Alaska Department of Revenue Tax Audit Response

ALASKA DEPARTMENT OF REVENUE — TAX AUDIT RESPONSE

TABLE OF CONTENTS

1. Cover Letter
2. Audit Identification
3. Scope of Response and Reservation of Rights
4. Information Document Request (IDR) Response Index
5. Position Statement
6. Records and Workpapers Produced
7. Records Retention and Privilege
8. Statute of Limitations and Consent
9. Power of Attorney
10. Verification
11. Certificate of Service
12. Alaska Practice Notes
13. Sources and References

1. COVER LETTER

[LAW FIRM / TAXPAYER LETTERHEAD]

Date: [__/__/____]

VIA EMAIL AND CERTIFIED MAIL

[ASSIGNED AUDITOR NAME], [Tax Auditor / Production Auditor / Senior Auditor]
Alaska Department of Revenue — Tax Division
[Audit Group: Income Tax Audit / Production Audit / Excise Audit / Mining]
550 West Seventh Avenue, Suite 500
Anchorage, AK 99501-3555
Email: [auditor.email]@alaska.gov

Re: AUDIT RESPONSE — IDR ROUND [#]
Taxpayer: [CORPORATE / BUSINESS TAXPAYER NAME]
FEIN: [__-_______]
Alaska Account No.: [________________________________]
Tax Type(s): [Corporate Income (AS 43.20) / Oil & Gas Production (AS 43.55) / Mining License (AS 43.65) / Fisheries (AS 43.75 / 43.76) / Other]
Period(s) Under Audit: [YYYY — YYYY]
Audit Engagement Letter Dated: [__/__/____]

Dear [AUDITOR NAME]:

This letter and its enclosures constitute Taxpayer's response to the Department's Information Document Request (IDR) Round [#] dated [__/__/____]. The materials produced are confidential under AS 40.25.100 and AS 43.05.230 and are subject to the privileges asserted in Section 7.

2. AUDIT IDENTIFICATION

3. SCOPE OF RESPONSE AND RESERVATION OF RIGHTS

3.1. Taxpayer responds to the IDR in good faith and within the timeframe set by the Department. Any extensions previously granted by the Department are documented in Exhibit A.

3.2. Production of any document does not waive any privilege, including the attorney-client privilege, work-product doctrine, federally authorized tax practitioner privilege under I.R.C. § 7525 (as incorporated by AS 43.20.021 to the extent applicable), or any constitutional or statutory protection.

3.3. Taxpayer reserves the right to supplement, amend, or correct any response upon further investigation, to assert additional privileges, and to object to any future IDR on grounds of relevance, burden, or privilege.

3.4. Taxpayer reserves all rights under AS 43.05.240 (informal conference), AS 43.05.241 (formal hearing before OAH), and AS 43.05.480 (Superior Court review) following any Notice of Assessment.

3.5. Taxpayer ☐ DOES / ☐ DOES NOT consent to extension of the assessment period under AS 43.05.260(c)(3); see Section 8.

4. INFORMATION DOCUMENT REQUEST (IDR) RESPONSE INDEX

5. POSITION STATEMENT

5.1. Issue: [TOPIC] — Position

Taxpayer's position is that [STATE THE LEGAL/FACTUAL POSITION]. The Department's apparent inquiry under IDR [#] appears directed at [ISSUE]. The applicable authority is:

• Statute: AS [43.20.XXX / 43.55.XXX / 43.65.XXX]
• Regulation: 15 AAC [___]
• Federal conformity (AS 43.20.021): I.R.C. § [___], Treas. Reg. § [___]
• Authority: [Case name], [citation]; OAH Decision No. [___]

[Apply the law to the facts. Distinguish unfavorable authority. Identify any computational concession.]

5.2. Issue: [TOPIC] — Position

[Repeat structure for each substantive issue.]

5.3. Penalty Considerations

Should the Department propose adjustments, Taxpayer submits that any negligence, substantial-understatement, or failure-to-file penalties under AS 43.05.220 are inappropriate because:

• Taxpayer relied in good faith on professional advice (15 AAC 05.210);
• Taxpayer's position is supported by substantial authority;
• Taxpayer maintained adequate books and records under AS 43.05.080; and
• Taxpayer cooperated fully throughout the examination.

