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PRINTER'S NO. 4098
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2673
Session of
2018
INTRODUCED BY MADDEN, SCHLOSSBERG, KINSEY, YOUNGBLOOD, DEAN,
STURLA, THOMAS, J. McNEILL, READSHAW, KAVULICH, TAI AND
PASHINSKI, SEPTEMBER 26, 2018
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
SEPTEMBER 26, 2018
AN ACT
Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
Statutes, in unconventional gas well fee, repealing
provisions related to expiration; providing for a natural gas
severance tax; establishing the Natural Gas Severance Tax
Account; providing for allocation of proceeds; and imposing
penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 2318 of Title 58 of the Pennsylvania
Consolidated Statutes is repealed:
[§ 2318. Expiration.
(a) Notice.--The Secretary of the Commonwealth shall, upon
the imposition of a severance tax on unconventional gas wells in
this Commonwealth, submit for publication in the Pennsylvania
Bulletin notice of the imposition.
(b) Date.--This chapter shall expire on the date of the
publication of the notice under subsection (a).]
Section 2. Title 58 is amended by adding a chapter to read:
CHAPTER 34
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NATURAL GAS SEVERANCE TAX
Sec.
3401. Legislative intent.
3402. Definitions.
3403. Imposition of natural gas severance tax.
3404. Tax adjustment index.
3405. Return and payment.
3406. Natural gas severance tax registration.
3407. Meters.
3408. Assessments.
3409. Time for assessment.
3410. Extension of assessment period.
3411. Reassessments.
3412. Interest.
3413. Penalties.
3414. Criminal acts.
3415. Abatement of additions or penalties.
3416. Bulk and auction sales.
3417. Collection upon failure to request reassessment, review
or appeal.
3418. Tax liens.
3419. Tax suit reciprocity.
3420. Service.
3421. Refunds.
3422. Refund petition.
3423. Rules and regulations.
3424. Recordkeeping.
3425. Examinations.
3426. Unauthorized disclosure.
3427. Cooperation with other governments.
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3428. Bonds.
3429. Natural Gas Severance Tax Account established.
§ 3401. Legislative intent.
The General Assembly finds and declares as follows:
(1) For decades, Commonwealth businesses and residents
have been paying the severance taxes assessed and passed on
from other natural gas-producing states in the country.
(2) It is the intent of the General Assembly to provide
the Commonwealth with a means to assess a value on the
commodity of natural gas being severed within this
Commonwealth that is exported and sold to consumers outside
of this Commonwealth.
(3) The severance tax established under this chapter is
intended to be borne by out-of-State consumers of natural gas
produced within this Commonwealth and not the natural gas
industry or residents of this Commonwealth.
§ 3402. 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:
"Account." The Natural Gas Severance Tax Account established
in section 3429 (relating to Natural Gas Severance Tax Account
established).
"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 its
standards for accreditation.
"Association." A partnership, limited partnership or other
form of unincorporated enterprise owned or conducted by two or
more persons.
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"Average annual price of natural gas." The arithmetic mean
of the New York Mercantile Exchange (NYMEX) Henry Hub settled
price on the last trading day of each month of a calendar year
as reported by the Wall Street Journal for the 12-month period
ending March 31.
"Base tax rate." The tax under section 3403(c) (relating to
imposition of natural gas severance tax).
"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 other incorporated
enterprise organized under the laws of the United States, this
Commonwealth or other state, territory or foreign country or
dependency.
"Department." The Department of Revenue of the Commonwealth.
"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.
"Nonproducing site." A point of severance that is not
capable of producing natural gas in paying quantities.
"Paying quantities." Profit to the producer, however small,
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over the producer's current operating expenses.
"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 clause prescribing and imposing a penalty
or imposing a fine or imprisonment, or both, the term shall
include the members, as applied to an association, and the
officers, as applied to a 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." Every three successive calendar months
beginning January 1, 2019.
"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 the natural
gas commodity from the soil or water of this Commonwealth to be
sold to consumers outside of this Commonwealth.
