PRINTER'S NO. 1789
No. 1527 Session of 1981
INTRODUCED BY MURPHY, MICHLOVIC, WACHOB, KUKOVICH, MORRIS,
PETRARCA, COHEN, HOEFFEL, PISTELLA, DOMBROWSKI, BROWN, EVANS,
STUBAN, SWAIM, J. D. WILLIAMS, RICHARDSON, CLARK, WAMBACH,
VAN HORNE, WHITE AND GALLAGHER, JUNE 15, 1981
REFERRED TO COMMITTEE ON FINANCE, JUNE 15, 1981
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," imposing taxes on the production of natural gas
11 and oil and providing for their collection and enforcement.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15 the "Tax Reform Code of 1971," is amended by adding articles to
16 read:
17 ARTICLE VI-A
18 NATURAL GAS PRODUCTION TAX
19 PART I
20 DEFINITIONS
21 Section 601-A. Definitions.--The following words, terms and
1 phrases when used in this article shall have the meanings
2 ascribed to them in this article, except where the context
3 clearly indicates a different meaning:
4 "Carrier." The owner, operator or manager of any means of
5 transporting gas or any instrumentality that may now be used or
6 come into use for such purpose.
7 "Casinghead gas." Gas or vapor indigenous to an oil stratum
8 and produced from such stratum with oil.
9 "Cubic foot of gas" or "standard cubic foot of gas." The
10 volume of gas (including natural and casinghead) contained in
11 one cubic foot of space at a standard pressure base and at a
12 standard temperature base. The standard pressure base shall be
13 fourteen and sixty-five hundredths pounds per square inch
14 absolute, and the standard temperature base shall be sixty
15 degrees fahrenheit. Whenever the conditions of pressure and
16 temperature differ from the above standard, conversion of the
17 volume from these conditions to the standard conditions shall be
18 made in accordance with the Ideal Gas Laws, corrected for
19 deviation.
20 "Department." The Department of Revenue of the Commonwealth.
21 "First purchaser." Any person purchasing gas from the
22 producer.
23 "Gas." Natural and casinghead gas or other gas taken from
24 the earth or waters, regardless of whether produced from a gas
25 well or from a well also productive of oil, distillate or
26 condensate, or other products.
27 "Market value." Market value as determined pursuant to
28 section 603-A.
29 "Person." Any person, firm, concern, receiver, trustee,
30 executor, administrator, agent, institution, association,
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1 partnership, company, corporation and persons acting under
2 declarations of trust as well as the trustees acting under such
3 declarations of trust.
4 "Producer." Any person owning, controlling, managing or
5 leasing any gas well or any person who produces in any manner
6 any gas by taking it from the earth or waters in this
7 Commonwealth, and shall include any person owning any royalty or
8 other interest in any gas or its value whether produced by him,
9 or by some other person on his behalf, either by lease,
10 contract, or otherwise.
11 "Production" or "total gas produced." The total gross amount
12 of gas produced including all royalty or other interest; that
13 is, the amount for the purpose of the tax imposed by this
14 article shall be measured or determined by meter readings
15 showing one hundred per cent of the full volume express in cubic
16 feet.
17 "Report." Any report required to be furnished in this
18 article or that may be required by the department in the
19 administration of this article.
20 "Royalty owners." All persons owning any mineral rights
21 under any producing leasehold within this Commonwealth, other
22 than the working interest, which working interest is that of the
23 person having the management and operation of the well.
24 "Sour gas." Any natural gas containing more than one and
25 one-half grains of hydrogen sulphide per one hundred cubic feet,
26 or more than thirty grains of total sulphur per one hundred
27 cubic feet.
28 "Subsequent purchaser." Any person who purchases gas for any
29 purpose whatsoever, when said gas is purchased from any person
30 other than the producer.
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1 "Sweet gas." All natural gas except sour gas and casinghead
2 gas.
3 PART II
4 IMPOSITION AND CALCULATION OF TAX
5 Section 602-A. Imposition of Tax.--(a) There is hereby
6 levied an occupation tax on the business or occupation of
7 producing gas within this Commonwealth which tax shall be paid
8 by each producer on the amount of gas produced and saved within
9 this Commonwealth at a rate equivalent to seven and one-half per
10 cent of the market value of the gas as and when produced.
11 (b) The tax imposed by subsection (a) shall not be imposed
12 upon:
13 (1) Gas injected into the earth in this Commonwealth, unless
14 sold for such purpose.
15 (2) Gas produced from oil wells with oil and lawfully vented
16 or flared.
17 (3) Gas used for lifting oil, unless sold for such purposes.
