PRINTER'S NO.  536

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

33

Session of

2011

  

  

INTRODUCED BY VITALI, GEORGE, SANTARSIERO, DERMODY, HANNA, FRANKEL, STURLA, BUXTON, B. BOYLE, K. BOYLE, BRADFORD, BRENNAN, BRIGGS, V. BROWN, CALTAGIRONE, CARROLL, COHEN, CURRY, DAVIDSON, DEASY, DeLUCA, DePASQUALE, FABRIZIO, FREEMAN, DELISSIO, GOODMAN, HALUSKA, HARKINS, GERBER, HARPER, HORNAMAN, JOHNSON, JOSEPHS, KIRKLAND, KORTZ, MAHONEY, McGEEHAN, MIRABITO, MUNDY, MURPHY, MURT, MYERS, D. O'BRIEN, M. O'BRIEN, PASHINSKI, PAYTON, READSHAW, ROEBUCK, SABATINA, SAMUELSON, SHAPIRO, K. SMITH, J. TAYLOR, WAGNER, WHEATLEY, YOUNGBLOOD, SANTONI, DAVIS AND KAVULICH, FEBRUARY 9, 2011

  

  

REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 9, 2011  

  

  

  

AN ACT

  

1

Amending Title 72 (Taxation and Fiscal Affairs) of the

2

Pennsylvania Consolidated Statutes, providing for taxation of

3

natural gas drilling and for transfers and distributions.

4

The General Assembly of the Commonwealth of Pennsylvania

5

hereby enacts as follows:

6

Section 1.  Title 72 of the Pennsylvania Consolidated

7

Statutes is amended by adding a chapter to read:

8

CHAPTER 15

9

EFFECTS OF NATURAL GAS DRILLING

10

Sec.

11

1501.  Scope of chapter.

12

1502.  Definitions.

13

1503.  Imposition of tax.

14

1504.  Return and payment.

 


1

1505.  Natural gas severance tax registration.

2

1505.1.  Meters.

3

1506.  Assessments.

4

1507.  Time for assessment.

5

1508.  Extension of assessment period.

6

1509.  Reassessments.

7

1510.  Interest.

8

1511.  Penalties.

9

1512.  Criminal acts.

10

1513.  Abatement of additions or penalties.

11

1514.  Bulk and auction sales.

12

1515.  Collection upon failure to request reassessment, review

13

or appeal.

14

1516.  Tax liens.

15

1517.  Tax suit reciprocity.

16

1518.  Service.

17

1519.  Refunds.

18

1520.  Refund petition.

19

1521.  Rules and regulations.

20

1522.  Recordkeeping.

21

1523.  Examinations.

22

1524.  Unauthorized disclosure.

23

1525.  Cooperation with other governments.

24

1526.  Bonds.

25

1527.  Accounts established.

26

1528.  Transfers and distributions.

27

1529.  Appropriation.

28

§ 1501.  Scope of chapter.

29

This chapter shall relate to the ability of all counties

30

within this Commonwealth to ameliorate the effects of natural

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1

gas drilling that occur within their borders.

2

§ 1502.  Definitions.

3

The following words and phrases when used in this chapter

4

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

5

context clearly indicates otherwise:

6

"Account."  The Natural Gas Severance Tax Account.

7

"Accredited laboratory."  A facility engaged in the testing

8

and calibration of scientific measurement devices and certified

9

by the Department of Environmental Protection as having met the

10

department's standards for accreditation.

11

"Association."  A partnership, limited partnership or any

12

other form of unincorporated enterprise owned or conducted by

13

two or more persons.

14

"Base rate."  The rate under section 1503(b) (relating to

15

imposition of tax).

16

"Coal bed methane."  Gas which can be produced from coal

17

beds, coal seams, mined-out areas or gob wells.

18

"Corporation."  A corporation, joint stock association,

19

limited liability company, business trust or any other

20

incorporated enterprise organized under the laws of this

21

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

22

foreign country or dependency.

23

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

24

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

25

or liquids past a certain point.

26

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

27

township.

28

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

29

hydrocarbon gases, primarily methane, possibly including ethane,

30

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

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1

hydrogen sulfide and other gas species. The term includes

2

natural gas from oil fields known as associated gas or casing

3

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

4

beds, shale beds and other formations. The term does not include

5

coal bed methane.

6

"Nonproducing site."  A point of severance that is not

7

capable of producing natural gas in paying quantities.

8

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

9

over the producer's current operating expenses.