"Severing." Extracting or otherwise removing the natural gas
commodity from the soil or water of this Commonwealth to be sold
to consumers outside 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.
"Stripper well." A producing site or a nonproducing site
that is not capable of producing and does not produce more than
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90,000 cubic feet of natural gas per day.
"Tax." The tax imposed under this chapter .
"Taxpayer." A person subject to the tax imposed by this
chapter .
"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971.
"Unit." One 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 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
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.
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(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 Institute of Standards and
Technology 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.
§ 3403. Imposition of natural gas severance tax.
(a) Establishment.--Beginning January 1, 2019, there shall
be levied a natural gas severance tax on every producer. The tax
shall not be imposed on units severed from a stripper well
unless:
(1) The stripper well is one of multiple producing sites
or nonproducing sites, the combined volumes of gas produced
by all of which sites are measured by a single wellhead meter
as provided in section 3407 (relating to meters).
(2) The combined volumes of gas produced by all the
producing sites or nonproducing sites described in paragraph
(1) is more than 90,000 cubic feet of natural gas per day.
(b) Exemptions.--The tax shall not be imposed on the
following:
(1) Units severed by a producer and sold and delivered
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to a manufacturer of tangible personal property, as defined
in section 201(m) of the Tax Reform Code, for the
manufacturer's use within this Commonwealth if the units have
been severed from one or more producing sites or nonproducing
sites on property owned by the manufacturer.
(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.
(c) Base tax rate.--The base tax rate shall be $0.08 per
unit severed at the wellhead.
§ 3404. Tax adjustment index.
(a) Annual adjustment.--The base tax rate shall be adjusted
annually by the amount of the tax adjustment index as calculated
under sub section (c), provided that the adjusted tax shall never
be less than the base tax rate. The adjusted rate shall be
effective for the next fiscal year.
(b) Determination of adjustment.--On or before April 30 of
each year following the effective date of this section , the
department shall calculate and determine the amount of the tax
adjustment index.
(c) Calculation of adjustment.--The tax adjustment index
shall be determined as follows:
(1) If 8% of the average annual price of natural gas is
less than the base tax rate, the tax adjustment index shall
be zero and the adjusted tax shall be the base tax rate.
(2) If 8% of the average annual price of natural gas is
greater than the base tax rate, the tax adjustment index
shall be 50% of the difference between 8% of the average
annual price of natural gas and the base tax rate. The
adjusted tax shall be the resulting tax adjustment index plus
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the base tax rate rounded to the nearest whole cent.
(d) Publication of adjustment.--The department shall forward
the amount of the tax adjustment index and the adjusted rate, as
determined under sub section (c), to the Legislative Reference
Bureau for publication in the Pennsylvania Bulletin by May 1 of
each year and shall simultaneously provide the information to
producers by written notice. Failure to publish or provide to
producers the amount of the tax adjustment index and the
adjusted rate shall not affect the applicability of the
adjustment under sub section (b).
(e) Discontinuance of data.--If publication of the NYMEX
Henry Hub average monthly natural gas price data is
discontinued, the adjusted rate then in effect shall not be
adjusted until a comparable method for determining the tax
adjustment index is adopted by the General Assembly.
(f) Other adjustments.--If the base data of the NYMEX Henry
Hub average monthly natural gas price is substantially revised,
the department shall, when determining the amount of the tax
adjustment index under sub section (c), make appropriate changes
to ensure that the tax adjustment index is reasonably consistent
with the result that would have been attained had the
substantial revision not been made. If the department is unable
to make reasonable changes sufficient to ensure a consistent
result, the adjusted tax then in effect shall not be adjusted
until a comparable method for determining the tax adjustment
index is adopted by the General Assembly.