18 Section 603-A. Market Value of Gas.--(a) The market value
19 of gas produced in this Commonwealth shall be the value thereof
20 at the mouth of the well; however, in case gas is sold for cash
21 only, the tax shall be computed on the producer's gross cash
22 receipts. Payments made by purchasers to producers for the
23 purpose of reimbursing such producers for taxes due under this
24 article shall not be considered a part of the producer's gross
25 cash receipts. In all cases where the whole or a part of the
26 consideration for the sale of gas is a portion of the products
27 extracted from the producer's gas or a portion of the residue
28 gas, or both, the tax shall be computed on the gross value of
29 all things of value received by the producer, including any
30 bonus or premium. However, notwithstanding any other provision
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1 in this article to the contrary, where gas is processed for its
2 liquid hydrocarbon content and the residue gas is returned by
3 cycling methods, as distinguished from repressuring or pressure
4 maintenance methods, to some gas producing formation, the
5 taxable value of such gas shall be three-fifths of the gross
6 value of all liquids extracted, separated and saved from such
7 gas, such value to be determined upon separation and extraction
8 and prior to absorption, refining or processing of such
9 hydrocarbons and such value prior to refining shall be the value
10 of the highest posted price of crude oil in the field where the
11 gas is produced or in the nearest oil field in the event no oil
12 is produced in the field and the quantity of the products shall
13 be measured by the total yield of the processing plant from the
14 gas.
15 (b) (1) All condensate recovered from gas shall be taxed at
16 the same rate as oil and shall be valued for the purpose of
17 computing the tax due thereon at the prevailing market price for
18 condensate in the general area where the same is recovered. The
19 term "condensate" shall include all liquid hydrocarbons that are
20 or can be recovered from gas by means of a separator but shall
21 not include any liquid hydrocarbons which can only be recovered
22 from gas by refrigeration or absorption and separated by a
23 fractionating process.
24 (2) Where additional liquid hydrocarbons other than
25 condensate are recovered from gas the taxable value of such
26 additional liquid hydrocarbons shall be determined by deducting
27 from the total receipts of the producer for all liquid
28 hydrocarbons recovered from his gas the taxable value assigned
29 to the condensate and the rate established in section 602 shall
30 be applied to the difference to determine the tax due under this
19810H1527B1789 - 5 -
1 article on the additional liquid hydrocarbons.
2 PART III
3 COLLECTION; PROCEDURE; ENFORCEMENT; PENALTIES
4 Section 604-A. Records and Payments.--(a) The tax levied
5 under this article shall be a liability of the producer of gas
6 and it shall be the duty of each such producer to keep accurate
7 records in this Commonwealth of all gas produced, making monthly
8 reports as provided in this article.
9 (b) The purchaser of gas shall pay the tax on all gas
10 purchased and deduct the tax so paid from the payment due the
11 producer or other interest holders, making such payments so
12 deducted to the department by legal tender or cashier's check
13 payable to the Commonwealth of Pennsylvania. Such moneys so
14 deducted from payments due producers for the payment of the tax
15 shall be held by the purchaser in trust for the use and benefit
16 of the Commonwealth of Pennsylvania and shall not be commingled
17 with any other funds held by the purchaser, and shall be
18 remitted to the department in accordance with the terms and
19 provisions of this article and any other applicable provisions
20 of this act. It shall be the duty of each such purchaser to keep
21 accurate records in this Commonwealth of all such gas purchased.
22 (c) The tax levied under this article shall be due and
23 payable at the office of the department in Harrisburg on the
24 last day of the calendar month, based on the amount of gas
25 produced and saved during the preceding calendar month, and on
26 or before said date each such producer shall make and deliver to
27 the department a report on forms prescribed by the department
28 showing the gross amount of gas produced, less the exclusions
29 and at the pressure base set out herein, upon which the tax
30 herein levied accrues, together with details as to amounts of
19810H1527B1789 - 6 -
1 gas, from what leases said gas was produced, the correct name
2 and address of the first purchaser of said gas, and such other
3 information as the department may desire. The report shall be
4 accompanied by legal tender or cashier's check payable to the
5 Commonwealth of Pennsylvania for the proper amount of taxes
6 levied. In no event shall a producer be relieved of
7 responsibility for the tax until the tax shall have been paid,
8 and in the event the amount of the tax shall be withheld by a
9 purchaser from payments due a producer and the purchaser fails
10 to make payment of the tax to the Commonwealth as provided in
11 this subsection the producer may bring legal action against such
12 a purchaser to recover the amount of tax so withheld, together
13 with penalties and interest which may have accrued by failure to
14 make such payment and shall be entitled to reasonable attorney's
15 fees and court costs incurred by legal action.
16 (d) Unless payment of tax on all gas produced during any
17 month or fractional part thereof shall be made on or before the
18 date due as specified, in this section, such payment shall
19 become delinquent and a penalty of five per cent of the amount
20 of the tax shall be added and after the first thirty days shall
21 be forfeited an additional five per cent of such tax. However,
22 in no event shall the penalty be less than one dollar ($1).
23 Delinquent taxes shall bear interest at the rate of six per cent
24 per annum beginning sixty days from the date due.
25 (e) The tax levied under this article shall be borne ratably
26 by all interested parties, including royalty interests.
27 Producers or purchasers of gas are hereby authorized and
28 required to withhold from any payment due interested parties,
29 the proportionate tax due and remit the same to the department.
