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Fisheries Business Tax
2015 Annual Report


Fisheries Business Tax Reports
End Year



AS 43.75

Description

Alaska levies a fisheries business tax (also known as the “raw fish tax”) on fisheries businesses and people who process fisheries resources in, or export unprocessed fisheries resources from Alaska. The tax is based on the price paid to commercial fishermen for the raw resource, or the fair market value when there is no arms-length transaction prior to processing or export. The Department of Revenue's Tax Division collects fisheries business taxes from processors and people who export unprocessed fishery resources from Alaska.

Rate

Fisheries business tax rates are based on the location and type of processing activity and whether a fishery resource is classified as “established” or “developing” by the Alaska Department of Fish and Game. Rates are as follows:

Processing Activity

EstablishedRate
Floating5.0%
Salmon Cannery4.5%
Shore-Based3.0%

Developing

Rate
Floating3.0%
Shore-Based1.0%

Returns

Fisheries businesses file calendar-year returns that are due with payment on March 31 of the following year. After filing the calendar-year return, taxpayers file returns to report post-season bonus payments made to fishermen. Returns for these payments are due with additional taxes by the last day of the month following the month of bonus payments.

Exclusion

Commercial fishermen who process fish on board their vessels are excluded from the tax if they sell to a licensed processor.

Credits

The following credits are available for use against the liability of this specific tax: Education, Scholarship Contributions ("Winn Brindle"), and Salmon Product Development Tax Credits. For specific information concerning these credits, see the Description of Credits section.

Disposition of Revenue
The division deposits all revenue derived from the fisheries business tax into the state’s General Fund. The Alaska Legislature may appropriate revenue from the tax for revenue sharing described below:

Processing Activity Inside Municipality

The division shares 50% of tax collected with the incorporated city or organized borough where the processing took place. If an incorporated city is within an organized borough, the division divides the 50% shareable amount equally between the incorporated city and the organized borough.

Processing Activity Outside Municipality


The division shares 50% of tax collected from processing activities outside an incorporated city or an organized borough through an allocation program administered by the Alaska Department of Commerce, Community and Economic Development.

History

1899 – The U.S. Congress adopted a “salmon case" tax to fund fisheries-related activities in pre-Territorial Alaska. The Organic Act passed in 1912 established an organized territorial government in Alaska. In 1913, the First Territorial Legislature adopted the “salmon pack” tax that applied to salmon canneries based on canned salmon ($0.07 per case); and the “cold storage” tax that applied to other fisheries and was based on business receipts. Between 1913 and 1949, the Territorial Legislature amended the tax several times by changing tax rates and expanding the tax base to include different fisheries.

1949 – The Territorial Legislature restructured the fisheries business tax to be based on the value of the fisheries rather than volumes (case or business receipts). The new “raw fish” tax applied to salmon (4%), crab and clams (2%), and other fishery products (1%) processed in canneries.

1951 – The Territorial Legislature enacted a fishery business license requirement with a $25 license fee, a tax on floating processors at 4% of value and increased the tax rate for salmon canneries to 6%.

1962 – The Alaska Legislature adopted provisions for sharing taxes (10%) and requiring calendar-year returns for all businesses.

1967 – The tax rate on salmon canneries was amended to 3% and provisions were adopted requiring security for a fishery business license under certain conditions.

1979 – The Legislature adopted the modern tax structure with different tax rates for established and developing species, as well as increasing the shared tax percentage to 20%.

1981 – The shared tax percentage was increased to 50%.

1986 – The Legislature authorized a Fisheries Business Tax Credit of up to 50% of fisheries business taxes for capital expenditures associated with constructing and improving shore-side processing operations. The tax credit program was effective for 1987 through 1989 with a carryforward provision through 1991. Taxpayers claimed approximately $47.5 million of credits under this program. The Legislature also enacted the A.W. “Winn” Brindle Scholarship Credit allowing a credit of up to 5% of fisheries business taxes due.

1987 – The Legislature enacted the Alaska Education Tax Credit program allowing a tax credit on educational contributions of up to $100,000 against fisheries business taxes due.

1990 – The Legislature enacted provisions for a civil penalty for processing without a license. The division may progressively assess penalties in increments of up to $5,000 for each infraction to a maximum of $25,000 for the fifth and subsequent assessments. The Legislature also enacted a provision that authorized sharing of 50% of taxes sourced from processing activities in the unorganized borough, effective July 1992.

1991 – The Legislature restructured the Alaska Education Credit and increased the maximum amount to $150,000.

1993 – The Alaska Department of Labor and Workforce Development Surety Bond Program transferred to the Department of Revenue under Executive Order 85, effective July 1, 1994.

1995 – The Legislature reduced the amount of surety bonding for small processors from $10,000 to $2,000.

2001 – The Legislature modified the tax payment security requirements necessary to obtain a fisheries business tax license. The Legislature also expanded the existing requirement for a whole-salmon exporter to include any exporter of any unprocessed fisheries resource. Under the legislation, exporters of unprocessed fish can obtain fisheries business licenses by posting a $50,000 surety bond and paying their taxes monthly.