10

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

11

association or other entity, including the Commonwealth, its

12

political subdivisions, instrumentalities and authorities. When

13

the term is used in a clause prescribing and imposing a penalty

14

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

15

include the members, as applied to an association, and the

16

officers, as applied to a corporation.

17

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

18

Commonwealth in the business of severing natural gas for sale,

19

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

20

severs natural gas from a storage field.

21

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

22

natural gas in paying quantities.

23

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

24

severed.

25

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

26

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

27

soil or water of this Commonwealth.

28

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

29

from the soil or water of this Commonwealth.

30

"Severing."  Extracting or otherwise removing natural gas

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1

from the soil or water of this Commonwealth.

2

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

3

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

4

been injected into the formation or site.

5

"Tax."  The tax imposed under this chapter.

6

"Tax rate adjustment index."  The amount calculated under

7

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

8

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

9

annually.

10

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

11

chapter.

12

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

13

wellhead at a temperature of 60 degrees Fahrenheit and an

14

absolute pressure of 14.73 pounds per square inch in accordance

15

with American Gas Association Standards and according to Boyle's

16

Law for the measurement of gas under varying pressures with

17

deviations as follows:

18

(1)  The average absolute atmospheric pressure shall be

19

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

20

elevation or location of point of delivery above sea level or

21

variations in atmospheric pressure from time to time.

22

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

23

be determined by the continuous use of a recording

24

thermometer installed to properly record the temperature of

25

gas flowing through the meters. The arithmetic average of the

26

temperature recorded each 24-hour day shall be used in

27

computing gas volumes. If a recording thermometer is not

28

installed, or is installed and not operating properly, an

29

average flowing temperature of 60 degrees Fahrenheit shall be

30

used in computing gas volume.

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1

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

2

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

3

gravity balance, or at intervals as found necessary in

4

practice. Specific gravity determinations shall be used in

5

computing gas volumes.

6

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

7

shall be determined by annual tests or at other shorter

8

intervals as found necessary in practice. The apparatus and

9

method used in making the test shall be in accordance with

10

recommendations of the National Bureau of Standards or Report

11

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

12

Association, or amendments thereto. The results of the tests

13

shall be used in computing the volume of gas delivered under

14

this chapter.

15

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

16

nonproducing site to measure the volume of natural gas severed

17

for which a wellhead meter certification has been issued.

18

"Wellhead meter certification."  A report issued by an

19

accredited laboratory certifying the accuracy of a wellhead

20

meter.

21

§ 1503.  Imposition of tax.

22

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

23

producer that severs natural gas.

24

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

25

the gross value of units severed at the wellhead during a

26

reporting period, plus 4.6¢ per unit severed.

27

§ 1504.  Return and payment.

28

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

29

return with the department, on a form prescribed by the

30

department, which shall include all of the following:

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1

(1)  The number of natural gas units severed by the

2

producer for the reporting period.

3

(2)  The number of producing sites used by the producer

4

for the severance of natural gas in each county and

5

municipality.

6

(3)  The amount of tax due under section 1503 (relating

7

to imposition of tax).

8

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

9

filed with the department within 15 days following the end of a

10

reporting period.

11

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

12

the day the return is required to be filed and becomes

13

delinquent if not remitted to the department by that date.

14

§ 1505.  Natural gas severance tax registration.

15

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

16

this Commonwealth, the producer shall apply to the department

17

for a natural gas severance tax registration certificate.

18

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

19

application fee to cover the administrative costs associated

20

with the application and registration process. If the department

21

charges an application fee, the department shall not issue a

22

registration certificate until the producer has paid the

23

application fee.

24

(a.2)  Declaration.--The producer shall include in its

25

application a declaration of all producing sites and

26

nonproducing sites used by the producer for the severance of

27

natural gas. The declaration shall include copies of wellhead

28

meter certifications for each site. The producer is required to

29

update the declaration when the producer adds or removes a

30

producing site or nonproducing site in this Commonwealth or when

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1

there is a change in the status of a producing site or

2

nonproducing site or when the producer uses a different

3

accredited laboratory to issue a wellhead meter certification.

4

The producer shall update the declaration within 30 days after a

5

calendar month in which a change to the declaration occurs.

6

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

7

the receipt of an application, the department shall issue a

8

registration certificate under subsection (a). The registration

9

certificate shall be nonassignable. All registrants shall be

10

required to renew their registration certificates and wellhead

11

meter certifications on a staggered renewal system established

12

by the department. After the initial staggered renewal period, a

13

registration certificate or a wellhead meter certification 

14

issued shall be valid for a period of five years.

