Bill Text: PA SB905 | 2011-2012 | Regular Session | Introduced

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Bill Title: Imposing a natural gas severance tax; providing for collection of the tax; establishing the Natural Gas Severance Tax Fund and the Local Government Services Account; and providing for transfers and distributions of certain funds.

Spectrum: Slight Partisan Bill (Democrat 7-4)

Status: (Introduced - Dead) 2011-03-28 - Referred to ENVIRONMENTAL RESOURCES AND ENERGY [SB905 Detail]

Download: Pennsylvania-2011-SB905-Introduced.html

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PRINTER'S NO. 942
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 905 Session of2011
INTRODUCED BY YUDICHAK, ERICKSON, COSTA, BLAKE, McILHINNEY, FONTANA, GREENLEAF AND WILLIAMS, MARCH 28, 2011
REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 28, 2011
AN ACT
Amending the act of December 19, 1984 (P.L.1140, No.223),
entitled "An act relating to the development of oil and gas
and coal; imposing duties and powers on the Department of
Environmental Resources; imposing notification requirements
to protect landowners; and providing for definitions, for
various requirements to regulate the drilling and operation
of oil and gas wells, for gas storage reservoirs, for various
reporting requirements, including certain requirements
concerning the operation of coal mines, for well permits, for
well registration, for distance requirements, for well casing
requirements, for safety device requirements, for storage
reservoir obligations, for well bonding requirements, for a
Well Plugging Restricted Revenue Account to enforce oil and
gas well plugging requirements, for the creation of an Oil
and Gas Technical Advisory Board, for oil and gas well
inspections, for enforcement and for penalties," imposing a
natural gas severance tax; providing for collection of the
tax; establishing the Natural Gas Severance Tax Fund and the
Local Government Services Account; and providing for
transfers and distributions of certain funds.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of December 19, 1984 (P.L.1140, No.223),
known as the Oil and Gas Act, is amended by adding a chapter to
read:
CHAPTER 5A
EFFECTS OF NATURAL GAS DRILLING
Section 5A01. 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:
"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.
"Association." A partnership, limited partnership or any
other form of unincorporated enterprise owned or conducted by
two or more persons.
"Base rate." The rate under section 5A02(a).
"Coal bed methane." Gas which can be produced from coal
beds, coal seams, mined-out areas or gob wells.
"Corporation." A corporation, joint stock association,
limited liability company, business trust or any other
incorporated enterprise organized under the laws of this
Commonwealth, the United States or any other state, territory or
foreign country or dependency.
"Department." The Department of Revenue of the Commonwealth.
"Fund." The Natural Gas Severance Tax Fund established under
section 5A27.
"Meter." A device to measure the passage of volumes of gases
or liquids past a certain point.
"Municipality." A city, borough, incorporated town or
township.
"Natural gas." A fossil fuel consisting of a mixture of
hydrocarbon gases, primarily methane, possibly including ethane,
propane, butane, pentane, carbon dioxide, oxygen, nitrogen and
hydrogen sulfide and other gas species. The term includes
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natural gas from oil fields known as associated gas or casing
head gas, natural gas fields known as nonassociated gas, coal
beds, shale beds and other formations. The term does not include
coal bed methane.
"Nonproducing site." A point of severance that is not
capable of producing natural gas in paying quantities.
"Paying quantities." Profit to the producer, however small,
over the producer's current operating expenses.
"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.
"Producing site." A point of severance capable of producing
natural gas in paying quantities.
"Reporting period." A calendar month in which natural gas is
severed.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Sever." To extract or otherwise remove natural gas from the
soil or water of this Commonwealth.
"Severance." The extraction or other removal of natural gas
from the soil or water of this Commonwealth.
"Severing." Extracting or otherwise removing natural gas
from the soil or water of this Commonwealth.
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"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.
"Tax." The tax imposed under this chapter.
"Taxpayer." A person subject to the tax imposed by this
chapter.
"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
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
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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.
"Wellhead meter certification." A report issued by an
accredited laboratory certifying the accuracy of a wellhead
meter.
Section 5A02. Imposition of tax.
(a) Establishment.--Beginning July 1, 2011, there shall be
levied a natural gas severance tax on every producer. The tax
shall not be imposed on units severed from a stripper well
unless the following apply:
(1) The stripper well is one of multiple producing sites
or nonproducing sites, the combined volumes of gas produced
by all of which sites are measured by a single wellhead meter
as provided in section 5A05.
