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Oil & Gas Property Tax
2015 Annual Report


Oil & Gas Property Tax Reports
End Year



AS 43.56

Description

Alaska levies an oil and gas property tax on the value of taxable exploration, production, and pipeline transportation property in the state. There are three established procedures for the three distinct classes of property:

  • Exploration Property – Valued on 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;
  • Production Property – Valued on the basis of replacement cost of similar new property, less depreciation based on the economic life of the proven reserves; and
  • Pipeline Transportation Property – Generally valued on its economic value relative to the reserves feeding into the pipeline.

Rate

The state tax rate is 20 mills, or 2%, of the assessed value.

Returns

Taxpayers file annual returns reporting taxable property as of Jan. 1 of the assessment year. Returns are due on or before Jan. 15. Payment is due on or before June 30.

Exemptions

Oil and gas reserves, oil or gas leases, and the lease or rights to explore or produce oil or gas are exempt, as are intangible drilling and exploration expenditures. Certain aircraft, motor vehicles, communication facilities, and buildings may be exempt even though they are associated with oil or gas exploration, production, or pipeline transportation. Oil or gas pipeline transportation systems owned and operated by a public utility are exempt.

Credits

The following are available for use against the liability of this specific tax: Education Credit and municipal property taxes paid. For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue

The Department of Revenue’s Tax Division deposits revenue from oil and gas property taxes into the General Fund. Payments received after a tax assessment are deposited into the Constitutional Budget Reserve Fund (CBRF).

History

The Alaska Legislature enacted this tax in 1973 during the first special session of the Eighth Legislature. The state assists local governments by assessing property subject to the tax, ensuring uniform treatment of all taxable property.

2008 – The Legislature amended the Education Credit provisions to include cash contributions accepted for secondary-level vocational courses and programs by a school district in Alaska and by a state-operated vocational technical education and training school.

2010 – The Legislature amended the Education Credit by increasing the maximum credit allowed from $150,000 to $5 million effective Jan. 1, 2011. In addition, the Legislature expanded contributions eligible for the credit to include contributions made for construction and maintenance of facilities by state-operated vocational education schools and two- or four-year colleges. The increase in the credit from $150,000 to $5 million expires Dec. 31, 2013. On Jan. 1, 2014, the maximum credit allowed will revert to $150,000.

2011 – The Legislature enacted legislation extending the date that the $5 million annual Education Credit limit expires from Jan. 1, 2014, to Jan. 1, 2021. It is then scheduled to return to $150,000. In addition, the Legislature expanded contributions eligible for the credit to include contributions made after June 30, 2011, to annual intercollegiate sports tournaments, Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership.

2014 – The Legislature passed House Bill 278 (CH 15 SLA 14) further expanding qualifying Education Tax Credits to include cash contributions to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research, and educational support purposes. In addition, tax credits are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs. Tax credits are also available for cash contributions for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   General Fund

$125,185,585 $128,066,886 $99,260,956 $111,179,244

   CBR Fund

8,849 18,911 21,122 104,235,535

   Total Tax

$125,194,434

$128,085,796

$99,282,078

$215,414,779


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

151 150 937 877

   Number of Taxpayers

151 150 153 147





Oil & Gas Property Tax Credits


Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – Taxpayers are allowed a non-transferrable, non-refundable credit for cash contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes.

The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify.

The credit is 50% of the first $100,000, 100% of the contribution over $100,000 and up to $300,000, and 50% of the remaining amount over $300,000. The total allowable credit per year for all affiliated taxpayers may not exceed $5 million.

Qualifying Education Tax Credits include cash contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes.

In addition, tax credits for certain taxpayers are available for cash contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, funding for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs.

Tax credits are also available for cash contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.





Film Production Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit, effective July 1, 2013, is a transferable credit for expenditures on eligible film production activities in Alaska. The Alaska Legislature repealed the credit effective July 1, 2015, and the Department of Revenue stopped accepting new projects on that date. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the Department of Revenue could see credits being taken until 2023 since credits were still being awarded in 2016.





Municipal Property Taxes Paid Taxpayers receive a credit against state oil and gas property tax for property taxes paid to municipalities on taxable property. The credit is limited to the amount of state tax otherwise due.






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