Alaska Mining License Tax Return Instructions

Mining License Tax Return Instructions
Form 662i
What’s New

Instructions for Form 662
Alaska Mining License Tax Return

Taxpayers Are Required to File Electronically

Taxpayers are required to file electronically all tax returns and reports, unless a taxpayer applies for and is granted a waiver from
that requirement, according to Alaska Statutes 43.05.045.
The Alaska Department of Revenue’s Tax Division has electronic
filing through Revenue Online, an online portal where taxpayers
can file and pay tax returns, view tax accounts and balances, apply for licenses, upload documents, and conduct other business
with the Tax Division.
Revenue Online allows the Tax Division to process refunds faster,
communicate with taxpayers quicker, and to more efficiently account for information it’s required to report to the Alaska Legislature.

Extension of Time to File

Upon application, the Tax Division will, at its discretion, grant an
extension of time to file a mining license tax return. The Application
for Extension of Time to File (Form 668) can be found on the Tax
Division’s website at www.tax.alaska.gov.
An application for an extension of time for filing a return must be
filed with the Tax Division no later than the date the return is due,
and must include a complete statement of the reasons for the
request for an extension.
An extension of time for filing the return does not extend the time
for payment of the total amount of tax due.

Avoid Common Mistakes
To facilitate the processing of your return, be sure to do the
following:

See page 2 for more information on the waiver and potential penalty.

1.

Use the correct form. If you have more than one mining
license, you must use Form 662.

General Information

2.

Use this form to calculate the Alaska mining license tax on all mining
operations conducted during the tax year in Alaska, including
operating and royalty interests. A mining operation is an operation
by which valuable metals, ores, minerals, asbestos, gypsum, coal
or stone, or any of them are extracted, mined or taken from the
earth. A mining operation consists of a single mining property or
several mining properties that are connected geographically.

File with the correct taxpayer name. If you are filing
as an individual, you must use the name reported on
your 1040 federal return. If you are filing as a company,
use the same name as it appeared on the prior mining
license tax return. If the company name has changed,
please call us.

3.

Provide the correct federal employer identification
number (FEIN) or Social Security number (SSN).

4.

Who must file a mining license tax return?

Fill in the Month/Day and Year to indicate for which tax
period you are filing. Example: 12/31, plus prior year, if
you are a calendar-year filer.

5.

Provide the name and phone number of a contact person who is authorized to answer any questions the Tax
Division may have regarding the return. The contact
person must be an officer or employee who is authorized to answer any such questions. The Tax Division
cannot discuss taxpayer information with an outside
party unless we have received a Power of Attorney.

6.

Only use U.S. dollars when reporting income and expenses. This includes, but is not limited to, royalties
paid and royalties received. Do not use ounces or
any other unit of measure unless the line item indicates units are to be used.

7.

If you have multiple licenses, file a separate schedule
for each license. Do not use the same mining license
number on more than one schedule.

8.

Attach schedules as required by the forms. Schedules providing detail are required as explained in the
instructions. Attaching complete schedules will ensure
a valid filing and prevent unnecessary correspondence
with the Tax Division. Be sure that attached schedules
are properly referenced and agree to the totals reported on the form.

9.

Sign the return. The return is not valid until it has been
signed. The return must be signed and dated by a person legally authorized to do so.

Mining License Tax Return – Form 662

A person engaged in one or more of the following activities in the
state is in the business of mining and shall obtain a mining license
and file a mining license tax return:
1.	 A person owning and/or operating a mining property.
2.	 A person owning a mining property and receiving lease
payments or royalty payments based on production
from the property.
3.	 A person leasing a mining property.
4.	 A person possessing a mineral interest, whether
an economic or production interest, in a producing
property, including royalty, working or operating
interests, net profits, overriding royalties, carried
interests and production payments.
Note: Mining license applications are due each year and are filed
separately from the mining license tax return. Please use Form
661 to apply for a mining license.

