THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GODSHALL, HORNAMAN, MICOZZIE, READSHAW AND SCAVELLO, JUNE 21, 2011

REFERRED TO COMMITTEE ON FINANCE, JUNE 21, 2011  

AN ACT

Amending Title 72 (Taxation and Fiscal Affairs) of the

Pennsylvania Consolidated Statutes, providing for a natural

gas severance tax.

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

NATURAL GAS SEVERANCE TAX

Sec.

1501.  Short title of chapter.

1502.  Definitions.

1503.  Imposition of tax.

1504.  Return and payment.

1505.  Natural gas severance tax registration.

1506.  Assessments.

1507.  Time for assessment.

1508.  Extension of assessment 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 and meters.

1523.  Examinations.

1524.  Unauthorized disclosure.

1525.  Cooperation with other governments.

1526.  Bonds.

1527.  Property Tax Assistance Program.

1528.  Property Tax Assistance Program Restricted Account.

§ 1501.  Short title of chapter.

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

Gas 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:

"Accredited laboratory."  A facility engaged in the testing

and calibration of scientific measurement devices and certified

by the Department of Environmental Protection as having met the

Department of Revenue's standards for accreditation.

"Association."  A partnership, limited partnership or any

other form of unincorporated enterprise owned or conducted by

two or more persons.

"Claimant."  An individual who seeks assistance under section

1527 (relating to Property Tax Assistance Program).

"Coal bed methane."  Gas that can be produced from coal beds,

coal seams, mined-out areas or gob wells.

"Corporation."  A corporation, joint stock association,

limited liability company, business trust or any other

incorporated enterprise organized under the laws of the United

States, this Commonwealth or any other state, territory or

foreign country or dependency.

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

"Household income." As defined in Chapter 13 of the act of

June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the

Taxpayer Relief Act.

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

or liquids past a certain point.

"Municipality."  A city, borough, incorporated town or

township.

"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. The term does not include

coal bed methane.

"Natural gas well." A bore hole drilled or being drilled for

the purpose of or to be used for producing natural gas from

subsurface geological formations.

"Nonproducing well."  A natural gas well that does not

produce natural gas in excess of 90,000 cubic feet per day.

"Operator."  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.

"Person."  A natural person or a corporation, fiduciary,

association or other entity, including the Commonwealth, its

political subdivisions, instrumentalities and authorities. When

the term is used in a provision prescribing and imposing a

penalty or imposing a fine or imprisonment, or both, the term

shall include a member of an association and an officer of a

corporation.

"Producing well."  A natural gas well that produces natural

gas in excess of 90,000 cubic feet of natural gas per day.

"Program."  The Property Tax Assistance Program established

in section 1527 (relating to Property Tax Assistance Program).

"Property tax."  A tax levied by a political subdivision on

real property.

"Rate."  The rate under section 1503(c) (relating to

imposition of tax).

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

severed.

"Secretary."  The Secretary of Revenue of the Commonwealth.

"Sever."  To extract or otherwise remove natural gas from the

soil or water of this Commonwealth.

"Severance."  The extraction or other removal of natural gas

from the soil or water of this Commonwealth.

"Severing."  Extracting or otherwise removing natural gas

from the soil or water of this Commonwealth.

"Storage field."  A natural formation or other site that is

used to store natural gas that did not originate from and has

been injected into the formation or site.

"Tax."  The natural gas severance tax imposed under this

chapter.

"Tax rate adjustment index."  The amount calculated under

section 1503(c) (relating to imposition of tax) by which the

rate of the tax imposed under section 1503(c) is adjusted

annually.

"Taxpayer."  A person, including, but not limited to, a well

operator who is subject to the tax imposed by this chapter.

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

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 a wellhead meter

shall be determined by the continuous use of a recording

thermometer installed to properly record the temperature of

gas flowing through the wellhead meter. 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 is 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

by annual 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

for which a wellhead meter certification has been issued.

"Wellhead meter certification."  A report issued by an

accredited laboratory certifying the accuracy of a wellhead

meter.

§ 1503.  Imposition of tax.

(a)  Establishment.--Except as otherwise provided in

subsection (b), a natural gas severance tax is levied on every

operator that severs natural gas from a producing well in this

Commonwealth.

(b)  Exemptions.--The tax shall not be imposed on the

following:

(1)  Units severed, sold and delivered by an operator at

or within five miles of the producing well for the processing

or manufacture of tangible personal property, as defined

under section 201 of the act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971, within this

Commonwealth.

(2)  Units provided free of charge to the owner of the

surface under which the gas is severed if the surface owner

is the end user of the gas.

(3)  Owners of the surface real property where natural

gas wells are drilled or operated and have leased the rights

to recover natural gas from beneath the surface to an

operator.

