.025(f)(2)(C)(ii) that would otherwise apply to the seismic data or other geophysical data is waived by the applicant;
(2) if the applicant, or an entity related to the applicant with the applicant's consent, and the Department of Natural Resources agree to an overriding royalty interest agreement under AS 44.37.230; or
(3) if the applicant commits to incur, not later than 24 months after the purchase of the certificate, qualified capital expenditures in an amount greater than or equal to the purchase amount, and
(A) the applicant provides to the department evidence of the commitment and a plan to
(i) use the qualified capital expenditures for the purpose of increasing production of oil or gas from leases or properties in the state; and
(ii) maximize the hiring of state residents and use of state businesses related to qualified capital expenditures;
(B) the applicant agrees in writing that, if the applicant does not incur qualified capital expenditures in an amount greater than or equal to the purchase amount within 24 months after the purchase of the certificate, the applicant shall pay the department the lesser of the difference between the purchase amount and the
(i) amount the applicant would have been paid had this subsection not applied; or
(ii) actual amount of qualified capital expenditures incurred by the applicant in the 24-month period; and
(C) after reviewing documents submitted under (A) and (B) of this paragraph, the commissioner approves the reduced discount rate for the purchase.
(n) An agreement under (m)(3)(B) of this section may require the applicant to pay the department interest on the amount due under (m)(3)(B) of this section. The interest rate must be consistent with the interest rate provided for a delinquent tax under AS 43.05.225. Payment under (m)(3)(B) of this section and interest under this subsection is waived if the department determines that the applicant could not incur the qualified capital expenditures because of a natural disaster, injunction or other court order, or administrative order.
(o) An applicant or claimant may not use a transferable tax credit certificate issued under AS 43.55.023, production tax credit certificate issued under AS 43.55.025, or refund or claim for payment under AS 43.20.046, 43.20.047, or 43.20.053 purchased by the department with money disbursed to the commissioner against tax liability, even if the purchase, refund, or payment amount was less than the total amount requested for purchase, refund, or payment.
(p) The department shall provide to the Department of Natural Resources the information necessary to evaluate an overriding royalty interest for the purposes of AS 44.37.230.
(q) After bonds are first issued by the Alaska Tax Credit Certificate Bond Corporation established under AS 37.18.010, the legislature may determine the amount of an appropriation under (b)(1) of this section by multiplying the percentage under (c) of this section by the net revenue from taxes levied by AS 43.55.011.
(r) The legislature may reduce an appropriation made under (b)(1) of this section by an amount equal to the amount appropriated to the Alaska Tax Credit Certificate Bond Corporation for maintenance of the required debt service reserve in the Alaska Tax Credit Certificate Bond Corporation reserve fund, as calculated under AS 37.18.040(g).
(s) The legislature may, for purposes of making purchases, refunds, and payments under this section, appropriate an amount equal to the amount disbursed to the commissioner by the Alaska Tax Credit Certificate Bond Corporation for purchases, refunds, and payments under this section.