THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GEORGE, LEVDANSKY, BELFANTI, BRENNAN, CARROLL, FREEMAN, GOODMAN, GRUCELA, HORNAMAN, JOSEPHS, MAHONEY, McILVAINE SMITH, MUNDY, MYERS, SIPTROTH, K. SMITH, STABACK, STURLA, J. TAYLOR AND YOUNGBLOOD, MAY 13, 2009

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MAY 13, 2009  

AN ACT

Amending Title 72 (Taxation and Fiscal Affairs) of the

Pennsylvania Consolidated Statutes, imposing a tax on the

extraction of natural gas; providing for natural resource

severance tax license, for duties of the Department of

Revenue, for tax assessments and tax liens; imposing

penalties; providing for service of process, for rulemaking,

for cooperation with other governments and for bonds; and

making an appropriation. 

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 72 of the Pennsylvania Consolidated

Statutes is amended by adding a chapter to read:

CHAPTER 15

SEVERANCE TAX

Sec.

1501.  Short title of chapter.

1502.  Definitions.

1503.  Imposition of tax.

1504.  Return and payment.

1505.  Natural resource severance tax registration.

1505.1  Meters.

1506.  Assessments.

1507.  Time for assessment.

1508.  Extension of limitation period.

1509.  Reassessments.

1510.  Interest.

1511.  Penalties.

1512.  Criminal acts.

1513.  Abatement of additions or penalties.

1514.  Bulk and auction sales.

1515.  Collection upon failure to request reassessment, review

or appeal.

1516.  Tax liens.

1517.  Tax suit reciprocity.

1518.  Service.

1519.  Refunds.

1520.  Refund petition.

1521.  Rules and regulations.

1522.  Recordkeeping.

1523.  Examinations.

1524.  Unauthorized disclosure.

1525.  Cooperation with other governments.

1526.  Bonds.

1527.  Appropriation.

§ 1501.  Short title of chapter.

This chapter shall be known and may be cited as the Natural

Resource Severance Tax Act.

§ 1502.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Association."  A partnership, limited partnership or any

other form of unincorporated enterprise owned or conducted by

two or more persons.

"Corporation."  A corporation, joint stock association,

limited liability company, business trust or any other

incorporated enterprise organized under the laws of this

Commonwealth, the United States or any other state, territory or

foreign country or dependency.

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

"Gross value."  The volume-weighted average market price for

all arms-length transactions that a producer receives at the

sales meter for natural gas during a reporting period.

"Meter."  A device to measure the passage of volumes of gases

or liquids past a certain point.

"Natural gas."  A fossil fuel consisting of a mixture of

hydrocarbon gases, primarily methane, possibly including ethane,

propane, butane, pentane, carbon dioxide, oxygen, nitrogen and

hydrogen sulfide and other gas species. The term includes

natural gas from oil fields known as associated gas or casing

head gas, natural gas fields known as nonassociated gas, coal

beds, shale beds and other formations.

"Non-producing site."  A point of severance that is not

capable of producing a natural gas in paying quantities.

"Paying quantities."  Profit to the producer, however small,

over the producer's current operating expenses.

"Person."  Every natural person, including a corporation,

limited liability company, business trust, trust, guardian or

other fiduciary, association, government entity or corporation.

"Producer."  A person who engages or continues within this

Commonwealth in the business of severing natural gas for sale,

profit or commercial use. The term does not include a person who

severs natural gas from a storage field.

"Producing site."  A point of severance capable of producing

natural gas in paying quantities.

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

severed.

"Sales meter."  A meter at the point where natural gas is

sold or transported to a purchaser or market.

"Sever," "severing" or "severance."  The extraction or other

removal of a natural resource from the soil or water of this

Commonwealth.

"Tax."  The tax imposed under this chapter.

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

chapter.

"Unit."  A thousand cubic feet of natural gas measured at the

wellhead at a temperature of 60 degrees Fahrenheit and an

absolute pressure of 14.73 pounds per square inch in accordance

with American Gas Association Standards and according to Boyle's

law for the measurement of gas under varying pressures with

deviations as follows:

(1)  The average absolute atmospheric pressure shall be

assumed to be 14.4 pounds to the square inch, regardless of

elevation or location of point of delivery above sea level or

variations in atmospheric pressure from time to time.