15

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

16

refuse to issue, suspend or revoke a registration certificate if

17

the applicant or registrant has not filed required State tax

18

reports and paid State taxes not subject to a timely perfected

19

administrative or judicial appeal or subject to a duly

20

authorized deferred payment plan. The department shall notify

21

the applicant or registrant of any refusal, suspension or

22

revocation. The notice shall contain a statement that the

23

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

24

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

25

aggrieved by the determination of the department may file an

26

appeal under the provisions for administrative appeals in the

27

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

28

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

29

appealed, the registration certificate shall remain valid

30

pending a final outcome of the appeals process. Notwithstanding

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1

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

2

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

3

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

4

conclusion of the appeal process the department may disclose, by

5

publication or otherwise, the identity of a producer and the

6

fact that the producer's registration certificate has been

7

refused, suspended or revoked under this subsection. Disclosure

8

may include the basis for refusal, suspension or revocation.

9

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

10

Commonwealth without holding a valid registration certificate

11

under subsection (b) shall be guilty of a summary offense and

12

shall, upon conviction, be sentenced to pay a fine of not less

13

than $300 nor more than $1,500. In the event the person

14

convicted defaults in the payment of the fine, he shall be

15

sentenced to imprisonment for not less than five days nor more

16

than 30 days. The penalties imposed by this subsection shall be

17

in addition to any other penalties imposed by this chapter. For

18

purposes of this subsection, the severing of natural gas during

19

any calendar day shall constitute a separate violation. The

20

secretary may designate employees of the department to enforce

21

the provisions of this subsection. The employees shall exhibit

22

proof of and be within the scope of the designation when

23

instituting proceedings as provided by the Pennsylvania Rules of

24

Criminal Procedure.

25

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

26

obtain or hold a valid registration certificate does not relieve

27

a person from liability for the tax imposed by this chapter.

28

§ 1505.1.  Meters.

29

A producer shall provide for and maintain a discrete wellhead

30

meter where natural gas is severed. A producer shall ensure that

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1

the meters are maintained according to industry standards. Any

2

wellhead meter installed after the effective date of this

3

section shall be a digital meter.

4

§ 1506.  Assessments.

5

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

6

authorized and shall make the inquiries, determinations and

7

assessments of the tax imposed under this chapter, including

8

interest, additions and penalties imposed under this chapter.

9

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

10

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

11

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

12

assessment to the taxpayer at its registered address via

13

certified mail if the assessment increases the taxpayer's tax

14

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

15

sent via regular mail.

16

§ 1507.  Time for assessment.

17

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

18

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

19

after the date when the return provided for by section 1504

20

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

21

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

22

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

23

filed before the last day prescribed for the filing period shall

24

be considered as filed on the last day.

25

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

26

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

27

six years after the date the return was filed.

28

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

29

taxpayer files a false or fraudulent return with intent to evade

30

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

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1

any time.

2

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

3

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

4

assessment or reassessment may have been issued by the

5

department for the taxable period for which the refund was

6

granted, whichever period shall last occur, the department may

7

issue an assessment to recover a refund or credit made or

8

allowed erroneously.

9

§ 1508.  Extension of assessment period.

10

Notwithstanding the provisions of this chapter, the

11

assessment period may be extended in the event a taxpayer has

12

provided written consent before the expiration of the period

13

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

14

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

15

time within the extended period. The period may be extended

16

further by subsequent written consents made before the

17

expiration of the extended period.

18

§ 1509.  Reassessments.

19

A taxpayer against whom an assessment is made may petition

20

the department for a reassessment under Article XXVII of the act

21

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

22

1971.

23

§ 1510.  Interest.

24

The department shall assess interest on any delinquent tax at

25

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

26

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

27

§ 1511.  Penalties.

28

The department shall enforce the following penalties:

29

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

30

severance tax registration certificate. The penalty shall be

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1

$1 for every unit severed without a valid registration 

2

certificate. The department may assess this penalty

3

separately from or in conjunction with any assessment of the

4

natural gas severance tax.

5

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

6

file a return as required under section 1504 (relating to

7

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

8

liability to be reported on the return for each day beyond

9

the due date that the return is not filed.

10

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

11

penalty against the producer for a willful failure to timely

12

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

13

required to be reported on the return.

14

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

15

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

16

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

17

payment date that the tax is not paid.

18

§ 1512.  Criminal acts.