30 Section 605-A. Liability for Tax.--(a) The tax imposed
19810H1527B1789 - 7 -
1 under this article on the producing of gas shall be the primary
2 liability of the producer and every person purchasing gas from
3 the producer thereof and taking delivery thereof at or near the
4 premises where produced shall collect the tax imposed under this
5 article from the producer. Every purchaser including the first
6 purchaser and the subsequent purchaser, required to collect any
7 tax under this article, shall make such collection by deducting
8 and withholding the amount of such tax from any payments made by
9 such purchaser to the producer, and remit same as herein
10 provided.
11 (b) When it shall appear that a taxpayer to whom the
12 provisions of this article shall apply has erroneously paid more
13 taxes than were due during any taxpaying period either on
14 account of a mistake of fact or law, it shall be the duty of the
15 department to credit the total amount of taxes due by such
16 taxpayer for the current period with the total amount of taxes
17 so erroneously paid.
18 (c) The tax levied under this article shall be a liability
19 upon the producer, the first purchaser and subsequent purchaser
20 or purchasers provided in this article.
21 (d) The tax levied under this article shall be paid by the
22 first purchaser purchasing the same from the producer, who shall
23 deduct the same from the amount paid the producer. However, the
24 failure of first purchaser to pay the tax shall not relieve the
25 producer from the payment of the tax, nor shall it relieve any
26 subsequent purchaser from the payment of the tax, where the
27 first purchaser does not account for and pay the tax. It shall
28 be the duty of every person purchasing gas produced in this
29 Commonwealth to satisfy himself that the tax on gas has been or
30 will be paid by the persons primarily liable for such payment.
19810H1527B1789 - 8 -
1 Section 606-A. Investigations and Verifying Reports.--In
2 addition to any other applicable enforcement powers granted
3 under this act, the department shall employ auditors or other
4 technical assistants for the purpose of verifying reports and
5 investigating the affairs of producers and purchasers to
6 determine whether the tax is being properly reported and paid.
7 Agents and employes of the department shall have the power to
8 enter upon the premises of any taxpayer liable for a tax under
9 this article, and any other premises necessary in determining
10 the correct tax liability, and to examine, or cause to be
11 examined, any books, or records of any person, subject to a tax
12 under this article and to secure any other information directly
13 or indirectly concerned in the enforcement of this article and
14 to promulgate and enforce, according to law, rules and
15 regulations pertinent to the enforcement of this article which
16 shall have the full force and effect of law.
17 Section 607-A. Delinquent Taxes.--In the event any person
18 engaged in the business of producing any gas in this
19 Commonwealth shall become delinquent in the payment of the
20 proper taxes imposed under this article or fails to file
21 required reports with the department, the Attorney General by a
22 suit in the name of the Commonwealth of Pennsylvania shall have
23 the right to enjoin such person from producing gas until the
24 delinquent tax is paid or said reports filed.
25 Section 608-A. Penalty for Violation.--Any person, firm,
26 association or corporation shall be subject to a penalty of not
27 less than one hundred dollars ($100) nor more than one thousand
28 dollars ($1,000) for failure or omission to keep the records
29 required in this article, or for the violation of any of the
30 other provisions of this article, and each day's violation shall
19810H1527B1789 - 9 -
1 constitute a separate offense. The Commonwealth shall have a
2 prior lien for all delinquent taxes, penalties and interest on
3 all property and equipment used by the producer of gas in his
4 business of producing gas, and if any producer of gas shall fail
5 to remit the proper taxes, penalties, and interest due, or any
6 of them, the department may employ auditors or other persons to
7 ascertain the correct amount due, and the producer of gas shall
8 be liable, as additional penalty, for the reasonable expenses or
9 the reasonable value of such services of representatives of the
10 department, incurred in such investigation and audit. All funds
11 collected for audits and examinations shall be placed in the
12 General Fund. The Attorney General shall file suit in the name
13 of the Commonwealth of Pennsylvania for all delinquent taxes,
14 penalties and other amounts due and for the enforcement of all
15 liens under this article.
16 Section 609-A. Suit to Collect Tax; Report or Audit as
17 Evidence; Report of Transfer.--(a) If any producer or purchaser
18 of natural or casinghead gas fails or refuses to pay any tax,
19 penalty or interest within the time and manner provided by this
20 article and it becomes necessary to bring suit or to intervene
21 in any manner for the establishment or collection of said claim
22 in any judicial proceedings, any report filed with the
23 department by the producer or purchaser, or representative of
24 the producer or purchaser or a certified copy thereof certified
25 to by the department showing the amount of gas produced on which
26 tax, penalties or interest have not been paid, or any audit made
27 by the department or his representative from the books of the
28 producer or purchaser when filed and sworn to by such
29 representative as being made from the records of the producer or
30 purchaser, such report or audit shall be admissible in evidence
19810H1527B1789 - 10 -
1 in such proceedings and shall be prima facie evidence of the
2 contents thereof. However, the incorrectness of the report or
3 audit may be shown and the report or audit may be admitted in
4 evidence only against the party by or from whom it was made.