(2)  The temperature of the gas passing the meters shall

be determined by the continuous use of a recording

thermometer installed to properly record the temperature of

gas flowing through the meters. The arithmetic average of the

temperature recorded each 24-hour day shall be used in

computing gas volumes. If a recording thermometer is not

installed, or if installed and not operating properly, an

average flowing temperature of 60 degrees Fahrenheit shall be

used in computing gas volume.

(3)  The specific gravity of the gas shall be determined

annually by tests made by the use of an Edwards or Acme

gravity balance, or at intervals as found necessary in

practice. Specific gravity determinations shall be used in

computing gas volumes.

(4)  The deviation of the natural gas from Boyle's Law

shall be determined by annual tests or at other shorter

intervals as found necessary in practice. The apparatus and

method used in making the test shall be in accordance with

recommendations of the National Bureau of Standards or Report

No. 3 of the Gas Measurement Committee of the American Gas

Association, or amendments thereto. The results of the tests

shall be used in computing the volume of gas delivered under

this chapter.

"Wellhead meter."  A meter placed at a producing or

nonproducing site to measure the volume of natural gas severed.

§ 1503.  Imposition of tax.

(a)  Establishment.--There is levied a privilege tax on every

producer who severs natural gas.

(b)  Rate.--The tax imposed in subsection (a) shall be 5% of

the gross value of units severed at the wellhead during a

reporting period, plus 4.7 cents per unit severed.

§ 1504.  Return and payment.

(a)  Requirement.--Every producer is required to file a

return with the department, on a form to be prescribed by the

department, reporting all severed natural gas resources per

reporting period and the tax due as imposed under section 1503

(relating to imposition of tax).

(b)  Filing.--The return required by subsection (a) shall be

filed with the department within 15 days following the end of

the second calendar month after a reporting period.

(c)  Deadline.--The tax imposed under section 1503 is due on

the day required to be filed and becomes delinquent if not

remitted to the department by that date.

§ 1505.  Natural resource severance tax registration.

(a)  Application.--Before a producer severs natural gas in

this Commonwealth, the producer shall apply to the department

for a severance tax registration certificate.

(a.1)  Application fee.--The department may charge an

application fee to cover the administrative costs associated

with the application and registration process. If the department

charges an application fee, the department shall not register a

producer or issue a certificate until the producer has paid the

application fee.

(a.2)  Declaration.--As part of the application for

registration, the producer is required to provide a declaration

of all sites in this Commonwealth used for the severance of

natural gas. The declaration is to include all producing sites

and nonproducing sites. The producer is required to update the

declaration when the producer adds or removes a producing or

nonproducing site in this Commonwealth or when there is a change

in the status of a producing or nonproducing site. The producer

shall update the declaration within 30 days after a calendar

month in which a change to the declaration occurs.

(b)  Issuance.--After the receipt of an application, the

department shall issue the certificate applied for under

subsection (a), provided that said applicant shall have filed

all required State tax reports and paid any State taxes not

subject to a timely perfected administrative or judicial appeal

or subject to a duly authorized deferred payment plan. The

certificate shall be nonassignable. All registrants shall be

required to renew their registration on a staggered renewal

system established by the department. After the initial

staggered period, a certificate issued shall be valid for a

period of five years.

(c)  Refusal, suspension or revocation.--The department may

refuse to issue, suspend or revoke the certificate if the

applicant or any person holding a certificate has not filed

required State tax reports and paid State taxes not subject to a

timely perfected administrative or judicial appeal or subject to

a duly authorized deferred payment plan. The department shall

notify the applicant or registrant of any refusal, suspension or

revocation. The notice shall contain a statement that the

refusal, suspension or revocation may be made public. The notice

shall be made by first class mail. An applicant or registrant

aggrieved by the determination of the department may file an

appeal under the provisions for administrative appeals in the

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

of 1971. In the case of a suspension or revocation which is

appealed, the registration and certificate shall remain valid

pending a final outcome of the appeals process. Notwithstanding

sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the

Tax Reform Code of 1971 or any other provision of law, if no

appeal is taken or if an appeal is taken and denied at the

conclusion of the appeal process the department may disclose, by

publication or otherwise, the identity of a person and the fact

that the person's registration and certificate has been refused,

suspended or revoked under this subsection. Disclosure may

include the basis for refusal, suspension or revocation.

