1Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
2Statutes, in unconventional gas well fee, repealing
3expiration; providing for definitions, for imposition of tax, 
4for registration, for meters, for assessments, for time for 
5assessment, for extension of assessment period, for 
6reassessments, for interest, for penalties, for criminal 
7acts, for abatement of additions or penalties, for bulk and 
8auction sales, for collection upon failure to request 
9reassessment, review or appeal, for tax liens, for tax suit 
10reciprocity, for service, for refunds, for refund petition, 
11for rules and regulations, for recordkeeping, for 
12examinations, for unauthorized disclosure, for cooperation 
13with other governments, for bonds and for transfer and 
14distributions; and establishing the Natural Gas Severance Tax 
15Account.

16The General Assembly of the Commonwealth of Pennsylvania
17hereby enacts as follows:

18Section 1. Section 2318 of Title 58 of the Pennsylvania
19Consolidated Statutes is repealed:

20[§ 2318. Expiration.

21(a) Notice.--The Secretary of the Commonwealth shall, upon
22the imposition of a severance tax on unconventional gas wells in
23this Commonwealth, submit for publication in the Pennsylvania
24Bulletin notice of the imposition.

1(b) Date.--This chapter shall expire on the date of the
2publication of the notice under subsection (a).]

3Section 2. Title 58 is amended by adding a part to read:

4PART IV

5TAXATION

6Chapter

741. (Reserved)

843. Severance Tax

9CHAPTER 41

10(Reserved)

11CHAPTER 43

12SEVERANCE TAX

13Sec.

144301. Scope of chapter.

154302. Definitions.

164303. Imposition of tax.

174304. Registration.

184305. Meters.

194306. Assessments.

204307. Time for assessment.

214308. Extension of assessment period.

224309. Reassessments.

234310. Interest.

244311. Penalties.

254312. Criminal acts.

264313. Abatement of additions or penalties.

274314. Bulk and auction sales.

284315. Collection upon failure to request reassessment, review
29or appeal.

304316. Tax liens.

14317. Tax suit reciprocity.

24318. Service.

34319. Refunds.

44320. Refund petition.

54321. Rules and regulations.

64322. Recordkeeping.

74323. Examinations.

84324. Unauthorized disclosure.

94325. Cooperation with other governments.

104326. Bonds.

114327. Natural Gas Severance Tax Account.

124328. Transfers and distributions.

13§ 4301. Scope of chapter.

14This chapter relates to taxation of the severance of natural
15gas.

16§ 4302. Definitions.

17The following words and phrases when used in this chapter
18shall have the meanings given to them in this section unless the
19context clearly indicates otherwise:

20"Account." The Natural Gas Severance Tax Account established
21in section 4327 (relating to natural gas severance tax account).

22"Average price of natural gas." The arithmetic mean of the
23market price for arm's-length transactions as reported to the
24department for the previous reporting period. Within 20 days
25after the end of each reporting period the department shall
26calculate and publish the average price of natural gas from
27returns received in the prior reporting period based on the
28total units of gas severed and the total gross value of gas
29reported by all producers for all arm's-length transactions on
30returns filed with the department.

1"Department." The Department of Revenue of the Commonwealth.

2"Gross value." All of the following, calculated prior to the
3payment of any royalties or other payments to a lessor and
4without any other deduction or credit:

5(1) The volume-weighted average market price for an
6arm's-length transaction that a producer receives at the
7point of sale for natural gas during a reporting period.

8(2) The average price of natural gas if:

9(i) the natural gas is not sold in an arm's-length
10transaction, as reported by the producer or as determined
11by the department;

12(ii) if the natural gas is exchanged for something
13other than cash; or

14(iii) if there is no sale or exchange between the
15time of severance and the end of the reporting period
16during which the natural gas was severed.

17"Natural gas." As defined in section 2301 (relating to
18definitions).

19"Person." Any natural person, a corporation, fiduciary,
20association or other entity. The term includes the Commonwealth
21and any political subdivision, instrumentality and authority of
22the Commonwealth.

23"Producer." As defined in section 2301 (relating to
24definitions).

