1Amending Title 72 (Taxation and Fiscal Affairs) of the
2Pennsylvania Consolidated Statutes, providing for taxation of
3natural gas drilling and for transfers and distributions;
4establishing the Natural Gas Severance Tax Account; and
5making a related repeal.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Title 72 of the Pennsylvania Consolidated
9Statutes is amended by adding a chapter to read:

10CHAPTER 15

11EFFECTS OF NATURAL GAS DRILLING

12Sec.

131501. Scope of chapter.

141502. Definitions.

151503. Imposition of tax.

161504. Return and payment.

171505. Natural gas severance tax registration.

181505.1. Meters.

191506. Assessments.

11507. Time for assessment.

21508. Extension of assessment period.

31509. Reassessments.

41510. Interest.

51511. Penalties.

61512. Criminal acts.

71513. Abatement of additions or penalties.

81514. Bulk and auction sales.

91515. Collection upon failure to request reassessment, review
10or appeal.

111516. Tax liens.

121517. Tax suit reciprocity.

131518. Service.

141519. Refunds.

151520. Refund petition.

161521. Rules and regulations.

171522. Recordkeeping.

181523. Examinations.

191524. Unauthorized disclosure.

201525. Cooperation with other governments.

211526. Bonds.

221527. Natural Gas Severance Tax Account.

231528. Transfers and distributions.

24§ 1501. Scope of chapter.

25This chapter shall relate to the ability of all counties
26within this Commonwealth to ameliorate the effects of natural
27gas drilling that occur within their borders.

28§ 1502. Definitions.

29The following words and phrases when used in this chapter
30shall have the meanings given to them in this section unless the

1context clearly indicates otherwise:

2"Account." The Natural Gas Severance Tax Account.

3"Accredited laboratory." A facility engaged in the testing
4and calibration of scientific measurement devices and certified
5by the Department of Environmental Protection as having met the
6department's standards for accreditation.

7"Association." A partnership, limited partnership or any
8other form of unincorporated enterprise owned or conducted by
9two or more persons.

10"Base rate." The rate under section 1503(b) (relating to
11imposition of tax).

12"Coal bed methane." Gas which can be produced from coal
13beds, coal seams, mined-out areas or gob wells.

14"Corporation." A corporation, joint stock association,
15limited liability company, business trust or any other
16incorporated enterprise organized under the laws of this
17Commonwealth, the United States or any other state, territory or
18foreign country or dependency.

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

20"Meter." A device to measure the passage of volumes of gases
21or liquids past a certain point.

22"Municipality." A city, borough, incorporated town or
23township.

24"Natural gas." A fossil fuel consisting of a mixture of 
25hydrocarbon gases, primarily methane, possibly including ethane, 
26propane, butane, pentane, carbon dioxide, oxygen, nitrogen and 
27hydrogen sulfide and other gas species. The term includes 
28natural gas from oil fields known as associated gas or casing 
29head gas, natural gas fields known as nonassociated gas, coal 
30beds, shale beds and other formations. The term does not include
 

1coal bed methane.

2"Nonproducing site." A point of severance that is not
3capable of producing natural gas in paying quantities.

4"Paying quantities." Profit to the producer, however small,
5over the producer's current operating expenses.

6"Person." A natural person or a corporation, fiduciary,
7association or other entity, including the Commonwealth, its
8political subdivisions, instrumentalities and authorities. When
9the term is used in a clause prescribing and imposing a penalty
10or imposing a fine or imprisonment, or both, the term shall
11include the members, as applied to an association, and the
12officers, as applied to a corporation.

13"Producer." A person who engages or continues within this
14Commonwealth in the business of severing natural gas for sale,
15profit or commercial use. The term does not include a person who
16severs natural gas from a storage field.

17"Producing site." A point of severance capable of producing
18natural gas in paying quantities.

19"Reporting period." A calendar month in which natural gas is 
20severed.

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

22"Sever." To extract or otherwise remove natural gas from the
23soil or water of this Commonwealth.

24"Severance." The extraction or other removal of natural gas
25from the soil or water of this Commonwealth.

26"Severing." Extracting or otherwise removing natural gas
27from the soil or water of this Commonwealth.