(d)  Violation.--A person severing natural gas in this

Commonwealth without holding a valid registration and

certificate under subsection (b) shall be guilty of a summary

offense and shall, upon conviction, be sentenced to pay a fine

of not less than $300 nor more than $1,500. In the event the

person convicted defaults, he shall be sentenced to imprisonment

for not less than five days nor more than 30 days. The penalties

imposed by this subsection shall be in addition to any other

penalties imposed by this chapter. For purposes of this

subsection, the severing of a natural gas during any calendar

day shall constitute a separate violation. The Secretary of

Revenue may designate employees of the department to enforce the

provisions of this subsection. The employees shall exhibit proof

of and be within the scope of the designation when instituting

proceedings as provided by the Pennsylvania Rules of Criminal

Procedure.

(e)  Failure to obtain license.--Failure to obtain a

registration and certificate does not relieve a person from

liability for the tax imposed by this chapter.

§ 1505.1.  Meters.

A producer shall provide for and maintain a discrete wellhead

and sales meters. A producer shall ensure that the meters are

maintained according to industry standards.

§ 1506.  Assessments.

(a)  Authorization and requirement.--The department is

authorized and shall make the inquiries, determinations and

assessments of the tax, including interest, additions and

penalties imposed under this chapter.

(b)  Notice.--The notice of assessment and demand for payment

shall be mailed to the taxpayer. The notice shall set forth the

basis of the assessment. The department shall issue a notice of

the assessment to the producer. The notice shall set forth the

department's basis for the assessment. The department shall send

the notice of assessment to the producer at his registered

address via certified mail if the assessment increases the

producer's tax liability by $300. Otherwise, the notice of

assessment may be sent via regular mail.

§ 1507.  Time for assessment.

(a)  Requirement.--An assessment as provided under section

1506 (relating to assessments) shall be made within three years

after the date when the return provided for by section 1504

(relating to return and payment) is filed or the end of the year

in which the tax liability arises, whichever shall occur last.

For the purposes of this subsection and subsection (b), a return

filed before the last day prescribed for the filing period shall

be considered as filed on the last day.

(b)  Exception.--The assessment may be made at any time

within six years after the return is filed if the total tax that

is properly included on the return is in excess of 25% of the

total tax reported on the return.

(c)  Intent to evade.--Where no return is filed or where the

taxpayer files a false or fraudulent return with intent to evade

the tax imposed by this chapter, the assessment may be made at

any time.

(d)  Erroneous credit or refund.--Within three years of the

granting of a refund or credit or within the period in which an

assessment or reassessment may have been filed by the department

for the taxable period for which the refund was granted,

whichever period shall last occur, the department may file an

assessment to recover a refund or credit made or allowed

erroneously.

§ 1508.  Extension of limitation period.

Notwithstanding the provisions of this chapter, the

assessment period may be extended where a taxpayer has provided

written consent before the expiration of the period provided in

section 1507 (relating to time for assessment) for a tax

assessment. The amount of tax due may be assessed at any time

within the extended period. The period extended may be extended

further by subsequent written consents made before the

expiration of the extended period.

§ 1509.  Reassessments.

A producer against whom an assessment is made may petition

the department for a reassessment under Article XXVII of the act

of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

1971.

§ 1510.  Interest.

The department shall assess interest on any delinquent tax at

the rate prescribed under section 806 of the act of April 9,

1929 (P.L.343, No. 176), known as The Fiscal Code.

§ 1511.  Penalties.

The department shall enforce the following penalties:

(1)  A penalty against a producer without a natural gas

severance tax registration and certificate. The penalty shall

be $1 for every unit severed without a registration and

certificate. The department may assess this penalty

separately from or in conjunction with any assessment of tax.

(2)  A penalty against a producer for failure to file a

return as required under section 1504 (relating to return and

payment). The penalty shall be 5% of the tax liability to be

reported on the return for each day beyond the due date that

the return is not filed.

