Alaska 2025-2026 Regular Session

Alaska House Bill HB113 Compare Versions

Version 1 (Old)

Version 2 (New)

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2		-	~~HB0113b~~ -1- ~~CSHB~~ 113~~(L&C)~~
	2	+	HB0113a -1- HB 113
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5		-	34-LS0641\N
	5	+	34-LS0641\A
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9	9
10		-	CS FOR HOUSE BILL NO. 113(L&C)
	10	+
	11	+	HOUSE BILL NO. 113
11	12
12	13		IN THE LEGISLATURE OF THE STATE OF ALASKA
13	14
14	15		THIRTY-FOURTH LEGISLATURE - FIRST SESSION
15	16
16	17		BY THE HOUSE LABOR AND COMMERCE COMMITTEE
17	18
18		-	~~Offered~~: 3/10/25
19		-	Referred: Finance
	19	+	Introduced: 2/24/25
	20	+	Referred: Labor and Commerce, Finance
20	21
21		-	~~Sponsor(s): HOUSE LABOR AND COMMERCE COMMITTEE~~
	22	+
22	23		A BILL
23	24
24	25		FOR AN ACT ENTITLED
25	26
26		-	"An Act relating to a tax exemption for qualified small businesses; relating to the film 1
27		-	production promotion program; creating a transferable tax credit applicable to certain 2
28		-	film production expenditures incurred in the state; and providing for an effective date." 3
29		-	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
30		-	* Section 1. AS 43.20.012(a) is amended to read: 5
31		-	(a) The tax imposed by this chapter does not apply to 6
32		-	(1) an individual; 7
33		-	(2) a fiduciary; 8
34		-	(3) the income received by a regional association qualified under 9
35		-	AS 16.10.380 or nonprofit corporation holding a hatchery permit under AS 16.10.400 10
36		-	from the sale of salmon or salmon eggs under AS 16.10.450 or from a cost recovery 11
37		-	fishery under AS 16.10.455; [OR] 12
38		-	(4) the income received by a nonprofit corporation holding a permit 13
39		-	under AS 16.12.010 from the sale of shellfish under AS 16.12.080 or from a cost 14 34-LS0641\N
40		-	CSHB 113(L&C) -2- HB0113b
	27	+	"An Act relating to a tax exemption for qualified small businesses; and providing for an 1
	28	+	effective date." 2
	29	+	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
	30	+	* Section 1. AS 43.20.012(a) is amended to read: 4
	31	+	(a) The tax imposed by this chapter does not apply to 5
	32	+	(1) an individual; 6
	33	+	(2) a fiduciary; 7
	34	+	(3) the income received by a regional association qualified under 8
	35	+	AS 16.10.380 or nonprofit corporation holding a hatchery permit under AS 16.10.400 9
	36	+	from the sale of salmon or salmon eggs under AS 16.10.450 or from a cost recovery 10
	37	+	fishery under AS 16.10.455; [OR] 11
	38	+	(4) the income received by a nonprofit corporation holding a permit 12
	39	+	under AS 16.12.010 from the sale of shellfish under AS 16.12.080 or from a cost 13
	40	+	recovery fishery under AS 16.12.090; or
	41	+	14 34-LS0641\A
	42	+	HB 113 -2- HB0113a
41	43		New Text Underlined [DELETED TEXT BRACKETED]
42	44
43		-	recovery fishery under AS 16.12.090; or 1
44		-	(5) an Alaska corporation that is a qualified small business and 2
45		-	that meets the active business requirements in 26 U.S.C. 1202(e), as that 3
46		-	subsection read on January 1, 2012, subject to the restrictions set out in (f) of this 4
47		-	section. 5
48		-	* Sec. 2. AS 43.20.012 is amended by adding new subsections to read: 6
49		-	(e) For the purposes of (a)(5) of this section, 7
50		-	(1) whether a corporation qualifies under (a)(5) of this section shall be 8
51		-	determined on the first day of the tax year for which the corporation claims it qualifies 9
52		-	under (a)(5) of this section; 10
53		-	(2) all corporations that are members of the same parent-subsidiary 11
54		-	controlled group shall be treated as one corporation. 12
55		-	(f) The total amount of tax foregone by the state under (a)(5) of this section 13
56		-	may not exceed $2,700,000 each calendar year. If the total amount of tax foregone 14
57		-	under (a)(5) of this section exceeds $2,700,000 in a calendar year, the department shall 15
58		-	allocate the tax exemption in order of returns received that year. 16
59		-	(g) The department shall notify a known corporation that qualifies under (a)(5) 17
60		-	of this section at least one year before the expiration of the exemption under (a)(5) of 18
61		-	this section. 19
62		-	(h) In this section, 20
63		-	(1) "Alaska corporation" means a corporation that has been 21
64		-	incorporated in the state or is authorized to do business in the state; 22
65		-	(2) "parent-subsidiary controlled group" has the meaning given in 26 23
66		-	U.S.C. 1202, as that section read on January 1, 2012; 24
67		-	(3) "qualified small business" has the meaning given in 26 U.S.C. 25
68		-	1202, as that section read on January 1, 2012, and does not include a construction, 26
69		-	transportation, utility, or fisheries business. 27
70		-	* Sec. 3. AS 43.98 is amended by adding new sections to read: 28
