THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

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

AS REPORTED FROM COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 23, 2009   

AN ACT

Amending Title 72 (Taxation and Fiscal Affairs) of the

Pennsylvania Consolidated Statutes, imposing a tax on the

extraction of natural gas; providing for natural resource gas 

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severance tax license registration certificate, for duties of

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the Department of Revenue, for tax assessments and tax liens;

imposing penalties; providing for service of process, for

rulemaking, for cooperation with other governments and for

bonds; and making an appropriation. 

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 72 of the Pennsylvania Consolidated

Statutes is amended by adding a chapter to read:

CHAPTER 15

SEVERANCE TAX

Sec.

1501.  Short title of chapter.

1502.  Definitions.

1503.  Imposition of tax.

1504.  Return and payment.

1505.  Natural resource gas severance tax registration.

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1505.1  Meters.

1506.  Assessments.

1507.  Time for assessment.

1508.  Extension of limitation period.

1509.  Reassessments.

1510.  Interest.

1511.  Penalties.

1512.  Criminal acts.

1513.  Abatement of additions or penalties.

1514.  Bulk and auction sales.

1515.  Collection upon failure to request reassessment, review

or appeal.

1516.  Tax liens.

1517.  Tax suit reciprocity.

1518.  Service.

1519.  Refunds.

1520.  Refund petition.

1521.  Rules and regulations.

1522.  Recordkeeping.

1523.  Examinations.

1524.  Unauthorized disclosure.

1525.  Cooperation with other governments.

1526.  Bonds.

1527.  Natural Gas Severance Tax Fund.

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1528.  Administration of fund.

1527 1529.  Appropriation.

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§ 1501.  Short title of chapter.

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

Resource Gas Severance Tax Act.

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§ 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

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and calibration of scientific measurement devices and certified

by the Department of Environmental Protection as having met the

department's standards for accreditation.

"Association."  A partnership, limited partnership or any

other form of unincorporated enterprise owned or conducted by

two or more persons.

"Corporation."  A corporation, joint stock association,

limited liability company, business trust or any other

incorporated enterprise organized under the laws of this

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

foreign country or dependency.

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

"Fund."  The Natural Gas Severance Tax Fund established under

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section 1527.

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

all arms-length transactions that a producer receives at the

sales meter for natural gas during a reporting period.

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

or liquids past a certain point.

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

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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.

"Non-producing "Nonproducing site."  A point of severance

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that is not capable of producing a natural gas in paying

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quantities.

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

over the producer's current operating expenses.

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

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limited liability company, business trust, trust, guardian or

other fiduciary, association, government entity or corporation.

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

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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."  A calendar month in which natural gas is

severed.

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

sold or transported to a purchaser or market.

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

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

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of this Commonwealth.

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

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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

60,000 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.

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

wellhead at a temperature of 60 degrees Fahrenheit and an

absolute pressure of 14.73 pounds per square inch in accordance

with American Gas Association Standards and according to Boyle's

law for the measurement of gas under varying pressures with

deviations as follows:

(1)  The average absolute atmospheric pressure shall be

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

elevation or location of point of delivery above sea level or

variations in atmospheric pressure from time to time.

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

be determined by the continuous use of a recording

thermometer installed to properly record the temperature of

gas flowing through the meters. The arithmetic average of the

temperature recorded each 24-hour day shall be used in

computing gas volumes. If a recording thermometer is not

installed, or if installed and not operating properly, an

average flowing temperature of 60 degrees Fahrenheit shall be

used in computing gas volume.

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

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

gravity balance, or at intervals as found necessary in

practice. Specific gravity determinations shall be used in

computing gas volumes.

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

shall be determined by annual tests or at other shorter

intervals as found necessary in practice. The apparatus and

method used in making the test shall be in accordance with

recommendations of the National Bureau of Standards or Report

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

Association, or amendments thereto. The results of the tests

shall be used in computing the volume of gas delivered under

this chapter.

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

nonproducing site to measure the volume of natural gas severed 

for which a wellhead meter certification has been issued.

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"Wellhead meter certification."  A report issued by an

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accredited laboratory certifying the accuracy of a wellhead

meter.

§ 1503.  Imposition of tax.

