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, CURRY, HARKINS, BRIGGS, HANNA, MIRABITO AND SEIP, MAY 13, 2009

AS RE-REPORTED FROM COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 21, 2010   

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 gas 

severance registration certificate, for duties of 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; establishing the Natural Gas Severance Tax Account,

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the Local Government Services Account and the Oil and Gas

Environmental Disaster Recovery Account; providing for the

establishment, implementation and administration of the

Marcellus Shale Job Creation Tax Credit; imposing additional

duties on the Department of Community and Economic

Development; 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.

1503.1.  Natural gas base rate adjustment.

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1504.  Return and payment.

1505.  Natural gas severance tax registration.

1505.1  Meters.

1506.  Assessments.

1507.  Time for assessment.

1508.  Extension of limitation assessment period.

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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 Accounts established.

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1528.  Administration of fund Transfers and distributions.

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 1529.  Appropriation.

§ 1501.  Short title of chapter.

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

Gas Severance Tax Act.

§ 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

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.

"Base rate adjustment index."  The amount calculated under

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

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

annually.

"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

section 1527.

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

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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. The term does not include

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"coalbed methane" which, for the purpose of this chapter, shall

mean gas which can be produced from coal beds, coal seams, mined

out areas or gob wells.

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

capable of producing natural gas in paying quantities.

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

over the producer's current operating expenses.

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

association or other entity, including the Commonwealth, its

political subdivisions, instrumentalities and authorities. When

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

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

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

officers, as applied to a corporation.

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

Commonwealth in the business of severing natural gas for sale,

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

severs natural gas from a storage field.

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

natural gas in paying quantities.

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

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severed A period of three successive calendar months beginning

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with the first day of July and ending on the 30th day of

September and each succeeding three successive calendar months.

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

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sold or transported to a purchaser or market.

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

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

removal of natural gas from the soil or water of this

Commonwealth.

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

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

been injected into the formation or site.

"Stripper well."  A producing site or a nonproducing site

that is not capable of producing and does not produce more than

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 Law for the measurement of gas under varying pressures with

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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.

"Wellhead meter certification."  A report issued by an

accredited laboratory certifying the accuracy of a wellhead

meter.

§ 1503.  Imposition of tax.

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

tax on every producer.

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

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the gross value of units severed at the wellhead during a

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

be imposed on units severed from a stripper well.

(a.1)  Stripper wells.--The tax shall not be imposed on units

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severed from a stripper well unless the following are true:

(1)  The stripper well is one of multiple producing sites

or nonproducing sites, the combined volumes of gas produced

by all of which sites are measured by a single wellhead meter

as provided in section 1505.1 (relating to meters).

(2)  The combined volumes of gas produced by all the

producing sites or nonproducing sites described in paragraph

(1) is more than 60,000 cubic feet of natural gas per day.

(a.2)  Exemptions.--The tax shall not be imposed on the

following:

(1)  units severed, sold and delivered by a producer at

or within five miles of the producing site for the processing

or manufacture of tangible personal property, as defined

under section 201 of the act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971, within this

Commonwealth; or

(2)  units provided free of charge to the owner of the

surface under which the gas is severed if the surface owner

is the end user of the gas.

(b)  Rate.--Subject to the provisions of section 1503.1, the

rate shall be 35¢ per unit severed at the wellhead.

§ 1503.1.  Natural gas base rate adjustment.

(a)  Annual adjustment.--The rate of tax imposed under

section 1503 (relating to imposition of tax) shall be adjusted

annually by the amount of the base rate adjustment index as

calculated under subsection (c), provided that the tax rate

shall never be less than 35¢ per unit severed. The adjusted tax

rate shall be effective for the next year.

(b)  Determination of adjustment.--On or before April 30 of

each year following the effective date of this section, the

secretary shall calculate and determine the amount of the base

rate adjustment index.

(c)  Calculation of adjustment.--The base rate adjustment

index shall be determined as follows:

(1)  If 5% of the average of New York Mercantile Exchange

(NYMEX) Henry Hub settled price on the last trading day of

the month, as reported by the Wall Street Journal for the

previous 12-month period ending March 31, is less than 35¢,

the base rate adjustment index shall be zero and the adjusted

tax rate shall be 35¢.

(2)  If 5% of the average of the New York Mercantile

Exchange (NYMEX) Henry Hub settled price on the last trading

day of the month, as reported by the Wall Street Journal for

the previous 12-month period ending March 31, is greater than

35¢, the base rate adjustment index shall be 50% of the

difference between 5% of the average of the NYMEX Henry Hub

settled price on the last trading day of the month, as

reported in the Wall Street Journal for the previous 12-month

period ending March 31, and 35¢. The adjusted tax rate shall

be the resulting base rate adjustment index plus 35¢.