6. RECORDS AND WORKPAPERS PRODUCED

The following categories of records are produced electronically via the Department's secure portal (or via encrypted media as agreed) and indexed in Exhibit B:

7. RECORDS RETENTION AND PRIVILEGE

7.1. Retention. Pursuant to AS 43.05.080 and 15 AAC 05.310, Taxpayer maintains tax records sufficient to verify reported amounts. AS 43.05.260 generally limits assessment to three years from the later of the return due date or filing date, extended to six years for substantial omissions (>25%) and unlimited for false, fraudulent, or unfiled returns. Federal RAR adjustments must be reported within 60 days under AS 43.20.030(d), which can re-open the Alaska period.

7.2. Privileges asserted. The privilege log at Exhibit C identifies documents withheld on the following grounds:

• Attorney-client privilege;
• Attorney work product doctrine;
• Tax practitioner privilege (I.R.C. § 7525, to the extent incorporated);
• Joint defense / common interest privilege; and
• Confidential commercial information under AS 40.25.120.

7.3. Confidentiality designation. All produced materials are designated CONFIDENTIAL — TAXPAYER INFORMATION under AS 40.25.100 and AS 43.05.230. The Department's confidentiality obligations apply to all employees, contractors, and consultants.

7.4. No waiver. The inadvertent production of any privileged material shall not constitute a waiver. Taxpayer may claw back any inadvertently produced privileged document upon written notice; the Department shall sequester or destroy the document upon notice.

8. STATUTE OF LIMITATIONS AND CONSENT

8.1. The audit periods identified in Section 2 are within the Alaska statute of limitations under AS 43.05.260 only if the assessment occurs on or before:

8.2. Consent decision. Taxpayer ☐ AGREES / ☐ DECLINES to execute Form 04-510 (Consent to Extend the Time to Assess Tax) extending the assessment period to [__/__/____]. The signed consent (if any) is attached as Exhibit D.

9. POWER OF ATTORNEY

Taxpayer designates the following authorized representative(s) under 15 AAC 05.030 (Form 04-775 attached as Exhibit E):

All Department communications shall be directed to the representative; direct contact with Taxpayer personnel is requested only with prior coordination.

10. VERIFICATION

I, [OFFICER NAME], [TITLE] of [TAXPAYER], declare under penalty of perjury under the laws of the State of Alaska that the responses, productions, and statements contained in and accompanying this audit response are true and correct to the best of my knowledge, information, and belief, and that I am authorized to execute this response on behalf of Taxpayer.

Executed this [____] day of [_______________], 20[____], at [CITY, STATE].

[________________________________]

[OFFICER NAME, TITLE]

11. CERTIFICATE OF SERVICE

I certify that on [__/__/____] I caused this Audit Response and all enclosures to be transmitted to the Alaska Department of Revenue, Tax Division, addressed as set forth in Section 1, by:

• ☐ Email to [auditor.email]@alaska.gov (encrypted);
• ☐ Department secure file transfer portal (Revenue Online); and
• ☐ Certified U.S. Mail with return receipt requested.

[________________________________]

[REPRESENTATIVE NAME]