(a)  Establishment.--There is levied a privilege natural gas

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severance tax on every producer who severs natural gas.

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

the gross value of units severed at the wellhead during a

reporting period, plus 4.7 cents per unit severed, but shall not

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be imposed on units severed from a stripper well.

§ 1504.  Return and payment.

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

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

department, reporting all severed natural gas resources per

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reporting period and the tax due as imposed under section 1503

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(relating to imposition of tax).

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

filed with the department within 15 days following the end of

the second calendar month after a reporting period.

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

the day the return is required to be filed and becomes

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delinquent if not remitted to the department by that date.

§ 1505.  Natural resource gas severance tax registration.

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

application fee to cover the administrative costs associated

with the application and registration process. If the department

charges an application fee, the department shall not register a

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producer or issue a registration certificate until the producer

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has paid the application fee.

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

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registration, the producer is required to provide The producer

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shall include in its application a declaration of all sites in

this Commonwealth used by the producer for the severance of

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natural gas. The declaration is to include all producing sites

and nonproducing sites as well as wellhead meter certification

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for each. The producer is required to update the declaration

when the producer adds or removes a producing site or

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nonproducing site in this Commonwealth or when there is a change

in the status of a producing site or nonproducing site or when

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the producer uses a different accredited laboratory to certify

the accuracy of the producer's wellhead meters. The producer

shall update the declaration within 30 days after a calendar

month in which a change to the declaration occurs.

(b)  Issuance.--After Except as provided in subsection (c),

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after the receipt of an application, the department shall issue

the a registration certificate applied for under subsection (a), 

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provided that said applicant shall have filed all required State

tax reports and paid any State taxes not subject to a timely

perfected administrative or judicial appeal or subject to a duly

authorized deferred payment plan. The registration certificate

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shall be nonassignable. All registrants shall be required to

renew their registration certificates and wellhead meter

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certifications on a staggered renewal system established by the

department. After the initial staggered period, a certificate 

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renewal period, a registration certificate or a wellhead meter

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certification issued shall be valid for a period of five years.

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

refuse to issue, suspend or revoke the a registration 

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certificate if the applicant or any person holding a certificate 

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registrant has not filed required State tax reports and paid

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State taxes not subject to a timely perfected administrative or

judicial appeal or subject to a duly authorized deferred payment

plan. The department shall notify the applicant or registrant of

any refusal, suspension or revocation. The notice shall contain

a statement that the refusal, suspension or revocation may be

made public. The notice shall be made by first class mail. An

applicant or registrant aggrieved by the determination of the

department may file an appeal under the provisions for

administrative appeals in the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971. In the case of a

suspension or revocation which is appealed, the registration and 

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certificate shall remain valid pending a final outcome of the

appeals process. Notwithstanding sections 274, 353(f), 408(b),

603, 702, 802, 904 and 1102 of the Tax Reform Code of 1971 or

any other provision of law, if no appeal is taken or if an

appeal is taken and denied at the conclusion of the appeal

process the department may disclose, by publication or

otherwise, the identity of a person producer and the fact that

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the person's producer's registration and certificate has been

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refused, suspended or revoked under this subsection. Disclosure

may include the basis for refusal, suspension or revocation.

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

Commonwealth without holding a valid registration and 

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

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

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

person convicted defaults, he shall be sentenced to imprisonment

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

imposed by this subsection shall be in addition to any other

penalties imposed by this chapter. For purposes of this

subsection, the severing of a natural gas during any calendar

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day shall constitute a separate violation. The Secretary of

Revenue may designate employees of the department to enforce the

provisions of this subsection. The employees shall exhibit proof

of and be within the scope of the designation when instituting

proceedings as provided by the Pennsylvania Rules of Criminal

Procedure.

(e)  Failure to obtain license registration certificate.--

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Failure to obtain a or hold a valid registration and certificate

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does not relieve a person from liability for the tax imposed by

this chapter.

§ 1505.1.  Meters.

A producer shall provide for and maintain a discrete wellhead 

meter and a discrete sales meters meter. A producer shall ensure

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that the meters are maintained according to industry standards. 

Any wellhead meter installed after the effective date of this

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section shall be a digital meter.

§ 1506.  Assessments.