(g) Application of tax determinations.--The provisions of
this section shall affect only the determination of the tax
imposed under section 3403 (relating to imposition of natural
gas severance tax). The provisions of this section are not
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intended nor shall they be construed to affect any other
determination, including, but not limited to, the determination
of royalty due under mineral leases. Notwithstanding any other
provision of law, the tax imposed under section 3403 shall not
reduce royalty payments due under mineral leases, and the
producer shall not recover a portion of the tax paid from the
royalty owner through other means of deduction or reallocation,
notwithstanding any provision in the lease, contract or
agreement.
§ 3405. Return and payment.
(a) Return.--A producer shall submit a return and payment of
the tax to the department on a form prescribed by the department
for each reporting period. The return shall include the
following:
(1) The units of production severed by the producer
during the reporting period.
(2) The number of producing sites of a producer in each
county and municipality.
(3) The amount due for the reporting period.
(b) Filing.--The return required under sub section (a) shall
be filed with the department within 25 days following the end of
a reporting period.
(c) Deadline.--The tax imposed under section 3403 (relating
to imposition of natural gas severance 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.
§ 3406. Natural gas severance tax registration.
(a) Application.--Before a producer severs natural gas in
this Commonwealth, the producer shall apply to the department
for a natural gas severance tax registration certificate.
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(b) 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 issue a
registration certificate until the producer has paid the
application fee.
(c) Declaration.--The producer shall include in the
producer's application a declaration of all producing sites and
nonproducing sites used by the producer for the severance of
natural gas. The declaration shall include copies of wellhead
meter certifications for each site. The producer shall update
the declaration when the producer adds or removes a producing
site or nonproducing site in this Commonwealth or when there is
a change in the status of a producing site or nonproducing site
or when the producer uses a different accredited laboratory to
issue a wellhead meter certification. The producer shall update
the declaration within 30 days after a calendar month in which a
change to the declaration occurs.
(d) Issuance.--Except as provided under sub section (e),
after the receipt of an application, the department shall issue
a registration certificate under sub section (a). The
registration certificate shall be nonassignable. All registrants
shall be required to renew registration certificates and
wellhead meter certifications on a staggered renewal system
established by the department. 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.--The department may
refuse to issue, suspend or revoke a registration certificate if
the applicant or registrant has not filed required State tax
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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
Tax Reform Code. 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. Notwithstanding
section s 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the
Tax Reform Code 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 producer and the fact that the
producer's registration certificate has been refused, suspended
or revoked under this sub section . Disclosure may include the
basis for refusal, suspension or revocation.
(f) Violation.--A person severing natural gas in this
Commonwealth without holding a valid registration certificate
under sub section (d) commits 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 in
the payment of the fine, the person shall be sentenced to
imprisonment for not less than five days nor more than 30 days.
The penalties imposed by this sub section shall be in addition to
any other penalties imposed by this chapter . For purposes of
this sub section , the severing of natural gas during any calendar
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day shall constitute a separate violation. The secretary may
designate employees of the department to enforce the provisions
of this sub section . 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 imposed by this chapter .
§ 3407. Meters.
(a) General rule.--Except as provided in sub section (b), a
producer shall provide for and maintain a discrete wellhead
meter where natural gas is severed. A producer shall ensure that
the meters are maintained according to industry standards. Any
wellhead meter installed after the effective date of this
section shall be a digital meter.
(b) Exception.--If a producer has multiple producing sites
or nonproducing sites, the combined volumes of gas produced by
all of which sites are measured by a single wellhead meter, the
producer shall not be required to provide for a discrete
wellhead meter at any of those producing sites or nonproducing
sites that are also a stripper well.
§ 3408. Assessments.
(a) Authorization and requirement.--The department is
authorized and shall make the inquiries, determinations and
assessments of the tax imposed under this chapter , 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 send the notice of
assessment to the taxpayer at the taxpayer's registered address
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via certified mail if the assessment increases the taxpayer's
tax liability by $300. Otherwise, the notice of assessment may
be sent via regular mail.
§ 3409. Time for assessment.