19

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

20

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

21

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

22

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

23

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

24

than three years, or both.

25

(b)  Other crimes.--

26

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

27

person is guilty of a misdemeanor and shall, upon conviction,

28

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

29

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

30

or both, for any of the following:

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1

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

2

department.

3

(ii)  Willfully failing or neglecting to timely file

4

a return or report required by this chapter.

5

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

6

interest imposed or provided for by this chapter.

7

(iv)  Willfully failing to preserve its books, papers

8

and records as directed by the department.

9

(v)  Refusing to permit the department or its

10

authorized agents to examine its books, records or

11

papers.

12

(vi)  Knowingly making any incomplete, false or

13

fraudulent return or report.

14

(vii)  Preventing or attempting to prevent the full

15

disclosure of the amount of natural gas severance tax

16

due.

17

(viii)  Providing any person with a false statement

18

as to the payment of the tax imposed under this chapter

19

with respect to any pertinent facts.

20

(ix)  Making, uttering or issuing a false or

21

fraudulent statement.

22

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

23

addition to other penalties imposed by this chapter.

24

§ 1513.  Abatement of additions or penalties.

25

Upon the filing of a petition for reassessment or a petition

26

for refund by a taxpayer as provided under this chapter,

27

additions or penalties imposed upon the taxpayer by this chapter

28

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

29

establishes that he acted in good faith, without negligence and

30

with no intent to defraud.

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1

§ 1514.  Bulk and auction sales.

2

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

3

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

4

wares or merchandise of any kind, fixtures, machinery,

5

equipment, buildings or real estate involved in a business for

6

which the person holds a registration certificate or is required

7

to obtain a registration certificate under the provisions of

8

this chapter shall be subject to the provisions of section 1403

9

of the act of April 9, 1929 (P.L.343, No.176), known as The

10

Fiscal Code.

11

§ 1515.  Collection upon failure to request reassessment, review

12

or appeal.

13

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

14

imposed under this chapter:

15

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

16

days after notice to the taxpayer when no petition for

17

reassessment has been filed.

18

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

19

for review has been filed.

20

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

21

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

22

petition for review; or

23

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

24

upon the petition.

25

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

26

assignments or bankruptcies.

27

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

28

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

29

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

30

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

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1

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

2

failure of the department to mail notice of assessment or

3

reassessment to the taxpayer and the defense of payment of

4

assessment or reassessment may be raised in proceedings for

5

collection by a motion to stay the proceedings.

6

§ 1516.  Tax liens.

7

(a)  Lien imposed.--If any taxpayer neglects or refuses to

8

pay the tax imposed under this chapter for which the taxpayer is

9

liable under this chapter after demand, the amount, including

10

interest, addition or penalty, together with additional costs

11

that may accrue, shall be a lien in favor of the Commonwealth

12

upon the real and personal property of the taxpayer but only

13

after the same has been entered and docketed of record by the

14

prothonotary of the county where the property is situated. The

15

department may, at any time, transmit to the prothonotaries of

16

the respective counties certified copies of all liens imposed by

17

this section. It shall be the duty of the prothonotary receiving

18

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

19

the prothonotary. The lien shall be indexed as judgments are now

20

indexed. No prothonotary shall require as a condition precedent

21

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

22

entry.

23

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

24

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

25

made and real estate taxes and municipal claims against the

26

property, a lien imposed under this section shall have priority

27

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

28

satisfied out of the proceeds of any judicial sale of property

29

subject to the lien, before any other obligation, judgment,

30

claim, lien or estate to which the property may subsequently

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1

become subject, but shall be subordinate to mortgages and other

2

liens existing and duly recorded or entered of record prior to

3

the recording of the lien.

4

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

5

judicial sale of property subject to a lien imposed under this

6

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

7

this section has priority, the sale shall discharge the lien

8

imposed under this section to the extent only that the proceeds

9

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

10

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

11

be no inquisition or condemnation upon any judicial sale of real

12

estate made by the Commonwealth under the provisions of this

13

chapter. The lien shall continue as provided in the act of April

14

9, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ

15

of execution may directly issue upon the lien without the

16

issuance and prosecution to judgment of a writ of scire facias,

17

provided that not less than ten days before issuance of any

18

execution on the lien, notice of the filing and the effect of

19

the lien shall be sent by registered mail to the taxpayer at its

20

last known post office address, provided further that the lien

21

shall have no effect upon any stock of goods, wares or

22

merchandise regularly sold or leased in the ordinary course of

23

business by the taxpayer against whom the lien has been entered,

24

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

25

made upon the stock of goods, wares and merchandise.