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

authorized and shall make the inquiries, determinations and

assessments of the natural gas severance tax, including

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interest, additions and penalties imposed under this chapter.

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

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

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

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

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

the notice of assessment to the producer at his taxpayer at its 

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registered address via certified mail if the assessment

increases the producer's taxpayer's tax liability by $300.

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Otherwise, the notice of assessment may be sent via regular

mail.

§ 1507.  Time for assessment.

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

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

after the date when the return provided for by section 1504

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

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

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

filed before the last day prescribed for the filing period shall

be considered as filed on the last day.

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

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

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

total tax reported on the return.

(b)  Exception.--If the taxpayer underpays the correct amount

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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 filed issued by the

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department for the taxable period for which the refund was

granted, whichever period shall last occur, the department may

file issue an assessment to recover a refund or credit made or

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allowed erroneously.

§ 1508.  Extension of limitation period.

Notwithstanding the provisions of this chapter, the

assessment period may be extended where in the event a taxpayer

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has provided written consent before the expiration of the period

provided in section 1507 (relating to time for assessment) for a

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

time within the extended period. The period extended may be

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extended further by subsequent written consents made before the

expiration of the extended period.

§ 1509.  Reassessments.

A producer taxpayer against whom an assessment is made may

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petition the department for a reassessment under Article XXVII

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

Reform Code of 1971.

§ 1510.  Interest.

The department shall assess interest on any delinquent tax at

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

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

§ 1511.  Penalties.

The department shall enforce the following penalties:

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

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gas severance tax registration and certificate. The penalty

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shall be $1 for every unit severed without a valid

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registration and certificate. The department may assess this

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penalty separately from or in conjunction with any assessment

of the natural gas severance tax.

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

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file a return as required under section 1504 (relating to

return and payment). The penalty shall be 5% of the tax

liability to be reported on the return for each day beyond

the due date that the return is not filed.

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

penalty against the producer for a willful failure to timely

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

required to be reported on the return.

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

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

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

payment date that the tax is not paid.

§ 1512.  Criminal acts.

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

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

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

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

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

than three years, or both.

(b)  Other crimes.--

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

producer person is guilty of a misdemeanor and shall, upon

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

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

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

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

department.

(ii)  Willfully failing or neglecting to timely file

a return or report required by this chapter.

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

interest imposed or provided for by this chapter.

(iv)  Willfully failing to preserve his its books,

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papers and records as directed by the department.

(v)  Refusing to permit the department or its

authorized agents to examine its books, records or

papers.

(vi)  Knowingly make any incomplete, false or

fraudulent return or report.

(vii)  Preventing or attempting to prevent the full

disclosure of the amount of natural gas severance tax

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due.

(viii)  Providing any person with a false statement

as to the payment of natural gas severance tax with

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respect to any pertinent facts.

(ix)  Making, uttering or issuing a false or

fraudulent statement.

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

addition to other penalties imposed by this chapter.

§ 1513.  Abatement of additions or penalties.

Upon the filing of a petition for reassessment or a petition

for refund by a taxpayer as provided under this chapter,

additions or penalties imposed upon the taxpayer by this chapter

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

establishes that he acted in good faith, without negligence and

with no intent to defraud.

§ 1514.  Bulk and auction sales.

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

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

wares or merchandise of any kind, fixtures, machinery,

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

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for which the person is licensed or required to be licensed 

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holds a registration certificate or is required to obtain a

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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 a the

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natural gas severance tax:

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

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days after notice to the taxpayer when no petition for

reassessment has been filed.

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

for review has been filed.

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

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

petition for review; or

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

upon the petition.

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

assignments or bankruptcies.

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

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

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assessed shall not be permitted to set up a ground of defense

that might have been determined by the department, the Board of

Finance and Revenue or the courts, provided that the defense of

failure of the department to mail notice of assessment or

reassessment to the taxpayer and the defense of payment of

assessment or reassessment may be raised in proceedings for

collection by a motion to stay the proceedings.

§ 1516.  Tax liens.