25"Reporting period." A calendar month in which natural gas is
26severed.

27"Sever." Extract or otherwise remove natural gas from the
28soil or water of this Commonwealth.

29"Taxpayer." A person subject to the tax imposed by this
30chapter.

1"Unconventional gas well." As defined in section 2301
2(relating to definitions).

3"Unit." A thousand cubic feet of natural gas measured at the 
4wellhead at a temperature of 60 degrees Fahrenheit and an 
5absolute pressure of 14.73 pounds per square inch in accordance 
6with American Gas Association Standards and according to Boyle's 
7Law for the measurement of gas under varying pressures with 
8deviations as follows:

9(1) The average absolute atmospheric pressure shall be
10assumed to be 14.4 pounds to the square inch, regardless of
11elevation or location of point of delivery above sea level or
12variations in atmospheric pressure.

13(2) The temperature of the gas passing the meters shall
14be determined by the continuous use of a recording
15thermometer installed to properly record the temperature of
16gas flowing through the meters. The arithmetic average of the
17temperature recorded each 24-hour day shall be used in
18computing gas volumes. If a recording thermometer is not
19installed, or is installed and not operating properly, an
20average flowing temperature of 60 degrees Fahrenheit shall be
21used in computing gas volume.

22(3) The specific gravity of the gas shall be determined
23annually by tests made by the use of an Edwards or Acme
24gravity balance, or at intervals as found necessary in
25practice. Specific gravity determinations shall be used in
26computing gas volumes.

27(4) The deviation of the natural gas from Boyle's Law
28shall be determined by annual tests or at other shorter
29intervals as found necessary in practice. The apparatus and
30method used in making the test shall be in accordance with

1recommendations of the National Bureau of Standards or Report
2No. 3 of the Gas Measurement Committee of the American Gas
3Association. The results of the tests shall be used in
4computing the volume of gas delivered under this chapter.

5"Wellhead meter." A meter that measures the volume of
6natural gas severed from an unconventional gas well.

7§ 4303. Imposition of tax.

8(a) Establishment.--Beginning July 1, 2014, there shall be
9levied a natural gas severance tax payable on every
10unconventional gas well that is required to pay the fee payable
11under Chapter 23 (relating to unconventional gas well fee).

12(b) Rate.--The tax imposed in subsection (a) shall be 5% of
13the gross value of units severed at the wellhead during a
14reporting period, plus 5¢ per unit severed.

15(c) Return and payment.--Every producer subject to the
16provisions of this chapter shall file a return with the
17department, on a form prescribed by the department, which shall
18include the following:

19(1) The total number of natural gas units severed by the
20producer for the reporting period broken down into:

21(i) the number of such units sold by the producer
22during the reporting period in arm's-length transactions;

23(ii) the number of such units sold by the producer
24during the reporting period in nonarm's-length
25transactions or exchanged for something other than cash;
26and

27(iii) the number of such units not yet sold or
28exchanged as of the end of the reporting period.

29(2) The gross value of the units identified in paragraph
30(1).

1(3) The amount of tax due under subsection (b).

2(4) Other information reasonably required by the
3department.

4(d) Filing.--The return required by subsection (c) shall be
5filed with the department within 15 days following the end of a
6reporting period. The tax is due on the day the return is
7required to be filed under this subsection and shall become
8delinquent if not remitted to the department by the required
9date. A producer shall commence filing the returns required
10under subsection (c) within 75 days following the effective date
11of this section. The initial return shall include the
12information required by subsection (c) for the reporting periods
13that occurred between July 1, 2014, and the 75th day following
14the effective date of this section. An initial return that
15requires a calculation based upon the average price of natural
16gas shall be due within 15 days following the first full
17reporting period for which such data is available.

18§ 4304. Registration.

19(a) Application.--Before a producer severs natural gas or
20continues to sever natural gas in this Commonwealth after the
21date occurring 60 days following the effective date of this
22section, the producer shall apply to the department for a
23registration certificate. The department may charge an
24application fee to cover the administrative costs associated
25with the application and registration process.

