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28th Legislature(2013-2014)

Bill Text 28th Legislature


00 Enrolled SB 71                                                                                                          
01 Relating to the fishery resource landing tax and cost recovery fisheries; relating to a product                         
02 development tax credit for certain salmon and herring products; providing for an effective                              
03 date by amending the effective date of sec. 3, ch. 57, SLA 2003; and providing for an                                   
04 effective date.                                                                                                         
05                           _______________                                                                               
06    * Section 1. AS 16.10.455(c) is amended to read:                                                                   
07            (c)  As a condition of participation in a common property salmon fishery in a                                
08       terminal harvest area under this section, a fisherman who participates in the fishery is                          
09       subject to the payment of the assessment levied under (d) of this section on the                              
10       projected value of the salmon or on the pounds of salmon harvested. The                                       
11       assessment is levied on the [VALUE OF] salmon that the fisherman takes in the                                     
12       terminal harvest area and sells to a licensed buyer. The buyer of the salmon must be                              
13       licensed under AS 43.75, and the buyer shall collect the assessment on salmon taken                               
14       in a terminal harvest area at the time of purchase and remit the assessment to the                                
01       Department of Revenue in accordance with regulations adopted by the Department of                                 
02       Revenue.                                                                                                          
03    * Sec. 2. AS 16.10.455(d) is amended to read:                                                                      
04            (d)  The Department of Revenue may, by regulation, annually, by March 1 of                                   
05       each year, set the [RATE OF THE] assessment levied on salmon taken in a terminal                                  
06       harvest area in consultation with the Department of Commerce, Community, and                                      
07       Economic Development, the hatchery permit holder, and representatives of affected                                 
08       commercial fishermen. The [RATE OF THE] assessment shall provide sufficient                                       
09       revenue to cover debt service to the state, reasonable operating expenses, reasonable                             
10       maintenance expenses, and development or maintenance of a reserve fund up to 100                                  
11       percent of annual operating costs of the hatchery permit holder. In setting the [RATE                             
12       OF THE] assessment, the department shall consider the estimated return and harvest                                
13       of salmon in the terminal harvest area, the projected price to be paid for salmon in the                          
14       region, the amount of the existing reserve held by the hatchery permit holder, and the                            
15       amount by which the assessment collected in previous years exceeded or fell short of                              
16       the amount anticipated to be collected. The [TOTAL RATE OF THE] assessment may                                    
17       not exceed 50 percent of the value of the salmon. The department may levy the                                 
18       assessment as a percentage of the projected value of the salmon returning to the                              
19       terminal harvest area or as a flat rate on each pound of salmon harvested in the                              
20       area, to the nearest whole cent.                                                                              
21   * Sec. 3. AS 43.75.035(a) is amended to read:                                                                       
22            (a)  A taxpayer that is a fisheries business may claim a [SALMON] product                                    
23       development tax credit of 50 percent of qualified investment in new property first                                
24       placed into service in a shore-based plant or on a vessel in the state in the tax year.                           