(c)  Rate.--The tax imposed in subsection (a) shall be 1.5%

of the gross value of units severed at the wellhead during a

reporting period for the first 60 months of production and 5% of

the gross value of units severed at the wellhead during a

reporting period thereafter for each producing well.

§ 1504.  Return and payment.

(a)  Requirement.--An operator shall file a return with the

department, on a form prescribed by the department, which shall

include the number of natural gas units severed by the operator

for the reporting period and the amount of tax due.

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

filed with the department within 30 days following the end of a

reporting period.

(c)  Deadline.--The tax is due on the day the return is

required to be filed and becomes delinquent if not remitted to

the department by that date.

§ 1505.  Natural gas severance tax registration.

(a)  Application.--Before an operator severs natural gas in

this Commonwealth, the operator shall apply to the department

for a natural gas severance tax registration certificate.

(b)  Application fee.--The department may charge an

application fee to cover the administrative costs associated

with the application and registration process, in which case the

department shall not issue a registration certificate until the

operator has paid the application fee.

(c)  Declaration.--

(1)  The operator shall include in its application a

declaration of all producing wells and nonproducing wells

used by the operator for the severance of natural gas. The

declaration shall include copies of wellhead meter

certifications for each site.

(2)  The operator shall update the declaration when:

(i)  the operator adds or removes a producing well or

nonproducing well in this Commonwealth;

(ii)  there is a change in the status of a producing

well or nonproducing well; or

(iii)  the operator uses a different accredited

laboratory to issue a wellhead meter certification.

(3)  The operator shall update the declaration within 30

days after a calendar month in which a change to the

declaration occurs.

(d)  Issuance.--

(1)  Except as provided in subsection (e), after the

receipt of an application, the department shall issue a

registration certificate under subsection (a). The

registration certificate shall be nonassignable.

(2)  All registrants shall renew their registration

certificates and wellhead meter certifications on a staggered

renewal system established by the department.

(3)  After the initial staggered renewal period, a

registration certificate or a wellhead meter certification

issued shall be valid for a period of five years.

(e)  Refusal, suspension or revocation.--

(1)  The department may refuse to issue, suspend or

revoke a registration certificate if the applicant or

registrant 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.

(2)  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.

(3)  An applicant or registrant aggrieved by the

determination of the department may file an appeal under the

provisions for administrative appeals provided under the act

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

of 1971.

(4)  In the case of a suspension or revocation which is

appealed, the registration certificate shall remain valid

pending a final outcome of the appeals process.

(5)  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 an operator and the fact that the operator's

registration certificate has been refused, suspended or

revoked under this subsection. Disclosure may include the

basis for refusal, suspension or revocation.

(f)  Violation.--

(1)  A person severing natural gas in this Commonwealth

without holding a valid registration certificate under

subsection (d) 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. Each day in which a

person is guilty of a summary offense under this section

shall be deemed to be a separate violation.

(2)  In the event the person convicted defaults in the

payment of the fine, the person shall be sentenced to a term

of imprisonment of not less than five days nor more than 30

days.

(3)  The penalties imposed by this subsection shall be in

addition to any other penalties imposed by this chapter.

(4)  For purposes of this subsection, the severing of

natural gas during any calendar day shall constitute a

separate violation.

(5)  The secretary 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.

(g)  Failure to obtain registration certificate.--Failure to

obtain or hold a valid registration certificate does not relieve

a person from liability for the tax.

§ 1506.  Assessments.

(a)  Authorization and requirement.--The department 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 state the

basis of the assessment. The department shall send the notice of

assessment to the taxpayer at its registered address by

certified mail if the assessment increases the taxpayer's tax

liability by $300. Otherwise, the notice of assessment may be

sent by regular mail.

§ 1507.  Time for assessment.

(a)  Requirement.--

(1)  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.

(2)  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.--If the taxpayer underpays the correct amount

of the tax due by 25% or more, the tax may be assessed within

six years after the date the return was filed.

(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, 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 issued by the

department for the taxable period for which the refund was

granted, whichever period shall last occur, the department may

issue an assessment to recover a refund or credit made or

allowed erroneously.

§ 1508.  Extension of assessment period.

Notwithstanding any other provision of this chapter, the

assessment period may be extended in the event 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 may be extended

further by subsequent written consents made before the

expiration of the extended period.

§ 1509.  Reassessments.

A taxpayer 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)  The penalty against an operator for severing natural

gas without a natural gas severance tax registration

certificate shall be $1 for every unit severed without a

valid registration certificate. The department may assess

this penalty separately from or in conjunction with any

assessment of the natural gas tax.

(2)  The penalty against an operator for failure to

timely file a return as required under section 1504 (relating

to return and payment) or for failure to timely pay the tax

as required by section 1504(c) 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 or tax is not paid.