5 (b) In the event the Attorney General shall file suit or
6 claim for taxes, and attach or file as an exhibit any report or
7 audit of a producer or purchaser, and an affidavit made by the
8 department that the taxes shown to be due by the report or audit
9 are past due and unpaid and that all payments and credits have
10 been allowed, then, unless the party resisting the same shall
11 file an answer the audit or report shall be taken as prima facie
12 evidence thereof.
13 Section 610-A. Removal of Gas; Report of Transfer.--(a) On
14 notice from the department, it shall be unlawful for any person
15 to produce or remove any natural or casinghead gas from any
16 lease in this Commonwealth whenever the owner or operator of
17 said lease has failed to file reports as required under the
18 provisions of this article.
19 (b) Whenever any lease producing natural or casinghead gas
20 changes hands, it shall be the duty of the owner or operator of
21 said lease to note on his last report that said lease has been
22 sold or transferred, showing the effective date of the change
23 and the name and address of the individual, firm, association,
24 joint stock company, syndicate, copartnership, corporation,
25 agency or receiver who will operate said lease and be
26 responsible for the filing of reports provided for in this
27 article. It further shall be the duty of the new owner or
28 operator of said lease to note on his first report that the
29 lease has been acquired, showing the effective date of the
30 change and the name and address of the individual, firm,
19810H1527B1789 - 11 -
1 association, joint stock company, syndicate, copartnership.
2 corporation, agency or receiver formerly owning or operating the
3 lease.
4 Section 611-A. False Entries; Destroying or Secreting
5 Records.--(a) Whoever shall, as a producer or purchaser or as
6 agent or representative of a producer or purchaser, knowingly
7 make any false entries or fail to make any proper entries in the
8 books required by this article with intent to defraud the
9 Commonwealth; or whoever, as such, shall knowingly make a false
10 or incomplete report as required by the provisions of this
11 article; or whoever, as such, shall knowingly fail or refuse to
12 make the report required to be made; or whoever, as such, shall
13 destroy, mutilate, or secrete any of the records required to be
14 kept by the provisions of this article; or whoever shall, as
15 such, hide or secrete with intent to defraud, any of the
16 property upon which a lien is created hereunder, shall be guilty
17 of a misdemeanor of the third degree.
18 (b) In addition to the criminal penalty provided in
19 subsection (a), such producer or purchaser or agent thereof
20 shall forfeit to the Commonwealth of Pennsylvania for any said
21 offense or the violation of any of the provisions hereof, or any
22 rule or regulation, a penalty of one thousand dollars ($1,000)
23 for each such offense to be recovered by the Attorney General in
24 a civil suit in the name of the Commonwealth of Pennsylvania.
25 Each suit may be brought separately or joined and made a part of
26 any one civil suit provided for by this article. The penalties
27 prescribed in this section, both criminal and civil, are in
28 addition to any and all other penalties prescribed in this
29 article.
30 Section 612-A. Incorporation of Other Procedures;
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1 Enforcement Provisions and Penalties.--To the extent they are
2 not otherwise provided for in this article or are inconsistent
3 or otherwise inapplicable, the provisions of Parts III, IV, V,
4 VI and VII of Article IV are incorporated by reference into this
5 article insofar as they are applicable to the tax imposed under
6 this article.
7 ARTICLE VI-B
8 OCCUPATION TAX ON OIL PRODUCED
9 PART I
10 DEFINITIONS
11 Section 601-B. Definitions.--The following words, terms and
12 phrases when used in this article shall have the meaning
13 ascribed to them in this section except where the context
14 clearly indicates a different meaning:
15 "Barrel." A measure containing forty-two standard gallons.
16 "Carrier." The owner, operator or manager of any means of
17 transporting oil or any instrumentality that may now be used or
18 come into use.
19 "Commission." The Pennsylvania Public Utility Commission.
20 "Department." The Department of Revenue of the Commonwealth.
21 "First purchaser." Any person purchasing crude oil from the
22 producer.
23 "Market value." Market value as determined pursuant to
24 section 602-B(b).
25 "Oil." Crude oil or other oil taken from the earth,
26 regardless of gravity of the oil.
27 "Person." Any person, firm, concern, receiver, trustee,
28 executor, administrator, agent, institution, association,
29 partnership, company, corporation and persons acting under
30 declarations of trust as well as the trustees acting under such
19810H1527B1789 - 13 -
1 declarations of trust.
2 "Producer." Any person owning, controlling, managing or
3 leasing any oil well or any person who produces in any manner
4 any oil taking it from the earth or waters in this Commonwealth
5 and shall include any person owning any royalty or other
6 interest in any oil or its value whether produced by him or by
7 some other person on his behalf, either by lease, contract or
8 otherwise.