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

penalty against the producer for a willful failure to file a

return. The penalty shall be 200% of the tax liability

required to be reported on the return.

(4)  A penalty against a producer for failure to timely

pay the tax as required by section 1504(c). The penalty shall

be 5% of the amount of tax due for each day beyond the

payment date that the tax is not paid.

§ 1512.  Criminal acts.

(a)  Fraudulent return.--Any person with intent to defraud

the Commonwealth, who willfully makes or causes to be made a

return required by this chapter which is false, is guilty of a

misdemeanor and shall, upon conviction, be sentenced to pay a

fine of not more than $2,000 or to imprisonment for not more

than three years, or both.

(b)  Other crimes.--

(1)  Except as otherwise provided by subsection (a), a

producer is guilty of a misdemeanor and shall, upon

conviction, be sentenced to pay a fine of not more than

$1,000 and costs of prosecution or to imprisonment for not

more than one year, or both, for any of the following:

(i)  Willfully failing to timely remit the tax to the

department.

(ii)  Willfully failing or neglecting to timely file

a return or report required by this chapter.

(iii)  Refusing to timely pay a tax, penalty or

interest imposed or provided for by this chapter.

(iv)  Willfully failing to preserve his books, papers

and records as directed by the department.

(v)  Refusing to permit the department or its

authorized agents to examine its books, records or

papers.

(vi)  Knowingly make any incomplete, false or

fraudulent return or report.

(vii)  Preventing or attempting to prevent the full

disclosure of the amount of tax due.

(viii)  Providing any person with a false statement

as to the payment of tax with respect to any pertinent

facts.

(ix)  Making, uttering or issuing a false or

fraudulent statement.

(2)  The penalties imposed by this section shall be in

addition to other penalties imposed by this chapter.

§ 1513.  Abatement of additions or penalties.

Upon the filing of a petition for reassessment or a petition

for refund by a taxpayer as provided under this chapter,

additions or penalties imposed upon the taxpayer by this chapter

may be waived or abated in whole or in part where the petitioner

establishes that he acted in good faith, without negligence and

with no intent to defraud.

§ 1514.  Bulk and auction sales.

A person that sells or causes to be sold at auction, or that

sells or transfers in bulk, 51% or more of a stock of goods,

wares or merchandise of any kind, fixtures, machinery,

equipment, buildings or real estate or is involved in a business

for which the person is licensed or required to be licensed

under the provisions of this chapter shall be subject to the

provisions of section 1403 of the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code.

§ 1515.  Collection upon failure to request reassessment, review

or appeal.

(a)  Power of department.--The department may collect a tax:

(1)  If an assessment of tax is not paid within 30 days

after notice to the taxpayer when no petition for

reassessment has been filed.

(2)  Within 60 days of the reassessment, if no petition

for review has been filed.

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

(i)  the Board of Finance and Revenue's decision of a

petition for review; or

(ii)  the expiration of the board's time for acting

upon the petition.

(4)  In all cases of judicial sales, receiverships,

assignments or bankruptcies.

(b)  Prohibition.--In a case for the collection of taxes

under subsection (a), the person against whom they were assessed

shall not be permitted to set up a ground of defense that might

have been determined by the department, the Board of Finance and

Revenue or the courts, provided that the defense of failure of

the department to mail notice of assessment or reassessment to

the taxpayer and the defense of payment of assessment or

reassessment may be raised in proceedings for collection by a

motion to stay the proceedings.

§ 1516.  Tax liens.

(a)  Lien imposed.--If any person liable to pay a tax

neglects or refuses to pay the tax after demand, the amount,

including interest, addition or penalty, together with

additional costs that may accrue, shall be a lien in favor of

the Commonwealth upon the real and personal property of the

person but only after the same has been entered and docketed of

record by the prothonotary of the county where the property is

situated. The department may, at any time, transmit to the

prothonotaries of the respective counties certified copies of

all liens for taxes imposed by this act and penalties and

interest. It shall be the duty of the prothonotary receiving the

lien to enter and docket the same of record to the office of the

prothonotary. The lien shall be indexed as judgments are now

indexed. No prothonotary shall require as a condition precedent

to the entry of the lien the payment of costs incidental to its

entry.