26(b) Issuance.--Except as provided in subsection (c), after
27the receipt of an application and the required application fee,
28the department shall issue a registration certificate to the
29producer. The registration certificate is nonassignable. A
30registrant is required to renew the registration certificate on

1a staggered renewal system established by the department. After
2the initial staggered renewal period, a registration certificate
3is valid for a period of five years.

4(c) Refusal, suspension or revocation.--

5(1) The department may refuse to issue, suspend or
6revoke a registration certificate if the applicant or
7registrant has not filed required State tax reports and paid
8State taxes not subject to a timely perfected administrative
9or judicial appeal or an authorized deferred payment plan.

10(2) The department shall notify the applicant or
11registrant of a refusal, suspension or revocation. The notice
12shall contain a statement that the refusal, suspension or
13revocation may be made public. The notice shall be made by
14first class mail.

15(3) An applicant or registrant aggrieved by the
16determination of the department may file an appeal under the
17provisions for administrative appeals in the act of March 4,
181971 (P.L.6, No.2), known as the Tax Reform Code of 1971. In
19the case of a suspension or revocation which is appealed, the
20registration certificate shall remain valid pending a final
21outcome of the appeals process. Notwithstanding any other
22provision of law, if no appeal is taken or if an appeal is
23taken and denied at the conclusion of the appeal process, the
24department may disclose, by publication or otherwise, the
25identity of a producer and the fact that the producer's
26registration certificate has been refused, suspended or
27revoked under this subsection. Disclosure may include the
28basis for refusal, suspension or revocation.

29(d) Violation.--

30(1) A person that severs natural gas in this
 

1Commonwealth in violation of subsection (a) commits a summary 
2offense and shall, upon conviction, be sentenced to pay a 
3fine not less than $300 nor more than $1,500 or, in default 
4of the payment, to imprisonment for not less than five days 
5nor more than 30 days.

6(2) For purposes of this subsection, each day in which 
7natural gas is severed shall constitute a separate violation.

8(3) The penalties imposed by this subsection shall be in
9addition to any other penalties imposed by this chapter.

10(4) The Secretary of Revenue may designate employees of 
11the department to enforce the provisions of this subsection. 
12The employees shall exhibit proof of and be within the scope 
13of the designation when instituting proceedings as provided 
14by the Pennsylvania Rules of Criminal Procedure.

15(e) Failure to obtain registration certificate.--Failure to
16obtain or hold a valid registration certificate does not relieve
17a person from liability for the tax imposed by this chapter.

18§ 4305. Meters.

19A producer shall provide for and maintain a discrete wellhead 
20meter where natural gas is severed. A producer shall ensure that 
21the meters are maintained according to industry standards. Any 
22wellhead meter installed after the effective date of this 
23section shall be a digital meter.

24§ 4306. Assessments.

25(a) Authorization and requirement.--The department is
26authorized and shall make inquiries, determinations and
27assessments of the tax imposed under this chapter, including
28interest, additions and penalties imposed under this chapter.

29(b) Notice.--The notice of assessment and demand for payment 
30shall be mailed to the taxpayer. The notice shall set forth the
 

1basis of the assessment. The department shall send the notice of 
2assessment to the taxpayer at its registered address via 
3certified mail if the assessment increases the taxpayer's tax 
4liability by $300. Otherwise, the notice of assessment may be 
5sent via regular mail.

6§ 4307. Time for assessment.

7(a) Requirement.--An assessment as provided under section
84306 (relating to assessments) shall be made within three years
9after the date when the return provided for by section 4303(c)
10(relating to imposition of tax) is filed or the end of the year
11in which the tax liability arises, whichever shall occur last.
12For the purposes of this subsection and subsection (b), a return
13filed before the last day prescribed for the filing period shall
14be considered as filed on the last day.

15(b) Exception.--If the taxpayer underpays the correct amount
16of the tax due by 25% or more, the tax may be assessed within
17six years after the date the return was filed.

18(c) Intent to evade.--Where no return is filed or where the
19taxpayer files a false or fraudulent return with intent to evade
20the tax imposed by this chapter, the assessment may be made at
21any time.