(2) The combined volumes of gas produced by all the
producing sites or nonproducing sites described in paragraph
(1) is more than 60,000 cubic feet of natural gas per day.
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(a.1) Exemptions.--The tax shall not be imposed on the
following:
(1) Units severed by a producer and sold and delivered
to a manufacturer of tangible personal property, as defined
in section 201(m) of the act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971, for the manufacturer's
use within this Commonwealth if the units have been severed
from one or more producing sites or nonproducing sites on
property owned by the manufacturer.
(2) Units provided free of charge to the owner of the
surface under which the gas is severed if the surface owner
is the end user of the gas.
(b) Rate.--
(1) For the first three years of production of the well,
the tax imposed shall be 2% of the gross value of the units
severed at the wellhead during a reporting period. The 2%
severance tax rate shall apply to the first 36 consecutive
calendar months beginning on the date of first production
from the well, regardless of whether production commenced
prior to July 1, 2011; provided that all production
attributable to the period prior to July 1, 2011, shall be
taxed at the 2% rate in effect.
(2) If the well has been in production for more than
three years on or after July 1, 2011, the tax rate shall be
5% of the gross value of the units severed at the wellhead
during a reporting period.
(3) Notwithstanding paragraphs (1) and (2), the tax rate
for any well shall be 2% of the gross value of the units
severed at the wellhead if the rate of production from the
well is less than 150,000 cubic feet of natural gas per day
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and above 60,000 cubic feet of natural gas per day.
Section 5A03. Return and payment.
(a) Requirement.--Every producer is required to file a
return with the department, on a form prescribed by the
department, which shall include all of the following:
(1) The number of natural gas units severed by the
producer for the reporting period.
(2) The number of producing sites used by the producer
for the severance of natural gas in each county and
municipality.
(3) The amount of tax due under section 5A02.
(b) Filing.--The return required by subsection (a) shall be
filed with the department within 15 days following the end of a
reporting period.
(c) Deadline.--The tax imposed under section 5A02 is due on
the day the return is required to be filed and becomes
delinquent if not remitted to the department by that date.
Section 5A04. Natural gas severance tax registration.
(a) Application.--Before a producer severs natural gas in
this Commonwealth, the producer shall apply to the department
for a natural gas severance tax registration certificate.
(a.1) Application fee.--The department may charge an
application fee to cover the administrative costs associated
with the application and registration process. If the department
charges an application fee, the department shall not issue a
registration certificate until the producer has paid the
application fee.
(a.2) Declaration.--The producer shall include in its
application a declaration of all producing sites and
nonproducing sites used by the producer for the severance of
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natural gas. The declaration shall include copies of wellhead
meter certifications for each site. The producer is required to
update the declaration when the producer adds or removes a
producing site or nonproducing site in this Commonwealth or when
there is a change in the status of a producing site or
nonproducing site or when the producer uses a different
accredited laboratory to issue a wellhead meter certification.
The producer shall update the declaration within 30 days after a
calendar month in which a change to the declaration occurs.
(b) Issuance.--Except as provided in subsection (c), after
the receipt of an application, the department shall issue a
registration certificate under subsection (a). The registration
certificate shall be nonassignable. All registrants shall be
required to renew their registration certificates and wellhead
meter certifications on a staggered renewal system established
by the department. After the initial staggered renewal period, a
registration certificate or a wellhead meter certification
issued shall be valid for a period of five years.
(c) Refusal, suspension or revocation.--The department may
refuse to issue, suspend or revoke a registration certificate if
the applicant or registrant has not filed required State tax
reports and paid State taxes not subject to a timely perfected
administrative or judicial appeal or subject to a duly
authorized deferred payment plan. The department shall notify
the applicant or registrant of any refusal, suspension or
revocation. The notice shall contain a statement that the
refusal, suspension or revocation may be made public. The notice
shall be made by first class mail. An applicant or registrant
aggrieved by the determination of the department may file an
appeal under the provisions for administrative appeals in the
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act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971. In the case of a suspension or revocation which is
appealed, the registration certificate shall remain valid
pending a final outcome of the appeals process. Notwithstanding
sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the
Tax Reform Code of 1971 or any other provision of law, if no
appeal is taken or if an appeal is taken and denied at the
conclusion of the appeal process the department may disclose, by
publication or otherwise, the identity of a producer and the
fact that the producer's registration certificate has been
refused, suspended or revoked under this subsection. Disclosure
may include the basis for refusal, suspension or revocation.