26

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

27

prothonotary to carry out any duty imposed upon him by this

28

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

29

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

30

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

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1

both.

2

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

3

distribution, voluntary or compulsory, in receivership,

4

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

5

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

6

are not collectible under the provisions of section 225 of the

7

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

8

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

9

distribution in priority to all other claims and liens, except

10

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

11

the Federal Government. A person charged with the administration

12

or distribution of the property or estate who violates the

13

provisions of this section shall be personally liable for the

14

taxes imposed by this chapter which are accrued and unpaid and

15

chargeable against the person whose property or estate is being

16

administered or distributed.

17

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

18

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

19

this section shall be construed to restrict, prohibit or limit

20

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

21

another remedy or procedure available at law or equity for the

22

collection of debts.

23

§ 1517.  Tax suit reciprocity.

24

The courts of this Commonwealth shall recognize and enforce

25

liabilities for natural gas severance or extraction taxes

26

lawfully imposed by any other state, provided that the other

27

state recognizes and enforces the tax imposed under this

28

chapter.

29

§ 1518.  Service.

30

A producer is deemed to have appointed the Secretary of the

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1

Commonwealth its agent for the acceptance of service of process

2

or notice in a proceeding for the enforcement of the civil

3

provisions of this chapter and service made upon the Secretary

4

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

5

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

6

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

7

manner provided by other laws of this Commonwealth relating to

8

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

9

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

10

shall be personally served upon any agent or representative of

11

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

12

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

13

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

14

the last known address of its principal place of business, home

15

office or residence.

16

§ 1519.  Refunds.

17

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

18

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

19

shall refund all taxes, interest and penalties paid to the

20

Commonwealth under the provisions of this chapter to which the

21

Commonwealth is not rightfully entitled. The refunds shall be

22

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

23

other personal representatives who paid the tax, provided that

24

no refund shall be made under this section regarding a payment

25

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

26

petition for reassessment under section 2702 of the Tax Reform

27

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

28

taxpayer by a decision which is no longer subject to further

29

review or appeal. Nothing in this chapter shall prohibit a

30

taxpayer who has filed a timely petition for reassessment from

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1

amending it to a petition for refund where the petitioner paid

2

the tax assessed.

3

§ 1520.  Refund petition.

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

(b)  Natural gas severance tax.--A refund or credit of tax,

12

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

13

the department under section 1505 (relating to natural gas 

14

severance tax registration) shall be made only where the person

15

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

16

refund with the department under Article XXVII of the Tax Reform

17

Code of 1971 within the time limits of section 3003.1 of the Tax

18

Reform Code of 1971. The filing of a petition for refund under

19

the provisions of this subsection shall not affect the abatement

20

of interest, additions or penalties to which the person may be

21

entitled by reason of his payment of the assessment.

22

§ 1521.  Rules and regulations.

23

The department is charged with the enforcement of the

24

provisions of this chapter and is authorized and empowered to

25

prescribe, adopt, promulgate and enforce rules and regulations

26

not inconsistent with the provisions of this chapter relating to

27

any matter or thing pertaining to the administration and

28

enforcement of the provisions of this chapter and the collection

29

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

30

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

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1

rules and regulations shall be applied without retroactive

2

effect.

3

§ 1522.  Recordkeeping.

4

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

5

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

6

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

7

statements, make returns and comply with the rules and

8

regulations as the department may prescribe regarding matters

9

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

10

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

11

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

12

keep records as the department deems sufficient to show whether

13

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

14

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

15

(1)  Wellhead meter charts for each reporting period and

16

the meter calibration and maintenance records. If turbine

17

meters are in use, the maintenance records will be made

18

available to the department upon request.

19

(2)  Records, statements and other instruments furnished

20

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

21

sale, transport or delivery of natural gas.

22

(3)  Records, statements and other instruments as the

23

department may prescribe by regulation.

24

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

25

business in this Commonwealth as a producer shall keep adequate

26

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

27

records shall be retained within this Commonwealth unless

28

retention outside this Commonwealth is authorized by the

29

department. The department may require a taxpayer who desires to

30

retain records outside this Commonwealth to assume reasonable

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1

out-of-State audit expenses.