22(d) Erroneous credit or refund.--Within three years of the
23granting of a refund or credit or within the period in which an
24assessment or reassessment may have been issued by the
25department for the taxable period for which the refund was
26granted, whichever period shall occur last, the department may
27issue an assessment to recover a refund or credit made or
28allowed erroneously.

29§ 4308. Extension of assessment period.

30Notwithstanding the provisions of this chapter, the
 

1assessment period may be extended in the event a taxpayer has 
2provided written consent before the expiration of the period 
3provided in section 4307 (relating to time for assessment) for a 
4tax assessment. The amount of tax due may be assessed at any 
5time within the extended period. The period may be extended 
6further by subsequent written consents made before the 
7expiration of the extended period.

8§ 4309. Reassessments.

9A taxpayer against whom an assessment is made may petition 
10the department for a reassessment under Article XXVII of the act 
11of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 
121971.

13§ 4310. Interest.

14The department shall assess interest on any delinquent tax at
15the rate prescribed under section 806 of the act of April 9,
161929 (P.L.343, No.176), known as The Fiscal Code.

17§ 4311. Penalties.

18The department shall enforce the following penalties:

19(1) A penalty against a producer without a registration 
20certificate required under section 4304 (relating to 
21registration). The penalty shall be $1 for every unit severed 
22without a valid registration certificate. The department may 
23assess this penalty separately from or in conjunction with 
24any assessment of the natural gas severance tax.

25(2) A penalty against a producer for failure to timely
26file a return as required under section 4303(c) (relating to
27imposition of tax). The penalty shall be 5% of the tax
28liability to be reported on the return for each day beyond
29the due date that the return is not filed.

30(3) In addition to the penalty under paragraph (2), a

1penalty against the producer for a willful failure to timely
2file a return. The penalty shall be 200% of the tax liability
3required to be reported on the return.

4(4) A penalty against a producer for failure to timely
5pay the tax as required by section 4303(d). The penalty shall
6be 5% of the amount of tax due for each day beyond the
7payment date that the tax is not paid.

8§ 4312. Criminal acts.

9(a) Fraudulent return.--Any person with intent to defraud
10the Commonwealth, who willfully makes or causes to be made a
11return required by this chapter which is false, is guilty of a
12misdemeanor and shall, upon conviction, be sentenced to pay a
13fine of not more than $2,000 or to imprisonment for not more
14than three years, or both.

15(b) Other crimes.--

16(1) Except as otherwise provided by subsection (a), a 
17person is guilty of a misdemeanor and shall, upon conviction, 
18be sentenced to pay a fine of not more than $1,000 and costs 
19of prosecution or to imprisonment for not more than one year, 
20or both, for any of the following:

21(i) Willfully failing to timely remit the tax to the
22department.

23(ii) Willfully failing or neglecting to timely file
24a return or report required by this chapter.

25(iii) Refusing to timely pay a tax, penalty or
26interest imposed or provided for by this chapter.

27(iv) Willfully failing to preserve its books, papers
28and records as directed by the department.

29(v) Refusing to permit the department or its
30authorized agents to examine its books, records or

1papers.

2(vi) Knowingly making any incomplete, false or 
3fraudulent return or report.

4(vii) Preventing or attempting to prevent the full
5disclosure of the amount of natural gas severance tax
6due.

7(viii) Providing any person with a false statement 
8as to the payment of the tax imposed under this chapter 
9with respect to any pertinent facts.

10(ix) Making, uttering or issuing a false or
11fraudulent statement.

12(2) The penalties imposed by this section shall be in
13addition to other penalties imposed by this chapter.

14§ 4313. Abatement of additions or penalties.

15Upon the filing of a petition for reassessment or a petition
16for refund by a taxpayer as provided under this chapter,
17additions or penalties imposed upon the taxpayer by this chapter
18may be waived or abated, in whole or in part, where the
19petitioner establishes that he acted in good faith, without
20negligence and with no intent to defraud.

21§ 4314. Bulk and auction sales.