28"Storage field." A natural formation or other site that is
29used to store natural gas that did not originate from and has
30been injected into the formation or site.

1"Tax." The tax imposed under this chapter.

2"Tax rate adjustment index." The amount calculated under
3section 1503(b) (relating to imposition of tax) by which the
4rate of the tax imposed under section 1503(b) is adjusted
5annually.

6"Taxpayer." A person subject to the tax imposed by this
7chapter.

8"Unit." A thousand cubic feet of natural gas measured at the 
9wellhead at a temperature of 60 degrees Fahrenheit and an 
10absolute pressure of 14.73 pounds per square inch in accordance 
11with American Gas Association Standards and according to Boyle's 
12Law for the measurement of gas under varying pressures with 
13deviations as follows:

14(1) The average absolute atmospheric pressure shall be
15assumed to be 14.4 pounds to the square inch, regardless of
16elevation or location of point of delivery above sea level or
17variations in atmospheric pressure from time to time.

18(2) The temperature of the gas passing the meters shall
19be determined by the continuous use of a recording
20thermometer installed to properly record the temperature of
21gas flowing through the meters. The arithmetic average of the
22temperature recorded each 24-hour day shall be used in
23computing gas volumes. If a recording thermometer is not
24installed, or is installed and not operating properly, an
25average flowing temperature of 60 degrees Fahrenheit shall be
26used in computing gas volume.

27(3) The specific gravity of the gas shall be determined
28annually by tests made by the use of an Edwards or Acme
29gravity balance, or at intervals as found necessary in
30practice. Specific gravity determinations shall be used in

1computing gas volumes.

2(4) The deviation of the natural gas from Boyle's Law
3shall be determined by annual tests or at other shorter
4intervals as found necessary in practice. The apparatus and
5method used in making the test shall be in accordance with
6recommendations of the National Bureau of Standards or Report
7No. 3 of the Gas Measurement Committee of the American Gas
8Association, or amendments thereto. The results of the tests
9shall be used in computing the volume of gas delivered under
10this chapter.

11"Wellhead meter." A meter placed at a producing or 
12nonproducing site to measure the volume of natural gas severed 
13for which a wellhead meter certification has been issued.

14"Wellhead meter certification." A report issued by an
15accredited laboratory certifying the accuracy of a wellhead
16meter.

17§ 1503. Imposition of tax.

18(a) Establishment.--There is levied a privilege tax on every
19producer that severs natural gas.

20(b) Rate.--The tax imposed in subsection (a) shall be 5% of
21the gross value of units severed at the wellhead during a
22reporting period, plus 5¢ per unit severed.

23§ 1504. Return and payment.

24(a) Requirement.--Every producer is required to file a 
25return with the department, on a form prescribed by the 
26department, which shall include all of the following:

27(1) The number of natural gas units severed by the 
28producer for the reporting period.

29(2) The number of producing sites used by the producer 
30for the severance of natural gas in each county and
 

1municipality. 

2(3) The amount of tax due under section 1503 (relating
3to imposition of tax).

4(b) Filing.--The return required by subsection (a) shall be 
5filed with the department within 15 days following the end of a 
6reporting period.

7(c) Deadline.--The tax imposed under section 1503 is due on
8the day the return is required to be filed and becomes
9delinquent if not remitted to the department by that date.

10§ 1505. Natural gas severance tax registration.

11(a) Application.--Before a producer severs natural gas in
12this Commonwealth, the producer shall apply to the department
13for a natural gas severance tax registration certificate.

14(a.1) Application fee.--The department may charge an
15application fee to cover the administrative costs associated
16with the application and registration process. If the department
17charges an application fee, the department shall not issue a
18registration certificate until the producer has paid the
19application fee.

20(a.2) Declaration.--The producer shall include in its 
21application a declaration of all producing sites and 
22nonproducing sites used by the producer for the severance of 
23natural gas. The declaration shall include copies of wellhead 
24meter certifications for each site. The producer is required to 
25update the declaration when the producer adds or removes a 
26producing site or nonproducing site in this Commonwealth or when 
27there is a change in the status of a producing site or 
28nonproducing site or when the producer uses a different 
29accredited laboratory to issue a wellhead meter certification. 
30The producer shall update the declaration within 30 days after a
 

1calendar month in which a change to the declaration occurs.

