Alaska Administrative Code › Title 15 - Revenue › Chapter 55 - Oil and Gas Production Tax and Oil Surcharge › Article 3 - Tax Credits › 15 AAC 55.305 - Application of tax credits

Current through May 31, 2024
(a) A producer may
				apply a tax credit as allowed by law only against the specified type of tax
				liability. A producer may not apply a tax credit against a penalty or interest,
				except for as provided in (c) of this section for interest associated with an
				additional amount of tax due when filing an amended return and any
				self-reported penalty.
(b) If a
				provision of AS 43.55, as that chapter read on June 30, 2007, or this chapter
				refers to application of a tax credit against a tax liability under
				AS
				43.55.011(e) but not also
				AS
				43.55.011(f), the tax credit
				may not be applied against the minimum tax for oil and gas produced before July
				1, 2007, from leases or properties in the state north of 68 degrees North
				latitude determined under
				AS
				43.55.011(f), as that
				subsection read on June 30, 2007. Nothing in this subsection prevents a
				producer from applying a tax credit based on a lease expenditure applicable to
				oil and gas produced from those leases or properties against a tax on oil or
				gas produced from leases or properties elsewhere in the state.
(c) A producer reporting an additional amount
				of tax due and associated interest from the tax levied by AS 43.55.011(e) for
				oil or gas produced in a prior year in an amended return filed with the
				department before the department has issued an assessment for the tax levied by
				AS 43.55.011(e) for oil or gas produced in that prior year may carryback a tax
				credit under
				AS
				43.55.023 or
				43.55.025 or a tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025 for application against
				the additional amount of tax and associated interest. A producer reporting a
				penalty associated with the tax levied by AS 43.55.011(e) before the department
				has issued an assessment for the penalty may carryback a tax credit under
				AS
				43.55.023 or
				43.55.025 or a tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025 for application against
				the penalty. If a producer uses a tax credit under
				AS
				43.55.023 or
				AS
				43.55.025 or a tax credit certificate under
				AS
				43.55.023 or
				AS
				43.55.025 to satisfy a self-reported penalty,
				the producer must specify the amount of the credit being applied to the
				self-reported penalty. The amount of a tax credit under
				AS
				43.55.023 or
				43.55.025 or the amount of a tax
				credit certificate under
				AS
				43.55.023 or
				43.55.025 that the producer may
				carryback for application against the additional amount due for that prior year
				is limited to the additional amount of tax and associated interest and any self
				reported penalty. The percentage limitation in
				AS
				43.55.023(e) for a tax
				credit certificate is inapplicable when a producer carries back a tax credit
				certificate under
				AS
				43.55.023(e) against the
				additional amount of tax due for a prior year. For a producer that elected to
				apply the tax credit in AS 43.55.024j) in the prior year, the amount of a tax
				credit under
				AS
				43.55.023 or
				43.55.025 or the amount of a tax
				credit certificate under
				AS
				43.55.023 or
				43.55.025 that the producer may
				carryback for application against the additional amount of tax due for that
				prior year is limited to the amount of the tax credit under
				AS
				43.55.023 or
				43.55.025 or tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025 that would reduce the
				tax liability under AS 43.55.011(e) for that prior year to the amount in AS
				43.55.011(f) as provided in
				15 AAC 55.335(g).
				A producer that elected to apply the tax credit in AS 43 .55.024j) in that
				prior year may, in its amended return reporting the additional amount of tax,
				withdraw the producer's application of all or a portion of tax credit in AS
				43.55.024j) in order to carryback a tax credit under
				AS
				43.55.023 or
				43.55.025 or a tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025 for application against
				the additional amount of tax provided no claim for refund would result and no
				assessment has been issued by the department for the prior year and the
				carryback is consistent with
				15 AAC 55.335(g)
				if only a portion of the tax credit in
				AS
				43.55.024(j) is withdrawn.