22A person that sells or causes to be sold at auction, or that 
23sells or transfers in bulk, 51% or more of a stock of goods, 
24wares or merchandise of any kind, fixtures, machinery, 
25equipment, buildings or real estate involved in a business for 
26which the person holds a registration certificate or is required 
27to obtain a registration certificate under the provisions of 
28this chapter shall be subject to the provisions of section 1403 
29of the act of April 9, 1929 (P.L.343, No.176), known as The 
30Fiscal Code.

1§ 4315. Collection upon failure to request reassessment, review
2or appeal.

3(a) Power of department.--The department may collect the tax 
4imposed under this chapter:

5(1) If an assessment of the tax is not paid within 30
6days after notice to the taxpayer when no petition for
7reassessment has been filed.

8(2) Within 60 days of the reassessment, if no petition
9for review has been filed.

10(3) If no appeal has been made, within 30 days of:

11(i) the Board of Finance and Revenue's decision of a
12petition for review; or

13(ii) the expiration of the board's time for acting
14upon the petition.

15(4) In all cases of judicial sales, receiverships,
16assignments or bankruptcies.

17(b) Prohibition.--In a case for the collection of taxes 
18under subsection (a), the taxpayer against whom they were 
19assessed shall not be permitted to set up a ground of defense 
20that might have been determined by the department, the Board of 
21Finance and Revenue or the courts, provided that the defense of 
22failure of the department to mail notice of assessment or 
23reassessment to the taxpayer and the defense of payment of 
24assessment or reassessment may be raised in proceedings for 
25collection by a motion to stay the proceedings.

26§ 4316. Tax liens.

27(a) Lien imposed.--If any taxpayer neglects or refuses to 
28pay the tax imposed under this chapter for which the taxpayer is 
29liable under this chapter after demand, the amount, including 
30interest, addition or penalty, together with additional costs
 

1that may accrue, shall be a lien in favor of the Commonwealth 
2upon the real and personal property of the taxpayer, but only 
3after the same has been entered and docketed of record by the 
4prothonotary of the county where the property is situated. The 
5department may, at any time, transmit to the prothonotaries of 
6the respective counties certified copies of all liens imposed by 
7this section. It shall be the duty of the prothonotary receiving 
8the lien to enter and docket the same of record to the office of 
9the prothonotary. The lien shall be indexed as judgments are now 
10indexed. No prothonotary shall require as a condition precedent 
11to the entry of the lien the payment of costs incidental to its 
12entry.

13(b) Priority of lien and effect on judicial sale.--Except
14for the costs of the sale and the writ upon which the sale was
15made and real estate taxes and municipal claims against the
16property, a lien imposed under this section shall have priority
17from the date of its recording and shall be fully paid and
18satisfied out of the proceeds of any judicial sale of property
19subject to the lien, before any other obligation, judgment,
20claim, lien or estate to which the property may subsequently
21become subject, but shall be subordinate to mortgages and other
22liens existing and duly recorded or entered of record prior to
23the recording of the lien.

24(c) No discharge by sale on junior lien.--In the case of a
25judicial sale of property subject to a lien imposed under this
26section, upon a lien or claim over which the lien imposed under
27this section has priority, the sale shall discharge the lien
28imposed under this section to the extent only that the proceeds
29are applied to its payment, and the lien shall continue in full
30force and effect as to the balance remaining unpaid. There shall

1be no inquisition or condemnation upon any judicial sale of real
2estate made by the Commonwealth under the provisions of this
3chapter. The lien shall continue as provided in the act of April
49, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ
5of execution may directly issue upon the lien without the
6issuance and prosecution to judgment of a writ of scire facias,
7provided that not less than ten days before issuance of any
8execution on the lien, notice of the filing and the effect of
9the lien shall be sent by registered mail to the taxpayer at its
10last known post office address, provided further that the lien
11shall have no effect upon any stock of goods, wares or
12merchandise regularly sold or leased in the ordinary course of
13business by the taxpayer against whom the lien has been entered,
14unless and until a writ of execution has been issued and a levy
15made upon the stock of goods, wares and merchandise.