2(b) Issuance.--Except as provided in subsection (c), after
3the receipt of an application, the department shall issue a
4registration certificate under subsection (a). The registration
5certificate shall be nonassignable. All registrants shall be
6required to renew their registration certificates and wellhead 
7meter certifications on a staggered renewal system established
8by the department. After the initial staggered renewal period, a 
9registration certificate or a wellhead meter certification
10issued shall be valid for a period of five years.

11(c) Refusal, suspension or revocation.--The department may
12refuse to issue, suspend or revoke a registration certificate if
13the applicant or registrant has not filed required State tax
14reports and paid State taxes not subject to a timely perfected
15administrative or judicial appeal or subject to a duly
16authorized deferred payment plan. The department shall notify
17the applicant or registrant of any refusal, suspension or
18revocation. The notice shall contain a statement that the
19refusal, suspension or revocation may be made public. The notice
20shall be made by first class mail. An applicant or registrant
21aggrieved by the determination of the department may file an
22appeal under the provisions for administrative appeals in the
23act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
24of 1971. In the case of a suspension or revocation which is
25appealed, the registration certificate shall remain valid
26pending a final outcome of the appeals process. Notwithstanding
27sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the
28Tax Reform Code of 1971 or any other provision of law, if no
29appeal is taken or if an appeal is taken and denied at the
30conclusion of the appeal process the department may disclose, by

1publication or otherwise, the identity of a producer and the
2fact that the producer's registration certificate has been
3refused, suspended or revoked under this subsection. Disclosure
4may include the basis for refusal, suspension or revocation.

5(d) Violation.--A person severing natural gas in this 
6Commonwealth without holding a valid registration certificate 
7under subsection (b) shall be guilty of a summary offense and 
8shall, upon conviction, be sentenced to pay a fine of not less 
9than $300 nor more than $1,500. In the event the person 
10convicted defaults in the payment of the fine, he shall be 
11sentenced to imprisonment for not less than five days nor more 
12than 30 days. The penalties imposed by this subsection shall be 
13in addition to any other penalties imposed by this chapter. For 
14purposes of this subsection, the severing of natural gas during 
15any calendar day shall constitute a separate violation. The 
16secretary may designate employees of the department to enforce 
17the provisions of this subsection. The employees shall exhibit 
18proof of and be within the scope of the designation when 
19instituting proceedings as provided by the Pennsylvania Rules of 
20Criminal Procedure.

21(e) Failure to obtain registration certificate.--Failure to
22obtain or hold a valid registration certificate does not relieve
23a person from liability for the tax imposed by this chapter.

24§ 1505.1. Meters.

25A producer shall provide for and maintain a discrete wellhead 
26meter where natural gas is severed. A producer shall ensure that 
27the meters are maintained according to industry standards. Any 
28wellhead meter installed after the effective date of this 
29section shall be a digital meter.

30§ 1506. Assessments.

1(a) Authorization and requirement.--The department is
2authorized and shall make the inquiries, determinations and
3assessments of the tax imposed under this chapter, including
4interest, additions and penalties imposed under this chapter.

5(b) Notice.--The notice of assessment and demand for payment 
6shall be mailed to the taxpayer. The notice shall set forth the 
7basis of the assessment. The department shall send the notice of 
8assessment to the taxpayer at its registered address via 
9certified mail if the assessment increases the taxpayer's tax 
10liability by $300. Otherwise, the notice of assessment may be 
11sent via regular mail.

12§ 1507. Time for assessment.

13(a) Requirement.--An assessment as provided under section
141506 (relating to assessments) shall be made within three years
15after the date when the return provided for by section 1504
16(relating to return and payment) is filed or the end of the year
17in which the tax liability arises, whichever shall occur last.
18For the purposes of this subsection and subsection (b), a return
19filed before the last day prescribed for the filing period shall
20be considered as filed on the last day.

21(b) Exception.--If the taxpayer underpays the correct amount
22of the tax due by 25% or more, the tax may be assessed within
23six years after the date the return was filed.