(d)  Publication of adjustment.--The secretary shall forward

the amount of the base rate adjustment index and the adjusted

tax rate, as determined under subsection (c), to the Legislative

Reference Bureau for publication in the Pennsylvania Bulletin by

May 1 of each year and shall simultaneously provide the

information to producers as required by written notice. Failure

of the amount of the base rate adjustment index and the adjusted

tax rate to be published or provided to producers as required by

this subsection shall not affect the effectiveness of the

adjusted tax rate under subsection (b).

(e)  Discontinuance of data.--If publication of the NYMEX

Henry Hub average monthly gas price data is discontinued, the

tax rate then in effect shall not be adjusted until a comparable

method for determining the base rate adjustment index is adopted

by the General Assembly in legislation.

(f)  Other adjustments.--If the base data of the NYMEX Henry

Hub average monthly gas price is substantially revised, the

secretary shall, when determining the amount of the base rate

adjustment index under subsection (c), make appropriate changes

to ensure that the base rate adjustment index is reasonably

consistent with the result which would have been attained had

such substantial revision not been made. If the secretary is

unable to make reasonable changes sufficient to ensure a

consistent result, the tax rate then in effect shall not be

adjusted until a comparable method for determining the base rate

adjustment index is adopted by the General Assembly in

legislation.

(g)  Application of rate determinations.--The provisions of

this section shall affect only the determination of the rate of

the tax on the severance units of natural gas imposed in section

1503. The provisions of this section are not intended, nor shall

they be construed, to affect any other determination whatsoever,

including, but not limited to, the determination of royalty due

under mineral leases. Notwithstanding any other provision of

law, the tax imposed by this chapter shall not reduce any

royalty payments due under mineral leases and the producer may

not recover any portion of the tax paid from the royalty owner

through other means of deduction or reallocation,

notwithstanding any provision in the lease, contract or

agreement.

§ 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 per reporting

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period and the tax due under section 1503 (relating to

imposition of tax). which shall include all of the following:

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(1)  The number of severed natural gas units for each

reporting period.

(2)  The number of producing sites in each county and

municipality.

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

imposition of tax).

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

filed with the department within 15 50 days following the end of

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the second calendar month after a reporting period.

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

the day the return is required to be filed and becomes

delinquent if not remitted to the department by that date.

§ 1505.  Natural gas severance tax registration.

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

this Commonwealth, the producer shall apply to the department

for a natural gas severance tax registration certificate.

(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 issue a

registration certificate until the producer has paid the

application fee.

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

application a declaration of all sites in this Commonwealth 

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producing sites and nonproducing sites used by the producer for

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the severance of natural gas. The declaration is to include all

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producing sites and nonproducing sites as well as wellhead meter

certification for each shall include copies of wellhead meter

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certifications for each site. The producer is required to update

the declaration when the producer adds or removes a producing

site or nonproducing site in this Commonwealth or when there is

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

or when the producer uses a different accredited laboratory to

certify the accuracy of the producer's wellhead meters issue a

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wellhead meter certification. The producer shall update the

declaration within 30 days after a calendar month in which a

change to the declaration occurs.

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

the receipt of an application, the department shall issue a

registration certificate under subsection (a). The registration 

certificate shall be nonassignable. All registrants shall be

required to renew their registration certificates and wellhead

meter certifications on a staggered renewal system established

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

registration certificate or a wellhead meter certification 

issued shall be valid for a period of five years.

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

refuse to issue, suspend or revoke a registration certificate if

the applicant or registrant has not filed required State tax

reports and paid State taxes not subject to a timely perfected

administrative or judicial appeal or subject to a duly

authorized deferred payment plan. The department shall notify

the applicant or registrant of any refusal, suspension or

revocation. The notice shall contain a statement that the

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

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

aggrieved by the determination of the department may file an

appeal under the provisions for administrative appeals in the

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 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 producer and the

fact that the producer's registration certificate has been

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 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 natural gas during any calendar day

shall constitute a separate violation. The Secretary of Revenue 

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secretary may designate employees of the department to enforce

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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 registration certificate.--Failure to

obtain or hold a valid registration certificate does not relieve

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

§ 1505.1.  Meters.