16(d) Penalty.--A prothonotary who intentionally violates this
17section commits a misdemeanor of the third degree and shall,
18upon conviction, be sentenced to pay a fine of not more than
19$1,000 and costs of prosecution or to imprisonment for not more
20than one year, or both.

21(e) Priority.--Except as provided in this chapter, the
22distribution, voluntary or compulsory, in receivership,
23bankruptcy or otherwise of the property or estate of any person,
24all taxes imposed by this chapter which are due and unpaid and
25are not collectible under the provisions of section 225 of the
26act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
27of 1971, shall be paid from the first money available for
28distribution in priority to all other claims and liens, except
29as the laws of the United States may give priority to a claim to
30the Federal Government. A person charged with the administration

1or distribution of the property or estate who violates the
2provisions of this section shall be personally liable for the
3taxes imposed by this chapter which are accrued and unpaid and
4chargeable against the person whose property or estate is being
5administered or distributed.

6(f) Other remedies.--Subject to the limitations contained in
7this chapter as to the assessment of taxes, nothing contained in
8this section shall be construed to restrict, prohibit or limit
9the use by the department in collecting taxes due and payable of
10another remedy or procedure available at law or equity for the
11collection of debts.

12§ 4317. Tax suit reciprocity.

13The courts of the Commonwealth shall recognize and enforce 
14liabilities for natural gas severance or extraction taxes 
15lawfully imposed by any other state, provided that the other 
16state recognizes and enforces the tax imposed under this 
17chapter.

18§ 4318. Service.

19A producer is deemed to have appointed the Secretary of the 
20Commonwealth its agent for the acceptance of service of process 
21or notice in a proceeding for the enforcement of the civil 
22provisions of this chapter, and service made upon the Secretary 
23of the Commonwealth as agent shall be of the same legal force 
24and validity as if the service had been personally made upon the 
25producer. Where service cannot be made upon the producer in the 
26manner provided by other laws of this Commonwealth relating to 
27service of process, service may be made upon the Secretary of 
28the Commonwealth. In that case, a copy of the process or notice 
29shall be personally served upon any agent or representative of 
30the producer who may be found within this Commonwealth or, where
 

1no agent or representative may be found, a copy of the process 
2or notice shall be sent via registered mail to the producer at 
3the last known address of its principal place of business, home 
4office or residence.

5§ 4319. Refunds.

6Under Article XXVII of the act of March 4, 1971 (P.L.6,
7No.2), known as the Tax Reform Code of 1971, the department
8shall refund all taxes, interest and penalties paid to the
9Commonwealth under the provisions of this chapter to which the
10Commonwealth is not rightfully entitled. The refunds shall be
11made to the person or the person's heirs, successors, assigns or
12other personal representatives who paid the tax, provided that
13no refund shall be made under this section regarding a payment
14made by reason of an assessment where a taxpayer has filed a
15petition for reassessment under section 2702 of the Tax Reform
16Code of 1971 to the extent the petition is adverse to the
17taxpayer by a decision which is no longer subject to further
18review or appeal. Nothing in this chapter shall prohibit a
19taxpayer who has filed a timely petition for reassessment from
20amending it to a petition for refund where the petitioner paid
21the tax assessed.

22§ 4320. Refund petition.

23(a) General rule.--Except as provided for in subsection (b),
24the refund or credit of tax, interest or penalty provided for by
25section 4319 (relating to refunds) shall be made only where the
26person who has paid the tax files a petition for refund with the
27department under Article XXVII of the act of March 4, 1971
28(P.L.6, No.2), known as the Tax Reform Code of 1971, within the
29time limits of section 3003.1 of the Tax Reform Code of 1971.

30(b) Natural gas severance tax.--A refund or credit of tax,
 

1interest or penalty paid as a result of an assessment made by 
2the department under section 4306 (relating to assessments) 
3shall be made only where the person who has paid the tax files 
4with the department a petition for a refund with the department 
5under Article XXVII of the Tax Reform Code of 1971 within the 
6time limits of section 3003.1 of the Tax Reform Code of 1971. 
7The filing of a petition for refund under the provisions of this 
8subsection shall not affect the abatement of interest, additions 
9or penalties to which the person may be entitled by reason of 
10his payment of the assessment.