71		-	Sec. 43.98.031. Film production tax credit. (a) In cooperation with the film 29
72		-	production promotion program, the department shall provide a transferable film 30
73		-	production tax credit to a producer for qualified production expenditures. 31 34-LS0641\N
74		-	HB0113b -3- CSHB 113(L&C)
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77		-	(b) A tax credit provided under (a) of this section may be sold, assigned, 1
78		-	exchanged, conveyed, or otherwise transferred in whole or in part. 2
79		-	(c) A taxpayer acquiring a transferable credit may use the credit or a portion of 3
80		-	the credit to offset taxes imposed under AS 43.20 (Alaska Net Income Tax Act). Any 4
81		-	portion of the credit not used may be used at a later period or transferred under (b) of 5
82		-	this section. 6
83		-	(d) The department shall adopt regulations necessary for the administration of 7
84		-	this section. 8
85		-	(e) A credit provided under (a) of this section, whether sold, assigned, 9
86		-	exchanged, conveyed, or otherwise transferred, in whole or in part, must be used 10
87		-	within three years after being provided by the department. 11
88		-	(f) The number of tax credits provided in the aggregate under this section may 12
89		-	not exceed $20,000,000. 13
90		-	Sec. 43.98.032. Eligibility. (a) A film production is eligible for a tax credit 14
91		-	under AS 43.98.031 if the producer has $100,000 or more in qualified expenditures, as 15
92		-	determined under AS 43.98.036, in a consecutive 24-month period. 16
93		-	(b) The following productions are not eligible, regardless of the production 17
94		-	costs: 18
95		-	(1) news, weather, or current events programming; 19
96		-	(2) a production produced primarily for industrial, corporate, or 20
97		-	institutional purposes, and for internal use; 21
98		-	(3) an advertisement, infomercial, or any other production that solicits 22
99		-	funds, except for a commercial television advertisement produced for national 23
100		-	distribution; or 24
101		-	(4) a political advertisement. 25
102		-	Sec. 43.98.033. Qualification for film production tax credit. (a) A film 26
103		-	producer may apply for the film production tax credit under AS 43.98.031 by 27
104		-	submitting an application to the film production promotion program. The application 28
105		-	must include 29
106		-	(1) a script or synopsis of the production; 30
107		-	(2) the names of the producer, director, and proposed cast; 31 34-LS0641\N
108		-	CSHB 113(L&C) -4- HB0113b
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111		-	(3) estimated start, completion, and filming dates; and 1
112		-	(4) other information the film production promotion program may 2
113		-	require to determine the producer's eligibility for a credit and the estimated amount of 3
114		-	the credit. 4
115		-	(b) If the film production promotion program approves an application 5
116		-	submitted under (a) of this section, the film production promotion program shall issue 6
117		-	a notice of qualification to the producer. The notice of qualification must include a 7
118		-	determination by the film production promotion program of the estimated film 8
119		-	production tax credit for which the production qualifies. 9
120		-	Sec. 43.98.034. Award of film production tax credit. (a) Subject to 10
121		-	AS 43.98.031(f), the film production promotion program, in cooperation with the 11
122		-	department, shall determine the amount of the tax credit under AS 43.98.031 available 12
123		-	to a producer who has obtained a notice of qualification under AS 43.98.033(b), based 13
124		-	on the qualified expenditures of the production under AS 43.98.036. 14
125		-	(b) The base amount of a tax credit awarded under this section is equal to 25 15
126		-	percent of the qualified expenditures of the production. 16
127		-	(c) In determining the amount of the tax credit, the percentage provided by (b) 17
128		-	of this section shall be increased by the film production promotion program based on 18
129		-	the following criteria: 19
130		-	(1) an additional 5 percent of qualified expenditures that are wages 20
131		-	paid to Alaska residents; 21
132		-	(2) an additional two percent of qualified expenditures made in a rural 22
133		-	area; and 23
134		-	(3) an additional two percent of qualified expenditures made in the 24
135		-	state between October 1 and March 30. 25
136		-	(d) After completion of the production, the producer shall provide the film 26
137		-	production promotion program with a production cost report detailing the qualified 27
138		-	expenditures of the production, with verification by an independent certified public 28
139		-	accountant approved by the film production promotion program that the costs claimed 29
140		-	in the report are qualified expenditures under AS 43.98.036.
