CHAPTER 005
ADMINISTRATION OF REVENUE LAWS

ARTICLE 01

HEARING PROCEDURES

15 AAC 05.001

APPLICATION OF 15 AAC 05.001 - 15 AAC 05.050 .

The provisions of 15 AAC 05.001 - 15 AAC 05.050 govern the procedures for all hearings relating to

(1) tax, tax credit, and license fee matters under AS 43 except objections to assessments made under AS 43.56 which are within the jurisdiction of the State Assessment Review Board;

(2) permanent fund dividend matters under AS 43.23.005 - 43.23.095 and under sec. 19, ch. 102, SLA 1982, unless 15 AAC 05.001 - 15 AAC 05.050 are inconsistent with the procedural provisions of 15 AAC 23; and

(3) child support matters under AS 25.25.101 - 25.25.903 and AS 25.27.010 - 25.27.900, unless 15 AAC 05.001 - 15 AAC 05.050 are inconsistent with the procedural provisions of AS 25.25, AS 25.27, and 15 AAC 125.

History -

Eff. 12/26/80, Register 76; am 7/1/82, Register 83; am 5/12/83, Register 86; am 4/21/88, Register 106; am 10/1/98, Register 147

Authority -

AS 25.27.020

AS 43.05.010

AS 43.05.080

AS 43.23.015

AS 43.55.080

AS 43.56.110

15 AAC 05.010

REQUEST FOR APPEAL.

(a) An appeal is initiated by filing a request for appeal. For the purpose of this section, "request for appeal" includes a request for a formal hearing under AS 25.25.101 - AS 25.25.903 , AS 25.27.010 - AS 25 .27.900, and AS 43.55.013 , but does not include a request for an administrative review under 15 AAC 125.118 , 15 AAC 125.216 , 15 AAC 125.222, 15 AAC 125.226 , 15 AAC 125.242 , 15 AAC 125.246 , 15 AAC 125.252, 15 AAC 125.321 , 15 AAC 125.331 , 15 AAC 125.335 , 15 AAC 125.410, 15 AAC 125.418 , 15 AAC 125.420 , 15 AAC 125.425 , 15 AAC 125.440, 15 AAC 125.505 , 15 AAC 125.510 , 15 AAC 125.550 , 15 AAC 125.560, 15 AAC 125.610 , 15 AAC 125.630 , 15 AAC 125.710 , or 15 AAC 125.715. A request for appeal filed under this section must

(1) state the department action to which the person objects and the relief sought;

(2) state the grounds for the objection, including a brief summary of the facts at issue, the legal authority, and, if appropriate, any generally accepted accounting principles that support the request for appeal;

(3) be signed

(A) by the taxpayer, or the taxpayer's authorized representative;

(B) in the case of an appeal of a permanent fund dividend denial or assessment, by the adult applicant or the adult sponsor or authorized representative of the applicant; or

(C) in the case of an appeal of a child support administrative review decision or an appeal of a decision granting or denying a petition for modification, by the parent appealing or authorized representative of that person; and

(4) if the request for appeal concerns a tax, tax credit, or license fee matter under AS 43, state whether an informal conference is requested, or waived in favor of proceeding directly to a formal hearing.

(b) In order to be timely filed, a request for appeal must conform to the following requirements, as applicable:

(1) if the request for appeal concerns a tax, tax credit, or license fee matter under AS 43, except one described in (2), (3) or (4) of this subsection, the request must be filed with the appropriate division within 60 days after the mailing date of the department's notice of the action to which the person objects or within 60 days after the department's notice is delivered in person; if the request is mailed, it must be addressed in accordance with the appeal form provided by the department;

(2) if the request for appeal concerns the monthly production rate or the monthly production at the economic limit under AS 43.55.013 , the request must be filed with the office of the commissioner before January 15 of the year of production or within five months after the commencement of production, whichever is later; if the request is mailed, it must be addressed in accordance with the appeal form provided by the department;

(3) if the request for appeal concerns whether property that has been assessed by the department is subject to tax under AS 43.56, the request must be filed with the appropriate division within 60 days after the date of the assessment notice; if the request is mailed, it must be addressed in accordance with the appeal form provided by the department;

(4) if the request for appeal concerns the fixing by the department of the amount of tax due under AS 43.56, which is not within the jurisdiction of the State Assessment Review Board, or the imposition of a penalty, the request must be filed with the appropriate division within 60 days after the date of the statement of the amount of tax or penalty, or within 60 days after the date of the assessment notice; if the request is mailed, it must be addressed in accordance with the appeal form provided by the department;

(5) if the request for appeal concerns a permanent fund dividend matter under AS 43.23, the request must be filed with the permanent fund dividend division within 60 days after the date of the notice of assessment or disallowance; a request for appeal must be accompanied by a $25 appeal fee, if applicable; the appeal fee must be in the form of a check or money order; if the request is mailed, it must be addressed in accordance with the appeal form provided by the department.