11§ 4321. Rules and regulations.

12The department is charged with the enforcement of the
13provisions of this chapter and is authorized and empowered to
14prescribe, adopt, promulgate and enforce rules and regulations
15not inconsistent with the provisions of this chapter relating to
16any matter or thing pertaining to the administration and
17enforcement of the provisions of this chapter and the collection
18of taxes, penalties and interest imposed by this chapter. The
19department may prescribe the extent, if any, to which any of the
20rules and regulations shall be applied without retroactive
21effect.

22§ 4322. Recordkeeping.

23(a) General rule.--Every person liable for any tax imposed
24by this chapter, or for the collection of the tax, shall keep
25records, including those enumerated in subsection (b), render
26statements, make returns and comply with the rules and
27regulations as the department may prescribe regarding matters
28pertinent to the person's business. Whenever it is necessary,
29the department may require a person, by notice served upon the
30person or by regulations, to make returns, render statements or

1keep records as the department deems sufficient to show whether
2or not a person is liable to pay tax under this chapter.

3(a.1) Records.--Records to be maintained are:

4(1) Wellhead meter charts for each reporting period and
5the meter calibration and maintenance records. If turbine
6meters are in use, the maintenance records will be made
7available to the department upon request.

8(2) Records, statements and other instruments furnished
9to a producer by a person to whom the producer delivers for
10sale, transport or delivery of natural gas.

11(3) Records, statements and other instruments as the
12department may prescribe by regulation.

13(b) Records of nonresidents.--A nonresident who does
14business in this Commonwealth as a producer shall keep adequate
15records of the business and of the tax due as a result. The
16records shall be retained within this Commonwealth unless
17retention outside this Commonwealth is authorized by the
18department. The department may require a taxpayer who desires to
19retain records outside this Commonwealth to assume reasonable
20out-of-State audit expenses.

21(c) Keeping of separate records.--A producer who is engaged
22in another business or businesses which do not involve the
23severing of natural gas taxable under this chapter shall keep
24separate books and records of the businesses so as to show the
25taxable severing of natural gas under this chapter separately
26from other business activities not taxable hereunder. If any
27person fails to keep separate books and records, the person
28shall be liable for a penalty equaling 100% of tax due under
29this chapter for the period where separate records were not
30maintained.

1§ 4323. Examinations.

2The department or any of its authorized agents are authorized
3to examine the books, papers and records of any taxpayer in
4order to verify the accuracy and completeness of any return made
5or, if no return was made, to ascertain and assess the tax
6imposed by this chapter. The department may require the
7preservation of all books, papers and records for any period
8deemed proper by it but not to exceed three years from the end
9of the calendar year to which the records relate. Every taxpayer
10is required to give to the department or its agent the means,
11facilities and opportunity for examinations and investigations
12under this section. The department is further authorized to
13examine any person, under oath, concerning the taxable severing
14of natural gas by any taxpayer or concerning any other matter
15relating to the enforcement or administration of this chapter,
16and to this end may compel the production of books, papers and
17records and the attendance of all persons whether as parties or
18witnesses whom it believes to have knowledge of relevant
19matters. The procedure for the hearings or examinations shall be
20the same as that provided by the act of April 9, 1929 (P.L.343,
21No.176), known as The Fiscal Code.

22§ 4324. Unauthorized disclosure.

23Any information gained by the department as a result of any
24return, examination, investigation, hearing or verification
25required or authorized by this chapter shall be confidential
26except for official purposes and except in accordance with
27proper judicial order or as otherwise provided by law, and any
28person unlawfully divulging the information shall be guilty of a
29misdemeanor and shall, upon conviction, be sentenced to pay a
30fine of not more than $1,000 and costs of prosecution or to

1imprisonment for not more than one year, or both.

2§ 4325. Cooperation with other governments.