9 "Production" or "total oil produced." The total gross amount
10 of oil produced including all royalty or other interest; that
11 is, the amount for the purpose of the tax imposed by this
12 article shall be measured or determined:
13 (1) by tank tables compiled to show one hundred per cent of
14 the full capacity of the tanks without deductions for coverage
15 or losses in handling; or
16 (2) by meter or other measuring device which accurately
17 determines the volume of "production" or "total oil produced."
18 Allowances for any reasonable and bona fide deduction for basic
19 sediment and water and for correction of temperature to sixty
20 degrees fahrenheit will be allowed. If the amount of oil
21 produced has been measured or determined by tank compiled to
22 show less than one hundred per cent of the full capacity of
23 tanks, then such amount shall be raised to a basis of one
24 hundred per cent for the purpose of the tax imposed by this
25 article.
26 "Report." Any report required to be furnished in this
27 article or that may be required by the department in the
28 administration of this article.
29 "Royalty owners." All persons owning any mineral rights
30 under any producing leasehold within this Commonwealth, other
19810H1527B1789 - 14 -
1 than the working interest, which working interest, is that of
2 the person having the management and operation of the well.
3 "Subsequent purchaser." Any person operating any reclamation
4 plant, topping plant, treating plant, refinery, or any kind or
5 character of processing plant, or anyone who purchases oil for
6 any purpose whatsoever, when the oil is purchased from any
7 person other than the producer.
8 PART II
9 IMPOSITION AND COMPUTATION OF TAX
10 Section 602-B. Imposition and Computation of Tax.--(a)
11 There is hereby levied an occupation tax on the business or
12 occupation of producing oil within this Commonwealth which tax
13 shall be at a rate equivalent to ten per cent of the market
14 value of the oil as and when produced.
15 (b) The market value of oil shall be the actual market value
16 of the oil plus any bonus or premiums or other things of value
17 paid therefor or the market value such oil will reasonably bring
18 if produced in accordance with the laws, rules and regulations
19 of the Commonwealth.
20 (c) The tax levied by this chapter shall be computed upon
21 the total barrels of oil produced or salvaged from the earth or
22 waters of this Commonwealth without any deductions and shall be
23 computed:
24 (1) by tank tables showing one hundred per cent of
25 production and exact measurements of contents; or
26 (2) by meter or by other measuring device which accurately
27 determines the volume of production or total oil produced.
28 PART III
29 COLLECTION; PROCEDURE; ENFORCEMENT; PENALTIES
30 Section 603-B. Primary Liability; Mode of Payment; Refunds;
19810H1527B1789 - 15 -
1 Penalties.--(a) The tax imposed under this article on the
2 producing of oil shall be the primary liability of the producer
3 and every person purchasing crude petroleum from the producer
4 thereof and taking delivery thereof at the premises where
5 produced shall collect said tax imposed by this article from the
6 producer. Every purchaser including the first purchaser and the
7 subsequent purchaser, required to collect any tax under this
8 article, shall make such collection by deducting and withholding
9 the amount of such tax from any payments made by such purchaser
10 to the producer and remit same as provided in this article.
11 (b) When it shall appear that a taxpayer to whom the
12 provisions of this article shall apply has erroneously paid more
13 taxes than were due during any taxpaying period either on the
14 account of a mistake of fact or law, it shall be the duty of the
15 department to credit the total amount of taxes due by such
16 taxpayer for the current period with the total amount of taxes
17 so erroneously paid.
18 (c) The tax under this article shall be a liability upon the
19 producer, the first purchaser or subsequent purchaser or
20 purchasers provided in this article.
21 (d) The tax levied under this article shall be paid by the
22 first purchaser purchasing the same from the producer, who shall
23 deduct the same from the amount paid producer. However, the
24 failure of first purchaser to pay the tax shall not relieve the
25 producer from its payment, nor shall it relieve any subsequent
26 purchaser from the payment of same, where the first purchaser
27 does not account for and pay the tax, and the Commonwealth shall
28 have a lien on all of the oil produced in Pennsylvania in the
29 hands of the producer, the first purchaser and any subsequent
30 purchaser to secure the payment of the tax, and it shall be the
19810H1527B1789 - 16 -
1 duty of every person purchasing oil produced in Pennsylvania to
2 satisfy himself that the tax on the oil has been or will be paid
3 by the persons primarily liable therefor.
4 (e) If the oil produced by a producer is not sold during the
5 month in which it is produced, then the producer shall pay the
6 tax at the same rate and in the same manner as if the oil were
7 sold during that month. In such case, however, the working
8 interest operator may pay the tax and deduct it from the
9 interest of the other interest holders.
10 (f) The tax levied under this article shall be borne ratably
11 by all interested parties, including royalty interests, and
12 producers or purchasers of oil are hereby authorized and
13 required to withhold from any payment due interested parties the
14 proportionate tax due.
15 (g) The tax levied under this chapter shall be a liability
16 of the producer of oil and it shall be the duty of the producer
17 to keep accurate records of all oil produced, making monthly
18 reports as provided in this article.