25    * Sec. 4. AS 43.75.035(b) is amended to read:                                                                      
26            (b)  The amount of the tax credit applied against taxes under this section may                               
27       not                                                                                                               
28                 (1)  exceed 50 percent of the taxpayer's tax liability incurred under this                              
29       chapter for processing of salmon and herring during the tax year; or                                          
30                 (2)  be claimed for property first placed into service after December 31,                               
31       2020 [2015].                                                                                                  
01    * Sec. 5. AS 43.75.035(c) is amended to read:                                                                      
02            (c)  If the property for which a tax credit is claimed is installed on a vessel, the                         
03       amount of qualified investment under (a) of this section is determined by multiplying                             
04       the investment cost of the qualified investment property by a fraction, the numerator                             
05       of which is the weight of raw salmon or raw herring processed on the vessel by the                            
06       taxpayer in the state in the tax year in which the property is first placed into service,                         
07       and the denominator of which is the weight of raw salmon or raw herring processed                             
08       on the vessel by the taxpayer in and outside of the state in the tax year in which the                            
09       property is first placed into service.                                                                            
10    * Sec. 6. AS 43.75.035(d) is amended to read:                                                                      
11            (d)  An unused credit under this section may be carried forward and applied                                  
12       against the tax liability incurred on salmon and herring in the following three tax                           
13       years.                                                                                                            
14    * Sec. 7. AS 43.75.035(g) is amended to read:                                                                      
15            (g)  If, during a tax year, property for which a credit was claimed under this                               
16       section is disposed of by the taxpayer, ceases to be qualified investment property, or is                         
17       removed from service in the state, the tax due under this chapter is increased by the                             
18       recapture percentage of the aggregate decrease in the credit allowed under this section                           
19       for all prior tax years that would have resulted solely from reducing to zero the credit                          
20       allowed for the qualified investment property under this section. The amount of tax                               
21       credit attributable to the qualified investment that is carried forward from prior tax                            
22       years is terminated as of the first day of the tax year in which the qualified investment                         
23       property is disposed of by the taxpayer, ceases to be qualified investment property, or                           
24       is removed from service in the state. For purposes of this subsection,                                            
25                 (1)  the recapture percentage during the year in which the property is                                  
26       first placed into service or during the first year following the year in which the                                
27       property is first placed into service is 100 percent;                                                             
28                 (2)  the recapture percentage during the second year following the year                                 
29       in which the property is first placed into service is 75 percent;                                                 
30                 (3)  the recapture percentage during the third year following the year in                               
31       which the property is first placed into service is 50 percent;                                                    
01                 (4)  the recapture percentage during the fourth or subsequent year                                      
02       following the year in which the property is first placed into service is zero percent;                            
03                 (5)  qualified investment property used on a vessel is considered to                                    
04       have been removed from the state on the first day of a tax year in which the proportion                           
05       of raw salmon or raw herring processed in the state on the vessel is less than 50                             
06       percent of total weight of raw salmon or raw herring processed on the vessel in and                           
07       outside of the state.                                                                                             
08    * Sec. 8. AS 43.75.035(i) is amended to read:                                                                      
09            (i)  The department shall develop and implement procedures by which a                                        
10       taxpayer that is a fisheries business may submit the taxpayer's proposed investment to                            
11       the department and request a preliminary determination of whether the investment                                  
12       qualifies for the [SALMON] product development tax credit under this section. A                                   
13       preliminary determination by the department that the taxpayer's submission qualifies                              
14       for the credit is binding, unless the department determines that the taxpayer has made                            
15       a material misrepresentation in the taxpayer's submission.                                                        
16    * Sec. 9. AS 43.75.035(j)(3) is amended to read:                                                                   
17                 (3)  "qualified investment" means the investment cost to purchase or                                
18       convert [IN] depreciable tangible personal property with a useful life of three years or                      
19       more to be used predominantly to perform an ice making, processing, packaging, or                                 
20       product finishing function that is a significant component in producing value-added                               
21       salmon or herring products, including canned salmon products in can sizes other                           
22       than 14.75 ounces or 7.5 ounces [BEYOND GUTTING OF THE SALMON]; in this                                       
