WEST virginia Legislature

2017 regular session

Introduced

Senate Bill 681

By Senators Sypolt and Boso

[Introduced March 20, 2017; Referred
to the Committee on Government Organization]

A BILL to amend and reenact §11-13A-3a of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new section, designated §22-6-42, all relating to requiring the Secretary of the Department of Environmental Protection to work with the State Tax Commissioner, the Public Service Commission and county assessors to develop a system for verifying production information submitted by an oil or gas producer in connection with the producer’s severance tax returns and other production reports; and requiring the cooperation of persons submitting the reports.

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; and that said code be amended by adding thereto a new section, designated §22-6-42, all to read as follows:

CHAPTER 11. TAXATION.

ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.

§11-13A-3a. Imposition 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 the 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. -- The tax imposed in subsection (a) of this section shall be is 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.

(c) Tax in addition to other taxes. -- The tax imposed by this section shall apply applies to all persons severing gas or oil in this state, and shall be is 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 July 1, 2003, 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 July 1, 2006, this subsection shall have no force or effect  Notwithstanding any of the confidentiality provisions of this chapter, the Tax Commissioner shall assist the Secretary of the Department of Environmental Protection to implement procedures that allow the Secretary of the Department of Environmental Protection to verify information submitted under this section and with other agencies, including, but not limited to, the Office of Oil and Gas, the Public Service Commission and county assessors.

CHAPTER 22. ENVIRONMENTAL RESOURCES.

ARTICLE 6. OFFICE OF OIL AND GAS; OIL AND GAS WELLS; ADMINISTRATION; ENFORCEMENT.

§22-6-42. Reporting of oil and natural gas production, including marketable liquids.

(a) The secretary shall work with the State Tax Commissioner, the Public Service Commission and county assessors to develop a system for verifying production information submitted by an oil or gas producer in connection with the producer’s severance tax returns and other production reports submitted to other agencies, including, but not limited to, the Office of Oil and Gas, the Public Service Commission and county assessors.

(b) Every person producing oil or gas shall cooperate with the secretary in verifying information reported by the person relating to the production of oil and gas and other marketable liquids produced in connection with the production of oil or gas. The cooperation shall be provided in the manner the secretary reasonably requests, which may include allowing the secretary access to all records necessary to audit the person’s production of oil and gas.

NOTE: The purpose of this bill is to require the Secretary of the Department of Environmental Protection to work with the State Tax Commissioner, the Public Service Commission and county assessors to develop a system for verifying production information submitted by an oil or gas producer in connection with the producer’s severance tax returns and other production reports. It also requires the cooperation of persons submitting the reports.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.