24(c) Intent to evade.--Where no return is filed or where the
25taxpayer files a false or fraudulent return with intent to evade
26the tax imposed by this chapter, the assessment may be made at
27any time.

28(d) Erroneous credit or refund.--Within three years of the
29granting of a refund or credit or within the period in which an
30assessment or reassessment may have been issued by the

1department for the taxable period for which the refund was
2granted, whichever period shall last occur, the department may
3issue an assessment to recover a refund or credit made or
4allowed erroneously.

5§ 1508. Extension of assessment period.

6Notwithstanding the provisions of this chapter, the 
7assessment period may be extended in the event a taxpayer has 
8provided written consent before the expiration of the period 
9provided in section 1507 (relating to time for assessment) for a 
10tax assessment. The amount of tax due may be assessed at any 
11time within the extended period. The period may be extended 
12further by subsequent written consents made before the 
13expiration of the extended period.

14§ 1509. Reassessments.

15A taxpayer against whom an assessment is made may petition 
16the department for a reassessment under Article XXVII of the act 
17of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 
181971.

19§ 1510. Interest.

20The department shall assess interest on any delinquent tax at
21the rate prescribed under section 806 of the act of April 9,
221929 (P.L.343, No.176), known as The Fiscal Code.

23§ 1511. Penalties.

24The department shall enforce the following penalties:

25(1) A penalty against a producer without a natural gas 
26severance tax registration certificate. The penalty shall be 
27$1 for every unit severed without a valid registration 
28certificate. The department may assess this penalty 
29separately from or in conjunction with any assessment of the 
30natural gas severance tax.

1(2) A penalty against a producer for failure to timely
2file a return as required under section 1504 (relating to
3return and payment). The penalty shall be 5% of the tax
4liability to be reported on the return for each day beyond
5the due date that the return is not filed.

6(3) In addition to the penalty under paragraph (2), a
7penalty against the producer for a willful failure to timely
8file a return. The penalty shall be 200% of the tax liability
9required to be reported on the return.

10(4) A penalty against a producer for failure to timely
11pay the tax as required by section 1504(c). The penalty shall
12be 5% of the amount of tax due for each day beyond the
13payment date that the tax is not paid.

14§ 1512. Criminal acts.

15(a) Fraudulent return.--Any person with intent to defraud
16the Commonwealth, who willfully makes or causes to be made a
17return required by this chapter which is false, is guilty of a
18misdemeanor and shall, upon conviction, be sentenced to pay a
19fine of not more than $2,000 or to imprisonment for not more
20than three years, or both.

21(b) Other crimes.--

22(1) Except as otherwise provided by subsection (a), a 
23person is guilty of a misdemeanor and shall, upon conviction, 
24be sentenced to pay a fine of not more than $1,000 and costs 
25of prosecution or to imprisonment for not more than one year, 
26or both, for any of the following:

27(i) Willfully failing to timely remit the tax to the
28department.

29(ii) Willfully failing or neglecting to timely file
30a return or report required by this chapter.

1(iii) Refusing to timely pay a tax, penalty or
2interest imposed or provided for by this chapter.

3(iv) Willfully failing to preserve its books, papers
4and records as directed by the department.

5(v) Refusing to permit the department or its
6authorized agents to examine its books, records or
7papers.

8(vi) Knowingly making any incomplete, false or 
9fraudulent return or report.

10(vii) Preventing or attempting to prevent the full
11disclosure of the amount of natural gas severance tax
12due.

13(viii) Providing any person with a false statement 
14as to the payment of the tax imposed under this chapter 
15with respect to any pertinent facts.

16(ix) Making, uttering or issuing a false or
17fraudulent statement.

18(2) The penalties imposed by this section shall be in
19addition to other penalties imposed by this chapter.

20§ 1513. Abatement of additions or penalties.

21Upon the filing of a petition for reassessment or a petition
22for refund by a taxpayer as provided under this chapter,
23additions or penalties imposed upon the taxpayer by this chapter
24may be waived or abated in whole or in part where the petitioner
25establishes that he acted in good faith, without negligence and
26with no intent to defraud.