(d) Violation.--A person severing natural gas in this
Commonwealth without holding a valid registration certificate
under subsection (b) shall be guilty of a summary offense and
shall, upon conviction, be sentenced to pay a fine of not less
than $300 nor more than $1,500. In the event the person
convicted defaults in the payment of the fine, he shall be
sentenced to imprisonment for not less than five days nor more
than 30 days. The penalties imposed by this subsection shall be
in addition to any other penalties imposed by this chapter. For
purposes of this subsection, the severing of natural gas during
any calendar day shall constitute a separate violation. The
secretary may designate employees of the department to enforce
the provisions of this subsection. The employees shall exhibit
proof of and be within the scope of the designation when
instituting proceedings as provided by the Pennsylvania Rules of
Criminal Procedure.
(e) Failure to obtain registration certificate.--Failure to
obtain or hold a valid registration certificate does not relieve
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a person from liability for the tax imposed by this chapter.
Section 5A05. Meters.
(a) General rule.--Except as provided in subsection (b), a
producer shall provide for and maintain a discrete wellhead
meter where natural gas is severed. A producer shall ensure that
the meters are maintained according to industry standards. Any
wellhead meter installed after the effective date of this
section shall be a digital meter.
(b) Exception.--If a producer has multiple producing sites
or nonproducing sites, the combined volumes of gas produced by
all of which sites are measured by a single wellhead meter, the
producer shall not be required to provide for a discrete
wellhead meter at any of those producing sites or nonproducing
sites that is also a stripper well.
Section 5A06. Assessments.
(a) Authorization and requirement.--The department is
authorized and shall make the inquiries, determinations and
assessments of the tax imposed under this chapter, including
interest, additions and penalties imposed under this chapter.
(b) Notice.--The notice of assessment and demand for payment
shall be mailed to the taxpayer. The notice shall set forth the
basis of the assessment. The department shall send the notice of
assessment to the taxpayer at its registered address via
certified mail if the assessment increases the taxpayer's tax
liability by $300. Otherwise, the notice of assessment may be
sent via regular mail.
Section 5A07. Time for assessment.
(a) Requirement.--An assessment as provided under section
5A06 shall be made within three years after the date when the
return provided for by section 5A03 is filed or the end of the
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year in which the tax liability arises, whichever shall occur
last. For the purposes of this subsection and subsection (b), a
return filed before the last day prescribed for the filing
period shall be considered as filed on the last day.
(b) Exception.--If the taxpayer underpays the correct amount
of the tax due by 25% or more, the assessment shall be made
within six years after the date the return was filed.
(c) Intent to evade.--Where no return is filed or where the
taxpayer files a false or fraudulent return with intent to evade
the tax imposed by this chapter, the assessment may be made at
any time.
(d) Erroneous credit or refund.--Within three years of the
granting of a refund or credit or within the period in which an
assessment or reassessment may have been issued by the
department for the taxable period for which the refund was
granted, whichever period shall last occur, the department may
issue an assessment to recover a refund or credit made or
allowed erroneously.
Section 5A08. Extension of assessment period.
Notwithstanding the provisions of this chapter, the
assessment period may be extended in the event a taxpayer has
provided written consent before the expiration of the period
provided in section 5A07 for a tax assessment. The amount of tax
due may be assessed at any time within the extended period. The
period may be extended further by subsequent written consents
made before the expiration of the extended period.
Section 5A09. Reassessments.
A taxpayer against whom an assessment is made may petition
the department for a reassessment under Article XXVII of the act
of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
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1971.
Section 5A10. Interest.
The department shall assess interest on any delinquent tax at
the rate prescribed under section 806 of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
Section 5A11. Penalties.
The department shall enforce the following penalties:
(1) A penalty against a producer without a natural gas
severance tax registration certificate. The penalty shall be
$1 for every unit severed without a valid registration
certificate. The department may assess this penalty
separately from or in conjunction with any assessment of the
natural gas severance tax.
(2) A penalty against a producer for failure to timely
file a return as required under section 5A03. 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.
(3) In addition to the penalty under paragraph (2), 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.
(4) A penalty against a producer for failure to timely
pay the tax as required by section 5A03(c). The penalty shall
be 5% of the amount of tax due for each day beyond the
payment date that the tax is not paid.