23       paragraph, "property"                                                                                             
24                      (A)  includes                                                                                      
25                           (i)  equipment used to fillet, skin, portion, mince,                                      
26                 form, extrude, stuff, inject, mix, marinate, preserve, dry, smoke,                                  
27                 brine, package, freeze, scale, grind, separate meat from bone, or                                   
28                 remove pin bones [FILLETING, SKINNING, PORTIONING,                                                  
29                 MINCING, FORMING, EXTRUDING, STUFFING, INJECTING,                                                       
30                 MIXING, MARINATING, PRESERVING, DRYING, SMOKING,                                                        
31                 BRINING, PACKAGING, BLAST FREEZING, OR PIN BONE                                                         
01                 REMOVAL EQUIPMENT];                                                                                     
02                           (ii)  new parts necessary for, or costs associated with,                                  
03                 converting a canned salmon line to produce can sizes other than                                     
04                 14.75 ounces or 7.5 ounces [TO CONVERT AN EXISTING CAN                                              
05                 SEAMER TO POP-TOP CAN PRODUCTION];                                                                      
06                           (iii)  conveyors used specifically in the act of producing                                    
07                 a value-added salmon or herring product; [AND]                                                      
08                           (iv)  ice making machines;                                                                    
09                           (v)  new canning equipment for herring products;                                          
10                 and                                                                                                 
11                           (vi)  equipment used to transform salmon or herring                                       
12                 byproduct that is discarded as waste into saleable product;                                         
13                      (B)  does not include                                                                              
14                           (i)  vehicles, forklifts, conveyors not used specifically in                                  
15                 the act of producing a value-added salmon or herring product, cranes,                               
16                 pumps, or other equipment used to transport salmon or herring, or                                   
17                 salmon or herring products, knives, gloves, tools, supplies and                                     
18                 materials, equipment, other than ice making machines, that is not                                       
19                 processing, packaging, or product finishing equipment, or other                                         
20                 equipment, the use of which is incidental to the production, packaging,                             
21                 or finishing of value-added salmon or herring products; [OR]                                        
22                           (ii)  the overhaul, retooling, or modification of new or                                      
23                 existing property, except for new parts necessary for, or costs                                     
24                 associated with, converting a canned salmon line to produce can                                     
25                 sizes other than 14.75 ounces or 7.5 ounces; or                                                     
26                           (iii)  property used predominantly to produce a                                           
27                 salmon or herring product that is not taxed under this chapter [TO                                  
28                 CONVERT AN EXISTING CAN SEAMER TO POP-TOP CAN                                                           
29                 PRODUCTION];                                                                                            
30    * Sec. 10. AS 43.75.035(j)(6) is amended to read:                                                                  
31                 (6)  "value-added salmon or herring product" means the product of a                                 
01       salmon or herring that is processed beyond heading, gutting, or separation in a                               
02       manner that [MATERIALLY] enhances the value or quality of the salmon or herring                           
03       product, such as shelf-stable, retort pouched, smoked, pickled, or filleted salmon,                               
04       ikura, leather, [OR] jerky, or a saleable product made from waste byproduct of                                
05       salmon or herring; "value-added salmon or herring product" does not include a                             
06       salmon or herring or salmon or herring product that                                                       
07                      (A)  has been subjected to only one or more of heading, gutting,                                   
08            freezing, or packaging [, QUALITY ASSURANCE PRACTICES, OR                                                
09            VALUE RETENTION PRACTICES];                                                                                  
10                      (B)  is salmon skeins or other unprocessed salmon or                                           
11            unprocessed herring products whether fresh or frozen; or                                             
12                      (C)  [IS CANNED, EXCEPT FOR SALMON PRODUCTS IN                                                     
13            A POP-TOP CAN; OR                                                                                            
14                      (D)]  is produced out of the state.                                                                
15    * Sec. 11. AS 43.77.020(b) is amended to read:                                                                     
16            (b)  The return shall be made on the basis of the calendar year. The return                              
17       [AND] is due on the last day of the month following the month that the                                        
18       department posts the statewide average fish price calculated by the Department                                
19       of Fish and Game for [BEFORE APRIL 1 AFTER THE CLOSE OF] the calendar                                         
20       year for which the return is made, and any unpaid tax shall be paid with the return.                          