27§ 1514. Bulk and auction sales.

28A person that sells or causes to be sold at auction, or that 
29sells or transfers in bulk, 51% or more of a stock of goods, 
30wares or merchandise of any kind, fixtures, machinery,
 

1equipment, buildings or real estate involved in a business for 
2which the person holds a registration certificate or is required 
3to obtain a registration certificate under the provisions of 
4this chapter shall be subject to the provisions of section 1403 
5of the act of April 9, 1929 (P.L.343, No.176), known as The 
6Fiscal Code.

7§ 1515. Collection upon failure to request reassessment, review
8or appeal.

9(a) Power of department.--The department may collect the tax 
10imposed under this chapter:

11(1) If an assessment of the tax is not paid within 30
12days after notice to the taxpayer when no petition for
13reassessment has been filed.

14(2) Within 60 days of the reassessment, if no petition
15for review has been filed.

16(3) If no appeal has been made, within 30 days of:

17(i) the Board of Finance and Revenue's decision of a
18petition for review; or

19(ii) the expiration of the board's time for acting
20upon the petition.

21(4) In all cases of judicial sales, receiverships,
22assignments or bankruptcies.

23(b) Prohibition.--In a case for the collection of taxes 
24under subsection (a), the taxpayer against whom they were 
25assessed shall not be permitted to set up a ground of defense 
26that might have been determined by the department, the Board of 
27Finance and Revenue or the courts, provided that the defense of 
28failure of the department to mail notice of assessment or 
29reassessment to the taxpayer and the defense of payment of 
30assessment or reassessment may be raised in proceedings for
 

1collection by a motion to stay the proceedings.

2§ 1516. Tax liens.

3(a) Lien imposed.--If any taxpayer neglects or refuses to 
4pay the tax imposed under this chapter for which the taxpayer is 
5liable under this chapter after demand, the amount, including 
6interest, addition or penalty, together with additional costs 
7that may accrue, shall be a lien in favor of the Commonwealth 
8upon the real and personal property of the taxpayer but only 
9after the same has been entered and docketed of record by the 
10prothonotary of the county where the property is situated. The 
11department may, at any time, transmit to the prothonotaries of 
12the respective counties certified copies of all liens imposed by 
13this section. It shall be the duty of the prothonotary receiving 
14the lien to enter and docket the same of record to the office of 
15the prothonotary. The lien shall be indexed as judgments are now 
16indexed. No prothonotary shall require as a condition precedent 
17to the entry of the lien the payment of costs incidental to its 
18entry.

19(b) Priority of lien and effect on judicial sale.--Except
20for the costs of the sale and the writ upon which the sale was
21made and real estate taxes and municipal claims against the
22property, a lien imposed under this section shall have priority
23from the date of its recording and shall be fully paid and
24satisfied out of the proceeds of any judicial sale of property
25subject to the lien, before any other obligation, judgment,
26claim, lien or estate to which the property may subsequently
27become subject, but shall be subordinate to mortgages and other
28liens existing and duly recorded or entered of record prior to
29the recording of the lien.

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

1judicial sale of property subject to a lien imposed under this
2section, upon a lien or claim over which the lien imposed under
3this section has priority, the sale shall discharge the lien
4imposed under this section to the extent only that the proceeds
5are applied to its payment, and the lien shall continue in full
6force and effect as to the balance remaining unpaid. There shall
7be no inquisition or condemnation upon any judicial sale of real
8estate made by the Commonwealth under the provisions of this
9chapter. The lien shall continue as provided in the act of April
109, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ
11of execution may directly issue upon the lien without the
12issuance and prosecution to judgment of a writ of scire facias,
13provided that not less than ten days before issuance of any
14execution on the lien, notice of the filing and the effect of
15the lien shall be sent by registered mail to the taxpayer at its
16last known post office address, provided further that the lien
17shall have no effect upon any stock of goods, wares or
18merchandise regularly sold or leased in the ordinary course of
19business by the taxpayer against whom the lien has been entered,
20unless and until a writ of execution has been issued and a levy
21made upon the stock of goods, wares and merchandise.

