(a) A taxpayer that owns an in-state oil refinery whose primary function is the manufacturing and sale of refined petroleum products to third parties in arm's length transactions may apply a credit against the tax due under this chapter for a qualified infrastructure expenditure incurred in the state for a tax year beginning after December 31, 2014, and before January 1, 2020. The total amount of credit a taxpayer may receive under this section may not exceed the lesser of 40 percent of qualified infrastructure expenditures incurred in the state during the tax year or $10,000,000 for each in-state refinery for which qualified expenditures are incurred.

(b) A taxpayer applying the credit under this section against a liability under this chapter shall claim the credit on the taxpayer's return. A tax credit or portion of a tax credit under this section may not be used to reduce the taxpayer's tax liability under this chapter below zero. Any unused tax credit or portion of a tax credit under this section may be carried forward to the five tax years immediately following the tax year in which the qualified infrastructure expenditures were incurred.

(c) An expenditure that is the basis of the credit under this section may not be the basis for

(1) a deduction against the tax levied under this chapter;

(2) a credit or deduction under another provision of this title; or

(3) any federal credit claimed under this title.

(d) A person entitled to a tax credit under this section that is greater than the person's tax liability under this chapter may request a refund or payment in the amount of the unused portion of the tax credit.

(e) Subject to the requirements in AS 43.55.028, the department may use either money available in the oil and gas tax credit fund established in AS 43.55.028 or, subject to appropriation by the legislature, money disbursed to the commissioner for refunds and payments under AS 43.55.028 from the Alaska Tax Credit Certificate Bond Corporation reserve fund established in AS 37.18.040, or both, to make a refund or payment under (d) of this section in whole or in part if the department finds that, after application of all available tax credits, the claimant's total tax liability under this chapter for the calendar year in which the claim is made is zero.

(f) A refund under this section does not bear interest.

(g) If an oil refinery ceases commercial operation during the nine calendar years immediately following the calendar year in which a credit under this section was received, regardless of whether commercial operation later resumes, the taxpayer's tax liability under this chapter will be increased. The tax liability increase is equal to the total amount of credit taken multiplied by a fraction

(1) the numerator of which is the difference between 10 and the number of calendar years for which the oil refinery was eligible for a credit under this section; and

(2) the denominator of which is 10.

(h) A person claiming a tax credit under this section for an oil refinery that ceases commercial operation or is sold during the nine calendar years immediately following the calendar year in which a credit under this section was received shall notify the department in writing of the date the oil refinery ceased commercial operation or was sold. The notice must be filed with the return for the tax year in which the oil refinery ceases commercial operation or was sold.

(i) The issuance of a refund under this section does not limit the department's ability to later audit or adjust the claim as provided in AS 43.05 if the department determines that the taxpayer claiming the credit was not entitled to the amount of the credit.

(j) In this section,

(1) “modification” means an adjustment or other alteration to existing tangible personal property that has a useful life of three years or more;

(2) “qualified infrastructure expenditure” means an expenditure for the in-state purchase, installation, or modification of tangible personal property for the in-state manufacture or in-state transport of refined petroleum products, or petroleum-based feedstock;

(3) “refined petroleum products” means separate marketable elements, compounds, or mixtures of oil in liquid form, including gasoline, diesel, jet fuel, gas oil, heating oil, and kerosene;

(4) [Repealed, § 33, ch. 4, 4SSLA 2016.]