Section 5A12. 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
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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.--
(1) 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 than one year,
or both, for any of the following:
(i) Willfully failing to timely remit the tax to the
department.
(ii) Willfully failing or neglecting to timely file
a return or report required by this chapter.
(iii) Refusing to timely pay a tax, penalty or
interest imposed or provided for by this chapter.
(iv) Willfully failing to preserve its books, papers
and records as directed by the department.
(v) Refusing to permit the department or its
authorized agents to examine its books, records or
papers.
(vi) Knowingly making any incomplete, false or
fraudulent return or report.
(vii) Preventing or attempting to prevent the full
disclosure of the amount of natural gas severance tax
due.
(viii) Providing any person with a false statement
as to the payment of the tax imposed under this chapter
with respect to any pertinent facts.
(ix) Making, uttering or issuing a false or
fraudulent statement.
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(2) The penalties imposed by this section shall be in
addition to other penalties imposed by this chapter.
Section 5A13. Abatement of additions or penalties.
Upon the filing of a petition for reassessment or a petition
for refund by a taxpayer as provided under this chapter,
additions or penalties imposed upon the taxpayer by this chapter
may be waived or abated in whole or in part where the petitioner
establishes that he acted in good faith, without negligence and
with no intent to defraud.
Section 5A14. Bulk and auction sales.
A person that sells or causes to be sold at auction, or that
sells or transfers in bulk, 51% or more of a stock of goods,
wares or merchandise of any kind, fixtures, machinery,
equipment, buildings or real estate involved in a business for
which the person holds a registration certificate or is required
to obtain a registration certificate under the provisions of
this chapter shall be subject to the provisions of section 1403
of the act of April 9, 1929 (P.L.343, No.176), known as The
Fiscal Code.
Section 5A15. Collection upon failure to request reassessment,
review or appeal.
(a) Power of department.--The department may collect the tax
imposed under this chapter:
(1) If an assessment of the tax is not paid within 30
days after notice to the taxpayer when no petition for
reassessment has been filed.
(2) Within 60 days of the reassessment, if no petition
for review has been filed.
(3) If no appeal has been made, within 30 days of:
(i) the Board of Finance and Revenue's decision of a
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petition for review; or
(ii) the expiration of the board's time for acting
upon the petition.
(4) In all cases of judicial sales, receiverships,
assignments or bankruptcies.
(b) Prohibition.--In a case for the collection of taxes
under subsection (a), the taxpayer against whom they were
assessed shall not be permitted to set up a ground of defense
that might have been determined by the department, the Board of
Finance and Revenue or the courts, provided that the defense of
failure of the department to mail notice of assessment or
reassessment to the taxpayer and the defense of payment of
assessment or reassessment may be raised in proceedings for
collection by a motion to stay the proceedings.
Section 5A16. Tax liens.
(a) Lien imposed.--If any taxpayer neglects or refuses to
pay the tax imposed under this chapter for which the taxpayer is
liable under this chapter after demand, the amount, including
interest, addition or penalty, together with additional costs
that may accrue, shall be a lien in favor of the Commonwealth
upon the real and personal property of the taxpayer but only
after the same has been entered and docketed of record by the
prothonotary of the county where the property is situated. The
department may, at any time, transmit to the prothonotaries of
the respective counties certified copies of all liens imposed by
this section. It shall be the duty of the prothonotary receiving
the lien to enter and docket the same of record to the office of
the prothonotary. The lien shall be indexed as judgments are now
indexed. No prothonotary shall require as a condition precedent
to the entry of the lien the payment of costs incidental to its
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entry.
(b) Priority of lien and effect on judicial sale.--Except
for the costs of the sale and the writ upon which the sale was
made and real estate taxes and municipal claims against the
property, a lien imposed under this section shall have priority
from the date of its recording and shall be fully paid and
satisfied out of the proceeds of any judicial sale of property
subject to the lien, before any other obligation, judgment,
claim, lien or estate to which the property may subsequently
become subject, but shall be subordinate to mortgages and other
liens existing and duly recorded or entered of record prior to
the recording of the lien.
