Bill Text: PA SB1176 | 2011-2012 | Regular Session | Introduced

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Bill Title: Imposing a tax on natural gas drilling and using that tax to reduce taxes on senior citizens.

Spectrum: Slight Partisan Bill (Republican 7-3)

Status: (Introduced - Dead) 2011-06-30 - Referred to FINANCE [SB1176 Detail]

Download: Pennsylvania-2011-SB1176-Introduced.html

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PRINTER'S NO. 1474
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1176 Session of2011
INTRODUCED BY PILEGGI, ERICKSON, RAFFERTY, GREENLEAF, DINNIMAN, McILHINNEY, TARTAGLIONE, TOMLINSON AND BROWNE, JUNE 30, 2011
REFERRED TO FINANCE, JUNE 30, 2011
AN ACT
Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
Statutes, imposing a tax on natural gas drilling and using
that tax to reduce taxes on senior citizens.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 58 of the Pennsylvania Consolidated
Statutes is amended by adding chapters to read:
CHAPTER 32
NATURAL GAS DRILLING
Sec.
3201. Definitions.
3202. Imposition of tax.
3203. Administration.
3204. Penalties.
3205. Criminal acts.
3206. Regulations.
3207. Unauthorized disclosure.
3208. Account.
§ 3201. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." The Marcellus Senior Citizens Account established
in section 3208 (relating to account).
"Accredited laboratory." A facility engaged in the testing
and calibration of scientific measurement devices and certified
by the Department of Environmental Protection as having met the
department's standards for accreditation.
"Base rate." The rate under section 3202(b) (relating to
imposition of tax).
"Coal bed methane." Gas which can be produced from coal
beds, coal seams, mined-out areas or gob wells.
"Department." The Department of Revenue of the Commonwealth.
"Meter." A device to measure the passage of volumes of gases
or liquids past a certain point.
"Person." A natural person or a corporation, fiduciary,
association or other entity, including the Commonwealth, its
political subdivisions, instrumentalities and authorities. When
the term is used in a clause prescribing and imposing a penalty
or imposing a fine or imprisonment, or both, the term shall
include the members, as applied to an association, and the
officers, as applied to a corporation.
"Producer." A person who engages or continues within this
Commonwealth in the business of severing natural gas for sale,
profit or commercial use. The term does not include a person who
severs natural gas from a storage field.
"Reporting period." A calendar month in which natural gas is
severed.
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"Sever." To extract or otherwise remove natural gas from the
soil or water of this Commonwealth.
"Storage field." A natural formation or other site that is
used to store natural gas that did not originate from and has
been injected into the formation or site.
"Stripper well." A producing site or a nonproducing site
that is not capable of producing and does not produce more than
60,000 cubic feet of natural gas per day.
"Unconventional well." A bore hole drilled or being drilled
for the purpose of or to be used for producing oil or gas from a
geological formation existing below the base of the Elk
Sandstone or its geologic equivalent stratigraphic interval
where oil or gas generally cannot be produced at economic flow
rates or in economic volumes except by vertical or horizontal
well bores stimulated by hydraulic fracture treatments or by
using multilateral well bores or other techniques to expose more
of the formation of the well bore.
"Unit." A thousand cubic feet of natural gas measured at the
wellhead at a temperature of 60 degrees Fahrenheit and an
absolute pressure of 14.73 pounds per square inch in accordance
with American Gas Association Standards and according to Boyle's
Law for the measurement of gas under varying pressures with
deviations as follows:
(1) The average absolute atmospheric pressure shall be
assumed to be 14.4 pounds to the square inch, regardless of
elevation or location of point of delivery above sea level or
variations in atmospheric pressure from time to time.
(2) The temperature of the gas passing the meters shall
be determined by the continuous use of a recording
thermometer installed to properly record the temperature of
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gas flowing through the meters. The arithmetic average of the
temperature recorded each 24-hour day shall be used in
computing gas volumes. If a recording thermometer is not
installed, or is installed and not operating properly, an
average flowing temperature of 60 degrees Fahrenheit shall be
used in computing gas volume.