2

(c)  Keeping of separate records.--A producer who is engaged

3

in another business or businesses which do not involve the

4

severing of natural gas taxable under this chapter shall keep

5

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

6

taxable severing of natural gas under this chapter separately

7

from other business activities not taxable hereunder. If any

8

person fails to keep separate books and records, the person

9

shall be liable for a penalty equaling 100% of tax due under

10

this chapter for the period where separate records were not

11

maintained.

12

§ 1523.  Examinations.

13

The department or any of its authorized agents are authorized

14

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

15

order to verify the accuracy and completeness of any return made

16

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

17

imposed by this chapter. The department may require the

18

preservation of all books, papers and records for any period

19

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

20

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

21

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

22

facilities and opportunity for examinations and investigations

23

under this section. The department is further authorized to

24

examine any person, under oath, concerning the taxable severing

25

of natural gas by any taxpayer or concerning any other matter

26

relating to the enforcement or administration of this chapter,

27

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

28

records and the attendance of all persons whether as parties or

29

witnesses whom it believes to have knowledge of relevant

30

matters. The procedure for the hearings or examinations shall be

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1

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

2

No. 176), known as The Fiscal Code.

3

§ 1524.  Unauthorized disclosure.

4

Any information gained by the department as a result of any

5

return, examination, investigation, hearing or verification

6

required or authorized by this chapter shall be confidential

7

except for official purposes and except in accordance with

8

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

9

person unlawfully divulging the information shall be guilty of a

10

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

11

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

12

imprisonment for not more than one year, or both.

13

§ 1525.  Cooperation with other governments.

14

Notwithstanding the provisions of section 1517 (relating to

15

tax suit reciprocity), the department may permit the

16

Commissioner of the Internal Revenue Service of the United

17

States, the proper officer of any state or the authorized

18

representative of either of them to inspect the tax returns of

19

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

20

to either of their authorized representative an abstract of the

21

return of any taxpayer, or supply him with information

22

concerning any item contained in any return or disclosed by the

23

report of any examination or investigation of the return of any

24

taxpayer. This permission shall be granted only if the laws of

25

the United States or another state grant substantially similar

26

privileges to the proper officer of the Commonwealth charged

27

with the administration of this chapter.

28

§ 1526.  Bonds.

29

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

30

nonresident natural person or any foreign corporation,

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1

association, fiduciary or other entity, not authorized to do

2

business within this Commonwealth or not having an established

3

place of business in this Commonwealth and subject to the tax

4

imposed by section 1503 (relating to imposition of tax), to file

5

a bond issued by a surety company authorized to do business in

6

this Commonwealth and approved by the Insurance Commissioner as

7

to solvency and responsibility, in amounts as it may fix, to

8

secure the payment of any tax or penalties due or which may

9

become due from a nonresident natural person, corporation,

10

association, fiduciary or other entity whenever it deems it

11

necessary to protect the revenues obtained under this chapter. 

12

The department may also require a bond of a person petitioning

13

the department for reassessment in the case of any assessment

14

over $500 or where, in its opinion, the ultimate collection is

15

in jeopardy. For a period of three years, the department may

16

require a bond of any person who has, on three or more occasions

17

within a 12-month period, either filed a return or made payment

18

to the department more than 30 days late. In the event the

19

department determines a taxpayer is required to file a bond, it

20

shall give notice to the taxpayer specifying the amount of the

21

bond required. The taxpayer shall file the bond within five days

22

after notice is given by the department unless, within five

23

days, the taxpayer shall request in writing a hearing before the

24

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

25

propriety and amount of the bond shall be determined by the

26

secretary or the secretary's representative. The determination

27

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

28

days after notice is mailed to the taxpayer.

29

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

30

required by this section securities approved by the department

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1

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

2

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

3

department may apply the securities or cash to the tax imposed

4

by this chapter and interest or penalties due without notice to

5

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

6

pay the tax and/or interest or penalties due at public or

7

private sale upon five days' written notice to the depositor.

8

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

9

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

10

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

11

section. All funds received upon execution of the judgment on

12

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

13

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

14

payment to the department.

15

§ 1527.  Accounts established.

16

(a)  Natural Gas Severance Tax Account.--

17

(1)  The Natural Gas Severance Tax Account is established

18

as a restricted account within the General Fund.

19

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

20

(relating to imposition of tax) and penalties and interest

21

imposed under this chapter, less the amounts appropriated

22

under section 1529 (relating to appropriation), shall be

23

deposited into the account.

24

(3)  The money in the account shall only be used in

25

accordance with section 1528 (relating to transfers and

26

distributions).