22(d) Duty of prothonotary.--Any willful failure of any
23prothonotary to carry out any duty imposed upon him by this
24section shall be a misdemeanor. Upon conviction, he shall be
25sentenced to pay a fine of not more than $1,000 and costs of
26prosecution or to imprisonment for not more than one year, or
27both.

28(e) Priority.--Except as provided in this chapter, the
29distribution, voluntary or compulsory, in receivership,
30bankruptcy or otherwise of the property or estate of any person,

1all taxes imposed by this chapter which are due and unpaid and
2are not collectible under the provisions of section 225 of the
3act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
4of 1971, shall be paid from the first money available for
5distribution in priority to all other claims and liens, except
6as the laws of the United States may give priority to a claim to
7the Federal Government. A person charged with the administration
8or distribution of the property or estate who violates the
9provisions of this section shall be personally liable for the
10taxes imposed by this chapter which are accrued and unpaid and
11chargeable against the person whose property or estate is being
12administered or distributed.

13(f) Other remedies.--Subject to the limitations contained in
14this chapter as to the assessment of taxes, nothing contained in
15this section shall be construed to restrict, prohibit or limit
16the use by the department in collecting taxes due and payable of
17another remedy or procedure available at law or equity for the
18collection of debts.

19§ 1517. Tax suit reciprocity.

20The courts of this Commonwealth shall recognize and enforce 
21liabilities for natural gas severance or extraction taxes 
22lawfully imposed by any other state, provided that the other 
23state recognizes and enforces the tax imposed under this 
24chapter.

25§ 1518. Service.

26A producer is deemed to have appointed the Secretary of the 
27Commonwealth its agent for the acceptance of service of process 
28or notice in a proceeding for the enforcement of the civil 
29provisions of this chapter and service made upon the Secretary 
30of the Commonwealth as agent shall be of the same legal force
 

1and validity as if the service had been personally made upon the 
2producer. Where service cannot be made upon the producer in the 
3manner provided by other laws of this Commonwealth relating to 
4service of process, service may be made upon the Secretary of 
5the Commonwealth. In that case, a copy of the process or notice 
6shall be personally served upon any agent or representative of 
7the producer who may be found within this Commonwealth or, where 
8no agent or representative may be found, a copy of the process 
9or notice shall be sent via registered mail to the producer at 
10the last known address of its principal place of business, home 
11office or residence.

12§ 1519. Refunds.

13Under Article XXVII of the act of March 4, 1971 (P.L.6,
14No.2), known as the Tax Reform Code of 1971, the department
15shall refund all taxes, interest and penalties paid to the
16Commonwealth under the provisions of this chapter to which the
17Commonwealth is not rightfully entitled. The refunds shall be
18made to the person or the person's heirs, successors, assigns or
19other personal representatives who paid the tax, provided that
20no refund shall be made under this section regarding a payment
21made by reason of an assessment where a taxpayer has filed a
22petition for reassessment under section 2702 of the Tax Reform
23Code of 1971 to the extent the petition is adverse to the
24taxpayer by a decision which is no longer subject to further
25review or appeal. Nothing in this chapter shall prohibit a
26taxpayer who has filed a timely petition for reassessment from
27amending it to a petition for refund where the petitioner paid
28the tax assessed.

29§ 1520. Refund petition.

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

1the refund or credit of tax, interest or penalty provided for by 
2section 1519 (relating to refunds) shall be made only where the 
3person who has paid the tax files a petition for refund with the 
4department under Article XXVII of the act of March 4, 1971 
5(P.L.6, No.2), known as the Tax Reform Code of 1971, within the 
6time limits of section 3003.1 of the Tax Reform Code of 1971.

7(b) Natural gas severance tax.--A refund or credit of tax, 
8interest or penalty paid as a result of an assessment made by 
9the department under section 1505 (relating to natural gas 
10severance tax registration) shall be made only where the person 
11who has paid the tax files with the department a petition for a 
12refund with the department under Article XXVII of the Tax Reform 
13Code of 1971 within the time limits of section 3003.1 of the Tax 
14Reform Code of 1971. The filing of a petition for refund under 
15the provisions of this subsection shall not affect the abatement 
16of interest, additions or penalties to which the person may be 
17entitled by reason of his payment of the assessment.

