WEST virginia Legislature
2017 regular session
Senate Bill 415
By Senators Carmichael (Mr.
President) and Prezioso
(By Request of the Executive)
[Introduced February 23, 2017; Referred
to the Committee on Energy, Industry and Mining; and then to the Committee on Finance]
A BILL to amend and reenact §11-13A-3a of the Code of West Virginia, 1931, as amended, relating generally to severance tax imposed on privilege of severing natural gas for sale, profit or commercial use; specifying effective date; and making technical corrections.
Be it enacted by the Legislature of West Virginia:
That §11-13A-3a of the Code of West Virginia, 1931, as amended, be amended and reenacted to read as follows:
ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.
of tax on privilege of severing natural gas or oil.
Tax Commissioner to develop
a uniform reporting form
(a) Imposition of tax. -- For the privilege of engaging or continuing within this state in the business of severing natural gas or oil for sale, profit or commercial use, there is hereby levied and shall be collected from every person exercising such privilege an annual privilege tax: Provided, That effective for all taxable periods beginning on or after January 1, 2000, there is an exemption from the imposition of the tax provided in this article on the following: (1) Free natural gas provided to any surface owner; (2) natural gas produced from any well which produced an average of less than five thousand cubic feet of natural gas per day during the calendar year immediately preceding a given taxable period; (3) oil produced from any oil well which produced an average of less than one-half barrel of oil per day during the calendar year immediately preceding a given taxable period; and (4) for a maximum period of ten years, all natural gas or oil produced from any well which has not produced marketable quantities of natural gas or oil for five consecutive years immediately preceding the year in which a well is placed back into production and thereafter produces marketable quantities of natural gas or oil.
(b) Rate and measure of tax. -- (1) The tax imposed in subsection (a) of this section shall be five percent of the gross value of the natural gas or oil produced, as shown by the gross proceeds derived from the sale thereof by the producer, except as otherwise provided in this article.
(2) On and after July 1, 2017, the rate of tax on the privilege of severing natural gas for sale, profit, or commercial use shall be:
When the annualized gross value
of natural gas per MCF is: The rate of tax is:
Less than $3.00 5%
$3.00 but less than $3.50 5.5%
$3.50 but less than $4.00 6%
$4.00 but less than $4.50 6.5%
$4.50 but less than $5.00 7%
$5.00 but less than $5.50 7.5%
$5.50 but less than $6.50 8%
$6.50 but less than $7.50 8.5%
$7.50 but less than $9.00 9%
$9.00 or more 10%
(c) Tax in addition
to other taxes. -- The tax imposed by this section shall apply to all
persons severing gas or oil in this state, and shall be in addition to all
other taxes imposed by law. (d)(1) The Legislature
finds that in addition to the production reports and financial records which
must be filed by oil and gas producers with the State Tax Commissioner in order
to comply with this section, oil and gas producers are required to file other
production reports with other agencies, including, but not limited to, the
office of oil and gas, the Public Service Commission and county assessors. The
reports required to be filed are largely duplicative, the compiling of the
information in different formats is unnecessarily time consuming and costly,
and the filing of one report or the sharing of information by agencies of
government would reduce the cost of compliance for oil and gas producers. (2) On or before the
first day of July, two thousand three, the Tax Commissioner shall design a
common form that may be used for each of the reports regarding production that
are required to be filed by oil and gas producers, which form shall readily
permit a filing without financial information when such information is
unnecessary. The commissioner shall also design such forms so as to permit
filings in different formats, including, but not limited to, electronic formats. (3) Effective the first
day of July, two thousand six, this subsection shall have no force or effect.
NOTE: The purpose of this bill is to impose that severance tax on the privilege of producing natural gas at graduated rates depending upon the gross value taxpayer derives from the sale of the natural gas during the severance tax year.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.