Return Due Date

A taxpayer shall file the return either on a calendar-year or fiscalyear basis, in conformance with the basis used in making the
return for federal income tax purposes. An entity with a calendar
year-end shall file a return on or before April 30 of the following
calendar year. An entity with a fiscal year-end shall file a return on
or before the last day of the fourth month following the end of the
fiscal year.

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How and Where to File and Pay
Filing Your Return

For the notification, prepare a payment voucher on Revenue
Online, and email it to [email protected]. The
notice must include the taxpayer’s name, total payment amount,
settlement date, tax type, purpose of the payment, and that the
funds are for the Department of Revenue. If your payment covers
multiple tax periods, prepare a separate voucher for each period.

Failure to file electronically may result in a penalty. The penalty is
(the greater of) $25 or 1% of the total tax due before payments are
applied. (See AS 43.05.045 and As 43.05.220(f).)

Contact the Treasury Division for the State of Alaska’s bank
information at [email protected] or 907.465.2320.
Ask your bank to initiate a wire transfer of funds through the
Federal Reserve wire transfer system to be received and credited
to the State of Alaska.

As mentioned earlier, a taxpayer is required to electronically file all
returns and reports electronically using Revenue Online at www.
tax.alaska.gov, unless the Tax Division grants a waiver from the
requirement. The requirement became effective July 1, 2016.

A taxpayer may apply for a waiver if the taxpayer does not have
the capability to file electronically. A waiver may be requested by
filing an Electronic Filing Waiver Application (Form 773) at least 30
days before the due date of the tax return and before the return is
filed. Do not submit the waiver request with the return.
If the Tax Division approves the waiver, please mail the tax return
with attachments to:
	
	
	
	

Tax Division
Alaska Department of Revenue
PO Box 110420
Juneau, AK 99811-0420

Note: Filing a paper return without an approved waiver may result
in a penalty. See this Filing Your Return section, and the Penalties
section to the right.

How to Pay

You may pay your taxes electronically through Revenue Online at
http://online-tax.alaska.gov, or access it from our home page at
www.tax.alaska.gov. You may also pay by wire transfer or mail
in a check.
Note: If your payment is $150,000 or more, you must pay
electronically through Revenue Online or by a wire transfer. See
Alaska Administrative Code 15 AAC 05.310 for more information.

Pay Electronically

Revenue Online uses Automated Clearing House (ACH)
debit payments. It does not accept credit cards or ACH credit
transactions.

If you don’t have email or want confirmation that a wire transfer
was successful, call 907.465.2360.

Pay by Check

Make checks payable to the State of Alaska. If you are filing your
tax return through Revenue Online, please print off a payment
voucher to mail in with your check. If you have been granted an
electronic filing waiver, mail your check with your tax return. In
both cases, please mail to:
		
		
		
		

Tax Division
Alaska Department of Revenue
PO Box 110420
Juneau, AK 99811-0420

Penalties
Late Filing of a Return

Returns not filed by the due date are subject to a failure to file
penalty of 5% of the unpaid tax for each 30-day period or portion
of a period the return is late, up to a maximum of 25%.

Late Payment of Tax

If the full amount of tax is not paid by the original due date of
the return, even if an extension to file was granted, the return is
subject to a failure to pay penalty of 5% of the unpaid tax for each
30-day period or portion of a period the payment is late, up to a
maximum of 25%. An extension to file is not an extension to pay
taxes. If, during any period or portion of a period, both the failure
to file and failure to pay penalties are applicable, only the failure to
file penalty is imposed.

If you are making a payment using Revenue Online for the first time,
click on “Enroll Now” on the sign-in page and follow the prompts.
If you have questions, call the Tax Division at 907.269.0041 or
907.269.6627.

Interest

Check with your bank before setting up a debit (ACH) payment to
determine if your account has a debit block. Debit blocks (or filters)
control electronic transactions posted to bank accounts and only
accept transactions from authorized ACH debit originators.