27

(b)  Local Government Services Account.--

28

(1)  The Local Government Services Account is established

29

as a restricted account within the General Fund.

30

(2)  The allocation under section 1528(a)(3) shall be

- 24 -

 


1

deposited into the Local Government Services Account and

2

shall be distributed as provided in section 1528(b).

3

§ 1528.  Transfers and distributions.

4

(a)  Monthly transfers and distributions.--On the last

5

business day of each calendar month, the State Treasurer shall

6

make the following transfers and distributions of the money in

7

the Natural Gas Severance Tax Account:

8

(1)  Thirty-two percent to the General Fund.

9

(2)  Twenty-nine and six-tenths percent to the

10

Environmental Stewardship Fund.

11

(3)  Thirty-two percent to the Local Government Services

12

Account, to be further distributed by the State Treasurer

13

under subsection (c).

14

(4)  One and six-tenths percent to the Hazardous Sites

15

Cleanup Fund.

16

(5)  One and three-tenths percent to the Conservation

17

District Fund for distribution to county conservation

18

districts pursuant to guidelines established by the State

19

Conservation Commission.

20

(6)  One and four-tenths percent to the Pennsylvania Fish

21

and Boat Commission.

22

(7)  One and three-tenths percent to the Department of

23

Public Welfare to provide cash and crisis grants to low-

24

income households under the Low Income Home Energy Assistance

25

Program.

26

(8)  Eight-tenths of one percent to the Department of

27

Environmental Protection for State dam removal, restoration

28

and repair projects.

29

(b)  Quarterly distributions.--On the last business day of

30

each period of three calendar months, the State Treasurer shall

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1

make the following distributions from the money in the Local

2

Government Services Account:

3

(1)  Thirty percent to counties with producing sites to

4

be used as provided in subsection (c). The money under this

5

subparagraph shall be distributed to each eligible county

6

based on the following formula:

7

(i)  Divide:

8

(A)  the number of producing sites in the county;

9

by

10

(B)  the total number of producing sites in all

11

of the counties in this Commonwealth.

12

(ii)  Multiply:

13

(A)  the quotient under subparagraph (i); by

14

(B)  the amount of money available for

15

distribution under this paragraph.

16

(2)  Forty-five percent to municipalities with producing

17

sites. Subject to paragraph (3), the money under this

18

paragraph shall be distributed to each eligible municipality

19

based on the following formula:

20

(i)  Divide:

21

(A)  the number of producing sites in the

22

municipality; by

23

(B)  the total number of producing sites in all

24

municipalities in this Commonwealth.

25

(ii)  Multiply:

26

(A)  the quotient under subparagraph (i); by

27

(B)  the amount of money available for

28

distribution under this paragraph.

29

(3)  All of the following apply to the distribution under

30

paragraph (2):

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1

(i)  The amount distributed to a municipality shall

2

not exceed 50% of the municipality's total budget for

3

fiscal year 2011-2012, adjusted for inflation in

4

subsequent years by an amount not to exceed an annual

5

cost-of-living adjustment calculated by applying the

6

Annual Percent Change in the Consumer Price Index for all

7

Urban Consumers immediately prior to the date the

8

adjustment is due to take effect. The amount distributed

9

under this subparagraph shall be used for the following

10

purposes:

11

(A)  Reconstruction, maintenance and repair of

12

municipal roadways and bridges, which the

13

municipality has determined have been or are being

14

used extensively to transport natural gas or

15

equipment related to the production of natural gas.

16

(B)  Preservation and improvement of municipal

17

water supplies.

18

(C)  Maintenance and capital improvements to

19

municipal waste and sewage systems.

20

(D)  Preservation and reclamation of the surface

21

waters of the municipality.

22

(E)  Other lawful purposes reasonably related to

23

the health, welfare and safety consequences of

24

severing natural gas in the municipality.

25

(ii)  Any funds not distributed to the municipalities

26

in a county because of the budgetary limitations under

27

subparagraph (i) shall be distributed to the county to be

28

used solely for grants to municipalities to defer the

29

cost of regional cooperation endeavors undertaken by the

30

municipalities within the county.

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1

(4)  Fifteen percent to municipalities with no producing

2

sites located in a county with producing sites. Subject to

3

paragraph (5), the money under this paragraph shall be

4

distributed to each eligible municipality based on the

5

following formula:

6

(i)  Divide:

7

(A)  the number of producing sites in the county;

8

by

9

(B)  the total number of producing sites in all

10

counties in this Commonwealth.