(c) No discharge by sale on junior lien.--In the case of a
judicial sale of property subject to a lien imposed under this
section, upon a lien or claim over which the lien imposed under
this section has priority, the sale shall discharge the lien
imposed under this section to the extent only that the proceeds
are applied to its payment, and the lien shall continue in full
force and effect as to the balance remaining unpaid. There shall
be no inquisition or condemnation upon any judicial sale of real
estate made by the Commonwealth under the provisions of this
chapter. The lien shall continue as provided in the act of April
9, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ
of execution may directly issue upon the lien without the
issuance and prosecution to judgment of a writ of scire facias,
provided that not less than ten days before issuance of any
execution on the lien, notice of the filing and the effect of
the lien shall be sent by registered mail to the taxpayer at its
last known post office address, provided further that the lien
shall have no effect upon any stock of goods, wares or
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merchandise regularly sold or leased in the ordinary course of
business by the taxpayer against whom the lien has been entered,
unless and until a writ of execution has been issued and a levy
made upon the stock of goods, wares and merchandise.
(d) Duty of prothonotary.--Any willful failure of any
prothonotary to carry out any duty imposed upon him by this
section shall be a misdemeanor. Upon conviction, he shall 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.
(e) Priority.--Except as provided in this chapter, the
distribution, voluntary or compulsory, in receivership,
bankruptcy or otherwise of the property or estate of any person,
all taxes imposed by this chapter which are due and unpaid and
are not collectible under the provisions of section 225 of the
act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, shall be paid from the first money available for
distribution in priority to all other claims and liens, except
as the laws of the United States may give priority to a claim to
the Federal Government. A person charged with the administration
or distribution of the property or estate who violates the
provisions of this section shall be personally liable for the
taxes imposed by this chapter which are accrued and unpaid and
chargeable against the person whose property or estate is being
administered or distributed.
(f) Other remedies.--Subject to the limitations contained in
this chapter as to the assessment of taxes, nothing contained in
this section shall be construed to 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
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collection of debts.
Section 5A17. Tax suit reciprocity.
The courts of this Commonwealth shall recognize and enforce
liabilities for natural gas severance or extraction taxes
lawfully imposed by any other state, provided that the other
state recognizes and enforces the tax imposed under this
chapter.
Section 5A18. Service.
A producer is deemed to have appointed the Secretary of the
Commonwealth its agent for the acceptance of service of process
or notice in a proceeding for the enforcement of the civil
provisions of this chapter and service made upon the Secretary
of the Commonwealth as agent shall be of the same legal force
and validity as if the service had been personally made upon the
producer. Where service cannot be made upon the producer in the
manner provided by other laws of this Commonwealth relating to
service of process, service may be made upon the Secretary of
the Commonwealth. In that case, a copy of the process or notice
shall be personally served upon any agent or representative of
the producer who may be found within this Commonwealth or, where
no agent or representative may be found, a copy of the process
or notice shall be sent via registered mail to the producer at
the last known address of its principal place of business, home
office or residence.
Section 5A19. Refunds.
Under Article XXVII of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, the department
shall refund all taxes, interest and penalties paid to the
Commonwealth under the provisions of this chapter to which the
Commonwealth is not rightfully entitled. The refunds shall be
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made to the person or the person's heirs, successors, assigns or
other personal representatives who paid the tax, provided that
no refund shall be made under this section regarding a payment
made by reason of an assessment where a taxpayer has filed a
petition for reassessment under section 2702 of the Tax Reform
Code of 1971 to the extent the petition is adverse to the
taxpayer by a decision which is no longer subject to further
review or appeal. Nothing in this chapter shall prohibit a
taxpayer who has filed a timely petition for reassessment from
amending it to a petition for refund where the petitioner paid
the tax assessed.
Section 5A20. Refund petition.
(a) General rule.--Except as provided for in subsection (b),
the refund or credit of tax, interest or penalty provided for by
section 5A19 shall be made only where the person who has paid
the tax files a petition for refund with the department under
Article XXVII of the act of March 4, 1971 (P.L.6, No.2), known
as the Tax Reform Code of 1971, within the time limits of
section 3003.1 of the Tax Reform Code of 1971.
(b) Natural gas severance tax.--A refund or credit of tax,
interest or penalty paid as a result of an assessment made by
the department under section 5A04 shall be made only where the
person who has paid the tax files with the department a petition
for a refund with the department under Article XXVII of the Tax
Reform Code of 1971 within the time limits of section 3003.1 of
the Tax Reform Code of 1971. The filing of a petition for
refund, under the provisions of this subsection, shall not
affect the abatement of interest, additions or penalties to
which the person may be entitled by reason of his payment of the
assessment.