Failure to File Electronically

If you have a debit block on your account, you must ask your bank
to list the State of Alaska as an authorized ACH debit originator on
your account, and give your bank the Department of Revenue’s
company ID (0000902050). If you don’t give that information to
your bank, your bank will reject your tax payment, and rejected
payments may result in late payment penalties and interest.

Pay by Wire Transfer

To make a payment by wire transfer, you must notify the Department
of Revenue, Treasury Division, by 2:00 p.m. Alaska Time the
business day prior to the wire transfer settlement date.

Under Alaska Statute 43.05.225, interest will be assessed on any
unpaid or delinquent tax. For current and historical rates, refer to
our website at www.tax.alaska.gov.
As stated earlier, failure to file electronically without an approved
waiver may result in a penalty. The penalty is (the greater of) $25
or 1% of the total tax due before payments are applied. (See AS
43.05.045 and AS 43.05.220(f).)
	

Line-by-Line Instructions

Note: Report all income and expenses in U.S. dollars.
If your mine was inactive for the season and you were licensed,
you are still required to file a return. Complete the return placing
zeroes where appropriate.

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Page 1
Line 1 – Enter the aggregate amount of taxable income from all
mining operations as reported on line 8 of each Schedule A.
Line 2 – Computation of tax. If line 1 is:
• $40,000 or less: the tax is zero.
• Over $40,000 and less than or equal to $50,000: the
tax is $1,200 plus 3% of the excess over $40,000.
• Over $50,000 and less than or equal to $100,000: the
tax is $1,500 plus 5% of the excess over $50,000.
• Over $100,000: the tax is $4,000 plus 7% of the excess
over $100,000.
Line 3 – Exploration incentive credit. Enter the amount from line 5
of Form 665 Exploration Incentive Credit.
Line 4 – Enter the amount, if any, from line 4 of Schedule EC Mining
License Tax Education Credit. Contributions used to calculate a
credit against any other taxes (such as Alaska corporation net
income tax) cannot be used as a credit against the Mining License
Tax.
Line 6 – Film production tax credit. Enter the amount of the film
production tax credit from the certificate issued by the Department
of Revenue. You must attach the original certificate to the tax
return.
Line 7 – Enter the amount you paid with your extension, if
applicable.

consideration received for mined materials. Include the value of
mined materials when the mined materials were traded for labor.
Line 2 – Royalties received. Enter the total amount of royalties
received from the mining operation identified at the top of the
schedule. Complete Schedule F and include the lessee’s name,
address and federal identification number.
Line 7 – Exemption for new mining operation. An exemption from
the mining license tax is allowed for three and one-half (3½) years
after initial commercial production begins on the property if the Tax
Division has issued a certificate of exemption. Please contact the
division at 907.269.6620 with questions regarding the exemption.

Schedule B – Depletion
A separate Schedule B must be completed for each mining
operation to calculate the allowable depletion deduction. Enter
only amounts attributable to the mining operation identified at the
top of this page.
Line 1 – Cost or basis of mining property (less residual value).
Enter the purchase cost of the property, plus all development costs
incurred while the property was in the development stage, less
the amount of cost or percentage depletion previously taken as a
deduction for this property.
Line 2 – Estimated recoverable units at the beginning of the tax
year. Enter the estimated recoverable reserves remaining at the
end of the tax year plus the units sold in the tax year.

Line 8 – If filing an amended return, enter the total amount of
tax paid on the original return and/or previous amendments.
Otherwise, enter zero.

Line 3 – Unit cost. Enter the quotient of line 1 divided by line 2.
This gives the unit cost.

Line 9 – Net tax due or (overpayment). Subtract lines 6, 7 and 8
from line 5.

Line 4 – Number of units sold this tax period. Enter the total
number of units sold during the reporting period. Use the same
unit measure as the prior year. This line must be filled out.

Schedule A – Taxable Income from Mining
Operation

Line 5 – Cost depletion deduction. Enter the product of line 3
multiplied by line 4.