(6) if the request for appeal concerns a child support matter under AS 25.25 or AS 25.27, the request for appeal must be filed with the child support enforcement division within 30 days after the date of an administrative review decision issued under 15 AAC 125.118 , 15 AAC 125.216, 15 AAC 125.222 , 15 AAC 125.226 , 15 AAC 125.242 , 15 AAC 125.246, 15 AAC 125.252 , 15 AAC 125.321 , 15 AAC 125.331 , 15 AAC 125.335, 15 AAC 125.505 , or 15 AAC 125.710 ;

(c) A request for appeal is filed on the date it is personally delivered, or, if delivered to the department by United States mail, the date of the United States postmark or official postmark of a foreign country stamped on the properly addressed cover in which the request is mailed. If the postmark is not the official postmark of a foreign country or the United States Postal Service, such as that made by a private postage or mailing machine, the postmark date will be the filing date only to the extent provided for by the United States Treasury in 26 C.F.R. 301.7502-1(c)(1)(iii)(b). If the due date falls on a Saturday, Sunday, or holiday, the due date is the next working day. A current mailing address must be provided to the department with the request for appeal, and any change in mailing address after the request for appeal is filed must be reported to the department immediately. If the department mails a document by registered or certified mail, service is effective if the mailing is addressed to the latest address provided to the department.

(d) At an informal conference and at a formal hearing, a person may be represented by an attorney, by a certified public accountant, or by another representative. A representative, other than an attorney, must file a completed power of attorney at the time the representative enters an appearance in the proceeding.

(e) A person or a representative may review the records on file with the department that are relevant to that person's request for appeal. A review under this subsection may be conducted at the offices of the department during regular working hours. Copies of the records on file will be furnished upon receipt of the applicable copying fee.

(f) In tax and license fee matters under AS 43, if a person fails to file a request for appeal within the time specified in this section, that person has no further right of appeal until the tax, license fee, penalty, or interest is paid.

(g) In tax and license fee matters under AS 43, if a notice shows an amount due the department, the uncontested portion of the amount due, if any, must be paid within 60 days after the date of the notice. If the uncontested amount is not paid within 60 days, collection action will be taken on that amount even if the taxpayer has filed a request for appeal. Payment of the total amount due may be made at any time before the informal conference or the formal hearing. If the department has reason to believe that collection of the total amount due might be jeopardized by delay, immediate payment of the total amount will be demanded. Payment in full does not affect the taxpayer's right to an informal conference or a formal hearing.

(h) Notwithstanding the provisions of 15 AAC 05.001 - 15 AAC 05.050 , to appeal a denial of a permanent fund dividend, including a related assessment, an individual must first request an informal conference and the department must issue a decision under 15 AAC 05.020 before the individual may request a formal hearing.

(i) Notwithstanding the provisions of 15 AAC 05.001 - 15 AAC 05.050 , to appeal a child support matter, an individual shall first request an administrative review and the child support enforcement division will issue a decision under 15 AAC 125.118 , 15 AAC 125.216 , 15 AAC 125.222 , 15 AAC 125.226 , 15 AAC 125.242 , 15 AAC 125.246 , 15 AAC 125.252 , 15 AAC 125.321, 15 AAC 125.331 , 15 AAC 125.335 , 15 AAC 125.505 , or 15 AAC 125.710 before the individual may request a formal hearing.

History -

Eff. 1/12/64, Register 12; am 5/31/78, Register 66; am 12/26/80, Register 76; am 4/21/88, Register 106; am 1/1/93, Register 124; am 12/24/93, Register 128; em am 11/20/96 - 3/19/97, Register 140; am 4/18/97, Register 142; am 10/1/98, Register 147

Authority -

AS 25.27.020

AS 43.05.010

AS 43.05.080

AS 43.05.240

AS 43.23.015

AS 43.23.055

AS 43.55.110

AS 43.56.200

15 AAC 05.020

INFORMAL CONFERENCES.

(a) Upon receipt of a written request for appeal under 15 AAC 05.010 requesting an informal conference, an appeals officer will promptly schedule the informal conference. If the appeal concerns a permanent fund dividend denial, the request must be accompanied by the $25 appeal fee required by AS 43.23.015 (g), except that the appeal fee is waived for an appeal brought by an agency of the state on behalf of an individual; an individual who meets the indigency waiver standard in AS 43.23.015(i) may apply for a waiver of the appeal fee on a form prescribed and furnished by the department. The informal conference will be conducted in person, through correspondence, or by telephone, audio, or video teleconference, or other electronic means. The appeals officer shall make available to the person who filed the request for appeal the relevant portion of that person's file, and shall explain at the informal conference the action taken by the department. A person who wants to present facts and information in support of its position must bring all pertinent books, records, schedules, and other documents to the conference. The appeals officer may copy any of the books, records, schedules, and other documents brought to the conference or otherwise made available to the appeals officer. The person who filed the request shall supply additional information that the appeals officer considers necessary.