141		-	30
142		-	(e) Subject to (g) of this section, the film production promotion program, in 31 34-LS0641\N
143		-	HB0113b -5- CSHB 113(L&C)
144		-	New Text Underlined [DELETED TEXT BRACKETED]
145		-
146		-	cooperation with the department, shall determine the amount of the tax credit based on 1
147		-	the information provided by the producer under (d) of this section and shall award a 2
148		-	tax credit in cooperation with the department if the producer has satisfied all 3
149		-	requirements under AS 43.98.031 - 43.98.038. 4
150		-	(f) The award of a tax credit under this section is conditioned on the 5
151		-	producer's and the production's full compliance with all applicable state laws and 6
152		-	regulations. At the request of the film production promotion program, a producer shall 7
153		-	provide any information necessary for the film production promotion program to 8
154		-	determine the producer's and production's compliance with this subsection. 9
155		-	(g) In determining the amount of a tax credit awarded under this section, the 10
156		-	film production promotion program may reduce the amount of the tax credit by any 11
157		-	amount the film production promotion program considers necessary to allow the state, 12
158		-	or a political subdivision of the state, to recover the cost of any damages caused by 13
159		-	any act or omission of the producer or production. 14
160		-	(h) The film production promotion program, in cooperation with the 15
161		-	department, may withhold the award of a tax credit under this section if the program 16
162		-	determines that there are filed, but unresolved, legal actions in the state involving the 17
163		-	producer or production. 18
164		-	(i) To qualify for the tax credit under AS 43.98.031, a producer shall include, 19
165		-	in the end credits of each qualified film, the logo designed under former 20
166		-	AS 44.25.105(b) and the words, "Filmed in Alaska with the Support of the State of 21
167		-	Alaska." 22
168		-	Sec. 43.98.036. Determination of qualified expenditures. (a) Expenditures 23
169		-	made by a production company in connection with a film production approved by the 24
170		-	film production promotion program that shall be considered qualified expenditures 25
171		-	must be directly related to the production and be incurred in the state. Only 26
172		-	expenditures that are ordinary, reasonable, and not in excess of fair market value and 27
173		-	that are for real or tangible property, fees, services, or state or municipal taxes shall be 28
174		-	considered. Expenditures may include 29
175		-	(1) costs of set construction and operation; 30
176		-	(2) costs of wardrobes, make-up, accessories, and related services;
177		-	31 34-LS0641\N
178		-	CSHB 113(L&C) -6- HB0113b
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180		-
181		-	(3) costs associated with photography and sound synchronization; 1
182		-	(4) costs of lighting and related services and materials; 2
183		-	(5) costs of editing and related services; 3
184		-	(6) rental of facilities and equipment; 4
185		-	(7) leasing of vehicles; 5
186		-	(8) costs of food and lodging; 6
187		-	(9) costs of digital or tape editing, film processing, transfer of film to 7
188		-	tape or digital format, sound mixing, and special and visual effects; 8
189		-	(10) the total aggregate payroll for services performed in Alaska, 9
190		-	including all salaries, wages, compensation, and related benefits provided to 10
191		-	producers, directors, writers, actors, and other personnel that are directly attributable 11
192		-	to services performed in Alaska; 12
193		-	(11) the costs of the use of an Alaska business for processing qualified 13
194		-	payroll and related expenditures; 14
195		-	(12) costs of music, if performed, composed, or recorded by an Alaska 15
196		-	musician, or released or published by an Alaska business; 16
197		-	(13) costs of intrastate travel, if provided by an Alaska business; 17
198		-	(14) costs relating to the design, construction, improvement, or repair 18
199		-	of a film, video, television, or digital production or postproduction facility or related 19
200		-	property, infrastructure, or equipment, except commercial exhibition facilities, as 20