(3) The specific gravity of the gas shall be determined
annually by tests made by the use of an Edwards or Acme
gravity balance, or at intervals as found necessary in
practice. Specific gravity determinations shall be used in
computing gas volumes.
(4) The deviation of the natural gas from Boyle's Law
shall be determined by annual tests or at other shorter
intervals as found necessary in practice. The apparatus and
method used in making the test shall be in accordance with
recommendations of the National Bureau of Standards or Report
No. 3 of the Gas Measurement Committee of the American Gas
Association, or amendments thereto. The results of the tests
shall be used in computing the volume of gas delivered under
this chapter.
"Wellhead meter." A meter placed at a producing or
nonproducing site to measure the volume of natural gas severed
for which a wellhead meter certification has been issued.
§ 3202. Imposition of tax.
(a) Establishment.--Beginning January 1, 2012, there shall
be imposed a severance tax on all natural gas from an
unconventional well producing gas in this Commonwealth.
(a.1) Exemptions.--The tax shall not be imposed on the
following:
(1) Units provided free of charge to the owner of the
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surface under which the gas is severed if the surface owner
is the end user of the gas.
(2) A stripper well.
(3) A gas well collecting coal bed methane.
(b) Rate.--The tax imposed shall be 3% of the gross value of
the units severed at the wellhead of the unconventional well
during a reporting period.
§ 3203. Administration.
(a) Registration.--A producer severing natural gas in this
Commonwealth from an unconventional gas well shall, within 30
days of the date of first production, or within 30 days of the
effective date of this act, whichever occurs later, apply for a
certificate of registration in the manner and subject to the
requirements of section 208 of the Tax Reform Code of 1971 to
the extent applicable to the tax imposed by this chapter. An
application shall include a list of unconventional gas wells in
which the producer has an interest and certification of the
accuracy of the sales meter at each well or well pad under
subsection (c).
(b) Returns, payments and recordkeeping.--A producer subject
to the tax imposed by this chapter shall file monthly returns,
make payments to the department and keep records in the manner
required by sections 215, 216, 217, 218, 219, 220, 221, 222 and
271 of the Tax Reform Code of 1971 to the extent applicable to
the tax imposed by this chapter. Returns shall include
information to update the producer's registration application
submitted under subsection (a) occurring in the month for which
returns are filed relating to:
(1) The addition or removal of an unconventional gas
well.
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(2) A change in the status of an unconventional gas
well.
(3) A change in the laboratory used to certify the
accuracy of the wellhead meter.
(c) Meters.--A producer shall provide and maintain or cause
to be provided and maintained a wellhead meter and a sales meter
for an unconventional gas well that is tested, calibrated and
maintained in accordance with industry standards adopted by the
American Gas Association or other standard adopted by the
department by regulation or, if the sale of gas is to a public
utility, by the Pennsylvania Public Utility Commission. Wellhead
and sales meters shall not be subject to 3 Pa.C.S. Ch. 41
(relating to weights and measures). Multiple wells located on
the same drilling pad may utilize the same meter. A wellhead
meter installed after the effective date of this section shall
be a digital meter.
(d) Tax Reform Code of 1971.--The provisions of sections
230, 231, 232, 272, 274, 407.3, 407.4, 408 and 408.1 of the Tax
Reform Code of 1971 shall apply, to the extent applicable to the
tax imposed by this chapter, to:
(1) the assessment, reassessment, enforcement and
collection of the tax; and
(2) the adoption of regulations by the department
necessary to implement this chapter.