(b) After considering the facts, information, and arguments presented at the informal conference, the appeals officer shall promptly render a written decision. The decision must identify the issues in controversy for purposes of further appeal. If the appeals officer believes that modification of the department's action is appropriate, modification must be made and reflected in the written decision.

(c) The decision of the appeals officer is final for purposes of appeal to a formal hearing under 15 AAC 05.030 but is not a final administrative determination for purposes of appeal to the superior court.

(d) This section does not apply to an administrative review conducted under 15 AAC 125.

History -

Eff. 5/31/78, Register 66; am 12/26/80, Register 76; am 4/21/88, Register 106; em am 11/20/96 - 3/19/97, Register 140; am 4/18/97, Register 142; am 10/1/98, Register 147

Authority -

AS 25.27.020

AS 43.05.010

AS 43.05.080

AS 43.05.240

AS 43.23.015

AS 43.23.055

AS 43.55.110

AS 43.56.200

15 AAC 05.025

ADMINISTRATIVE REVIEWS.

In a child support matter under AS 25.25 or AS 25.27, an administrative review will be conducted in accordance with the procedures set out in 15 AAC 125. The decision of the review officer issued under 15 AAC 125.118, 15 AAC 125.216 , 15 AAC 125.222 , 15 AAC 125.226 , 15 AAC 125.242, 15 AAC 125.246 , 15 AAC 125.252 , 15 AAC 125.321 , 15 AAC 125.331, 15 AAC 125.335 , 15 AAC 125.505 , or 15 AAC 125.710 is final for purposes of appeal to a formal hearing under 15 AAC 05.030 but is not a final administrative determination for purposes of appeal to the superior court.

History -

Eff. 10/1/98, Register 147

Authority -

AS 25.27.020

AS 25.27.150

AS 25.27.160

AS 25.27.165

AS 25.27.170

AS 25.27.190

15 AAC 05.030

FORMAL HEARINGS.

(a) The department will hold a formal hearing if a request for a formal hearing conforming to the requirements of 15 AAC 05.010 (a) is filed. If a request for a formal hearing follows an informal conference, it must be filed within 30 days after the date the informal conference decision is issued, and must be filed in accordance with the appeal form provided by the department. If a request for a formal hearing follows an administrative review under 15 AAC 125.118 , 15 AAC 125.216, 15 AAC 125.222 , 15 AAC 125.226 , 15 AAC 125.242 , 15 AAC 125.246, 15 AAC 125.252 , 15 AAC 125.321 , 15 AAC 125.331 , 15 AAC 125.335, 15 AAC 125.505 , or 15 AAC 125.710 , it must be filed within 30 days after the date the decision of the review officer is issued and must be filed with the child support enforcement division in accordance with the appeal form provided by the division.

(b) On receipt of a request for appeal requesting a formal hearing, the commissioner will appoint a hearing officer. The department will notify the person who filed the request of the appointment. Within 60 days after receipt of the request for formal hearing, the hearing officer will notify the applicant of the date of either a prehearing conference or the hearing, except in child support matters under AS 25.27.170, in which a hearing must be scheduled within 30 days of the date of service of the request for hearing on the agency. For purposes of a request for a formal hearing in a child support matter, in computing the 30-day time period for scheduling the hearing, the department will exclude a period of delay resulting from pre-hearing motions filed by the parties and the granting of continuances requested by a parent. The hearing officer may

(1) administer oaths and affirmations;

(2) issue subpoenas;

(3) order discovery by the parties and issue protective orders;

(4) receive relevant evidence;

(5) regulate the course of the hearing, including granting and denying continuances;

(6) hold prehearing conferences;

(7) dispose of procedural requests or similar matters; and

(8) exercise all other powers necessary for the orderly and expeditious conduct of the hearing.

(c) A party requesting the disqualification of a hearing officer must file a motion and a supporting affidavit within 10 days after the date of notice that the hearing officer was assigned to the appeal. The moving party has the burden of establishing that the hearing officer is personally prejudiced and would be incapable of according the party an impartial hearing or consideration of the appeal. No responsive briefing is allowed. The hearing officer shall rule on the motion after reviewing the affidavit. The ruling must be in writing and will become a part of the record. A party aggrieved by the determination of the hearing officer may file a motion for reconsideration of the ruling with the commissioner within 10 days after the ruling by the hearing officer. The commissioner will issue an order in writing either affirming or overruling the ruling of the hearing officer.