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

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taxpayer neglects or refuses to pay the tax natural gas

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severance 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 person taxpayer but only after the same

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has been entered and docketed of record by the prothonotary of

the county where the property is situated. The department may,

at any time, transmit to the prothonotaries of the respective

counties certified copies of all liens for taxes imposed by this

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act and penalties and interest section. It shall be the duty of

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the prothonotary receiving the lien to enter and docket the same

of record to the office of the prothonotary. The lien shall be

indexed as judgments are now indexed. No prothonotary shall

require as a condition precedent to the entry of the lien the

payment of costs incidental to its entry.

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

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

made and real estate taxes and municipal claims against the

property, the a lien imposed under this section shall have

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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,

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judgment, claim, lien or estate to which the property may

subsequently become subject, but shall be subordinate to

mortgages and other liens existing and duly recorded or entered

of record prior to the recording of the tax lien.

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

judicial sale of property subject to a lien imposed under this

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

this section has priority, the sale shall discharge the lien

imposed under this section to the extent only that the proceeds

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

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

be no inquisition or condemnation upon any judicial sale of real

estate made by the Commonwealth under the provisions of this

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

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

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

directly issue upon the lien without the issuance and

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

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

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

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

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post office address, provided further that the lien shall have

no effect upon any stock of goods, wares or merchandise

regularly sold or leased in the ordinary course of business by

the person taxpayer against whom the lien has been entered,

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unless and until a writ of execution has been issued and a levy

made upon said stock of goods, wares and merchandise.

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

prothonotary to carry out any duty imposed upon him by this

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

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

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

both.

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

distribution, voluntary or compulsory, in receivership,

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

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

are not collectible under the provisions of section 225 of the

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

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

distribution in priority to all other claims and liens, except

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

the Federal Government. A person charged with the administration

or distribution of the property or estate who violates the

provisions of this section shall be personally liable for the

taxes imposed by this chapter which are accrued and unpaid and

chargeable against the person whose property or estate is being

administered or distributed.

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

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

this section shall be construed to restrict, prohibit or limit

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

another remedy or procedure available at law or equity for the

collection of debts.

§ 1517.  Tax suit reciprocity.

The courts of this Commonwealth shall recognize and enforce

liabilities for natural gas severance taxes lawfully imposed by

any other state, provided that the other state recognizes and

enforces the tax set forth in this chapter.

§ 1518.  Service.

A producer is deemed to have appointed the Secretary of the

Commonwealth its agent for the acceptance of service of process

or notice in a proceeding for the enforcement of the civil

provisions of this chapter and service made upon the Secretary

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

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

person producer. Where service cannot be made upon the person 

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producer in the manner provided by other laws of this

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Commonwealth relating to service of process, service may be made

upon the Secretary of the Commonwealth. In that case, a copy of

the process or notice shall be personally served upon any agent

or representative of the person producer who may be found within

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this Commonwealth or, where no agent or representative may be

found, a copy of the process or notice shall be sent via

registered mail to the person producer at the last known address

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of his its principal place of business, home office or

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residence.

§ 1519.  Refunds.

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

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

shall refund all taxes, interest and penalties paid to the

Commonwealth under the provisions of this chapter to which the

Commonwealth is not rightfully entitled. The refunds shall be

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

other personal representatives who paid the tax, provided that

no refund shall be made under this section regarding a payment

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

petition for reassessment under section 2702 of the Tax Reform

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

taxpayer by a decision which is no longer subject to further

review or appeal. Nothing in this chapter shall prohibit a

taxpayer who has filed a timely petition for reassessment from

amending it to a petition for refund where the petitioner paid

the tax assessed.

§ 1520.  Refund petition.

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

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

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

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

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

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

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

(b)  Severance tax license.-- Natural gas severance tax.--A

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refund or credit of tax, interest or penalty paid as a result of

an assessment made by the department under section 1505

(relating to natural resource gas severance tax registration),

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shall be made only where the person who has paid the tax files

with the department a petition for a refund with the department

under Article XXVII within the time limits of section 3003.1 of

the Tax Reform Code of 1971. The filing of a petition for

refund, under the provisions of this subsection, shall not

affect the abatement of interest, additions or penalties to

which the person may be entitled by reason of his payment of the

assessment.

§ 1521.  Rules and regulations.