19 (h) The purchaser of oil shall pay the tax on all oil
20 purchased and deduct the tax so paid from payment due the
21 producer or other interest holder, making such payments so
22 deducted to the department by legal tender or cashier's check
23 payable to the Commonwealth of Pennsylvania. However, if the oil
24 produced is not sold during the month in which it is produced,
25 then the producer shall pay the tax at the same rate and in the
26 manner as if the oil were sold.
27 (i) The tax levied under this article shall be paid monthly
28 on the twenty-fifth day of each month on all oil produced during
29 the month next preceding by the purchaser or the producer as the
30 case may be, but in no event shall a producer be relieved of
19810H1527B1789 - 17 -
1 responsibility for the tax until the tax shall have been paid.
2 In event the amount of the tax levied under this article shall
3 be withheld by a purchaser from payments due a producer and the
4 purchaser fails to make payment of the tax to the department as
5 provided by this article the producer may bring legal action
6 against the purchaser to recover the amount of tax withheld,
7 together with penalties and interest which may have accrued by
8 failure to make payments and shall be entitled to reasonable
9 attorneys fees and court costs incurred by such legal action.
10 (j) Unless payment of the tax on all oil produced during any
11 month or fractional part thereof shall be made on or before the
12 twenty-fifth of the month immediately following, such payment
13 shall become delinquent and a penalty of five per cent of the
14 amount of the tax shall be added, and after the first thirty
15 days shall be forfeited an additional five per cent of such tax;
16 said penalty shall never be less than one dollar ($1).
17 Delinquent taxes shall bear interest at the rate of six per cent
18 per annum beginning sixty days from the date due.
19 Section 604-B. Records and Reports.--(a) A complete record
20 shall be kept by every producer of oil within this Commonwealth
21 which records shall show the county or counties in which the
22 producer operates, the correct name or names of the lease or
23 leases from which oil is produced, the total number of barrels
24 of oil produced from each lease, the correct name and address of
25 the first purchaser, the total number of barrels of oil sold or
26 delivered to each first purchaser and the price received
27 therefor. In addition each producer shall keep a record of all
28 oil used on the lease from which said oil is produced, and if
29 the oil is not sold, the location of storage and the total
30 number of barrels in storage, if owned by such operator, or if
19810H1527B1789 - 18 -
1 stored with a pipeline or refinery.
2 (b) Every producer shall file monthly on the twenty-fifth
3 day of each month with the department under oath of the producer
4 or his duly authorized agent a report showing the total number
5 of barrels of oil produced by the producer during the month
6 preceding the date of the report, the county in which the oil is
7 produced, the correct name of the lease from which the oil is
8 produced, the correct name and address of the first purchaser of
9 said oil and the price received therefor, and such other
10 information as the department may require. Such records and
11 reports shall be open to the inspection of the department or the
12 Attorney General and their duly authorized agents.
13 (c) Every first purchaser shall keep in this Commonwealth
14 records showing the correct name and address of the producer
15 from whom the first purchaser buys oil, the county in which the
16 oil is produced, the true and correct name of the lease from
17 which said oil is produced, the total number of barrels bought,
18 and the price paid therefor. In addition each producer shall
19 keep a record showing the total number of barrels of oil
20 purchased and used, refined or processed in any manner by the
21 first purchaser and the total number of barrels of oil sold by
22 him, the price received therefor, and the true and correct name
23 and address of the subsequent purchaser of the oil. On the
24 twenty-fifth day of each month each and every first purchaser of
25 oil shall file with the department, under oath of the first
26 purchaser or his duly authorized agent, a report showing the
27 total number of barrels of oil purchased during the preceding
28 month, the price paid therefor, the correct name and address of
29 the producer or producers from whom the oil was purchased, the
30 county in which the oil was produced, and the correct name of
19810H1527B1789 - 19 -
1 the lease from which the oil was produced, and such other
2 information as the department may require. Such records and
3 reports shall be open to the inspection of the department and
4 the Attorney General and their duly authorized agents.
5 (d) Each and every subsequent purchaser, shall keep in this
6 Commonwealth a record showing the correct name and address of
7 each first purchaser or subsequent purchaser from whom any oil
8 is bought, the total number of barrels purchased and the price
9 paid therefor, the date of purchase, the disposition of the oil,
10 the total number of barrels used, refined, or processed in any
11 manner by the subsequent purchaser, and if sold, shall show the
12 correct name and address of the subsequent purchaser to whom the
13 oil is sold or delivered and the date of said sale and delivery,
14 and the price received therefor.
15 (e) Each and every subsequent purchaser shall file with the
16 department on the twenty-fifth day of each month a report under
17 oath of the subsequent purchaser or a duly authorized agent
18 showing the correct name and address of the person from whom the
19 subsequent purchaser has bought oil during the preceding month,
20 the total number of barrels purchased, the price paid therefor,
21 and the disposition of said oil. Such reports shall show the
22 total number of barrels of oil used, refined, or processed in
23 any manner by the subsequent purchaser and the correct name and
24 address of any subsequent purchaser to whom the oil was sold and
25 the number of barrels sold, and the price received therefor.