(b)  Priority of lien and effect on judicial sale.--Except

for the costs of the sale and the writ upon which the sale was

made and real estate taxes and municipal claims against the

property, the lien imposed under this section shall have

priority from the date of its recording and shall be fully paid

and satisfied out of the proceeds of any judicial sale of

property subject to, before any other obligation, judgment,

claim, lien or estate to which the property may subsequently

become subject, but shall be subordinate to mortgages and other

liens existing and duly recorded or entered of record prior to

the recording of the tax lien.

(c)  No discharge by sale on junior lien.--In the case of a

judicial sale of property subject to a lien imposed under this

section, upon a lien or claim over which the lien imposed under

this section has priority, the sale shall discharge the lien

imposed under this section to the extent only that the proceeds

are applied to its payment, and the lien shall continue in full

force and effect as to the balance remaining unpaid. There shall

be no inquisition or condemnation upon any judicial sale of real

estate made by the Commonwealth under the provisions of this

chapter. The lien of the taxes, interest and penalties shall

continue as provided in the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code, and a writ of execution may

directly issue upon the lien without the issuance and

prosecution to judgment of a writ of scire facias, provided that

not less than ten days before issuance of any execution on the

lien, notice of the filing and the effect of the lien shall be

sent by registered mail to the taxpayer at his last known post

office address, provided further that the lien shall have no

effect upon any stock of goods, wares or merchandise regularly

sold or leased in the ordinary course of business by the person

against whom the lien has been entered, unless and until a writ

of execution has been issued and a levy made upon said stock of

goods, wares and merchandise.

(d)  Duty of prothonotary.--Any willful failure of any

prothonotary to carry out any duty imposed upon him by this

section shall be a misdemeanor. Upon conviction, he shall be

sentenced to pay a fine of not more than $1,000 and costs of

prosecution or to imprisonment for not more than one year, or

both.

(e)  Priority.--Except as provided in this chapter, the

distribution, voluntary or compulsory, in receivership,

bankruptcy or otherwise of the property or estate of any person,

all taxes imposed by this chapter which are due and unpaid and

are not collectible under the provisions of section 225 of the

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

of 1971, shall be paid from the first money available for

distribution in priority to all other claims and liens, except

as the laws of the United States may give priority to a claim to

the Federal Government. A person charged with the administration

or distribution of the property or estate who violates the

provisions of this section shall be personally liable for the

taxes imposed by this chapter which are accrued and unpaid and

chargeable against the person whose property or estate is being

administered or distributed.

(f)  Other remedies.--Subject to the limitations contained in

this chapter as to the assessment of taxes, nothing contained in

this section shall be construed to restrict, prohibit or limit

the use by the department in collecting taxes due and payable of

another remedy or procedure available at law or equity for the

collection of debts.

§ 1517.  Tax suit reciprocity.

The courts of this Commonwealth shall recognize and enforce

liabilities for natural gas severance taxes lawfully imposed by

any other state, provided that the other state recognizes and

enforces the tax set forth in this chapter.

§ 1518.  Service.

A producer is deemed to have appointed the Secretary of the

Commonwealth its agent for the acceptance of service of process

or notice in a proceeding for the enforcement of the civil

provisions of this chapter and service made upon the Secretary

of the Commonwealth as agent shall be of the same legal force

and validity as if the service had been personally made upon the

person. Where service cannot be made upon the person in the

manner provided by other laws of this Commonwealth relating to

service of process, service may be made upon the Secretary of

the Commonwealth. In that case, a copy of the process or notice

shall be personally served upon any agent or representative of

the person who may be found within this Commonwealth or, where

no agent or representative may be found, a copy of the process

or notice shall be sent via registered mail to the person at the

last known address of his principal place of business, home

office or residence.

§ 1519.  Refunds.