(d) A hearing officer may not communicate with a party, directly or indirectly, regarding a case unless notice and opportunity to participate is given to all parties. A hearing officer may communicate with a party without notice and opportunity for all other parties to participate if the communication involves a procedural matter and the other parties have verbally or in writing waived notice and participation. A verbal waiver may be communicated directly to the hearing officer or through an opposing party. A party conveying a waiver of another party to the hearing officer must first declare that the subject matter of the communication was discussed with the other party and the other party expressly authorized the communication. A hearing officer who receives an ex parte communication in violation of this subsection may be disqualified if necessary to eliminate the effect of the communication.

(e) The hearing officer may order the parties to participate in a prehearing conference. The hearing officer shall set the time and place of the conference. The prehearing conference may be conducted by telephone, audio or video teleconference, or other electronic means. At the conference, the hearing officer shall determine matters promoting the orderly and prompt conduct of the hearing, including preparation of stipulations, simplification of issues, identity and limitation of the number of witnesses, objections to evidence, order of presentation of evidence and cross-examination, exchange of exhibits, issuance of subpoenas, discovery orders and protective orders, briefing schedules, the extent to which evidence will be presented in written form, and the substitution of telephone, teleconference, or other electronic means for proceedings in person. The hearing officer may issue a prehearing order incorporating the matters determined at the conference. If a prehearing conference is not held, the hearing officer may issue a prehearing order to regulate the conduct of the proceedings.

(f) The hearing officer may give the parties the opportunity, at appropriate stages of the proceedings, to file motions and objections, briefs, and proposed findings of fact, conclusions of law and orders. A party shall serve copies of any filed item on all parties, personally delivered or deposited in the United States mail with first class postage prepaid. A motion to dismiss, motion for summary judgment, or other dispositive motion must be filed at least 15 days before the date scheduled for hearing, unless good cause is shown for filing the motion after that time. An opposition to a dispositive motion must be filed within 10 days after receipt of the motion by the opposing party, unless otherwise ordered by the hearing officer. The hearing officer may, at the request of a party, or on the hearing officer's own motion, issue a subpoena. A subpoena issued under this section must be served in accordance with the Alaska Rules of Civil Procedure or by a person designated by the hearing officer.

(g) The hearing officer shall set the time and place of the hearing and shall give reasonable notice to the parties. A request to change the time and place set for the hearing must be made at least 7 days before the date scheduled for hearing, unless good cause is shown. The hearing officer may conduct all or part of the hearing by telephone, audio or video teleconference, or other electronic means. With the consent of the parties the hearing may be conducted through correspondence. The hearing must be recorded by the hearing officer or by a person designated by the hearing officer. The parties may obtain, at cost, a copy of the recording or, if the department hires a reporter, a transcript. If the hearing officer records the hearing by tape recording and a reporter is not hired, a party may, at the party's expense, hire a reporter approved by the department to prepare a transcript from the department's recording or to record and transcribe the hearing. If the party's reporter prepares a transcript, a copy must be provided to the department at the usual cost for a copy of a transcript.

(h) A hearing is not conducted according to technical rules of evidence. Relevant evidence must be admitted if it is probative of material facts. Irrelevant and unduly repetitious evidence must be excluded. Hearsay evidence is admissible if in the judgment of the hearing officer it is the kind of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs. Oral evidence may be taken only on oath or affirmation. Each party may call and examine witnesses, introduce and object to exhibits, cross-examine opposing witnesses, impeach a witness, and offer rebuttal evidence. At the hearing, the person requesting the hearing has the burden of proving that the action by the department to which that person objects is incorrect.

(i) The hearing officer may allow the parties a designated time after conclusion of the hearing for the submission of additional evidence, briefs, or proposed findings, with opportunity for objection by the opposing parties. The hearing officer shall issue a written decision containing the hearing officer's findings of fact and conclusions of law within six months after the record is closed, except in a child support matter. In a child support matter under AS 25.27.170 - AS 25.27.180, the hearing officer shall issue the written decision within 20 days after the date of the hearing, unless the hearing officer determines that it is necessary to keep the record open after the hearing in order to have a complete record upon which to base the hearing officer's decision, in which case the hearing officer shall issue the written decision within 20 days after the date the record is closed. Upon adoption by the commissioner, the commissioner's designee, or the senior hearing officer on behalf of the commissioner, the written decision shall be mailed to the parties and is the final administrative decision of the department for purposes of appeal to the superior court under under 15 AAC 05.040 , unless a motion for reconsideration is filed under 15 AAC 05.035 .

(j) If a person requests a hearing and fails to appear at the hearing, the hearing officer may issue a decision without taking evidence from that person, unless the person, within 10 days after the date scheduled for hearing, shows reasonable cause for failure to appear.