(a) Requirement.--An assessment as provided under section
3408 (relating to assessments) shall be made within three years
after the date when the return provided for by section 3405
(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 sub section and sub section (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 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 issued by the
department for the taxable period for which the refund was
granted, whichever period occurs last, the department may issue
an assessment to recover a refund or credit made or allowed
erroneously.
§ 3410. Extension of assessment period.
Notwithstanding the provisions of this chapter , the
assessment period may be extended in the event a taxpayer has
provided written consent before the expiration of the period
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provided in section 3409 (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.
§ 3411. Reassessments.
A taxpayer against whom an assessment is made may petition
the department for a reassessment under Article XXVII of the Tax
Reform Code.
§ 3412. Interest.
The department shall assess interest on a 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.
§ 3413. Penalties.
The department shall enforce the following penalties:
(1) A penalty against a producer without a natural gas
severance tax registration certificate. The penalty shall be
$1 for every unit severed without a valid registration
certificate. The department may assess this penalty
separately from or in conjunction with an assessment of the
natural gas severance tax.
(2) A penalty against a producer for failure to timely
file a return as required under section 3405 (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 timely
file a return. The penalty shall be 200% of the tax liability
required to be reported on the return.
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(4) A penalty against a producer for failure to pay the
tax by the deadline under section 3405(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.
§ 3414. Criminal acts.
(a) Fraudulent return.--A 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
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 sub section (a), a
person commits 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 the person's
books, papers and records as directed by the department.
(v) Refusing to permit the department or the
department's authorized agents to examine the person's
books, records or papers.
(vi) Knowingly making an incomplete, false or
fraudulent return or report.
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(vii) Preventing or attempting to prevent the full
disclosure of the amount of natural gas severance tax
due.
(viii) Providing any person with a false statement
as to the payment of the tax imposed under this chapter
with respect to 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 .
§ 3415. 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.
§ 3416. 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 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.
§ 3417. Collection upon failure to request reassessment, review
or appeal.
(a) Power of department.--The department may collect the tax
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imposed under this chapter :
(1) If an assessment of the 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 of Finance and
Revenue'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 tax under
sub section (a), the taxpayer against whom the taxes 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.
§ 3418. Tax liens.
(a) Lien imposed.--If a taxpayer neglects or refuses to pay
the tax imposed under this chapter 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 same has been entered and docketed of record by the
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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 imposed by
this section . 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 the
lien's 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 have priority
from the date of the lien's recording and shall be fully paid
and satisfied out of the proceeds of a 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, but shall 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.--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 the lien's 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 a judicial
sale of real estate made by the Commonwealth under the
provisions of this chapter . The lien shall continue as provided
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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 10 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 the taxpayer's 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 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) Duty of prothonotary.--Willful failure of a prothonotary
to carry out a duty imposed upon the prothonotary by this
section shall be a misdemeanor. Upon conviction, 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.--Except as provided in this chapter , the
distribution, voluntary or compulsory, in receivership,
bankruptcy or otherwise of the property or estate of a person,
all taxes imposed by this chapter which are due and unpaid and
are not collectible under the provisions of section 225 of the
Tax Reform Code, 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 that
violates the provisions of this section shall be personally
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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.
§ 3419. Tax suit reciprocity.
The courts of this Commonwealth shall recognize and enforce
liabilities for natural gas severance taxes or extraction taxes
lawfully imposed by any other state, provided that the other
state recognizes and enforces the tax imposed under this
chapter .
§ 3420. Service.
A producer is deemed to have appointed the Secretary of the
Commonwealth as the producer's 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 producer. Where service cannot be made upon the
producer 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 an agent
or representative of the producer 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
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mail to the producer at the last known address of the producer's
principal place of business, home office or residence.
§ 3421. Refunds.
Under Article XXVII of the Tax Reform Code, 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 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 the petition
for reassessment to a petition for refund where the petitioner
paid the tax assessed.
§ 3422. Refund petition.
(a) General rule.--Except as provided for in sub section (b),
the refund or credit of tax, interest or penalty provided for by
section 3421 (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 Tax Reform Code, within
the time limits of section 3003.1 of the Tax Reform Code.