Under Article XXVII of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, the department

shall refund all taxes, interest and penalties paid to the

Commonwealth under the provisions of this chapter to which the

Commonwealth is not rightfully entitled. The refunds shall be

made to the person or the person's heirs, successors, assigns or

other personal representatives who paid the tax, provided that

no refund shall be made under this section regarding a payment

made by reason of an assessment where a taxpayer has filed a

petition for reassessment under section 2702 of the Tax Reform

Code of 1971 to the extent the petition is adverse to the

taxpayer by a decision which is no longer subject to further

review or appeal. Nothing in this chapter shall prohibit a

taxpayer who has filed a timely petition for reassessment from

amending it to a petition for refund where the petitioner paid

the tax assessed.

§ 1520.  Refund petition.

(a)  General rule.--Except as provided for in subsection (b),

the refund or credit of tax, interest or penalty provided for by

section 1519 (relating to refunds) shall be made only where the

person who has paid the tax files a petition for refund with the

department under Article XXVII of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, within the

time limits of section 3003.1 of the Tax Reform Code of 1971.

(b)  Severance tax license.--A refund or credit of tax,

interest or penalty paid as a result of an assessment made by

the department under section 1505 (relating to natural resource

severance tax registration), shall be made only where the person

who has paid the tax files with the department a petition for a

refund with the department under Article XXVII within the time

limits of section 3003.1 of the Tax Reform Code of 1971. The

filing of a petition for refund, under the provisions of this

subsection, shall not affect the abatement of interest,

additions or penalties to which the person may be entitled by

reason of his payment of the assessment.

§ 1521.  Rules and regulations.

The department is charged with the enforcement of the

provisions of this chapter and is authorized and empowered to

prescribe, adopt, promulgate and enforce rules and regulations

not inconsistent with the provisions of this chapter relating to

any matter or thing pertaining to the administration and

enforcement of the provisions of this chapter and the collection

of taxes, penalties and interest imposed by this chapter. The

department may prescribe the extent, if any, to which any of the

rules and regulations shall be applied without retroactive

effect.

§ 1522.  Recordkeeping.

(a)  General rule.--Every person liable for any tax imposed

by this chapter, or for the collection, shall keep records,

including those enumerated in subsection (b), render statements,

make returns and comply with the rules and regulations as the

department may prescribe regarding matters pertinent to the

person's business. Whenever it is necessary, the department may

require a person, by notice served upon the person or by

regulations, to make returns, render statements or keep records

as the department deems sufficient to show whether or not a

person is liable to pay tax under this chapter.

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

(1)  Wellhead and sales meter charts for each reporting

period and the meter calibration and maintenance records. If

turbine meters are in use, the maintenance records will be

made available to the department upon request.

(2)  Records, statements and other instruments furnished

to a producer by a person to whom the producer delivers for

sale, transport or delivery of natural gas.

(3)  Records, statements and other instruments as the

department may prescribe by regulation.

(b)  Records of nonresidents.--A nonresident who does

business in this Commonwealth as a producer shall keep adequate

records of the business and of the tax due as a result. The

records shall be retained within this Commonwealth unless

retention outside this Commonwealth is authorized by the

department. The department may require a taxpayer who desires to

retain records outside this Commonwealth to assume reasonable

out-of-State audit expenses.

(c)  Keeping of separate records.--A person doing business as

a producer, who at the same time is engaged in another business

or businesses which do not involve the severing of natural gas

taxable under this chapter, shall keep separate books and

records of the businesses so as to show the taxable severing of

natural gas under this chapter separately from other business

activities not taxable hereunder. If any person fails to keep

separate books and records, the person shall be liable for a

penalty equaling 100% of tax due under this chapter for the

period where separate records were not maintained.

§ 1523.  Examinations.

The department or any of its authorized agents are authorized

to examine the books, papers and records of any taxpayer in

order to verify the accuracy and completeness of any return made

or, if no return was made, to ascertain and assess the tax

imposed by this chapter. The department may require the

preservation of all books, papers and records for any period

deemed proper by it but not to exceed three years from the end

of the calendar year to which the records relate. Every taxpayer

is required to give to the department or its agent the means,

facilities and opportunity for examinations and investigation

under this section. The department is further authorized to

examine any person, under oath, concerning the taxable severing

of natural gas by any taxpayer or concerning any other matter

relating to the enforcement or administration of this chapter,

and to this end may compel the production of books, papers and

records and the attendance of all persons whether as parties or

witnesses whom it believes to have knowledge of relevant

matters. The procedure for the hearings or examinations shall be

the same as that provided by the act of April 9, 1929 (P.L.343,

No. 176), known as The Fiscal Code.