(k) The hearing officer may waive any requirement or deadline established in 15 AAC 05.010 - 15 AAC 05.030 if it appears to the officer that strict adherence to the deadline or requirement would work an injustice; however, the hearing officer may not waive the provision in (b) of this section applying to the scheduling of a hearing or a prehearing conference, or the provision in (i) of this section requiring that a hearing decision be adopted within six months after the close of the hearing. If a written decision is not issued within six months after the record is closed, the commissioner will, within 30 days after the expiration of the six-month period, notify the parties of the reason for the delay.

History -

Eff. 5/31/78, Register 66; am 12/26/80, Register 76; am 4/21/88, Register 106; am 4/1/89, Register 109; am 10/1/98, Register 147

Authority -

AS 25.27.020

AS 25.27.170

AS 25.27.180

AS 43.05.010

AS 43.05.040

AS 43.05.080

AS 43.05.240

AS 43.23.015

AS 43.55.110

AS 43.56.200

15 AAC 05.035

MOTION FOR RECONSIDERATION.

(a) A party to a formal hearing may, within 10 days after the decision of the hearing officer is mailed to the party, file with the commissioner a written motion for reconsideration of that decision. The motion must state specific grounds for relief and, if mailed, be addressed: Commissioner's Office Appeals (Reconsideration), Alaska Department of Revenue, P.O. Box 110400, Juneau, Alaska 99811-0400.

(b) Within 20 days after receipt of a motion for reconsideration, the commissioner will issue an order in writing either granting or denying the motion.

(c) If the commissioner grants a motion for reconsideration, the decision will be reconsidered and any modifications to it made as promptly as possible. If appropriate, the commissioner will authorize the submission of further briefs, order the hearing reopened to receive further evidence or provide for other suitable procedures for reconsideration of the decision. After a decision has been reconsidered, the commissioner will readopt the decision with any appropriate modifications. Upon readoption, the decision is the final administrative decision of the department for purposes of appeal to the superior court under 15 AAC 05.040 .

(d) If the commissioner denies a motion for reconsideration, the hearing officer's decision becomes the final administrative decision of the department for purposes of appeal to the superior court under 15 AAC 05.040 as of the date of the commissioner's written order denying the motion.

History -

Eff. 12/26/80, Register 76; am 4/21/88, Register 106; am 1/1/93, Register 124; am 10/1/98, Register 147

Authority -

AS 25.27.020

AS 43.05.010

AS 43.05.080

AS 43.05.240

AS 43.23.015

AS 43.55.110

AS 43.56.200

15 AAC 05.040

APPEAL OF FINAL DECISION OF DEPARTMENT.

A person who disagrees with and wishes to appeal the final administrative decision of the department must within 30 days after the date the decision is mailed to the party, file an appeal with the superior court. In tax and licensee fee matters under AS 43, any taxes, license fees, penalties, and interest declared in the final administrative decision to be due must be paid within 30 days after the date of the decision, or a bond must be filed with the court in accordance with the Alaska Rules of Appellate Procedure.

History -

Eff. 5/31/78, Register 66; am 12/26/80, Register 76; am 4/21/88, Register 106; am 10/1/98, Register 147

Authority -

AS 25.27.020

AS 43.05.010

AS 43.05.080

AS 43.05.240

AS 43.23.015

AS 43.55.110

AS 43.56.200

15 AAC 05.050

TAXPAYER PROTEST WHEN DEPARTMENT FAILS TO TAKE PROMPT ACTION ON A REFUND CLAIM OR A PROTEST.

(a) If the department fails to act on a refund claim within six months from the date of filing the claim, the taxpayer may file a protest under 15 AAC 05.010 . A protest filed under this section must include the date the claim was filed and the fact that the taxpayer has not received a notice of disallowance of the claim for refund or credit.

(b) A taxpayer who requested an informal conference as provided in 15 AAC 05.020 and who believes that the conference officer is unduly delaying the hearing process, may notify the commissioner and request a formal hearing under 15 AAC 05.030 .

(c) The commissioner or the hearing officer will acknowledge a request for a formal hearing under 15 AAC 05.030 within 30 days. If a taxpayer who has requested a formal hearing under 15 AAC 05.030 believes that the hearing officer or other department representative is unduly delaying the hearing process, the taxpayer may notify the commissioner. If the commissioner determines that the interests of justice would be served, he or she will order that appropriate relief be granted including an order to the hearing officer to issue a decision by a date specified by the commissioner.

History -

Eff. 5/31/78, Register 66; am 12/26/80, Register 76

Authority -

AS 43.05.080

AS 43.05.240

AS 43.15.010

ARTICLE 02

GENERAL PROVISIONS

15 AAC 05.200

REASONABLE CAUSE FOR DELAY.

(a) The civil penalty under AS 43.05.220 will not be imposed if the taxpayer shows reasonable cause for delay in filing the return or paying the tax.

