TAX NEWS - January 2009

Alaska tax: Supplemental And Corrected Notice - Lease Expenditures & Overhead Public Hearing Comment Period Extended from February 4 to February 23, 2009 and Corrected Call-in Number for Teleconference

SUPPLEMENTAL AND CORRECTED NOTICE OF PROPOSED CHANGES IN THE REGULATIONS OF THE DEPARTMENT OF REVENUE

The Department of Revenue proposes to adopt regulation changes in Title 15, Chapter 55, Alaska Administrative Code, dealing with the oil and gas production tax. This is a SUPPLEMENTAL AND CORRECTED NOTICE adding to the NOTICE OF PROPOSED CHANGES that was issued on December 24, 2008. This SUPPLEMENTAL AND CORRECTED NOTICE incorporates by reference the contents of the NOTICE OF PROPOSED CHANGES issued on December 24, 2008, and is being issued because:

1) the Department of Revenue has decided to extend the period for receiving written public comments, from February 4 to February 23, 2009; and
2) The conference call-in number listed in the original NOTICE OF PROPOSED CHANGES was incorrect. The corrected number for the January 21, 2009 hearing is 1-888-295-4546.

The Department of Revenue proposes to adopt regulation changes in Title 15, Chapter 55 of the Alaska Administrative Code, dealing with the oil and gas production tax, including the following:

15 AAC 55.245, dealing with lease expenditures under operating agreements, is proposed to be amended to limit application of the regulation to expenditures incurred before July 1, 2007.

A new section, 15 AAC 55.250, is proposed, adopting standards relating to lease expenditures, other than overhead.

A new section 15 AAC 55.260, is proposed, dealing with direct charges for purposes of the standards relating to lease expenditures under proposed 15 AAC 55.250(a) & (b).

15 AAC 55.270, dealing with overhead, is proposed to be amended to change the formula for calculating an overhead allowance and to limit application of the regulation to expenditures incurred before July 1, 2007.

A new section 15 AAC 55.271, is proposed, dealing with an overhead allowance after June 30, 2007.

15 AAC 55.800, dealing with retroactive application of regulations, is proposed to be amended to provide for retroactive application of certain of the proposed regulation changes referred to in this notice.

You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to:

John Larsen
Audit Master
Alaska Department of Revenue
550 W. 7th Ave., Ste. 500
Anchorage, AK 99501

You may also send comments by electronic mail to john.larsen@alaska.gov, or by fax to, (907) 269-6644. Written comments must be received no later than 4:30 p.m, on Monday, February 23, 2009.

Oral or written comments also may be submitted at a hearing to be held on Wednesday, January 21, 2009 at the Legislative Information Offices located at 716 W. 4th Avenue, Suite 550, Anchorage, Alaska. The hearing will be held from 9:00 a.m. to 11:00 a.m. and may be extended to accommodate those present before 10:00 a.m. who did not have an opportunity to comment. If you are unable to attend the public hearing, you may participate by teleconference by dialing the LIO's toll-free conference call number, 1-888-295-4546.

If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Lashondra Wilson-Tanner at (907) 269-6620 no later than Wednesday, February 18, 2009 to ensure that any necessary accommodations can be provided.

For a copy of the proposed regulation changes, contact the Tax Division at (907) 269-6620 or go to the Division's Internet website at http://www.tax.alaska.gov.

After the public comment period ends, the Department of Revenue will either adopt these or other provisions dealing with the same subject, without further notice, or decide to take no action on them. The language of the final regulations may be different from that of the proposed regulations. YOU SHOULD COMMENT DURING THE TIME ALLOWED IF YOUR INTERESTS COULD BE AFFECTED.

Statutory Authority: AS 43.05.080; AS 43.55.110; AS 43.55.165: Sec. 37, ch. 2, TSSLA 2006; Sec. 72, ch. 1, SSSLA 2007.

Statutes Being Implemented, Interpreted, or Made Specific: AS 43.55.160; AS 43.55.165; AS 43.55.170; Sec. 37, ch. 2, TSSLA 2006; Sec. 72, ch. 1, SSSLA 2007.

Fiscal Information: The proposed regulation changes are not expected to require an increased appropriation.

Prepared by: /s/Jonathan Iversen
Director, Tax Division
(907) 269-6620