§ 1524.  Unauthorized disclosure.

Any information gained by the department as a result of any

return, examination, investigation, hearing or verification

required or authorized by this chapter shall be confidential

except for official purposes and except in accordance with

proper judicial order or as otherwise provided by law, and any

person unlawfully divulging the information shall be guilty of a

misdemeanor and shall, upon conviction, be sentenced to pay a

fine of not more than $1000 and costs of prosecution or to

imprisonment for not more than one year, or both.

§ 1525.  Cooperation with other governments.

Notwithstanding the provisions of section 1517 (relating to

tax suit reciprocity), the department may permit the

Commissioner of the Internal Revenue Service of the United

States, the proper officer of any state or the authorized

representative of either officer to inspect the tax returns of

any taxpayer, or may furnish to the officer or to his authorized

representative an abstract of the return of any taxpayer, or

supply him with information concerning any item contained in any

return or disclosed by the report of any examination or

investigation of the return of any taxpayer. This permission

shall be granted only if the statutes of the United States or

another state grant substantially similar privileges to the

proper officer of the Commonwealth charged with the

administration of this chapter.

§ 1526.  Bonds.

(a)  Taxpayer to file bond.--The department may require a

nonresident natural person or any foreign corporation,

association, fiduciary, partnership or other entity, not

authorized to do business within this Commonwealth or not having

an established place of business in this Commonwealth and

subject to the tax imposed by section 1503 (relating to

imposition of tax), to file a bond issued by a surety company

authorized to do business in this Commonwealth and approved by

the Insurance Commissioner as to solvency and responsibility, in

amounts as it may fix, to secure the payment of any tax or

penalties due or which may become due from a natural person or

corporation whenever it deems it necessary to protect the

revenues obtained under this chapter. In order to protect the

revenues obtained under this chapter, the department shall

require a nonresident natural person or a foreign corporation,

association, fiduciary, partnership or entity who is not

authorized to do business or does not have an established place

of business in this Commonwealth and is subject to the tax

imposed by section 1503, to file a bond issued by a surety

company authorized to do business in this Commonwealth and

approved by the Insurance Commissioner as to solvency and

responsibility, in amounts as it may fix, to secure the payments

of any tax or penalties due or which may become due from a

natural person, corporation or other entity. The department may

also require a bond of a person petitioning the department for

reassessment in the case of any assessment over $500 or where,

in its opinion, the ultimate collection is in jeopardy. For a

period of three years, the department may require a bond of any

person who has, on three or more occasions within a 12-month

period, either filed a return or made payment to the department

more than 30 days late. In the event the department determines a

taxpayer is required to file a bond, it shall give notice to the

taxpayer specifying the amount of the bond required. The

taxpayer shall file the bond within five days after notice is

given by the department unless, within five days, the taxpayer

shall request in writing a hearing before the Secretary of

Revenue or his representative. At the hearing, the necessity,

propriety and amount of the bond shall be determined by the

secretary or the secretary's representative. The determination

shall be final and the taxpayer shall comply with it within 15

days after notice is mailed to the taxpayer.

(b)  Securities in lieu of bond.--In lieu of the bond

required by this section securities approved by the department

or cash in a prescribed amount may be deposited. The securities

or cash shall be kept in the custody of the department. The

department may apply the securities or cash to a tax and

interest or penalties due without notice to the depositor. The

securities may be sold by the department to pay a tax and/or

interest or penalties due at public or private sale upon five

days' written notice to the depositor.

(c)  Failure to file bond.--The department may file a lien

under section 1516 (relating to tax liens) against any taxpayer

who fails to file a bond when required to do so under this

section. All funds received upon execution of the judgment on

the lien shall be refunded to the taxpayer with 3% interest,

should a final determination be made that he does not owe any

payment to the department.

§ 1527.  Appropriation.

The amount of the proceeds from the tax imposed by this

chapter as shall be necessary for the payment of refunds,

enforcement or administration under this chapter, is hereby

appropriated for such purposes.

Section 2.  This act shall take effect October 1, 2009.