PRINTER'S NO. 822

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

500

Session of

2015

INTRODUCED BY DEAN, COHEN, V. BROWN, DAVIDSON, CARROLL,

SANTARSIERO, HANNA, STURLA, THOMAS, M. DALEY, BROWNLEE,

FRANKEL, ROZZI, HARPER, MOUL AND DAVIS, MARCH 4, 2015

registration, for meters, for assessments, for time for

assessment, for extension of assessment period, for

reassessments, for interest, for penalties, for criminal

acts, for abatement of additions or penalties, for bulk and

auction sales, for collection upon failure to request

reassessment, review or appeal, for tax liens, for tax suit

reciprocity, for service, for refunds, for refund petition,

for rules and regulations, for recordkeeping, for

examinations, for unauthorized disclosure, for cooperation

with other governments, for bonds and for deposit of

(a) Notice.--The Secretary of the Commonwealth shall, upon

the imposition of a severance tax on unconventional gas wells in

this Commonwealth, submit for publication in the Pennsylvania

Bulletin notice of the imposition.

(b) Date.--This chapter shall expire on the date of the

publication of the notice under subsection (a).]

Section 2. Title 58 is amended by adding a part to read:

Chapter

Sec.

4301. Scope of chapter.

4302. Definitions.

4303. Imposition of tax.

4304. Registration.

4305. Meters.

4306. Assessments.

4307. Time for assessment.

4308. Extension of assessment period.

4309. Reassessments.

or appeal.

4316. Tax liens.

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4317. Tax suit reciprocity.

4318. Service.

4319. Refunds.

4320. Refund petition.

4321. Rules and regulations.

4322. Recordkeeping.

4323. Examinations.

4324. Unauthorized disclosure.

4325. Cooperation with other governments.

§ 4302. 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:

"Average price of natural gas." The arithmetic mean of the

market price for arm's-length transactions as reported to the

department for the previous reporting period. Within 20 days

after the end of each reporting period the department shall

calculate and publish the average price of natural gas from

returns received in the prior reporting period based on the

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payment of any royalties or other payments to a lessor and

without any other deduction or credit:

(1) The volume-weighted average market price for an

arm's-length transaction that a producer receives at the

point of sale for natural gas during a reporting period.

(2) The average price of natural gas if:

(i) the natural gas is not sold in an arm's-length

transaction, as reported by the producer or as determined

by the department;

definitions).

"Person." Any natural person, a corporation, fiduciary,

association or other entity. The term includes the Commonwealth

and any political subdivision, instrumentality and authority of

the Commonwealth.

"Producer." As defined in section 2301 (relating to

definitions).

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

severed.

"Sever." Extract or otherwise remove natural gas from the

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"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

computing gas volumes. If a recording thermometer is not

installed, or is installed and not operating properly, an

average flowing temperature of 60 degrees Fahrenheit shall be

used in computing gas volume.

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

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

gravity balance, or at intervals as found necessary in

practice. Specific gravity determinations shall be used in

computing gas volumes.

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

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Association. The results of the tests shall be used in

computing the volume of gas delivered under this chapter.

"Wellhead meter." A meter that measures the volume of

natural gas severed from an unconventional gas well.

§ 4303. Imposition of tax.

(a) Establishment.--Beginning July 1, 2015, there shall be

levied a natural gas severance tax payable on every

unconventional gas well that is required to pay the fee payable

under Chapter 23 (relating to unconventional gas well fee).

include the following:

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

producer for the reporting period broken down into:

(i) the number of such units sold by the producer

during the reporting period in arm's-length transactions;

(ii) the number of such units sold by the producer

during the reporting period in non-arm's-length

transactions or exchanged for something other than cash;

and

(iii) the number of such units not yet sold or

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department.

(d) Filing.--The return required by subsection (c) shall be

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

reporting period. The tax is due on the day the return is

required to be filed under this subsection and shall become

delinquent if not remitted to the department by the required

date. A producer shall commence filing the returns required

under subsection (c) within 75 days following the effective date

of this section. The initial return shall include the

§ 4304. Registration.

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

continues to sever natural gas in this Commonwealth after the

date occurring 60 days following the effective date of this

section, the producer shall apply to the department for a

registration certificate. The department may charge an

application fee to cover the administrative costs associated

with the application and registration process.

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

the receipt of an application and the required application fee,

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is valid for a period of five years.

(c) Refusal, suspension or revocation.--

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

revoke a registration certificate if the applicant or

registrant has not filed required State tax reports and paid

State taxes not subject to a timely perfected administrative

or judicial appeal or an authorized deferred payment plan.

(2) The department shall notify the applicant or

registrant of a refusal, suspension or revocation. The notice

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 certificate shall remain valid pending a final

outcome of the appeals process. Notwithstanding any other

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

taken and denied at the conclusion of the appeal process, the

department may disclose, by publication or otherwise, the

identity of a producer and the fact that the producer's

registration certificate has been refused, suspended or

revoked under this subsection. Disclosure may include the

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fine not less than $300 nor more than $1,500 or, in default

of the payment, to imprisonment for not less than five days

nor more than 30 days.

(2) For purposes of this subsection, each day in which

natural gas is severed shall constitute a separate violation.

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

addition to any other penalties imposed by this chapter.

(4) The S ecretary of Revenue may designate employees of

the department to enforce the provisions of this subsection.

§ 4305. Meters.

A producer shall provide for and maintain a discrete wellhead

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

the meters are maintained according to industry standards. Any

wellhead meter installed after the effective date of this

section shall be a digital meter.

§ 4306. Assessments.

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

authorized and shall make inquiries, determinations and

assessments of the tax imposed under this chapter, including

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

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

of execution may directly issue upon the lien without the

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

provided that not less than 10 days before issuance of any

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

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

last known post office address, provided further that the lien

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

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

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

than one year, or both.

(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

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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.

§ 4318. 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

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

manner provided by other laws of this Commonwealth relating to

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

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

office or residence.

§ 4319. 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

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.

§ 4320. 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 4319 (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

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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 of the Tax Reform Code of 1971 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.

§ 4321. Rules and regulations.

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.

§ 4322. Recordkeeping.

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

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

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

statements, make returns and comply with the rules and

regulations as the department may prescribe regarding matters

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

(1) Wellhead meter charts for each 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. 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 producer who is engaged

in 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

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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 investigations

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.

§ 4324. 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

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Notwithstanding the provisions of section 4317 (relating to

tax suit reciprocity), the department may permit the

Commissioner of the Internal Revenue Service of the United

States, the proper officer of any state or the authorized

representative of either of them to inspect the tax returns of

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

to either of their authorized representative an abstract of the

return of any taxpayer, or supply him with information

concerning any item contained in any return or disclosed by the

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

nonresident natural person or any foreign corporation,

association, fiduciary or other entity, not authorized to do

business within this Commonwealth or not having an established

place of business in this Commonwealth and subject to the tax

imposed by section 4303 (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

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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

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

required by this section securities approved by the department

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

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

department may apply the securities or cash to the tax imposed

by this chapter and interest or penalties due without notice to

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

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

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

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

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payment to the department.

§ 4327. Appropriation.

The amount of the proceeds from the tax imposed by this

chapter as shall be necessary for the payment of refunds,

enforcement or administration under this chapter is hereby

appropriated to the department for those purposes.

§ 4328. Deposit of proceeds.

The proceeds of the tax imposed under section 4303 (relating

to imposition of tax) and penalties and interest imposed under

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