(b) A taxpayer who wishes to avoid the penalty established by AS 43.05.220 for failure to file a tax return or pay a tax must make an affirmative showing of all facts alleged as a reasonable cause for his or her failure to file the return or pay the tax on time in a written statement containing a declaration that it is made under penalty of perjury. The statement should be filed with the return or filed with the Department of Revenue as soon as possible thereafter. In determining whether the delinquency was due to reasonable cause and not to willful neglect, the department will apply the administrative and judicial interpretations of Internal Revenue Code Sec. 6651 and the Treasury Regulation Sec. 301.6651-1(c).

(c) Circumstances which may constitute reasonable cause under AS 43.05.220 include, but are not limited to, the following:

(1) war, riot, rebellion, act of God or other disaster which rendered it impossible to make the filing or payment or which made delay unavoidable in making the filing or payment; or

(2) acts or omissions by a third party which were beyond the control of the person making the filing or payment and which made delay unavoidable in making the filing or payment; or

(3) the person took in good faith all steps and precautions reasonably necessary to ensure the timeliness of the filing or payment.

History -

Eff. 7/20/77, Register 63

Authority -

AS 43.05.080

AS 43.05.220

15 AAC 05.210

FAILURE TO FILE OR PAY.

(a) A failure-to-file penalty will be added to a tax at the rate of five percent for each 30-day period or fraction of a 30-day period during which the taxpayer fails to file at the time or times required by law or regulation a return or report as required by AS 43, unless it is shown that the failure is due to a reasonable cause, as defined in 15 AAC 05.200 , and not to wilful neglect. A failure-to-file penalty will not exceed 25 percent for any one return or report required to be filed. The failure-to-file penalty is computed only on the unpaid balance of the tax liability as determined by the department. The penalty provided in AS 43.55.030 (d) will be assessed in addition to this penalty.

(b) A failure-to-pay penalty will be added to a tax at the rate of five percent for each 30-day period or fraction of a 30-day period during which the taxpayer fails to pay the full amount of the tax, a portion of the tax, or a deficiency of the tax, as required by AS 43, and as reported by the taxpayer or assessed by the department, unless it is shown that the failure is due to a reasonable cause, as defined in 15 AAC 05.200 , and not to wilful neglect. The failure-to-pay penalty will not exceed 25 percent for any one return or report required to be filed. The failure-to-pay penalty is computed from the date the payment is due, on the unpaid balance of the total tax liability as shown on the return or report filed or on an audit assessment notice. The penalty provided for in AS 43.56.160 for failure to pay the tax under AS 43.56 is in place of the failure-to-pay penalty provided in this subsection.

(c) If, with respect to the same return or report, a failure to file and a failure to pay occur during different periods of time, a penalty for each period may be imposed. If a failure to file and a failure to pay occur during the same period of time, only the penalty for failure to file will be imposed for that period. The combined rate imposed under this section for the failure-to-file and the failure-to-pay penalties with respect to the same return or report will not exceed 25 percent.

(d) The obligation to file is separate from the obligation to pay. An approved extension to file is not an extension to pay.

(e) For purposes of calculating a penalty for failure to file or failure to pay, the first 30-day period or fraction of a 30-day period begins on the day following the day the obligation arises and ends when the obligation is met or 30 calendar days later, whichever occurs first. Each additional 30-day period or fraction of a 30-day period begins on the day following the expiration of the preceding period and ends when the obligation is met or 30 calendar days later, whichever occurs first. If the 30th calendar day is a holiday, it is excluded and the next business day is considered the 30th day.

(f) If a properly filed, amended return reduces the total tax liability or the tax required to be paid, or the department reduces the tax liability, the related penalty will be reduced accordingly. However, if the reduction results from the application of a carryback provision provided in AS 43, the penalties will not be reduced.

(g) If an additional penalty for negligence or intentional disregard is imposed under AS 43.05.220 (b), then a failure-to-pay penalty under this section will also be imposed on the total amount of the tax deficiency.

History -

Eff. 7/1/81, Register 78; am 1/12/83, Register 85

Authority -

AS 01.10.080

AS 01.10.220 (a)

AS 43.05.080

15 AAC 05.220

ADDITIONAL PENALTY FOR NEGLIGENCE OR INTENTIONAL DISREGARD.

(a) A negligence-or-intentional-disregard penalty will, in the department's discretion, be assessed in addition to a penalty for failure to file, failure to pay, or civil fraud.

(b) If it is determined by the department that a tax deficiency or part of a tax deficiency is due to negligence or intentional disregard of a law or a regulation without intent to defraud, then a penalty of five percent will be assessed and collected. The penalty is computed on the total amount of the tax deficiency, even if the determination relates to only a part of the deficiency.

(c) Negligence is the failure to do something which a prudent and reasonable person, guided by those considerations which ordinarily regulate the conduct of human affairs, would do; it is also doing something which a prudent and reasonable person would not do.