The department is charged with the enforcement of the

provisions of this chapter and is authorized and empowered to

prescribe, adopt, promulgate and enforce rules and regulations

not inconsistent with the provisions of this chapter relating to

any matter or thing pertaining to the administration and

enforcement of the provisions of this chapter and the collection

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

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

rules and regulations shall be applied without retroactive

effect.

§ 1522.  Recordkeeping.

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

by this chapter, or for the collection of such tax, shall keep

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

statements, make returns and comply with the rules and

regulations as the department may prescribe regarding matters

pertinent to the person's business. Whenever it is necessary,

the department may require a person, by notice served upon the

person or by regulations, to make returns, render statements or

keep records as the department deems sufficient to show whether

or not a person is liable to pay tax under this chapter.

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

(1)  Wellhead meter and sales meter charts for each

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reporting period and the meter calibration and maintenance

records. If turbine meters are in use, the maintenance

records will be made available to the department upon

request.

(2)  Records, statements and other instruments furnished

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

sale, transport or delivery of natural gas.

(3)  Records, statements and other instruments as the

department may prescribe by regulation.

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

business in this Commonwealth as a producer shall keep adequate

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

records shall be retained within this Commonwealth unless

retention outside this Commonwealth is authorized by the

department. The department may require a taxpayer who desires to

retain records outside this Commonwealth to assume reasonable

out-of-State audit expenses.

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

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

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another business or businesses which do not involve the severing

of natural gas taxable under this chapter, shall keep separate

books and records of the businesses so as to show the taxable

severing of natural gas under this chapter separately from other

business activities not taxable hereunder. If any person fails

to keep separate books and records, the person shall be liable

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

the period where separate records were not maintained.

§ 1523.  Examinations.

The department or any of its authorized agents are authorized

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

order to verify the accuracy and completeness of any return made

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

imposed by this chapter. The department may require the

preservation of all books, papers and records for any period

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

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

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

facilities and opportunity for examinations and investigation

under this section. The department is further authorized to

examine any person, under oath, concerning the taxable severing

of natural gas by any taxpayer or concerning any other matter

relating to the enforcement or administration of this chapter,

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

records and the attendance of all persons whether as parties or

witnesses whom it believes to have knowledge of relevant

matters. The procedure for the hearings or examinations shall be

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

No. 176), known as The Fiscal Code.

§ 1524.  Unauthorized disclosure.

Any information gained by the department as a result of any

return, examination, investigation, hearing or verification

required or authorized by this chapter shall be confidential

except for official purposes and except in accordance with

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

person unlawfully divulging the information shall be guilty of a

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

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

imprisonment for not more than one year, or both.

§ 1525.  Cooperation with other governments.

Notwithstanding the provisions of section 1517 (relating to

tax suit reciprocity), the department may permit the

Commissioner of the Internal Revenue Service of the United

States, the proper officer of any state or the authorized

representative of either officer of them to inspect the tax

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returns of any taxpayer, or may furnish to the commissioner or

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officer or to his either of their authorized representative an

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abstract of the return of any taxpayer, or supply him with

information concerning any item contained in any return or

disclosed by the report of any examination or investigation of

the return of any taxpayer. This permission shall be granted

only if the statutes laws of the United States or another state

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grant substantially similar privileges to the proper officer of

the Commonwealth charged with the administration of this

chapter.

§ 1526.  Bonds.

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

nonresident natural person or any foreign corporation,

association, fiduciary, partnership or other entity, not

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authorized to do business within this Commonwealth or not having

an established place of business in this Commonwealth and

subject to the tax imposed by section 1503 (relating to

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

authorized to do business in this Commonwealth and approved by

the Insurance Commissioner as to solvency and responsibility, in

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

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

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nonresident natural person, corporation, association, fiduciary

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or other entity whenever it deems it necessary to protect the

revenues obtained under this chapter. In order to protect the

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revenues obtained under this chapter, the department shall

require a nonresident natural person or a foreign corporation,

association, fiduciary, partnership or entity who is not

authorized to do business or does not have an established place

of business in this Commonwealth and is subject to the tax

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

company authorized to do business in this Commonwealth and

approved by the Insurance Commissioner as to solvency and

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

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

natural person, corporation or other entity. The department may

also require a bond of a person petitioning the department for

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

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

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

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

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

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

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

taxpayer specifying the amount of the bond required. The

taxpayer shall file the bond within five days after notice is

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

shall request in writing a hearing before the Secretary of

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

propriety and amount of the bond shall be determined by the

secretary or the secretary's representative. The determination

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

days after notice is mailed to the taxpayer.