(e) Interest; additions to tax and penalties; abatement.--
The provisions of sections 266(a) and (b), 267, 268(a) and 269
of the Tax Reform Code of 1971 and sections 806 and 806.1 of the
act of April 9, 1929 (P.L.343, No. 176), known as The Fiscal
Code, shall apply to interest, additions to tax and penalties to
the extent applicable to the tax imposed by this chapter.
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(f) Liens.--The provisions of section 242 of the Tax Reform
Code of 1971 shall apply to liens for the severance tax imposed
by this chapter.
(g) Service.--The provisions of section 245 of the Tax
Reform Code of 1971 shall apply to service under this chapter.
(h) Refunds.--The provisions of sections 2703, 2704, 3003.1
and 3003.5 of the Tax Reform Code of 1971 shall apply to
severance tax refunds under this chapter.
§ 3204. Penalties.
The department shall enforce the following penalties:
(1) A penalty against a producer for failure to timely
file a return as required under section 3203(b) (relating to
administration). The penalty shall be 5% of the tax liability
to be reported on the return for each day beyond the due date
that the return is not filed.
(2) In addition to the penalty under paragraph (1), a
penalty against the producer for a willful failure to timely
file a return. The penalty shall be 200% of the tax liability
required to be reported on the return.
§ 3205. Criminal acts.
(a) Fraudulent return.--Any person with intent to defraud
the Commonwealth, who willfully makes or causes to be made a
return required by this chapter which is false, is guilty of a
misdemeanor and shall, upon conviction, be sentenced to pay a
fine of not more than $2,000 or to imprisonment for not more
than three years, or both.
(b) Other crimes.--Except as otherwise provided by
subsection (a), a person is guilty of a misdemeanor and shall,
upon conviction, be sentenced to pay a fine of not more than
$1,000 and costs of prosecution or to imprisonment for not more
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than one year, or both, for any of the following:
(1) Willfully failing to timely remit the tax, penalty
or interest.
(2) Willfully failing to preserve its books, papers and
records as directed by the department or to permit the
department or its authorized agents to examine its books,
records or papers.
(3) Knowingly making or providing a person with any
incomplete, false or fraudulent return or report, as to the
payment of the tax imposed under this chapter.
(c) Other remedies.--Nothing in this section shall restrict,
prohibit or limit the use by the department in collecting taxes
due and payable of another remedy or procedure available at law
or equity for the collection of debts.
§ 3206. Regulations.
The department shall promulgate regulations necessary to
enforce this chapter.
§ 3207. Unauthorized disclosure.
Any information gained by the department as a result of any
return, examination, investigation, hearing or verification
required or authorized by this chapter shall be confidential
except for official purposes and except in accordance with
proper judicial order or as otherwise provided by law, and any
person unlawfully divulging the information shall be guilty of a
misdemeanor and shall, upon conviction, be sentenced to pay a
fine of not more than $1,000 and costs of prosecution or to
imprisonment for not more than one year, or both.
§ 3208. Account.
(a) Establishment.--The Marcellus Senior Citizens Account is
established as a restricted account within the General Fund.
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(b) Proceeds.--The proceeds of the tax imposed under section
3202 (relating to imposition of tax) and penalties and interest
imposed under this chapter shall be deposited into the account.
(c) Distributions.--The department shall make the
calculations required for the transfers and distributions under
Chapter 33 (relating to tax relief based on natural gas
drilling) and shall submit the calculations to the State
Treasurer in sufficient time for the State Treasurer to make the
transfers and distributions as required by Chapter 33.
CHAPTER 33
TAX RELIEF BASED ON NATURAL GAS DRILLING
Sec.
3301. Definitions.
3302. Distribution.
3303. Senior citizen tax relief.
§ 3301. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." The Marcellus Senior Citizens Account established
in section 3208 (relating to account).
"Base payment." The:
(1) amount of school property tax levied on the
homestead of an eligible claimant in the base year; or
(2) amount of school property tax levied on the
homestead of an eligible claimant in the earlier of:
(i) the calendar year prior to the calendar year for
which an eligible claimant files an application under
this section; or
(ii) the calendar year prior to the series of
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consecutive calendar years for which an eligible claimant
has filed applications under this section and during
which the claimant has maintained continuous eligibility.