(d) Intentional disregard of a law or a regulation without intent to defraud is the failure to comply with governing laws and regulations when the taxpayer has knowledge of the pertinent laws and regulations and does not have specific intent to evade the payment of tax. An error or honest difference of opinion does not constitute intentional disregard.

(e) Negligence or intentional disregard may be demonstrated by any relevant evidence, including but not limited to the following:

(1) the taxpayer has substantially deviated from the statutes or regulations in reporting income or claiming deductions after being advised by the department of the proper methods of reporting;

(2) the taxpayer has failed to keep adequate records;

(3) the taxpayer has exaggerated deductions unsubstantiated by facts; or

(4) the taxpayer has not justified an understatement of income.

History -

Eff. 7/1/81, Register 78

Authority -

AS 43.05.080

AS 43.05.220 (b)

15 AAC 05.230

CIVIL FRAUD.

(a) A civil fraud penalty may be assessed in addition to a penalty for failure to file, failure to pay, negligence, or intentional disregard.

(b) If it is determined by the department that a tax deficiency or part of a tax deficiency is due to fraud, then a penalty will be added to the tax. The penalty is 50 percent of the deficiency due or $500, whichever is greater. The penalty is computed on the total amount of the deficiency due, even if the determination of fraud relates to only a part of the deficiency.

(c) Fraud is the intentional misrepresentation of a material fact with the intent to evade payment of tax which the taxpayer believed to be owing. The taxpayer must have had knowledge of its falsity and intended that it be acted upon or accepted as the truth.

(d) To establish civil fraud, the department must prove by clear and convincing evidence that

(1) the tax liability reported was understated; and

(2) the understatement was the result of an intent to evade tax.

(e) An intent to evade tax may be demonstrated by any relevant evidence, including but not limited to the following:

(1) the taxpayer has provided false explanations regarding understated or omitted income;

(2) the taxpayer has provided falsified source documents;

(3) the taxpayer has not justified an omission or an understatement of a significant amount of income; or

(4) the taxpayer has substantially overstated a deduction and has failed to justify the overstatement.

History -

Eff. 7/1/81, Register 78

Authority -

AS 43.05.080

AS 43.05.220 (c)

15 AAC 05.240

ACTS OF AGENTS OR EMPLOYEES.

The penalties provided in 15 AAC 05.210 - 15 AAC 05.230 will, in the department's discretion, be imposed on the taxpayer even if the return or report was prepared by an agent or employee of the taxpayer.

History -

Eff. 7/1/81, Register 78

Authority -

AS 43.05.080

AS 43.05.220

15 AAC 05.250

USE OF CONFIDENTIAL INFORMATION IN ENFORCEMENT PROCEEDINGS.

(a) Department representatives will, in their discretion, disclose confidential information obtained from a taxpayer in an audit or investigation of another taxpayer under AS 43.21 and AS 43.55, if the information is relevant to a sale, exchange, disposition, or netback valuation of oil or gas that relates to a period at least one year before the department's release of the information. The information will be disclosed only to the parties, counsel, experts, and consultants involved in the proceeding after notification to the taxpayer whose information is to be disclosed. The information will be disclosed only under an administrative protective order issued by an authorized representative of the department and only after the taxpayer whose information is to be disclosed has had an opportunity to appear and present objections to that representative.

(b) The notice and hearing requirements set out in (a) of this section do not apply if (1) the information to be used or disclosed, and both the taxpayer whose information is being disclosed and the taxpayer under audit or investigation, are subject to the protective order issued September 11, 1984 in State v. Amerada Hess, No. 1JU-77-847 Civil ("Amerada Hess") and, (2) the department issues an administrative protective order that protects the taxpayer whose information is being disclosed to the full extent as is provided in the Amerada Hessprotective order.

History -

Eff. 9/1/84, Register 91; am 12/20/89, Register 112

Authority -

AS 09.25.100

AS 43.05.080

AS 43.05.230

15 AAC 05.300

ASSESSMENT AND COLLECTION.

(a) The amount of tax must be assessed within three years after the return is filed. The date of assessment is the date on which a written notice to the taxpayer is issued which specifies that this is a notice and demand for payment. The notice and demand for payment is issued to the taxpayer when it is personally delivered to him or mailed to his last known address. The period for assessment may be extended by the taxpayer's filing a written consent agreeing to a time extension at any time before the expiration of the assessment period.

(b) There is no time limit within which the department must assess a tax liability against a person who files a false or fraudulent return intending to evade paying the tax he owes, or against a person who fails to file a return.

(c) If a person fails to file a return or files a false or fraudulent return intending to evade payment of the tax he owes, the department will prepare a return for him and assess the tax due from any information available to the department. Preparation of the return by the department does not limit the time in which the department must assess the tax due.

(d) If the department does not collect a tax liability or begin distraint or court proceedings to collect it within six years after it is assessed, the department will never collect it. A taxpayer may, however, extend the time in which the department must collect his tax liability by filing a waiver of restrictions on assessment and collection of a deficiency of tax with the department.