A separate Schedule A must be completed for each mining
operation. Taxable income must be calculated for each mining
operation separately. Examples of mining operations are as
follows:

Line 6 – Gross income and royalties received from mining
operations. Enter the sum of Schedule A, lines 1 and 2.

Example 1: Company A is a gold dredging operator that owns or
leases three properties. The properties are joined contiguously and
lie within a single river valley. Company A acquires an additional
lease that shares a common boundary with the other properties.
Company A is engaged in a single mining operation that includes
the four properties. Company A is required to file a single Schedule
A to report the taxable income from its operation.

Line 8 – Depletion base. Subtract line 7 from line 6.

Example 2: Company B owns and operates property P1, a
producing placer mine in Southeast Alaska, receives a royalty from
property P2 located in Fairbanks, and is developing property P3,
a potential placer mine near Anchorage. Company B is engaged
in three separate mining operations and must file a separate
Schedule A to calculate taxable income from each operation.
Line 1 – Gross income from mining operation. Enter the gross
income from the mining operation identified at the top of the
schedule. Gross income is the sale price or value actually received,
including cash, credits, in-kind exchange and other valuable

Line 7 – Royalties paid. Enter the total from Schedule E, line 6.

Line 9 – Enter the applicable depletion percentage.
Depletion percentages to be used:
10%
15%

23%

Coal mines
Metal mines, fluorspar, flake graphite,
vermiculite, beryl, feldspar, mica, talc,
lepidolite, spodumene, barite, ball and sagger
clay, or rock asphalt mines and potash mines
or deposits
Sulphur mines or deposits

If the material mined is not listed above, enter 0 on line 9.
Line 10 – Percentage depletion. Multiply line 8 by line 9 and enter
the result here.
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Line 14 – Limitation. Multiply line 13 by 50%. The percentage
depletion is limited to 50% of net income from the property before
the depletion deduction.

Line 12 – Total direct mining expenses of all mining operations.

Line 15 – Compare the amounts on lines 10 and 14 and enter
whichever is less.

Line 13 – Total direct non-mining expenses from all non-mining
activities. Enter the total direct non-mining expenses incurred from
business activities that are non-mining but share indirect expenses
with the mining operation(s).

Line 16 – Depletion deduction. Compare the amounts on lines
5 and 15 and enter whichever is greater here. The depletion
deduction is the greater of cost or percentage depletion calculated
each year.

Schedule C – Mining Expenses
Complete a separate Schedule C for each mining operation.
Royalty recipients cannot take any expenses except for
depletion.

Direct Mining Expenses

Direct mining expenses are fully deductible against mining gross
income. Only those expenses related to the extraction of the mined
material, transportation of the material to the point of ordinary
treatment processes, and the ordinary treatment process itself are
deductible. Included in this category of expenses are maintenance
and repairs, and salaries and wages paid to those engaged in the
extraction, transportation and ordinary treatment processes of the
mined material.
Line 1 – Royalties paid. Enter the total amount of royalties (cash,
credits, in-kind exchanges and other valuable consideration) paid.
If the payment was in kind (in minerals, for example), include the
fair market value of the minerals on the date that the payment
was made. Complete Schedule E and include the lessor’s
name, address and Social Security number or federal employee
identification number and the amount of royalty paid.
Line 3 – Current development costs. If a mining property is in the
development stage, all development costs that are in excess of net
income from the sale of mined materials must be included in the
mine’s basis and are recoverable through the depletion allowance.
Development expenses incurred after the mine has reached the
production stage are deductible as a current operating cost. A
mine is considered to be in the production stage when the principal
activity becomes the production of ore from the property rather
than the development of the ore body (15 AAC 65.125).
Line 8 – Depreciation. Depreciation on all mining equipment,
buildings and other facilities located in Alaska is allowed as a
deduction. A property’s basis for computing depreciation is the
adjusted basis of the asset for federal income tax purposes on
the date the asset is placed in service in Alaska. Depreciation on
mining assets may be computed using any of the methods allowed
under secs. 167 and 168 of the Internal Revenue Code (26 U.S.C.
167 and 168). In place of the depreciation expense deduction, a
person may elect to amortize the cost of pollution control facilities
used in the mining operation in accordance with sec. 169 of the
Internal Revenue Code (26 U.S.C 169) (15 AAC 65.125(b)(2)(f)).
Line 9 – Other expenses. Enter the amount of other expenses
directly related to the mining operation. Attach a separate schedule
itemizing the type and amount of other mining expenses that are
not included on lines 1 through 8.