18§ 1521. Rules and regulations.

19The department is charged with the enforcement of the
20provisions of this chapter and is authorized and empowered to
21prescribe, adopt, promulgate and enforce rules and regulations
22not inconsistent with the provisions of this chapter relating to
23any matter or thing pertaining to the administration and
24enforcement of the provisions of this chapter and the collection
25of taxes, penalties and interest imposed by this chapter. The
26department may prescribe the extent, if any, to which any of the
27rules and regulations shall be applied without retroactive
28effect.

29§ 1522. Recordkeeping.

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

1by this chapter, or for the collection of the tax, shall keep
2records, including those enumerated in subsection (b), render
3statements, make returns and comply with the rules and
4regulations as the department may prescribe regarding matters
5pertinent to the person's business. Whenever it is necessary,
6the department may require a person, by notice served upon the
7person or by regulations, to make returns, render statements or
8keep records as the department deems sufficient to show whether
9or not a person is liable to pay tax under this chapter.

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

11(1) Wellhead meter charts for each reporting period and
12the meter calibration and maintenance records. If turbine
13meters are in use, the maintenance records will be made
14available to the department upon request.

15(2) Records, statements and other instruments furnished
16to a producer by a person to whom the producer delivers for
17sale, transport or delivery of natural gas.

18(3) Records, statements and other instruments as the
19department may prescribe by regulation.

20(b) Records of nonresidents.--A nonresident who does
21business in this Commonwealth as a producer shall keep adequate
22records of the business and of the tax due as a result. The
23records shall be retained within this Commonwealth unless
24retention outside this Commonwealth is authorized by the
25department. The department may require a taxpayer who desires to
26retain records outside this Commonwealth to assume reasonable
27out-of-State audit expenses.

28(c) Keeping of separate records.--A producer who is engaged
29in another business or businesses which do not involve the
30severing of natural gas taxable under this chapter shall keep

1separate books and records of the businesses so as to show the
2taxable severing of natural gas under this chapter separately
3from other business activities not taxable hereunder. If any
4person fails to keep separate books and records, the person
5shall be liable for a penalty equaling 100% of tax due under
6this chapter for the period where separate records were not
7maintained.

8§ 1523. Examinations.

9The department or any of its authorized agents are authorized
10to examine the books, papers and records of any taxpayer in
11order to verify the accuracy and completeness of any return made
12or, if no return was made, to ascertain and assess the tax
13imposed by this chapter. The department may require the
14preservation of all books, papers and records for any period
15deemed proper by it but not to exceed three years from the end
16of the calendar year to which the records relate. Every taxpayer
17is required to give to the department or its agent the means,
18facilities and opportunity for examinations and investigations
19under this section. The department is further authorized to
20examine any person, under oath, concerning the taxable severing
21of natural gas by any taxpayer or concerning any other matter
22relating to the enforcement or administration of this chapter,
23and to this end may compel the production of books, papers and
24records and the attendance of all persons whether as parties or
25witnesses whom it believes to have knowledge of relevant
26matters. The procedure for the hearings or examinations shall be
27the same as that provided by the act of April 9, 1929 (P.L.343,
28No. 176), known as The Fiscal Code.

29§ 1524. Unauthorized disclosure.

30Any information gained by the department as a result of any

1return, examination, investigation, hearing or verification
2required or authorized by this chapter shall be confidential
3except for official purposes and except in accordance with
4proper judicial order or as otherwise provided by law, and any
5person unlawfully divulging the information shall be guilty of a
6misdemeanor and shall, upon conviction, be sentenced to pay a
7fine of not more than $1,000 and costs of prosecution or to
8imprisonment for not more than one year, or both.

9§ 1525. Cooperation with other governments.

10Notwithstanding the provisions of section 1517 (relating to 
11tax suit reciprocity), the department may permit the 
12Commissioner of the Internal Revenue Service of the United 
13States, the proper officer of any state or the authorized 
14representative of either of them to inspect the tax returns of 
15any taxpayer, or may furnish to the commissioner or officer or 
16to either of their authorized representative an abstract of the 
17return of any taxpayer, or supply him with information 
18concerning any item contained in any return or disclosed by the 
19report of any examination or investigation of the return of any 
20taxpayer. This permission shall be granted only if the laws of 
21the United States or another state grant substantially similar 
22privileges to the proper officer of the Commonwealth charged 
23with the administration of this chapter.