201		-	determined by the film production promotion program; or 21
202		-	(15) other similar production expenditures as determined by the film 22
203		-	production promotion program in cooperation with the Department of Revenue. 23
204		-	(b) Production costs that may not be considered qualified expenditures include 24
205		-	(1) costs related to the acquisition, determination, transfer, or use of a 25
206		-	film production tax credit under AS 43.98.031; 26
207		-	(2) postproduction expenditures for marketing and distribution; 27
208		-	(3) production financing, depreciation, and amortization costs, and 28
209		-	other costs that are not cash or cash equivalent expenditures directly attributable to 29
210		-	production costs incurred in the state; 30
211		-	(4) amounts that are later reimbursed or reasonably anticipated to be 31 34-LS0641\N
212		-	HB0113b -7- CSHB 113(L&C)
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214		-
215		-	reimbursed, resulting in a reduction in production costs; 1
216		-	(5) amounts that are reasonably anticipated to be recovered through 2
217		-	subsequent sale or other realization of value by disposal of an asset that has been 3
218		-	claimed as a qualified expenditure; 4
219		-	(6) amounts that are paid to a person or entity as a result of 5
220		-	participation in profits from the exploitation of the production; 6
221		-	(7) costs incurred in the purchase of real or tangible property for which 7
222		-	a qualified expenditure has, at any time, been claimed. 8
223		-	Sec. 43.98.037. Recovery of film production tax credit. (a) The film 9
224		-	production promotion program, in cooperation with the department, may review, 10
225		-	audit, and bring legal proceedings to recover any amount of a tax credit awarded under 11
226		-	AS 43.98.034 from a producer or production to which a credit was awarded if the film 12
227		-	production promotion program determines that the film producer or production is 13
228		-	liable for damages to the state, or any political subdivision of the state. 14
229		-	(b) Legal proceedings may not be brought under (a) of this section more than 15
230		-	one year after the date the tax credit was awarded under AS 43.98.034. 16
231		-	Sec. 43.98.038. Definitions. In AS 43.98.031 - 43.98.038, 17
232		-	(1) "Alaska business" means 18
233		-	(A) a person who holds a current Alaska business license; 19
234		-	(B) a person who provides goods or services under the name as 20
235		-	appearing on the person's current Alaska business license; 21
236		-	(C) a person who has maintained a place of business within the 22
237		-	state staffed by the person or an employee of the person for a period of six 23
238		-	months immediately preceding the date the goods or services were provided; 24
239		-	(D) a person who is 25
240		-	(i) incorporated or qualified to do business under the 26
241		-	laws of the state; 27
242		-	(ii) a sole proprietorship, and the proprietor is a resident 28
243		-	of the state; 29
244		-	(iii) a limited liability company organized under 30
245		-	AS 10.50, and all members are residents of the state; or 31 34-LS0641\N
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249		-	(iv) a partnership under former AS 32.05, AS 32.06, or 1
250		-	AS 32.11, and all partners are residents of the state; and 2
251		-	(E) if the business is a joint venture, a joint venture composed 3
252		-	entirely of ventures that qualify under (A) - (D) of this subsection; 4
253		-	(2) "department" means the Department of Revenue; 5
254		-	(3) "film" includes television, commercials, and videos; 6
255		-	(4) "film production promotion program" means the film production 7
256		-	promotion program created under AS 44.33.231; 8
257		-	(5) "producer" means a person who arranges financing for or 9
258		-	supervises the production of a film, video, commercial, or television production or 10
259		-	pilot; 11
260		-	(6) "rural area" means a community with a population of 1,500 or less 12
261		-	or a community with a population of 7,500 or less that is not connected by road or rail 13
262		-	to Anchorage or Fairbanks. 14
263		-	* Sec. 4. AS 44.33.231(b) is amended to read: 15
264		-	(b) The purpose of the film production promotion program is to 16