12. ALASKA PRACTICE NOTES

• No state personal income or sales tax. Alaska does not impose a state-level personal income tax or general sales tax. State tax audits at the Department of Revenue level focus on corporate income (AS 43.20), oil and gas production (AS 43.55) and property (AS 43.56), mining license (AS 43.65), fisheries (AS 43.75 / 43.76), and excise taxes. Local sales tax audits are conducted by individual municipalities or boroughs (or by ARSSTC for remote-seller compliance) and follow a separate track.
• Production Audit Group. The Tax Division's Production Audit Group conducts AS 43.55 and AS 43.56 oil and gas audits separately from corporate income audits. Coordinate parallel audits because findings cross-pollinate (e.g., lease-level expense classification affects both production tax and AS 43.20.144 apportionment).
• Records under AS 43.05.080. The Department may inspect records "at all reasonable times." Failure to produce can support a jeopardy assessment and a presumption against the taxpayer. Maintain organized, Bates-numbered productions to streamline the audit.
• Statute of limitations. AS 43.05.260: 3 years standard, 6 years for substantial omission, unlimited for fraud/no return. Extensions require written consent on Form 04-510. Federal RAR triggers a 60-day Alaska reporting obligation under AS 43.20.030(d) and re-opens the period for related items.
• Penalties under AS 43.05.220. Failure-to-file and failure-to-pay penalties are 5% per month up to 25%; substantial-understatement penalty applies. Reasonable cause defense follows 15 AAC 05.210, mirroring federal standards.
• Confidentiality. Returns and audit materials are confidential under AS 40.25.100 and AS 43.05.230. Unauthorized disclosure is a misdemeanor (AS 43.05.230(b)). Mark all submissions accordingly.
• Federal conformity. AS 43.20.021 conforms Alaska to the I.R.C. as currently in effect (rolling conformity with limited decoupling), so most federal positions translate directly. Watch for Alaska-specific decoupling on bonus depreciation, NOLs, and IRC § 199A (which is irrelevant for AS 43.20 because § 199A applies only to non-corporate taxpayers).
• Oil and gas overlay. AS 43.55 production tax and AS 43.20 corporate income tax interact under AS 43.20.144. Production tax is NOT added back to federal taxable income. Apportionment uses extraction and tariff factors specific to oil and gas.
• Mining license tax. AS 43.65 imposes a separate net-income-based license tax on mining at progressive rates. Mining-license audits typically focus on royalty and depletion treatment.
• Fisheries taxes. AS 43.75 (fisheries business tax) and AS 43.76 (fishery resource landing tax) reach processors and floating processors; audits center on ex-vessel value and landings allocation between Alaska and federal waters.
• Informal conference vs. audit response. This template covers the EXAMINATION phase. After the Department issues a Notice of Proposed Adjustment and ultimately a Notice of Assessment, transition to the protest template (state_income_tax_protest.md) within the AS 43.05.240 60-day window.

13. SOURCES AND REFERENCES

• Alaska Department of Revenue — Tax Division — https://tax.alaska.gov/
• Alaska Revenue Online portal — https://online-tax.alaska.gov/
• AS Title 43 (Revenue and Taxation) — https://www.akleg.gov/basis/statutes.asp
• AS 43.05.080 (Inspection of records) — https://law.justia.com/codes/alaska/title-43/chapter-05/
• AS 43.05.220 (Civil penalties)
• AS 43.05.230 (Confidentiality)
• AS 43.05.240 (Informal conference) — https://law.justia.com/codes/alaska/title-43/chapter-05/article-3/section-43-05-240/
• AS 43.05.260 (Limitation on assessment) — https://codes.findlaw.com/ak/title-43-revenue-and-taxation/ak-st-sect-43-05-260/
• AS 43.20 (Corporate Net Income Tax) — https://law.justia.com/codes/alaska/title-43/chapter-20/
• AS 43.55 (Oil & Gas Production Tax) — https://dog.dnr.alaska.gov/Documents/Programs/2023-08-03_Reference_Summary_Of_Oil_and_Gas_Production_Tax.pdf
• AS 43.65 (Mining License Tax) — https://law.justia.com/codes/alaska/title-43/chapter-65/section-43-65-010/
• 15 AAC 05; 15 AAC 20; 15 AAC 55; 15 AAC 65 — https://www.akleg.gov/basis/aac.asp
• Records Retention Schedule 04-99.1 (DOR) — https://archives.alaska.gov/documents/rims/schedules/revenue/04-99-1.pdf
• Records Retention Schedule 04-112.2 (DOR) — https://archives.alaska.gov/documents/rims/schedules/revenue/04-112-2.pdf
• Form 04-510 (Consent to Extend Time to Assess Tax)
• Form 04-775 (Power of Attorney)

Disclaimer: This template is provided for informational purposes only and does not constitute legal or tax advice. An attorney or CPA licensed in Alaska must review and customize this document before use. Statutes, regulations, and Department procedures change frequently; verify all authorities before filing.