By Maria T. Albanese, JD, LL.M, Checkpoint News

The Alaska Supreme Court affirmed the Alaska Superior Court’s decision upholding the Alaska Department of Revenue’s (DOR) denial of the Municipality of Anchorage’s claimed tax credits. The Municipality of Anchorage owned a one-third interest in a gas field that produced natural gas. Under Alaska law, municipalities are generally exempt from production taxes but Alaska Stat. § 43.55.895 taxes municipal gas only when sold to others, thus making municipal producers eligible for tax credits “to the same extent as any other producer.” For two tax years, the municipality sold less than 1% of its gas and used the rest for municipal electricity. The municipality applied for tax credits and calculated them based on costs for producing all of its gas against the very small amount of gas it actually paid taxes on, which yielded sizeable tax credits. The DOR rejected the claims, calculating credits based on the full value of all gas produced, and the municipality appealed, arguing that the DOR’s interpretation was invalid because it amounted to a new regulation not adopted through formal rulemaking. (Municipality of Anchorage v. Alaska Dept. of Rev., Alaska S. Ct., Dkt. No. S-18923, 04/17/2026.)

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