				No claim for refund may be requested by a producer carrying back a tax credit
				under AS 55.023 or
				43.55.025 or a tax credit
				certificate under
				AS
				43.55.023 or 43 .55.025 for application
				against the additional amount of tax, associated interest for that prior year,
				or a self-reported penalty. The department may issue a notice and demand for
				payment, including interest, not later than six years after the date the
				producer files an amended return that carries back a tax credit under
				AS
				43.55.023 or
				43.55.025 or a tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025 if the department
				reduces the amount of the tax credit under
				AS
				43.55.023 or
				43.55.025 or tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025 following an audit of
				the tax credit claim to which the tax credit or tax credit certificate relates.
				A producer may carryforward any excess amount of a tax credit or tax credit
				certificate if the producer overstated the additional amount of a tax,
				associated interest, or self-reported penalty, due in its amended return that
				carried back a tax credit under
				AS
				43.55.023 or
				43.55.025 or tax credit
				certificate under
				AS
				43.55.023 or
				43.55.025.
(d)The following examples illustrate ( c) of
				this section:
Example 1. Producer A has a tax credit under
				  AS
				  43.55.023(b) in Year 6 due
				  to an annual loss in Year 5. In Year 7, Producer A is required under
				  AS
				  43.55.075(b) to file amended
				  returns for Year 2 and Year 3 reporting additional tax and associated interest
				  due to a decision of a regulatory agency that results in a retroactive change
				  to costs of transportation that has a corresponding increase on the production
				  tax value of oil produced in Year 2 and Year 3. The department has not issued a
				  notice of assessment and demand for payment for oil and gas produced by
				  Producer A in Year 2 and Year 3 when Producer A files the amended return in
				  Year 7. Producer A in its amended return filed in Year 7 for oil and gas
				  produced in Year 2 and Year 3 may carryback the tax credit under
				  AS
				  43.55.023 from Year 6 against the additional
				  amount of tax and associated interest due in Year 2 and Year 3.
Example 2. The facts are the same as in Example 1 except the
				  department has determined in Year 10 after an audit that the annual loss in
				  Year 5 for Producer A was a lower amount than claimed in Producer's original
				  return for Year 5. The amount of the tax credit under
				  AS
				  43.55.023(b) in Year 6 is
				  correspondingly reduced. Producer A overstated its tax credit under
				  AS
				  43.55.023(b) that it carried
				  back in its amended return for Year 2 and Year 3. The department issues a
				  notice and demand for payment for Year 3 to account for the reduction in the
				  tax credit after the audit in Year 10.
Example 3. The facts are the same as in Example 1 except
				  Producer A in Year 6 purchased a tax credit certificate under
				  AS
				  43.55.023 from Explorer B. The department has
				  determined in Year 10 after an audit that the annual loss in Year 5 from
				  Explorer B for a tax credit issued as a carried-forward annual loss under
				  AS
				  43.55.023(b) was a lower
				  amount than claimed in Explorer B's application for the tax credit certificate.
				  The department issues a notice of assessment and demand for payment pursuant to
				  AS 43 .55.023(g) to Explorer B. The department does not issue a demand for
				  payment to Producer A despite the reduction in the tax credit
				  certificate.
Example 4. The facts are the same as in Example 1 except
				  Producer A in Year 8 realizes that it overstated the additional tax and
				  associated interest due in its amended return for Year 3 filed in Year 7.
				  Producer A files an amended return for Year 3 to correct its error. Producer A
				  carried back an excess amount of its tax credit under AS 43 55.023(b) in Year 6
				  against its amended return in Year 7 for Year 3. Producer A may not request a
				  refund of the excess tax credit in its amended return filed in Year 8. The
				  department will adjust the tax credit to reflect the additional amount of tax
				  credit available due to the decrease in tax.
Example 5. The facts are the same as in Example 1 except
				  Producer A filed its original return late for Year 3. Producer A realizes its
				  failure before the department issues a notice of assessment and demand for
				  payment for the failure to file penalty under
				  AS
				  43.05.220. Producer A in its amended return
				  for Year 7 includes a self-report of the penalty. Producer A may carryback the
				  tax credit under
				  AS
				  43.55.023 to apply against its self-reported
				  penalty.
Authority:
AS
					 43.05.080
AS
					 43.55.011
AS
					 43.55.023
AS
					 43.55.024
AS
					 43.55.025
AS 43.55.030
AS 43.55.075
AS
					 43.55.110