(3)  In addition to the penalty prescribed under

paragraph (2), the penalty against an operator for a willful

failure to file a timely return shall be 200% of the tax

liability required to be reported on the return.

§ 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, commits a

misdemeanor of the third degree and shall, upon conviction

thereof, 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

person commits a misdemeanor of the third degree and shall,

upon conviction thereof, 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 its 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 making 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 the 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 the petitioner acted in good faith, without

negligence and with no intent to defraud.

§ 1514.  Bulk and auction sales.

A person who sells or causes to be sold at auction or 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 involved in a business for which the

person holds a registration certificate or is required to obtain

a registration certificate 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 the

tax:

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

days and no petition for reassessment has been filed, after

notice to the taxpayer.

(2)  Within 60 days of a 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 of Finance and

Revenue's time for acting upon a petition for review.

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

assignments or bankruptcies.

(b)  Limitation of defenses.--In a case for the collection of

taxes under subsection (a), the taxpayer against whom the taxes

were assessed may not 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.--

(1)  If a taxpayer neglects or refuses to pay the tax for

which the taxpayer is liable under this chapter 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 taxpayer, but only after the lien has been entered and

docketed of record by the prothonotary of the county where

the property is situated.

(2)  The department may, at any time, transmit to the

prothonotaries of the respective counties certified copies of

all liens imposed by this section.

(3)  (i)  The prothonotary who receives the lien shall

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

prothonotary. The lien shall be indexed as judgments are

now indexed.

(ii)  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, a lien imposed under this section shall:

(1)  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 the lien, before any

other obligation, judgment, claim, lien or estate to which

the property may subsequently become subject.

(2)  Be subordinate to mortgages and other liens existing

and duly recorded or entered of record prior to the recording

of the lien.

(c)  No discharge by sale on junior lien.--

(1)  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.

(2)  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 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, subject to

the following:

(i)  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 its last known post office address.

(ii)  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 taxpayer against

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

of execution has been issued and a levy made upon the

stock of goods, wares and merchandise.

(d)  Violation by prothonotary.--A willful failure of a

prothonotary to carry out any duty imposed on the prothonotary

by this section shall be a misdemeanor of the third degree and,

upon conviction thereof, the prothonotary 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.--

(1)  Except as otherwise provided in this chapter, the

distribution, voluntary or compulsory, in receivership,

bankruptcy or otherwise of the property or estate of any

person, all taxes 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.

(2)  A person required to administer or distribute the

property or estate who violates the provisions of this

section shall be personally liable for the taxes which are

accrued and unpaid and chargeable against the person whose

property or estate is being administered or distributed.

(f)  Construction.--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 or extraction taxes

lawfully imposed by any other state, provided that the other

state recognizes and enforces the tax imposed under this

chapter.

§ 1518.  Service.

(a)  Appointment of Secretary of the Commonwealth.--An

operator 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

operator.

(b)  Substituted service.--

(1)  Where service cannot be made upon the operator 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.

(2)  In that case, a copy of the process or notice shall

be personally served upon any agent or representative of the

operator 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 by registered mail to the

operator at the last known address of its principal place of

business, home office or residence.

§ 1519.  Refunds.

(a)  General rule.--Pursuant to 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.

(b)  Payment of refunds.--

(1)  Subject to the provisions of paragraph (2), the

refunds shall be paid to the person or the person's heirs,

successors, assigns or other personal representatives who

paid the tax.

(2)  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.

(c)  Construction.--Nothing in this chapter shall be

construed to 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)  Natural gas severance tax.--

(1)  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 gas severance tax

registration) shall be made only where the person who has

paid the tax files with the department a petition for a

refund under Article XXVII of the Tax Reform Code of 1971

within the time limits of section 3003.1 of the Tax Reform

Code of 1971.

(2)  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 the person's payment of the

assessment.

§ 1521.  Rules and regulations.

The department shall enforce the provisions of this chapter

and may 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 and meters.

(a)  Duty to maintain records.--

(1)  Every person liable for the tax or for the

collection of the tax 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.

(2)  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 the person

is liable to pay the tax.

(b)  Records.--Every person liable for the tax shall maintain

the following records:

(1)  Wellhead meter charts for each reporting period and

the meter calibration and maintenance records. If turbine

meters are in use, the maintenance records shall be made

available to the department upon request.

(2)  Records, statements and other instruments furnished

to an operator by a person to whom the operator delivers for

sale, transport or delivery of natural gas.

(3)  Records, statements and other instruments as the

department may prescribe by regulation.

(c)  Records of nonresidents.--

(1)  A nonresident who does business in this Commonwealth

as an operator 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.

(2)  The department may require a taxpayer who desires to

retain records outside this Commonwealth to assume reasonable

out-of-State audit expenses.

(d)  Keeping of separate records.--

(1)  An operator who is engaged in another business which

does 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 under this chapter.