3Notwithstanding the provisions of section 4317 (relating to 
4tax suit reciprocity), the department may permit the 
5Commissioner of the Internal Revenue Service of the United 
6States, the proper officer of any state or the authorized 
7representative of either of them to inspect the tax returns of 
8any taxpayer, or may furnish to the commissioner or officer or 
9to either of their authorized representative an abstract of the 
10return of any taxpayer, or supply him with information 
11concerning any item contained in any return or disclosed by the 
12report of any examination or investigation of the return of any 
13taxpayer. This permission shall be granted only if the laws of 
14the United States or another state grant substantially similar 
15privileges to the proper officer of the Commonwealth charged 
16with the administration of this chapter.

17§ 4326. Bonds.

18(a) Taxpayer to file bond.--The department may require a 
19nonresident natural person or any foreign corporation, 
20association, fiduciary or other entity, not authorized to do 
21business within this Commonwealth or not having an established 
22place of business in this Commonwealth and subject to the tax 
23imposed by section 4303 (relating to imposition of tax), to file 
24a bond issued by a surety company authorized to do business in 
25this Commonwealth and approved by the Insurance Commissioner as 
26to solvency and responsibility, in amounts as it may fix, to 
27secure the payment of any tax or penalties due or which may 
28become due from a nonresident natural person, corporation, 
29association, fiduciary or other entity whenever it deems it 
30necessary to protect the revenues obtained under this chapter.
 

1The department may also require a bond of a person petitioning 
2the department for reassessment in the case of any assessment 
3over $500 or where, in its opinion, the ultimate collection is 
4in jeopardy. For a period of three years, the department may 
5require a bond of any person who has, on three or more occasions 
6within a 12-month period, either filed a return or made payment 
7to the department more than 30 days late. In the event the 
8department determines a taxpayer is required to file a bond, it 
9shall give notice to the taxpayer specifying the amount of the 
10bond required. The taxpayer shall file the bond within five days 
11after notice is given by the department unless, within five 
12days, the taxpayer shall request in writing a hearing before the 
13Secretary of Revenue or his representative. At the hearing, the 
14necessity, propriety and amount of the bond shall be determined 
15by the Secretary of Revenue or his representative. The 
16determination shall be final and the taxpayer shall comply with 
17it within 15 days after notice is mailed to the taxpayer.

18(b) Securities in lieu of bond.--In lieu of the bond 
19required by this section securities approved by the department 
20or cash in a prescribed amount may be deposited. The securities 
21or cash shall be kept in the custody of the department. The 
22department may apply the securities or cash to the tax imposed 
23by this chapter and interest or penalties due without notice to 
24the depositor. The securities may be sold by the department to 
25pay the tax and/or interest or penalties due at public or 
26private sale upon five days' written notice to the depositor.

27(c) Failure to file bond.--The department may file a lien
28under section 4316 (relating to tax liens) against any taxpayer
29who fails to file a bond when required to do so under this
30section. All funds received upon execution of the judgment on

1the lien shall be refunded to the taxpayer with 3% interest,
2should a final determination be made that it does not owe any
3payment to the department.

4§ 4327. Natural Gas Severance Tax Account.

5(a) Account established.--The Natural Gas Severance Tax
6Account is established as a restricted account within the
7General Fund.

8(b) Deposits.--The proceeds of the tax imposed under section
94303 (relating to imposition of tax) and penalties and interest
10imposed under this chapter shall be deposited into the account.

11(c) Use of moneys.--The money in the account shall only be
12used in accordance with section 4328 (relating to transfers and
13distributions).

14§ 4328. Transfers and distributions.

15On the last business day of each calendar month, the State
16Treasurer shall make the following transfers and distributions
17of the money in the Natural Gas Severance Tax Account:

18(1) Sixteen percent to the General Fund.

19(2) Twenty-nine and six-tenths percent to the 
20Environmental Stewardship Fund.

21(3) Seventeen and three-tenths percent to the Department
22of Health.

23(3.1) Thirty-two percent to the Department of Education.

24(4) Four and three-tenths percent to the Hazardous Sites
25Cleanup Fund.

26(5) Eight-tenths of one percent to the Department of
27Environmental Protection for State dam removal, restoration
28and repair projects.

29Section 3. This act shall take effect immediately.