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

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producer shall provide for and maintain a discrete wellhead 

meter and a discrete sales meter where natural gas is severed. A

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producer shall ensure that the meters are maintained according

to industry standards. Any wellhead meter installed after the

effective date of this section shall be a digital meter.

(b)  Exception.--If a producer has multiple producing sites

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or nonproducing sites, the combined volumes of gas produced by

all of which sites are measured by a single wellhead meter, the

producer shall not be required to provide for a discrete

wellhead meter at any of those producing sites or nonproducing

sites that is also a stripper well.

§ 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

interest, additions and penalties imposed under this chapter.

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

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

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

assessment to the taxpayer at its registered address via

certified mail if the assessment increases the taxpayer's tax

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

sent via regular mail.

§ 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.--If the taxpayer underpays the correct amount

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

six years after the date the return was filed.

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

taxpayer files a false or fraudulent return with intent to evade

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

any time.

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

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

assessment or reassessment may have been issued by the

department for the taxable period for which the refund was

granted, whichever period shall last occur, the department may

issue an assessment to recover a refund or credit made or

allowed erroneously.

§ 1508.  Extension of limitation assessment period.

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Notwithstanding the provisions of this chapter, the

assessment period may be extended in the event a taxpayer has

provided written consent before the expiration of the period

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 may be extended

further by subsequent written consents made before the

expiration of the extended period.

§ 1509.  Reassessments.

A taxpayer against whom an assessment is made may 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 certificate. The penalty shall

be $1 for every unit severed without a valid registration 

certificate. The department may assess this penalty

separately from or in conjunction with any assessment of the

natural gas severance tax.

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

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

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

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

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

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

or both, for any of the following:

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

department.

(ii)  Willfully failing or neglecting to timely file

a return or report required by this chapter.

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

interest imposed or provided for by this chapter.

(iv)  Willfully failing to preserve its books, 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

due.

(viii)  Providing any person with a false statement

as to the payment of natural gas severance tax with

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 involved in a business for

which the person holds a registration certificate or is required

to obtain a registration certificate under the provisions of

this chapter shall be subject to the provisions of section 1403

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

Fiscal Code.

§ 1515.  Collection upon failure to request reassessment, review

or appeal.

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

natural gas severance tax imposed under this chapter:

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

days after notice to the taxpayer when no petition for

reassessment has been filed.

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

for review has been filed.

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

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

petition for review; or

(ii)  the expiration of the board'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 taxpayer against whom they were

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

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

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

failure of the department to mail notice of assessment or

reassessment to the taxpayer and the defense of payment of

assessment or reassessment may be raised in proceedings for

collection by a motion to stay the proceedings.

§ 1516.  Tax liens.

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

pay the natural gas severance tax tax imposed under this chapter 

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for which the taxpayer is liable under this chapter after

demand, the amount, including interest, addition or penalty,

together with additional costs that may accrue, shall be a lien

in favor of the Commonwealth upon the real and personal property

of the taxpayer but only after the same has been entered and

docketed of record by the prothonotary of the county where the

property is situated. The department may, at any time, transmit

to the prothonotaries of the respective counties certified

copies of all liens imposed by this section. It shall be the

duty of the prothonotary receiving the lien to enter and docket

the same of record to the office of the prothonotary. The lien

shall be indexed as judgments are now indexed. No prothonotary

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

the payment of costs incidental to 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, a lien imposed under this section shall have 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, judgment,

claim, lien or estate to which the property may subsequently

become subject, but shall be subordinate to mortgages and other

liens existing and duly recorded or entered of record prior to

the recording of the lien.

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

judicial sale of property subject to a lien imposed under this

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

this section has priority, the sale shall discharge the lien

imposed under this section to the extent only that the proceeds

are applied to 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 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 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 its 

last known post office address, provided further that the lien

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

merchandise regularly sold or leased in the ordinary course of

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

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

made upon 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

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

manner provided by other laws of this Commonwealth relating to

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

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

shall be personally served upon any agent or representative of

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

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

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

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

office or 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)  Natural gas severance tax.--A 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 gas 

severance tax registration), 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

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 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

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 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

report of any examination or investigation of the return of any

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

the United States or another state grant substantially similar

privileges to the proper officer of the Commonwealth charged

with the administration of this chapter.

§ 1526.  Bonds.

(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 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 nonresident natural person, corporation,

association, fiduciary or other entity whenever it deems it

necessary to protect the revenues obtained under this chapter. 

The department may also require a bond of a person petitioning

the department for reassessment in the case of 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 secretary or his representative. At the

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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 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

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 it does not owe any

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: