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Fisheries Business Tax
2018 Annual Report


Fisheries Business Tax Reports





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 Alaska, or export unprocessed fisheries resources from the state.

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 business taxpayers file annual returns that are due with their payment on March 31 of the following year. Or, in lieu of annual returns, taxpayers have the option to file monthly returns, where they file and pay by the 15th of each month to report their activities from the previous month.

Taxpayers are also required to file returns to report post-season bonus payments that they paid fishermen. Bonus returns and payments are due by the last day of the month following the month the bonus payment was made (for annual filers) or by the 15th of the following month (for monthly filers).

Exclusion

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

Credits

The Education Credit, Film Production Credit, and the Salmon and Herring Product Development Credit (often called the Product Development, or PD credit) are available for use against the liability of this specific tax. For more information, see the Fisheries Business Credits section below.


Disposition of Revenue

The Tax 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 in the following two paragraphs:

Processing Activity Inside a Municipality

The Tax 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 Tax Division divides the 50% shareable amount equally between the incorporated city and the organized borough.

Processing Activity Outside a Municipality

The Tax 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 Tax 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 Tax 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 the 2011 entry 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 Tax Credit to the Salmon and Herring Product Development Tax Credit (Product Development or PD credit), which added herring. The credit on salmon and herring expenditures is for promoting the development of salmon and herring products. The credit was extended to Dec. 31, 2020.

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

2016 – The A.W. “Winn” Brindle Scholarship Credit under HB 306 was repealed effective Dec. 31, 2016.

2018 – The Legislature passed House Bill 233, which amended the Fisheries Business Education Credit in AS 43.75.018 (in conjunction with corresponding amendments to parallel Education Credits provided in other titles and chapters).

The credit amount was reduced from 100% to 75% of donations of between $100,000 and $300,000 starting Jan. 1, 2019, and was further reduced to 50% of all contributions beginning Jan. 1, 2021.

Additionally, the total Education Credit that any taxpayer may claim for all parallel Education Credits was reduced to $1 million a year from $5 million, beginning Jan. 1, 2019. HB 233 also extended the credit to in-kind donations of equipment in addition to cash donations as of Jan. 1, 2019.




Click here for data with additional years.

  Collections Summary

Fiscal Year

2018 2017 2016 2015

   Established Shore-Based

$35,279,591 $30,167,981 $32,416,535 $33,859,642

   Established Floating

4,569,016 4,515,272 3,118,600 4,412,960

   Established Cannery

5,803,015 2,465,607 3,817,208 5,117,768

   Developing

344 1,609 1,089 9,760

   Prepayments

328,710 117,269 408,198 502,939

   Penalties and Interest

234,630 1,048,784 125,525 491,989

   License Fees

13,100 13,650 14,325 12,050
   Total Tax

$46,228,406

$38,330,171

$39,901,481

$44,407,109

   General Fund

21,233,058 15,462,926 22,251,627 21,316,683

   Shared with Municipalities

(23,710,558) (21,245,655) (16,235,168) (21,479,070)

   DCCED Municipal Allocation

(1,284,789) (1,621,591) (1,414,686) (1,611,355)


  Filing Information

Fiscal Year

2018 2017 2016 2015

   Number of Returns

1,128 1,062 976 753

   Number of Taxpayers

514 469 405 347





Fisheries Business Tax Credits


Education – AS 43.20.014, 43.75.018, 43.77.045, 43.55.019, 43.56.018 and 43.65.018 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.

Taxpayers can claim a credit for 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 as well.

The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.

Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.

Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.

As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.

On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.

Qualifying Education Tax Credits include 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 contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, 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 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 under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.





Salmon and Herring Product Development – AS 43.75.035 – This credit is for eligible capital expenditures to expand value-added processing of Alaska salmon and herring. The credit is 50% of qualified investments up to 50% of the fisheries business tax liability incurred for processing salmon and herring during the tax year. The credit is not transferable, but it may be carried forward for three years. The statute is scheduled to sunset on Dec. 31, 2020. Herring products were added to the credit in 2014.






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