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Senate hears bill to tax oil‑and‑gas S‑corporations; industry groups urge opposition (SB92)
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Summary
Senate Bill 92 would update Alaska's tax treatment of S corporations and other pass‑through entities in the oil and gas sector, applying a structure that proponents say closes a gap and opponents call targeted and retroactive. The committee heard testimony from the sponsor, a CPA modeler and multiple industry groups and set the bill aside for a
Juneau — The Senate Finance Committee heard Senate Bill 92 on April 9, a proposal to expand Alaska's corporate income tax to S corporations and other pass‑through entities engaged in oil and gas activity. Sponsor Senator Kathy Giesel said the measure is an update to tax law rather than a new tax and described it as a means to tax pass‑through oil‑and‑gas income more like traditional C corporations.
"This would put in place an updated S corporation tax structure for Alaska," Senator Kathy Giesel said in her presentation. "I will emphasize this is not a new tax." The bill would apply to pass‑through entities that produce or transport oil and gas in the state and includes a roughly $5,000,000 exemption/deduction threshold in the sponsor's presentation before higher rate brackets apply.
Sponsor materials cited prior state reviews recommending closure of the pass‑through gap; a January 2021 indirect expenditure report recommended action and a 2021 fiscal working group estimated a first‑year revenue effect in the tens of millions of dollars. Giesel and staff cautioned they do not have access to taxpayer‑specific Department of Revenue data because of confidentiality rules, so the number of affected entities is not publicly known.
John Letourneau, a certified public accountant who provided invited testimony, illustrated a hypothetical: using a $1 billion taxable‑income example, a similarly situated C corporation would pay roughly $94 million under current law, while an S corporation under current Alaska law would pay zero; under the sponsor's proposed structure for pass‑through oil and gas entities, that same hypothetical S corporation would pay an amount close to the C corporation level after accounting for the proposed exemption threshold.
Industry groups testified in opposition. Kara Moriarty, president and CEO of the Alaska Oil and Gas Association (AOGA), said SB92 "imposes a new discriminatory and retroactive income tax on a select group of firms in the oil and gas industry," warned of investor confidence and competitiveness effects, and urged the committee to set the bill aside. Leila Kimbrell of the Resource Development Council also urged opposition, calling the measure "targeted, discriminatory, and retroactive" and arguing it would deter investment and reduce production and associated state revenue.
Public comment included support from Doug Woodby, who said the bill "honors the Alaska Constitution" by seeking additional public benefit from resource development and that Alaska needs revenue to support public services.
Why it matters: SB92 would change how pass‑through oil and gas entities are taxed in Alaska and could raise state revenue if enacted; opponents argue it is a targeted, retroactive tax that would undermine investment and production.
Next steps: The committee closed the initial public hearing on SB92 and set the bill aside for future hearings; senators and stakeholders flagged the need for further modeling and fiscal analysis and raised constitutional and competitiveness concerns.