(2)  If any person fails to keep separate books and

records, the person shall be liable for a penalty equaling

100% of tax due for the period where separate records were

not maintained.

(e)  Type of meters required.--An operator shall provide for

and maintain, according to industry standards, a discrete

wellhead meter where natural gas is severed. Any wellhead meter

installed after the effective date of this section shall be a

digital meter.

§ 1523.  Examinations.

(a)  Powers of department.--The department or any of its

authorized agents may:

(1)  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.

(2)  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.

(3)  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.

(b)  Duties of taxpayers.--Every taxpayer shall provide the

department or its agent with the means, facilities and

opportunity for examinations and investigations under this

section.

§ 1524.  Unauthorized disclosure.

(a)  General rule.--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.

(b)  Penalty for violation.--Any person unlawfully divulging

the information commits a misdemeanor of the third degree and

shall, upon conviction thereof, be sentenced to pay a fine of

not more than $1,000 and costs of prosecution or to a term of

imprisonment for not more than one year, or both.

§ 1525.  Cooperation with other governments.

(a)  General rule.--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 of them to inspect the tax returns of

any taxpayer, or may furnish to the commissioner or officer or

to either of their authorized representative an abstract of the

return of a taxpayer, or supply any of them with information

concerning any item contained in a return or disclosed by the

report of an examination or investigation of the return of a

taxpayer.

(b)  Applicability.--Subsection (a) shall apply only when the

laws 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.--

(1)  The department may require a nonresident natural

person or any foreign corporation, association, fiduciary 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 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 nonresident natural person, corporation,

association, fiduciary or other entity whenever it deems it

necessary to protect the revenues obtained under this

chapter.

(2)  The department may also require a bond of a person

petitioning the department for reassessment in the case of an

assessment over $500 or where, in the department's opinion,

the ultimate collection is in jeopardy.

(3)  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.

(4)  (i)  In the event the department determines a

taxpayer must file a bond, the department shall give

notice to the taxpayer specifying the amount of the bond

required.

(ii)  The taxpayer shall file the bond within five

days after notice is given by the department unless,

within five days, the taxpayer requests in writing a

hearing before the secretary or the secretary's

representative.

(iii)  At the hearing, the necessity, propriety and

amount of the bond shall be determined by the secretary

or the secretary's representative.

(iv)  The determination shall be final and the

taxpayer shall comply with the determination within 15

days after notice is mailed to the taxpayer.

(b)  Securities in lieu of bond.--

(1)  In lieu of the bond required by this section,

securities approved by the department or cash in a prescribed

amount may be deposited.

(2)  The securities or cash shall be kept in the custody

of the department. The department may apply the securities or

cash to the tax and interest or penalties due without notice

to the depositor. The securities may be sold by the

department to pay the tax, interest or penalties, or any

combination thereof, due at public or private sale upon five

days' written notice to the depositor.

(c)  Failure to file bond.--

(1)  The department may file a lien under section 1516

(relating to tax liens) against a taxpayer who fails to file

a bond when required to do so under this section.

(2)  All funds received upon execution of the judgment on

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

if the department makes a final determination that the

taxpayer does not owe any payment to the department.

§ 1527.  Property Tax Assistance Program.

(a)  Establishment.--

(1)  The Property Tax Assistance Program is established

in the department to assist eligible claimants in the payment

of property tax.

(2)  The proceeds of the tax imposed under section 1503

(relating to imposition of tax) and penalties and interest

imposed under this chapter, less the amounts appropriated

under section 1528(b) (relating to Property Tax Assistance

Program Restricted Account), shall be deposited into the

Property Tax Assistance Program Restricted Account

established in section 1528(a) and used for the program.

(b)  Eligibility.--To be eligible for participation in the

program, a claimant must be over 65 years of age and have an

annual household income of not more than $50,000.

(c)  Application.--In order to participate in the program, a

claimant must submit to the department all of the following

within 45 days of the date the claimant's property tax is due:

(1)  An application on a form prescribed by the

department establishing eligibility under subsection (b).

(2)  The property tax bill for which assistance is

sought.

(d)  Determination.--Within 45 days of receipt of an

application from a claimant under subsection (c), the department

shall determine the claimant's eligibility. If the claimant is

eligible, the department shall make a payment to the claimant

or, if the claimant is determined to be ineligible, the

department shall notify the claimant of such determination.

§ 1528.  Property Tax Assistance Program Restricted Account.

(a)  Establishment.--The Property Tax Assistance Program

Restricted Account is established within the Property Tax Relief

Fund.

(b)  Use of restricted account.--The moneys of the restricted

account established in subsection (a) are appropriated to the

department on a continuing basis for the payment of refunds and

the enforcement and administration of the program.

Section 2.  This act shall take effect in 120 days.