Tip: This line 12 must be the same as line 12 of all Schedule Cs.

Tip: This line 13 must be the same as line 13 of all Schedule Cs.
Direct non-mining expenses would arise in a situation similar to
the following examples:
A miner uses a loader to mine in summer, and at end of the
summer the miner transports the loader to town to be used for
snow removal in the winter. Direct non-mining expenses related to
the use of the loader would be the fuel used and other expenses
incurred as a result of snow removal. These non-mining direct
expenses need to be taken into account before indirect expenses
of owning the loader, such as insurance, finance charges, and so
forth, can be allocated between mining operations and non-mining
operations.
Another example of when direct non-mining expenses would
arise is if a company has a mining division and a logging division
and the company uses the same central office for administrative
functions (billing, payroll, etc.). The mining operation and the
logging operation are considered related because of the expenses
incurred at the common central office. In this case, the expenses
directly incurred by the logging operation are the direct non-mining
expenses. For mining license tax purposes, the direct expenses
of the logging operation need to be taken into account before the
indirect expenses (central office expenses) can be allocated to the
mining division.
Line 15 – Direct mining expenses as a percentage of total direct
expenses. Calculate what percentage of total direct expenses
the direct mining expenses are. This calculation is needed so
indirect expenses can be allocated between mining and nonmining activities in proportion to the mining and non-mining direct
expenses (15 AAC 65.125).

Indirect Expense Allocation

Where two or more properties are involved, indirect expenses
must be allocated between the properties based on the ratio of
each property’s production to the taxpayer’s total production from
all properties during the tax year.
Line 18 – Total current-year production from this mining operation.
Enter the total number of units produced during the tax year
from the mining operation identified at the top of Schedule C,
regardless of the number of units sold. Use the same unit measure
as reported in the previous year.
Line 19 – Total current-year production of all mining operations.
Enter the total number of units produced during the tax year from
the mining operation(s) not identified at the top of Schedule C,
regardless of the number of units sold.
Line 20 – Total current-year production of all mining operations.
This line 20 should be the same as line 20 of all Schedule Cs.

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Schedule D – Indirect Mining Expenses
Use only one Schedule D with Form 662.
Indirect mining expenses are those expenses necessary to the
mining operation but not directly connected to the extraction,
transportation and ordinary treatment processes of the operation.
These expenses are deductible from mining gross income in
whole or in part.
Exploration costs, federal income taxes, the Alaska mining license
tax, losses on the sale of mining equipment or properties, net
operating losses and other capital losses are not deductible (see
15 AAC 65.125). Exploration costs may, however, be allowed
as a credit against mining license tax due. See the Form 665
Instructions to determine if the property qualifies for the exploration
incentive credit.
Include indirect expenses from all mining and all related non-mining
activities. The expenses entered on Schedule D will be carried to
Schedule C of all mining operations reported on the return. The
expenses will then be allocated to the mining operations.
Line 11 – Other expenses. Enter the amount of other expenses
indirectly related to the mining operation. Attach a separate
schedule itemizing the type and amount of other mining expenses
that are not included on lines 1 through 10.
Line 12 – Total indirect expenses. Add lines 1 through 11,
and enter the result here and on each Schedule C, line 19. For
example: If you are reporting the income and expenses of three
operations, you will include this total on three Schedule Cs.

