Section 15 AAC 55.305 - Application of tax credits(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.
Eff. 5/3/2007, Register 182; am 10/21/2009, Register 192; am 1/1/2018,Register 224, January 2018Authority: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