11

(ii)  Multiply:

12

(A)  the quotient under subparagraph (i); by

13

(B)  the amount of money available for

14

distribution under this paragraph.

15

(5)  All of the following apply to the distribution under

16

paragraph (4):

17

(i)  Subject to the limitation in subparagraph (ii),

18

the State Treasurer shall distribute an equal share to

19

each eligible municipality within the same county.

20

(ii)  The amount distributed to a municipality shall

21

not exceed 50% of the municipality's total budget for

22

fiscal year 2011-2012, adjusted for inflation in

23

subsequent years by an amount not to exceed an annual

24

cost-of-living adjustment calculated by applying the

25

Annual Percent Change in the Consumer Price Index for all

26

Urban Consumers immediately prior to the date the

27

adjustment is due to take effect. The amount distributed

28

under this subparagraph shall be used for the following

29

purposes:

30

(A)  Reconstruction, maintenance and repair of

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1

municipal roadways and bridges, which the

2

municipality has determined have been or are being

3

used extensively to transport natural gas or

4

equipment related to the production of natural gas.

5

(B)  Preservation and improvement of municipal

6

water supplies.

7

(C)  Maintenance and capital improvements to

8

municipal waste and sewage systems.

9

(D)  Preservation and reclamation of surface

10

waters of the municipality.

11

(E)  Other lawful purposes reasonably related to

12

the health, welfare and safety consequences of

13

severing natural gas in municipalities within the

14

county.

15

(iii)  Any funds not distributed to the

16

municipalities in a county because of the budgetary

17

limitations under subparagraph (ii) shall be distributed

18

to the county to be used solely for grants to

19

municipalities to defer the cost of regional cooperation

20

endeavors undertaken by the municipalities within the

21

county.

22

(6)  Ten percent to the Pennsylvania Emergency Management

23

Agency to be distributed to fire and ambulance services in

24

counties with producing sites in accordance with the

25

procedures established in 35 Pa.C.S. Ch. 78 (relating to

26

grants to volunteer fire companies and volunteer services).

27

(7)  Only producing sites and nonproducing sites on which

28

the tax is levied under section 1503(a) (relating to

29

imposition of tax) during the three-month period for which

30

transfers and distributions are made shall be included in any

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1

of the calculations made under paragraphs (1), (2) and (4)

2

for that three-month period.

3

(c)  Distributions to counties.--

4

(1)  The governing body of counties receiving

5

distributions under subsection (b)(1) shall administer the

6

funds received. The governing body shall give priority to the

7

reconstruction, repair and maintenance of county roadways and

8

bridges, which the governing body has determined have been or

9

are being used to transport natural gas or equipment related

10

to the production of natural gas. The governing body shall

11

allocate the remainder to the county or its municipalities

12

for any of the purposes enumerated in subsection (b)(3) or

13

(5). A simple majority vote of all of the members of the

14

governing body shall be required for any action under this

15

paragraph.

16

(2)  Commencing in 2013, before February 1, each county

17

receiving distributions under subsection (b)(1) shall prepare

18

and deliver a report to the Governor, the Secretary of the

19

Senate and the Chief Clerk of the House of Representatives

20

detailing the expenditure of funds. The Department of

21

Community and Economic Development shall have the authority

22

to audit a county's use of such funds and each county

23

receiving funds shall make their financial records and other

24

documents relating to its use of funds available to the

25

department.

26

(d)  Distributions to municipalities.--

27

(1)  Commencing in 2013, before February 1, each

28

municipality receiving distributions under subsection (b)(2)

29

or (4) shall prepare and deliver a report to the Governor,

30

the Secretary of the Senate and the Chief Clerk of the House

- 30 -

 


1

of Representatives detailing the expenditure of funds.

2

(2)  The Department of Community and Economic Development

3

shall have the authority to audit a municipality's use of the

4

funds. Each municipality receiving funds shall make financial

5

records and other documents relating to its use of the funds

6

available to to the Department of Community and Economic

7

Development.

8

(e)  Administration.--The department shall make the

9

calculations required for the transfers and distributions under

10

this section and shall submit the calculations to the State

11

Treasurer in sufficient time for the State Treasurer to make the

12

transfers and distributions as required by this section.

13

§ 1529.  Appropriation.

14

The amount of the proceeds from the tax imposed by this

15

chapter as shall be necessary for the payment of refunds,

16

enforcement or administration under this chapter is hereby

17

appropriated to the department for those purposes.

18

Section 2.  This act shall take effect immediately.

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