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Section 5A21. Rules and regulations.
The department is charged with the enforcement of the
provisions of this chapter and is authorized and empowered to
prescribe, adopt, promulgate and enforce rules and regulations
not inconsistent with the provisions of this chapter relating to
any matter or thing pertaining to the administration and
enforcement of the provisions of this chapter and the collection
of taxes, penalties and interest imposed by this chapter. The
department may prescribe the extent, if any, to which any of the
rules and regulations shall be applied without retroactive
effect.
Section 5A22. Recordkeeping.
(a) General rule.--Every person liable for any tax imposed
by this chapter, or for the collection of the tax, shall keep
records, including those enumerated in subsection (b), render
statements, make returns and comply with the rules and
regulations as the department may prescribe regarding matters
pertinent to the person's business. Whenever it is necessary,
the department may require a person, by notice served upon the
person or by regulations, to make returns, render statements or
keep records as the department deems sufficient to show whether
or not a person is liable to pay tax under this chapter.
(a.1) Records.--Records to be maintained are:
(1) Wellhead meter charts for each reporting period and
the meter calibration and maintenance records. If turbine
meters are in use, the maintenance records will be made
available to the department upon request.
(2) Records, statements and other instruments furnished
to a producer by a person to whom the producer delivers for
sale, transport or delivery of natural gas.
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(3) Records, statements and other instruments as the
department may prescribe by regulation.
(b) Records of nonresidents.--A nonresident who does
business in this Commonwealth as a producer shall keep adequate
records of the business and of the tax due as a result. The
records shall be retained within this Commonwealth unless
retention outside this Commonwealth is authorized by the
department. The department may require a taxpayer who desires to
retain records outside this Commonwealth to assume reasonable
out-of-State audit expenses.
(c) Keeping of separate records.--A producer who is engaged
in another business or businesses which do not involve the
severing of natural gas taxable under this chapter shall keep
separate books and records of the businesses so as to show the
taxable severing of natural gas under this chapter separately
from other business activities not taxable hereunder. If any
person fails to keep separate books and records, the person
shall be liable for a penalty equaling 100% of tax due under
this chapter for the period where separate records were not
maintained.
Section 5A23. Examinations.
The department or any of its authorized agents are authorized
to examine the books, papers and records of any taxpayer in
order to verify the accuracy and completeness of any return made
or, if no return was made, to ascertain and assess the tax
imposed by this chapter. The department may require the
preservation of all books, papers and records for any period
deemed proper by it but not to exceed three years from the end
of the calendar year to which the records relate. Every taxpayer
is required to give to the department or its agent the means,
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facilities and opportunity for examinations and investigation
under this section. The department is further authorized to
examine any person, under oath, concerning the taxable severing
of natural gas by any taxpayer or concerning any other matter
relating to the enforcement or administration of this chapter,
and to this end may compel the production of books, papers and
records and the attendance of all persons whether as parties or
witnesses whom it believes to have knowledge of relevant
matters. The procedure for the hearings or examinations shall be
the same as that provided by the act of April 9, 1929 (P.L.343,
No. 176), known as The Fiscal Code.
Section 5A24. 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.
Section 5A25. Cooperation with other governments.
Notwithstanding the provisions of section 5A17, the
department may permit the Commissioner of the Internal Revenue
Service of the United States, the proper officer of any state or
the authorized representative of either of them to inspect the
tax returns of any taxpayer, or may furnish to the commissioner
or officer or to either of their authorized representative an
abstract of the return of any taxpayer, or supply him with
information concerning any item contained in any return or
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disclosed by the report of any examination or investigation of
the return of any taxpayer. This permission shall be granted
only if the laws of the United States or another state grant
substantially similar privileges to the proper officer of the
Commonwealth charged with the administration of this chapter.
Section 5A26. Bonds.