Royalties

Enter the name, address and federal identification number of each
individual, partnership or corporation to whom royalties were paid
or received. Attach a separate schedule if necessary.
Royalty recipients may not take any deduction except for depletion
under Alaska Statute 43.65.010(h).
Royalties that are paid or received in kind must be reported in U.S.
dollars at the fair market value of the mined material on the date
that payment was paid or received.
Advance royalties should not be included in income until the tax
year in which the mined material relating to the royalty is actually
extracted, per 15 AAC 65.110(a)(2).

Schedule EC – Education Credit

AS 43.75.018, and AS 43.77.045. Any unused credit or portion
of a credit may not be sold, traded, transferred or applied in a
subsequent tax year.

Section I - Contributions

Line 1: List all contributions of cash and equipment for which the
credit is claimed.
Column C: Report the code from the table that best describes
the recipient of the contribution.
Column D: List those contributions that qualify.
Line 2: Enter the sum of column D.
Line 3: Enter the lesser of line 2 or $2,000,000.
Line 4: Multiply line 3 by 50%. This is the tentative education
credit. Enter here and on page 1, line 4.
Column C Table - Use the following codes for each contribution
A Direct instruction, research & educational support by an
Alaska 2-year or 4-year accredited college, Alaska University
Foundation or an elementary or secondary school
B Secondary school level vocational courses operated by an
Alaska school district
C State-operated vocational technical education and training
school, regional training center, and state registered
apprenticeship programs
D Alaska 2-year or 4-year college, elementary, or secondary
school for facilities
E Alaska Native cultural or heritage program for public school
staff and students K–12
F Coastal ecosystem learning center qualified under the
Coastal America Partnership
G Alaska higher education investment fund under AS 37.14.750
H Non-profit organization to fund scholarship for a dual-credit
student as defined in AS 43.20.014 (g)(1)
I

Residential school approved under AS 14.16.200

J

Childhood learning and development programs provided by a
non-profit organization

K Science, technology, engineering, and math programs provided by a non-profit agency or school district for students
K-12 and staff
L Non-profit organization providing educational opportunities
for public service

Use this schedule to claim as a credit a portion of contributions to
qualifying Alaska institutions. Subject to the limitations described
in a succeeding paragraph, a taxpayer is allowed a credit for contributions accepted by authorized education institutions.

Note: The above list of qualifying recipients is intended as a
general description only. Please see AS 43.65.018(a) for details
of requirements. Taxpayers are encouraged to consult their tax
advisor.

The education credit is limited to 50% of the first $2,000,000. The
total allowable credit may not exceed $1 million. If a taxpayer is a
member of an affiliated group, the total amount of credit may not
exceed $1 million for the affiliated group.

Section II - Equipment Contributions Listed in Section I

The credit may not reduce the tax liability below zero. Contributions
claimed as a credit on this return cannot be claimed as a credit for
other Alaska taxes. The taxpayer may not claim more than $1
million for all credits claimed under AS 21.96.070, AS 21.96.075,
AS 43.20.014, AS 43.55.019, AS 43.56.018, AS 43.65.018,

Column A: A description of the equipment contributed in sufficient
detail to be easily identified by the recipient organization including make, model number, year, serial number or any other unique
identifying information.
Column B: The original date the equipment was acquired by the
donor.

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Column C: The date title of the equipment was transferred to the
recipient organization.
Column D: Donor’s cost or adjusted basis.
Column E: Appraised market value at time of donation. For
equipment donated that exceeds $5,000, a written appraisal from
a qualified appraiser and recipient acknowledgement must be submitted with Form 662.
Column F: The amount available may be included in Section I,
Column D.

Additional Assistance

These instructions are not in place of Alaska statutes or regulations
and are offered only for the convenience of the taxpayer in
completing the return.
If you have questions or require assistance, contact the Tax
Division at [email protected] or call 907.269.6620.

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