24§ 1526. Bonds.

25(a) Taxpayer to file bond.--The department may require a 
26nonresident natural person or any foreign corporation, 
27association, fiduciary or other entity, not authorized to do 
28business within this Commonwealth or not having an established 
29place of business in this Commonwealth and subject to the tax 
30imposed by section 1503 (relating to imposition of tax), to file
 

1a bond issued by a surety company authorized to do business in 
2this Commonwealth and approved by the Insurance Commissioner as 
3to solvency and responsibility, in amounts as it may fix, to 
4secure the payment of any tax or penalties due or which may 
5become due from a nonresident natural person, corporation, 
6association, fiduciary or other entity whenever it deems it 
7necessary to protect the revenues obtained under this chapter. 
8The department may also require a bond of a person petitioning 
9the department for reassessment in the case of any assessment 
10over $500 or where, in its opinion, the ultimate collection is 
11in jeopardy. For a period of three years, the department may 
12require a bond of any person who has, on three or more occasions 
13within a 12-month period, either filed a return or made payment 
14to the department more than 30 days late. In the event the 
15department determines a taxpayer is required to file a bond, it 
16shall give notice to the taxpayer specifying the amount of the 
17bond required. The taxpayer shall file the bond within five days 
18after notice is given by the department unless, within five 
19days, the taxpayer shall request in writing a hearing before the 
20secretary or his representative. At the hearing, the necessity, 
21propriety and amount of the bond shall be determined by the 
22secretary or the secretary's representative. The determination 
23shall be final and the taxpayer shall comply with it within 15 
24days after notice is mailed to the taxpayer.

25(b) Securities in lieu of bond.--In lieu of the bond 
26required by this section securities approved by the department 
27or cash in a prescribed amount may be deposited. The securities 
28or cash shall be kept in the custody of the department. The 
29department may apply the securities or cash to the tax imposed 
30by this chapter and interest or penalties due without notice to
 

1the depositor. The securities may be sold by the department to 
2pay the tax and/or interest or penalties due at public or 
3private sale upon five days' written notice to the depositor.

4(c) Failure to file bond.--The department may file a lien 
5under section 1516 (relating to tax liens) against any taxpayer 
6who fails to file a bond when required to do so under this 
7section. All funds received upon execution of the judgment on 
8the lien shall be refunded to the taxpayer with 3% interest, 
9should a final determination be made that it does not owe any 
10payment to the department.

11§ 1527. Natural Gas Severance Tax Account.

12(a) Account established.--The Natural Gas Severance Tax
13Account is established as a restricted account within the
14General Fund.

15(b) Deposits.--The proceeds of the tax imposed under section 
161503 (relating to imposition of tax) and penalties and interest 
17imposed under this chapter shall be deposited into the account.

18(c) Use of moneys.--The money in the account shall only be
19used in accordance with section 1528 (relating to transfers and
20distributions).

21§ 1528. Transfers and distributions.

22On the last business day of each calendar month, the State
23Treasurer shall make the following transfers and distributions
24of the money in the Natural Gas Severance Tax Account:

25(1) Sixteen percent to the General Fund.

26(2) Twenty-nine and six-tenths percent to the 
27Environmental Stewardship Fund.

28(3) Seventeen and three-tenths percent to the Department
29of Health.

30(3.1) Thirty-two percent to the Department of Education.

1(4) Four and three-tenths percent to the Hazardous Sites
2Cleanup Fund.

3(5) Eight-tenths of one percent to the Department of
4Environmental Protection for State dam removal, restoration
5and repair projects.

6Section 2. Repeals are as follows:

7(1) The General Assembly declares that the repeal under
8paragraph (2) is necessary to effectuate the addition of 72
9Pa.C.S. Ch. 15.

10(2) The provisions of 58 Pa.C.S. § 2318 are repealed.

11Section 3. This act shall take effect immediately.