265		-	(1) work with organizations in the private sector for the expansion and 17
266		-	development of film production industries in the state; 18
267		-	(2) promote Alaska as an appropriate location for film production; 19
268		-	(3) provide production assistance through connecting film directors, 20
269		-	makers, and producers with Alaska location scouts and contractors, including 21
270		-	contractors providing assistance with permit applications; [AND] 22
271		-	(4) certify Alaska film production internship training programs and 23
272		-	promote the employment of program interns by eligible productions; and 24
273		-	(5) in cooperation with the Department of Revenue, administer the 25
274		-	Alaska film production promotion program. 26
275		-	* Sec. 5. AS 44.33.231 is amended by adding new subsections to read: 27
276		-	(d) Subject to appropriations for the purpose, the film production promotion 28
277		-	program shall administer, in cooperation with the Department of Revenue, the Alaska 29
278		-	film production promotion program to provide a tax credit under AS 43.98.031 for 30
279		-	certain film production expenditures incurred in the state. 31 34-LS0641\N
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282		-
283		-	(e) The film production promotion program, in cooperation with the 1
284		-	Department of Revenue, may adopt procedures and regulations to carry out its 2
285		-	functions under this section. 3
286		-	* Sec. 6. AS 43.20.012(a)(5), 43.20.012(e), 43.20.012(f), 43.20.012(g), and 43.20.012(h) 4
287		-	are repealed July 1, 2035. 5
288		-	* Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 6
289		-	read: 7
290		-	APPLICABILITY. AS 43.20.012(a), as amended by sec. 1 of this Act, and 8
291		-	AS 43.20.012(e) - (h), enacted by sec. 2 of this Act, apply to the tax year of a corporation 9
292		-	beginning on or after the effective date of this Act and before the repeal in sec. 6 of this Act. 10
293		-	* Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 11
294		-	read: 12
295		-	NOTIFICATION. When the number of tax credits provided under AS 43.98.031(f), 13
296		-	enacted by sec. 3 of this Act, in the aggregate and the estimated amount of tax credits that 14
297		-	could be claimed based on notices of qualification issued by the film production promotion 15
298		-	program under AS 44.33.234(b), together equal $20,000,000, the commissioner of revenue 16
299		-	shall notify the presiding officers of each house of the legislature in writing. 17
300		-	* Sec. 9. This Act takes effect immediately under AS 01.10.070(c). 18
	45	+	(5) an Alaska corporation that is a qualified small business and 1
	46	+	that meets the active business requirements in 26 U.S.C. 1202(e), as that 2
	47	+	subsection read on January 1, 2012. 3
	48	+	* Sec. 2. AS 43.20.012 is amended by adding new subsections to read: 4
	49	+	(e) For the purposes of (a)(5) of this section, 5
	50	+	(1) whether a corporation qualifies under (a)(5) of this section shall be 6
	51	+	determined on the first day of the tax year for which the corporation claims it qualifies 7
	52	+	under (a)(5) of this section; 8
	53	+	(2) all corporations that are members of the same parent-subsidiary 9
	54	+	controlled group shall be treated as one corporation. 10
	55	+	(f) In this section, 11
	56	+	(1) "Alaska corporation" means a corporation that has been 12
	57	+	incorporated in the state or is authorized to do business in the state; 13
	58	+	(2) "parent-subsidiary controlled group" has the meaning given in 26 14
	59	+	U.S.C. 1202, as that section read on January 1, 2012; 15
	60	+	(3) "qualified small business" has the meaning given in 26 U.S.C. 16
	61	+	1202, as that section read on January 1, 2012, and does not include a construction, 17
	62	+	transportation, utility, or fisheries business. 18
	63	+	* Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to 19
	64	+	read: 20
	65	+	APPLICABILITY. AS 43.20.012(a), as amended by sec. 1 of this Act, and 21
	66	+	AS 43.20.012(e) and (f), enacted by sec. 2 of this Act, apply to the tax year of a corporation 22
	67	+	beginning on or after the effective date of this Act. 23
	68	+	* Sec. 4. This Act takes effect immediately under AS 01.10.070(c). 24