(b) Natural gas severance tax.--A refund or credit of taxes,
interest or penalty paid as a result of an assessment made by
the department under section 3406 (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
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refund with the department under Article XXVII of the Tax Reform
Code within the time limits of section 3003.1 of the Tax Reform
Code. The filing of a petition for refund, under the provisions
of this sub section , 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.
§ 3423. 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.
§ 3424. Recordkeeping.
(a) General rule.--Every person liable for tax imposed by
this chapter , or for the collection of the tax, shall keep
records, including those enumerated in sub section (c), 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 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 taxes under this chapter .
(b) Records.--Records to be maintained are:
(1) Wellhead meter charts for each reporting period and
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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.
(c) 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 that desires
to retain records outside this Commonwealth to assume reasonable
out-of-State audit expenses.
(d) Keeping of separate records.--A producer who is engaged
in another business or businesses which do not involve the
severing of natural gas under this chapter shall keep separate
books and records of the businesses so as to show the severing
of natural gas under this chapter separately from other business
activities not regulated under this chapter . If a person fails
to keep separate books and records, the person shall be liable
for a penalty equaling 100% of taxes due under this chapter for
the period where separate records were not maintained.
§ 3425. Examinations.
The department or the department's authorized agents are
authorized to examine the books, papers and records of a
taxpayer in order to verify the accuracy and completeness of a
return made or, if no return was made, to ascertain and assess
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the tax imposed by this chapter . The department may require the
preservation of all books, papers and records for a period
deemed proper by the department but not to exceed three years
from the end of the calendar year to which the records relate.
Each taxpayer is required to give to the department or the
department's agent the means, facilities and opportunity for
examinations and investigations under this section . The
department is further authorized to examine a person, under
oath, concerning the taxable severing of natural gas by a
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
the department 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.
§ 3426. Unauthorized disclosure.
Information gained by the department as a result of a 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 a person unlawfully
divulging the information commits 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.
§ 3427. Cooperation with other governments.
Notwithstanding the provisions of section 3419 (relating to
tax suit reciprocity), the department may permit the
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Commissioner of the Internal Revenue Service of the United
States, or authorized representative, or the proper officer of a
state, or the authorized representative to inspect the returns
of a taxpayer, or may furnish to the commissioner or officer or
to either of the authorized representatives an abstract of the
return of a taxpayer, or supply the taxpayer with information
concerning an item contained in a return or disclosed by the
report of an examination or investigation of the return of a
taxpayer. This permission shall be granted only if 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 .
§ 3428. Bonds.
(a) Taxpayer to file bond.--The department may require a
nonresident natural person or a 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
imposed under section 3403 (relating to imposition of natural
gas severance 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 the department may fix, to secure the payment of a
tax or penalties due or which may become due from a nonresident
natural person, corporation, association, fiduciary or other
entity whenever the department deems it necessary to protect the
revenues obtained under this chapter . 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
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jeopardy. For a period of three years, the department may
require a bond of a 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, the
department 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 or the secretary's 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 the determination 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 the tax imposed
by this chapter and interest or penalties due without notice to
the depositor. The securities may be sold by the department to
pay the tax 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 3418 (relating to tax liens) against a 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 the taxpayer does not
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owe any payment to the department.
§ 3429. Natural Gas Severance Tax Account established.
(a) Establishment.--The Natural Gas Severance Tax Account is
established as a restricted account within the General Fund.
(b) Deposit.--The proceeds of the tax imposed under section
3403 (relating to imposition of natural gas severance tax) and
penalties and interest imposed under this chapter shall be
deposited into the account.
(c) Allocation.--All money in the account shall be allocated
for the purpose of funding homestead and farmstead property
exclusions under the act of June 27, 2006 (1st Sp.Sess.,
P.L.1873, No.1), known as the Taxpayer Relief Act.
Section 3. This act shall take effect in 60 days.
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