26 Such records and reports shall be open to the inspection of the
27 department and the Attorney General and their duly authorized
28 agents.
29 (f) Royalty owners shall only keep a record of all moneys
30 received as royalty from any producing leasehold within this
19810H1527B1789 - 20 -
1 Commonwealth. They shall also keep a copy of all settlement
2 sheets furnished them by the purchaser or operator or any other
3 statement showing the number of barrels of oil from which
4 royalty was received and the amount of tax deducted. Such
5 records shall be open to the inspection of the department and
6 the Attorney General and their duly authorized agents.
7 (g) Every carrier, including all railroads, barges, trucks,
8 or pipelines, carrying or transporting oil for hire, for
9 themselves or their owners, shall keep in this Commonwealth
10 complete and accurate record of all oil so handled by months,
11 showing date received, number of barrels, of whom received,
12 point of delivery, to whom delivered and manner of
13 transportation, and such records shall be open to the inspection
14 of the duly authorized agents of the department and the Attorney
15 General at all times, and, if requested by the department, shall
16 furnish information and reports of movements as often as
17 required by the department under this article.
18 Section 605-B. Purchasers to Deduct Tax.--Purchasers buying
19 oil from properties in litigation or in receivership,
20 bankruptcy, or any other legal proceedings, or covered by
21 assignments, are required to deduct the amount of the taxes
22 levied by this article, before payment is made to the producers,
23 trustees, assignees or to any person who claims ownership of
24 said funds, or before the proceeds of the purchase of oil is
25 impounded or escrowed by the purchaser pending such litigation
26 or tenure of assignments, and shall remit the tax deducted in
27 the same manner as if the oil had been purchased from any other
28 source. The purchaser shall not be liable to any claimant of
29 said funds on account of payment of the tax.
30 Section 606-B. Reports to Department.--At the time of filing
19810H1527B1789 - 21 -
1 the reports required, the first purchaser shall pay to the
2 department by legal tender or cashier's check, payable to the
3 Commonwealth, the tax required to be paid. Failure to pay the
4 tax on the twenty-fifth day of the month immediately following
5 shall cause said tax to become delinquent and a penalty of five
6 per cent of the amount of the tax shall be added, and after the
7 first thirty days shall be forfeited an additional five per cent
8 of said tax; said penalty shall never be less than one dollar
9 ($1). Delinquent taxes shall bear interest at the rate of six
10 per cent per annum beginning sixty days from the date due.
11 Section 607-B. Prior Lien of State for Taxes; Penalties and
12 Interest.--(a) For the tax, penalties and interest herein
13 provided for, the Commonwealth shall have a prior and preferred
14 lien on every leasehold interest, ownership of the oil rights,
15 or the value of oil rights or other interest, including oil
16 produced and oil runs owned by the person owing any tax levied
17 under this article, and in addition thereto the lien shall
18 include equipment, tools, tanks, and all other implements used
19 on the lease from which oil is produced. The lien shall extend
20 to and be enforceable against any property, either real or
21 personal, or both, owned by any person or persons made liable
22 for the tax levied under this article.
23 (b) When any oil is discovered upon which the tax has not
24 been paid as and when required, any authorized official or agent
25 is authorized to levy on the oil by notice to the owner or other
26 person in charge, that the oil is levied on for taxes due on it
27 and after ten days notice posted at the site of the oil, the
28 official or agent shall proceed to sell the oil to the highest
29 bidder for cash. Any money received for the oil in excess of the
30 taxes and ten per cent commission to the agency selling the
19810H1527B1789 - 22 -
1 property, shall be paid by the agency to the owner of the oil.
2 The agency selling the oil shall transmit the amount of the tax
3 to the department. Should the oil sold fail to sell for enough
4 to pay said taxes, the agency selling the oil shall deduct ten
5 per cent of the amount received and forward the balance to the
6 department.
7 Section 608-B. Collection of Delinquent Taxes; Venue;
8 Evidence.--(a) It shall be the duty of the Attorney General to
9 bring legal action for the collection of delinquent taxes
10 levied, and a suit instituted shall attach to oil in storage, in
11 transit, or being produced by such operator.
12 (b) If any producer or purchaser of crude oil, or subsequent
13 purchaser, fails or refuses to pay any tax, penalty, or interest
14 within the time and manner provided by this article and it
15 becomes necessary to bring suit or to intervene in any manner
16 for the establishment or collection of said claim in any
17 judicial proceedings, any report filed in the office of the
18 department by the producer or purchaser or representative of the
19 producer or purchaser or a certified copy thereof certified to
20 by the department showing the amount of crude oil produced or
21 purchased on which such tax, penalties or interest have not been
22 paid, or any audit made by the department from the books of the
23 producer or purchaser when filed and sworn to by such
24 representative as being made from the records of the producer or
25 purchaser. The report or audit shall be admissable in evidence
26 in such proceedings and shall be prima facie evidence of the
27 contents thereof. However, the incorrectness of the report or
28 audit may be shown and the report or audit may be admitted in
29 evidence only against the party by or for whom it was made.