(a) Taxpayer to file bond.--The department may require a
nonresident natural person or any foreign corporation,
association, fiduciary or other entity, not authorized to do
business within this Commonwealth or not having an established
place of business in this Commonwealth and subject to the tax
imposed by section 5A02, to file a bond issued by a surety
company authorized to do business in this Commonwealth and
approved by the Insurance Commissioner as to solvency and
responsibility, in amounts as it may fix, to secure the payment
of any tax or penalties due or which may become due from a
nonresident natural person, corporation, association, fiduciary
or other entity whenever it deems it necessary to protect the
revenues obtained under this chapter. The department may also
require a bond of a person petitioning the department for
reassessment in the case of any assessment over $500 or where,
in its opinion, the ultimate collection is in jeopardy. For a
period of three years, the department may require a bond of any
person who has, on three or more occasions within a 12-month
period, either filed a return or made payment to the department
more than 30 days late. In the event the department determines a
taxpayer is required to file a bond, it shall give notice to the
taxpayer specifying the amount of the bond required. The
taxpayer shall file the bond within five days after notice is
given by the department unless, within five days, the taxpayer
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shall request in writing a hearing before the secretary or his
representative. At the hearing, the necessity, propriety and
amount of the bond shall be determined by the secretary or the
secretary's representative. The determination shall be final and
the taxpayer shall comply with it within 15 days after notice is
mailed to the taxpayer.
(b) Securities in lieu of bond.--In lieu of the bond
required by this section securities approved by the department
or cash in a prescribed amount may be deposited. The securities
or cash shall be kept in the custody of the department. The
department may apply the securities or cash to the tax imposed
by this chapter and interest or penalties due without notice to
the depositor. The securities may be sold by the department to
pay the tax and/or interest or penalties due at public or
private sale upon five days' written notice to the depositor.
(c) Failure to file bond.--The department may file a lien
under section 5A16 against any taxpayer who fails to file a bond
when required to do so under this section. All funds received
upon execution of the judgment on the lien shall be refunded to
the taxpayer with 3% interest, should a final determination be
made that it does not owe any payment to the department.
Section 5A27. Funds and accounts established.
(a) Natural Gas Severance Tax Fund.--
(1) The Natural Gas Severance Tax Fund is established as
a restricted account within the General Fund.
(2) The proceeds of the tax imposed under section 5A02
and penalties and interest imposed under this chapter, less
the amounts transferred to the department under section 5A30,
shall be deposited into the fund.
(3) The money in the fund shall only be used in
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accordance with sections 5A28 and 5A29.
(b) Local Government Services Account.--
(1) The Local Government Services Account is established
as a restricted account within the fund.
(2) The allocation under section 5A28(3) shall be
deposited into the Local Government Services Account and
shall be distributed as provided in section 5A29(c).
Section 5A28. Transfers from fund.
For fiscal year 2011-2012 and each fiscal year thereafter,
the State Treasurer shall transfer the moneys in the fund at the
end of each month as follows:
(1) Thirty-three percent to the Commonwealth Financing
Authority established under 64 Pa.C.S. Ch. 15 (relating to
Commonwealth Financing Authority) for projects defined in the
act of July 9, 2008 (P.L.908, No.63), known as the H2O PA
Act.
(2) Thirty three percent to the Environmental
Stewardship Fund established pursuant to 27 Pa.C.S. § 6104
(relating to fund).
(3) Thirty-four percent to the Local Government Services
Account established in section 5A27.
Section 5A29. Distributions from local government services
account.
(a) Quarterly distributions.--On the last business day of
each period of three calendar months, the State Treasurer shall
make the following distributions from the money in the Local
Government Services Account:
(1) Thirty-five percent to counties with producing sites
to be used as provided in subsection (c). The money under
this subparagraph shall be distributed to each eligible
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county based on the following formula:
(i) Divide:
(A) the number of producing sites in the county;
by
(B) the total number of producing sites in all
the counties in this Commonwealth.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount of money available for
distribution under this paragraph.
(2) Fifty-five percent to municipalities with producing
sites. The money under this subparagraph shall be distributed
to each eligible municipality based on the following formula:
(i) Divide:
(A) the number of producing sites in the
municipality; by
(B) the total number of producing sites in all
municipalities in this Commonwealth.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount of money available for
distribution under this paragraph.
(iii) The amount distributed to a municipality shall
not exceed 50% of the municipality's total budget for
fiscal year 2010-2011, adjusted for inflation in
subsequent years by an amount not to exceed an annual
cost-of-living adjustment calculated by applying the
Annual Percent Change in the Consumer Price Index for all
Urban Consumers immediately prior to the date the
adjustment is due to take effect. The amount distributed
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under this subparagraph shall be used for the following
purposes:
(A) Reconstruction, maintenance and repair of
municipal roadways and bridges, which the
municipality has determined have been or are being
used extensively to transport natural gas or
equipment related to the production of natural gas.