2002 – The Legislature authorized credits of up to 50% for contributions of not more than $100,000 and 75% of the next $100,000 in contributions made to the Alaska Veterans’ Memorial Endowment Fund. The tax credit expired July 1, 2003.

2003 – The Legislature authorized a Salmon Product Development/Utilization (SPDU) Credit that allows tax credits against fisheries business taxes for expenditures promoting the value-added processing of salmon products and the utilization of salmon waste in Alaska. The amount of the tax credit cannot exceed 50% of the taxpayer’s fisheries business liability for processing of salmon during the tax year.

Effective June 11, 2003, and retroactive to Jan. 1, 2003, the SPDU legislation sunset date was Dec. 31, 2005. Unused credits earned may be carried forward for three years.

The Legislature authorized the monthly payment of the fisheries taxes in lieu of existing forms of security or prepayment as a prerequisite to being licensed. Fisheries businesses that elect the monthly payment option must post a $50,000 bond or have $100,000 equity in real property in the state. The provisions of this legislation took effect Sept. 8, 2003.

2004 – Legislation authorized a new direct marketing fisheries business license, and a tax structure set at the shore-based rate of 1% of the value of developing fish species and 3% of the value of established fish species. The provisions of this legislation took effect Jan. 1, 2005.

2005 – Effective May 18, 2005, the Legislature modified the surety and tax payment requirements for obtaining a fisheries business license. The Legislature reduced the amount of surety bonding for small primary fish buyers from $10,000 to $2,000. The legislation also added requisites for obtaining a fisheries business license.

Before being issued a license, a fisheries business must have fully paid (including penalties and interest) taxes administered by the division, seafood marketing assessments, employment security contributions, federal Occupational Safety and Health penalties, and municipal fishery taxes.

2006 – The Legislature extended the Salmon Product Development Credit for expenditures made through Dec. 31, 2008. The Salmon Utilization Credit, established in 2003, was not extended beyond the sunset date of Dec. 31, 2005.

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.

The Legislature extended the Salmon Product Development Tax Credit program by three years. The legislation extended the ending date for placing specified property in service to qualify for the credit from Dec. 31, 2008, to Dec. 31, 2011. This legislation expanded the list of qualified property to include conveyors used for producing value-added salmon products and requires that the Department of Revenue develop and implement procedures for predetermining if investments qualify for the Salmon Product Development Tax Credit.

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 the 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 expired Dec. 31, 2013. The maximum credit allowed was to revert to $150,000 on Jan. 1, 2014. That date was extended in 2011 (see below).

The Legislature extended the Salmon Product Development Tax Credit program by four years. The legislation extended the last date for placing qualified property in service from Dec. 31, 2011, to Dec. 31, 2015. The legislation also expanded the list of qualified property to include ice-making machines.

The Legislature authorized the Department of Revenue to withhold or suspend a fisheries business license if a fisheries business fails to pay the permit buyback fee imposed by the federal National Marine Fisheries Service under 16 U.S.C. 1861a.

2011 – The Legislature extended 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. The Legislature also 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) and changed AS 43.75 to further expand 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.

HB 306 (CH 69 SLA 14) amended AS 43.75 and repealed certain existing tax credits (the Winn Brindle Scholarship Credit, Education Credit, Salmon Development Credit, and Film Production Credit) over the next five to six years if the Legislature does not reauthorize the credits before their sunset dates.

The Legislature passed Senate Bill 71 (CH 69 SLA 14) that renamed the Salmon Product Development Credit to the Product Development Credit. The revised statute included herring products for credit, as well as salmon products for credit. The credit on salmon and herring expenditures are for promoting the development of salmon and herring products and was extended to Dec. 31, 2020.

2015 – The Legislature passed SB 39, which finalized the repeal of the Film Production Credit.



Click here for data with additional years.

  Collections Summary

Fiscal Year

2015 2014 2013 2012

   Established Shore-Based

$33,859,642 $34,375,661 $34,797,124 $36,627,375

   Established Floating

4,412,960 6,498,425 5,578,323 7,053,585

   Established Cannery

5,117,768 10,295,427 6,478,824 5,939,305

   Developing Shore-Based

9,732 37,743 50,442 63,557

   Developing Floating

28 525 493 725

   Prepayments

502,939 1,392,697 521,526 2,405,470

   Penalties and Interest

491,989 418,060 566,989 995,246

   License Fees

12,050 11,000 11,575 12,250

   Total Tax

$44,407,109

$53,029,538

$48,005,296

$53,097,514

   Shared with Municipalities

(21,479,070) (24,912,169) (23,165,321) (24,576,578)

   DCCED Municipal Allocation

(1,611,355) (1,581,457) (1,898,248) (2,075,432)

   Total Retained by State

$21,316,683 $26,535,912 $22,941,727 $26,445,504


  Filing Information

Fiscal Year

2015 2014 2013 2012

   Number of Returns

753 915 923 913

   Number of Taxpayers

347 420 393 433





Fisheries Business 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.





Salmon and Herring Product Development – AS 43.75.035 – Taxpayers are allowed tax credits against the fisheries business tax on salmon and herring expenditures, which promote the development of salmon and herring products. The credit on salmon and herring expenditures for promoting salmon and herring products was extended to Dec. 31, 2020.






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