30 (c) In the event the Attorney General shall file suit or
19810H1527B1789 - 23 -
1 claim for taxes as provided in this section and attach or file
2 as an exhibit any report or audit of the producer or purchaser,
3 and an affidavit made by the department that the taxes shown to
4 be due by the report or audit are past due and unpaid; and all
5 payments and credits have been allowed, then, unless the party
6 resisting the same shall file an answer the audit or report
7 shall be taken as prima facie evidence thereof.
8 Section 609-B. Unlawful Removal of Oil from Lease.--On
9 notice from the department, it shall be unlawful for any person
10 to remove any oil from any lease in this Commonwealth whenever
11 the owner or operator of the lease has failed to file reports as
12 required under provisions of this article.
13 Section 610-B. Lease Transfers Noted on Reports.--(a)
14 Whenever any lease producing oil changes hands, it shall be the
15 duty of the owner or operator of the lease to note on his last
16 report that the lease has been sold or transferred, showing the
17 effective date of the change and the name and address of the
18 individual firm, association, joint stock company, syndicate,
19 copartnership, corporation, agency, or receiver who will operate
20 the lease and be responsible for the filing of reports provided
21 for in this article.
22 (b) The new owner or operator of the leases shall note on
23 his first report that said lease has been acquired, showing the
24 effective date of the change and the name and address of the
25 individual, firm, association, joint stock company, syndicate,
26 copartnership, corporation, agency, or receiver formerly owning
27 or operating the lease.
28 Section 611-B. Duties of Department.--(a) The department
29 shall promulgate rules and regulations governing the detail
30 administration of the terms and requirements of this article not
19810H1527B1789 - 24 -
1 specifically mentioned herein and to employ auditors and
2 supervisors for the purpose of verifying reports and
3 investigating the affairs of producers or purchasers to
4 determine whether the tax is being properly reported and paid.
5 Section 612-B. False Entries and Other Unlawful Acts.--
6 Whoever, as producer, first purchaser, subsequent purchaser, or
7 carrier, or whoever shall as a principal or as agent or
8 representative of such principal, knowingly make any false
9 entries or fail to make any proper entries in the books required
10 by this article with intent to defraud the Commonwealth; or
11 whoever as such, shall knowingly make a false or incomplete
12 report as required by this article; or whoever, as such shall
13 knowingly fail or refuse to make the report required to be made;
14 or whoever, as such, shall destroy, mutilate, or secrete any of
15 the records required to be kept by the provisions of this
16 chapter; or whoever shall, as such, hide or secrete with intent
17 to defraud, any of the property upon which a lien is created
18 hereunder, or whoever fails or refuses to permit the department
19 or the Attorney General or their duly authorized agents of
20 either to inspect the records and reports provided for, shall be
21 guilty of a misdemeanor of the third degree.
22 Section 613-B. Interfering with Inspector.--Each and every
23 person appointed by the commission and holding the certificate
24 of the commission authorizing such appointee to inspect oil
25 wells, oil leases, pipe lines, railroad cars or tanks shall have
26 the right of free access to such leases, premises, wells,
27 pipelines, railroad cars, or tanks, and to motor truck tanks, at
28 any and all times for the purpose of inspection with respect to
29 the production and transportation of oil. Any person or owner
30 producing oil in this Commonwealth who shall by objection,
19810H1527B1789 - 25 -
1 interference, or otherwise prevent any person so appointed by
2 the commission from the free right of access to any leases or
3 premises or wells where oil is produced, or who shall in any
4 manner interfere with such representative's examination of any
5 such leases, premises, or wells to ascertain the quantity and
6 time of production of oil, shall be guilty of a misdemeanor of
7 the third degree.
8 Section 614-B. Measuring Oil or Gas.--It shall be unlawful
9 for any person owning, leasing, operating or controlling any oil
10 property within this Commonwealth to permit the oil or gas so
11 produced to pass beyond the possession or control of such person
12 into the possession or control of any other person without first
13 accurately measuring the amount of the oil or gas, and making
14 and preserving an accurate record thereof. It shall also be
15 unlawful for any person to use any method or device to evade the
16 accurate measurement. Upon conviction for a willful violation of
17 any provision hereof, such person shall be deemed guilty of a
18 misdemeanor of the first degree.
19 Section 615-B. Incorporation of Other Procedures;
20 Enforcement Provisions and Penalties.--To the extent they are
21 not otherwise provided for in this article or are inconsistent
22 or otherwise inapplicable, the provisions of Parts III, IV, V,
23 VI and VII of Article IV are incorporated by reference into this
24 article insofar as they are applicable to the tax imposed under
25 this article.
26 Section 2. This act shall apply to all oil and gas produced
27 and saved on and after January 1, 1982.
28 Section 3. This act shall take effect in 60 days or January
29 1, 1982 whichever date first occurs.
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