(B) Preservation and improvement of municipal
water supplies.
(C) Maintenance and capital improvements to
municipal waste and sewage systems.
(D) Preservation and reclamation of the surface
waters of the municipality.
(E) Other lawful purposes reasonably related to
the health, welfare and safety consequences of
severing natural gas in the municipality.
Any funds not distributed to the municipalities in a
county because of the budgetary limitations under
subparagraph (i) shall be distributed to the county to be
used solely for grants to municipalities to defer the
cost of regional cooperation endeavors undertaken by the
municipalities within the county.
(3) Fifteen percent to municipalities with no producing
sites located in a county with producing sites. The money
under this subparagraph shall be distributed to each eligible
municipality based on the following formula:
(i) Divide:
(A) the number of producing sites in the county;
by
(B) the total number of producing sites in all
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counties in this Commonwealth.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount of money available for
distribution under this paragraph.
(iii) The State Treasurer shall distribute an equal
share to each eligible municipality within the same
county. The amount distributed to a municipality shall
not exceed 50% of the municipality's total budget for
fiscal year 2010-2011, adjusted for inflation in
subsequent years by an amount not to exceed an annual
cost-of-living adjustment calculated by applying the
Annual Percent Change in the Consumer Price Index for all
Urban Consumers immediately prior to the date the
adjustment is due to take effect and shall be used for
the following purposes:
(A) Reconstruction, maintenance and repair of
municipal roadways and bridges, which the
municipality has determined have been, or are being,
used extensively to transport natural gas or
equipment related to the production of natural gas.
(B) Preservation and improvement of municipal
water supplies.
(C) Maintenance and capital improvements to
municipal waste and sewage systems.
(D) Preservation and reclamation of surface
waters of the municipality.
(E) Other lawful purposes reasonably related to
the health, welfare and safety consequences of
severing natural gas in municipalities within the
20110SB0905PN0942 - 28 -
county.
Any funds not distributed to the municipalities in a
county because of the budgetary limitations under
subparagraph (ii) shall be distributed to the county to
be used solely for grants to municipalities to defer the
cost of regional cooperation endeavors undertaken by the
municipalities within the county.
(b) Limitations.--Only producing sites and nonproducing
sites on which the tax is levied under section 5A02(a) during
the three-month period for which transfers and distributions are
made shall be included in any of the calculations made under
paragraphs (1), (2) and (3) for that three-month period.
(c) Administration of funds by counties.--
(1) The governing body of each county receiving
distributions under subsection (c)(1) shall administer the
funds received. The governing body shall give priority to the
reconstruction, repair and maintenance of county roadways and
bridges, which the governing body has determined have been or
are being used to transport natural gas or equipment related
to the production of natural gas. The governing body shall
allocate the remainder to the county or its municipalities
for any of the purposes enumerated in subsection (c)(3) or
(5). A simple majority vote of all of the members of the
governing body shall be required for any action under this
paragraph.
(2) Commencing in 2012, before February 1, each county
receiving distributions under subsection (c)(1) shall prepare
and deliver a report to the Governor, the Secretary of the
Senate and the Chief Clerk of the House of Representatives
detailing the expenditure of funds. The Department of
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Community and Economic Development shall have the authority
to audit a county's use of such funds and each county
receiving funds shall make their financial records and other
documents relating to its use of funds available to the
Department of Community and Economical Development.
(d) Administration of funds by municipalities.--
(1) The governing body of a municipality receiving
distributions under subsection (a)(2) or (3) shall administer
the funds received.
(2) Commencing in 2012, before February 1, each
municipality receiving distributions under this paragraph or
paragraph (3) shall prepare and deliver a report to the
Governor, the Secretary of the Senate and the Chief Clerk of
the House of Representatives detailing the expenditure of
funds.
(3) The Department of Community and Economic Development
shall have the authority to audit a municipality's use of the
funds. Each municipality receiving funds shall make financial
records and other documents relating to its use of the funds
available to the Department of Community and Economic
Development.
(e) Administration.--The department shall make the
calculations required for the transfers and distributions under
this section 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 this section.
Section 5A30. Administration of costs.
Annually, the State Treasurer shall transfer from the fund an
amount not to exceed $3,000,000 to the department to be used for
costs associated with the enforcement or administration of this
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chapter.
Section 2. This act shall take effect in 60 days.
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