History -

Eff. 1/12/64, Register 12; am 6/2/82, Register 82

Authority -

AS 43.05.245

AS 43.05.260

AS 43.20.160 (c)

AS 43.20.200

15 AAC 05.310

PAYMENT.

(a) A payment in an amount less than the amounts prescribed in (b)(1) and (2) of this section may be made by check in the manner prescribed in (c) or in (d) of this section, whichever is applicable, or may be made by wire transfer in the manner prescribed in (e) of this section.

(b) A payment in an amount equal to or greater than the following amounts must be made by wire transfer in the manner prescribed in (e) of this section:

(1) $100,000 if for a return or report required to be filed on a monthly or quarterly basis;

(2) $150,000 if for a return or report required to be filed on a yearly basis;

(c) For payment of a tax under AS 43, except a tax described in (d) of this section, if payment is made by check, the taxpayer must mail the check, together with the required tax return or report, to the following address or to another address designated by the department: Cashier, Department of Revenue, State of Alaska, P.O. Box SA, Juneau, Alaska 99811. A payment made by check or a return not requiring a payment will be considered timely if it is postmarked on or before the day of the month on which it is due.

(d) For payment of a tax under AS 43.55, Oil and Gas Properties Production Tax, AS 43.56, Oil and Gas Exploration, Production and Pipeline Transportation Property Taxes, or AS 43.57, Oil and Gas Regulation and Conservation Tax, if payment is made by check, the taxpayer must mail the check, together with a copy of the summary pages of the tax return or report, to the following address or to another address designated by the department: Cashier, Department of Revenue, State of Alaska, P.O. Box SA, Juneau, Alaska 99811. The taxpayer must mail the required tax return to the Petroleum Revenue Division, Audit Division, Department of Revenue, 550 West 7th Avenue, Suite 570, Anchorage, Alaska 99501. A payment made by check or a return not requiring a payment will be considered timely if it is postmarked on or before the day of the month on which it is due.

(e) A payment by direct-wire transfer must be made through the commercial banking system in accordance with the following procedures:

(1) the taxpayer shall notify the Alaska Department of Revenue, Treasury Division, by Telex (Telex number 099-45-333) of the dollar amount and the type of tax to be paid no later than 9:00 a.m. Pacific Standard or Daylight time (whichever is in effect at Juneau, Alaska) on the day before the wire transfer is to be made;

(2) the taxpayer shall obtain sufficient collected funds to cover the payment and shall instruct the commercial bank holding the funds to initiate the transfer of federal funds in the amount of payment through the Federal Reserve wire transfer system to the credit of the State of Alaska account as designated by the Treasury Division of the Alaska Department of Revenue;

(3) the taxpayer shall make the payment in one lump sum from one bank and shall designate the type of tax payment along with the wire transfer;

(4) a payment made by wire transfer is timely if the taxpayer's commercial bank initiates the transfer of funds through the federal wire-transfer system on the date the payment is due;

(5) the taxpayer must mail the report or return in accordance with (c) or (d) of this section and indicate on the face of the report or return that the tax has been paid by wire transfer.

(f) In this section, "payment" means the total amount due or estimated to be due by the taxpayer under any provision of AS 43, including taxes, interest and penalty, and for the purpose of taxes due under AS 43.55, AS 43.56 and AS 43.57, includes the total amount due for all interests on whose behalf the taxpayer is reporting and paying tax. For example, the $100,000 threshold in (b)(1) of this section is reached if this total figure equals or exceeds $100,000 even though none of the taxes nor the penalty may be $100,000 individually.

(g) This section applies to payments due on or after September 1, 1982.

(h) When the last day for performing any act under any provision of AS 43 falls on a Saturday, Sunday, or a legal holiday, the performance of that act is considered timely if it is performed on the next succeeding day that is not a Saturday, Sunday, or legal holiday. "Legal Holiday" means a legal holiday in the District of Columbia or in this state.

History -

Eff. 9/15/82, Register 83; am 6/1/84, Register 91; am 3/9/90, Register 113

Authority -

AS 43.05.080

AS 43.05.250

Editor's Notes -

The Department of Revenue's bank wire instructions under 15 AAC 05.310(e)(2) are subject to change. For current instructions, contact the Cash Management Section of the department's Treasury Division by facsimile/telecopy (907-465-4019) or telephone (907-465-2360).

15 AAC 05.320

PAYMENT BY CREDIT CARD.

In addition to the methods of payment prescribed by 15 AAC 05.310 , the department will, in its discretion, accept credit cards as a method of payment for license and permit fees, delinquent taxes, interest, penalties, and for repayment of permanent fund dividends.

History -

Eff. 3/30/85, Register 93

Authority -

AS 43.05.080

AS 43.05.250