"Base year." The earlier of:
(1) the calendar year prior to the calendar year for
which an eligible claimant files an application under this
section; or
(2) the calendar year prior to the series of consecutive
calendar years for which an eligible claimant has filed
applications under this section and during which the claimant
has maintained continuous eligibility.
"Department." The Department of Education of the
Commonwealth.
"Eligible claimant." An individual who meets all of the
following for the base year and each succeeding year up to and
including the year for which the freeze is sought:
(1) Was at least 65 years of age or has a spouse who is
a member of the household, who was at least 65 years of age
during the base year.
(2) Has held a homestead exemption for the previous five
years.
(3) Has paid the full amount of property taxes that were
due for each succeeding year up to and including the year for
which the freeze is sought.
"School property tax." The real property tax levied by a
school district on the homestead of an eligible claimant. The
term does not include penalties, interest or payments made in
lieu of taxes.
"School property tax increase." The amount of increase in
school property tax levied on the homestead of an eligible
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claimant in a calendar year compared to the school property tax
levied on the homestead of the eligible claimant in the base
year.
§ 3302. Distribution.
For fiscal year 2012-2013 through fiscal year 2017-2018, the
department shall distribute the amount deposited in the account
in accordance with section 3303 (relating to senior citizen tax
relief).
§ 3303. Senior citizen tax relief.
(a) Tax freeze.--Notwithstanding any other law, an eligible
claimant who meets the eligibility requirements in this section
shall be entitled to a freeze of school property taxes and shall
not be required to pay any increases in those school property
taxes in excess of the claimant's base payment.
(b) Application.--An eligible claimant may apply for the tax
freeze under subsection (a) by filing the following with the
school district imposing the school property tax on a form
prescribed by the department:
(1) A request for the tax freeze and a copy of the most
recent school property tax bill.
(2) Certification that the claimant or the claimant's
spouse is the owner of the homestead upon which the real
property taxes are imposed.
(3) Evidence that the claimant is one of the following:
(i) An individual who was at least 65 years of age
during a calendar year in which school property taxes
were due and payable.
(ii) An individual who was a widow or widower and
was at least 65 years of age during a calendar year or
part of the calender year in which school property taxes
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were due and payable.
(4) Receipts showing prompt payment of the current
year's school property tax liability.
(c) Timing.--
(1) The initial application under subsection (b) must be
filed within 45 days prior to the end of the school
district's fiscal year.
(2) Within 15 days of receipt of an application, the
political subdivision shall determine the claimant to be
eligible or ineligible. If the political subdivision fails to
determine if the claimant is eligible or ineligible within 15
days of receipt of an application, the claimant shall be
deemed eligible.
(d) Renewal.--The school district may require an annual
renewal form to be submitted no later than 45 days prior to the
end of the school district's fiscal year.
(e) Termination.--
(1) Subject to paragraph (2), the tax rate on and the
assessment of any school property taxes shall become current
on the sale or transfer of that real property, including any
transfer under a recorded real property sales contract.
(2) A tax freeze under this section shall remain in
effect upon the transfer of the affected real property to a
surviving spouse if at the time of the death of the claimant,
the surviving spouse is at least 65 years of age or will be
65 years of age within six months of the date of death of the
claimant.
(f) Commonwealth payment.--
(1) In fiscal year 2012-2013 through 2017-2018, the
department shall pay to school districts the amount of each
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eligible claimant's increase in school property taxes in
excess of the claimant's base payment.
(2) The school district shall provide notification and
documentation to the department of the total balance due to
the local taxing authorities for increases in school property
taxes.
(3) The department shall certify the total amount due to
increase in school property taxes for each school district.
Section 2. This act shall take effect immediately.
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