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

required by this section securities approved by the department

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

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

department may apply the securities or cash to a tax the tax

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imposed by this chapter and interest or penalties due without

notice to the depositor. The securities may be sold by the

department to pay a the tax and/or interest or penalties due at

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public or private sale upon five days' written notice to the

depositor.

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

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

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

section. All funds received upon execution of the judgment on

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

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

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payment to the department.

§ 1527.  Natural Gas Severance Tax Fund.

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(a)  Establishment.--The Natural Gas Severance Tax Fund is

established as a separate fund in the State Treasury.

(b)  Deposit.--The proceeds of the natural gas severance tax,

penalties and interest imposed by this chapter, less the amounts

appropriated under section 1529 (relating to appropriation),

shall be deposited into the fund.

(c)  Restriction.--The money in the fund shall only be used

in accordance with section 1528 (relating to administration of

fund).

§ 1528.  Administration of fund.

(a)  Transfers.--The State Treasurer shall make the following

transfers from the fund on a quarterly basis commencing on the

first business day of January 2010:

(1)  Sixty percent to the General Fund.

(2)  Three percent to the Department of Public Welfare to

provide cash and crisis grants to low-income households under

the Low Income Home Energy Assistance Program.

(3)  Fifteen percent to the Environmental Stewardship

Fund.

(4)  Four percent to the Hazardous Sites Cleanup Fund.

(5)  Five percent to the Liquid Fuels Tax Fund for the

reconstruction, maintenance and repair of State roadways and

bridges. The funds under this paragraph shall be:

(i)  allocated in addition to and not in lieu of any

funds normally and customarily allocated to the

reconstruction, maintenance and repair of roadways and

bridges by the Department of Transportation; and

(ii)  distributed equally among all the 67 counties

of this Commonwealth.

(b)  Distributions.--

(1)  The State Treasurer shall distribute from the fund,

on a quarterly basis commencing on the first business day of

January 2010, 4.5% to municipalities where natural gas has

been severed and taxed under this chapter in the previous

quarter. The amount distributed shall be determined on a pro

rata basis as follows: The total amount to be distributed

under this paragraph is divided by the total number of

taxable gas units severed in the Commonwealth during the

preceding quarter; this quotient is then multiplied by the

total number of taxable gas units severed in the municipality

during the preceding quarter. The result equals the amount of

money to be distributed to the municipality, which shall be

used solely for any of the following:

(i)  Reconstruction, maintenance and repair of

municipal roadways and bridges which the municipality has

determined have been or are being used extensively to

transport natural gas or equipment related to the

production thereof.

(ii)  Parks and recreation.

(iii)  Industrial and commercial development.

(iv)  Preservation and improvement of municipal water

supplies.

(v)  Maintenance and capital improvements to the

municipal waste and sewage systems.

(vi)  Preservation and reclamation of the surface

waters of the municipality.

(vii)  Other lawful purposes reasonably related to

the consequences of severing natural gas in the

municipality.

(2)  The State Treasurer shall distribute from the fund,

on a quarterly basis commencing on the first business day of

January 2010, 4.5% to counties where natural gas has been

severed and taxed under this chapter in the previous quarter.

The amount distributed to a county shall be determined on a

pro rata basis as follows: The total amount to be distributed

under this paragraph is divided by the total number of

taxable gas units severed in the Commonwealth during the

preceding quarter; this quotient is then multiplied by the

total number of taxable gas units severed in the county

during the preceding quarter. The result equals the amount of

money to be distributed to the county, which shall be

administered by a board comprised of the chairperson of the

board of county commissioners, a representative from the

natural gas producing municipalities within the county and a

county commissioner selected by the representative of the

natural gas producing municipalities. The board shall give

priority to the reconstruction, repair and maintenance of

county roadways and bridges determined by the board to have

been and are used to transport natural gas or equipment

related to the production thereof and may allocate the

remainder to the county or its municipalities for any of the

purposes enumerated in subsection (b)(1). A simple majority

vote of all the members of the board shall be required for