21    * Sec. 12. AS 43.77.020(d) is amended to read:                                                                     
22            (d)  A person subject to the tax under this chapter shall make quarterly                                     
23       payments of the tax estimated to be due for the year, as required under (e) of this                           
24       section [REGULATIONS ADOPTED BY THE DEPARTMENT]. A taxpayer will be                                           
25       subject to an estimated tax penalty, determined by applying the interest rate specified                           
26       in AS 43.05.225 to the underpayment for each quarter, unless the taxpayer makes                                   
27       estimated tax payments as required under (e) of this section [IN EQUAL                                        
28       INSTALLMENTS THAT TOTAL EITHER                                                                                    
29                 (1)  AT LEAST 90 PERCENT OF THE TAXPAYER'S TAX                                                          
30       LIABILITY UNDER THIS CHAPTER FOR THE TAX YEAR; OR                                                                 
31                 (2)  AT LEAST 100 PERCENT OF THE TAXPAYER'S TAX                                                         
01       LIABILITY UNDER THIS CHAPTER FOR THE PRIOR TAX YEAR].                                                             
02    * Sec. 13. AS 43.77.020 is amended by adding new subsections to read:                                              
03            (e)  A person subject to tax under this chapter shall make estimated quarterly                               
04       tax payments on or before March 31, June 30, September 30, and December 31 of                                     
05       each year using one of the following methods:                                                                     
06                 (1)  four equal installments the sum of which is at least equal to the                                  
07       taxpayer's tax liability under this chapter for the immediately preceding calendar year;                          
08                 (2)  four equal installments the sum of which equals at least 90 percent                                
09       of the taxpayer's tax liability under this chapter for the current calendar year; or                              
10                 (3)  four installments, calculated in each quarter, equal to 90 percent of                              
11       the sum of the number of pounds of unprocessed fish of each species landed in the                                 
12       state during the quarter that are subject to tax under this chapter, multiplied by the                            
13       respective statewide average price for each species posted by the department in the                               
14       immediately preceding calendar year, multiplied by the applicable tax rate under this                             
15       chapter.                                                                                                          
16            (f)  By March 31 of each year, a taxpayer electing to use the method under                                   
17       (e)(3) of this section shall notify the department of the election. Once the election is                          
18       made, the taxpayer may not change the estimated payment method until the following                                
19       calendar year. If a taxpayer does not notify the department of an election to use the                             
20       method under (e)(3) of this section, the department shall calculate the taxpayer's                                
21       estimated liability under (e)(1) and (2) of this section, and apply the estimated                                 
22       payment method that results in the lowest tax liability to determine the taxpayer's                               
23       underpayment and estimated tax penalty.                                                                           
24    * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to                         
25 read:                                                                                                                   
26       TRANSITION AND IMPLEMENTATION. For the 2014 calendar year, a taxpayer                                             
27 may make estimated quarterly tax payments under AS 43.77.020, and the regulations adopted                               
28 to implement that section, as they read on December 31, 2013, or under AS 43.77.020, as                                 
29 amended by secs. 11 - 13 of this Act. A taxpayer may not make estimated tax payments for                                
30 the 2014 calendar year under AS 43.77.020(e)(3), added by sec. 13 of this Act, unless the                               
31 taxpayer notifies the department before January 1, 2015, of the taxpayer's intent to make                               
01 payments under that paragraph.                                                                                          
02    * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to                         
03 read:                                                                                                                   
04       RETROACTIVITY. Sections 11 - 13 of this Act are retroactive to January 1, 2014.                                   
05    * Sec. 16. Section 7, ch. 57, SLA 2003, as amended by sec. 4, ch. 3, SLA 2006, sec. 4, ch. 8,                      
06 SLA 2008, and sec. 3, ch. 102, SLA 2010, is amended to read:                                                            
07            Sec. 7. Section 3, ch. 57, SLA 2003, takes effect on the earlier of the                                      
08       following:                                                                                                        
09                 (1)  January 1, 2021 [2019]; or                                                                     
10                 (2)  the date of the attorney general's notification to the lieutenant                                  
11       governor and to the revisor of statutes that                                                                      
12                      (A)  a court has entered final judgment that AS 43.75.035 or                                       
13            43.75.036, added by sec. 1, ch. 57, SLA 2003, violates the commerce clause                                   
14            contained in art. I, sec. 8, United States Constitution; and                                                 
15                      (B)  the time for an appeal of that judgment has expired, or, if                                   
16            an appeal was taken, a final order on the appeal has been entered that                                       
17            AS 43.75.035 or 43.75.036, added by sec. 1, ch. 57, SLA 2003, violates the                                   
18            commerce clause contained in the United States Constitution.                                                 
19    * Sec. 17. This Act takes effect immediately under AS 01.10.070(c).                                                
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