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PRINTER'S NO. 603
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
528
Session of
2015
INTRODUCED BY CONKLIN, V. BROWN, BROWNLEE, DEAN, MAHONEY AND
THOMAS, FEBRUARY 23, 2015
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
FEBRUARY 23, 2015
AN ACT
Amending Title 72 (Taxation and Fiscal Affairs) of the
Pennsylvania Consolidated Statutes, providing for natural gas
severance tax; and repealing provisions relating to the
expiration of the unconventional gas well fee.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 72 is amended by adding a chapter to read:
CHAPTER 16
NATURAL GAS SEVERANCE TAX
Sec.
1601. Scope of chapter.
1602. Definitions.
1603. Imposition of tax.
1603.1. Rate adjustment index.
1604. Registration.
1605. Meters.
1606. Assessments.
1607. Time for assessment.
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1608. Extension of assessment period.
1609. Reassessments.
1610. Interest.
1611. Criminal acts.
1612. Abatement of additions or penalties.
1613. Bulk and auction sales.
1614. Collection upon failure to request reassessment, review
or appeal.
1615. Tax liens.
1616. Tax suit reciprocity.
1617. Service.
1618. Refunds.
1619. Refund petition.
1620. Rules and regulations.
1621. Recordkeeping.
1622. Examinations.
1623. Unauthorized disclosure.
1624. Cooperation with other governments.
1625. Bonds.
1626. Deposit of proceeds.
1627. Penalties.
§ 1601. Scope of chapter.
This chapter relates to the implementation of a natural gas
severance tax.
§ 1602. 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:
"Association." A partnership, limited partnership or any
other form of unincorporated enterprise owned or conducted by
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two or more persons.
"Average annual price of natural gas." The arithmetic mean
of the New York Mercantile Exchange (NYMEX) Henry Hub settled
price on the last trading day of each month of a calendar year
as reported by the Wall Street Journal for the 12-month period
ending March 31.
"Base rate." The rate under section 1603 (relating to
imposition of tax).
"Coal bed methane." Gas that can be produced from coal beds,
coal seams, mined-out areas or gob wells.
"Corporation." A corporation, joint-stock association,
limited liability company, business trust or any other
incorporated enterprise organized under the laws of the United
States, this Commonwealth or any other state, territory or
foreign country or dependency.
"Department." The Department of Revenue of the Commonwealth.
"Municipality." A city, borough, incorporated town or
township.
"Natural gas." As defined in 58 Pa.C.S. § 2301 (relating to
definitions).
"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." Any natural person, 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 58 Pa.C.S. § 2301 (relating to
definitions).
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"Producing site." A point of severance capable of producing
natural gas in paying quantities.
"Reporting period." Every three successive calendar months
beginning January 1, 2016.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Sever." Extract or otherwise remove natural gas from the
soil or water of this Commonwealth.
"Stripper well." A producing site or a nonproducing site
that is not capable of producing and does not produce more than
90,000 cubic feet of natural gas per day.
"Taxpayer." A person subject to the tax imposed by this
chapter.
"Unconventional gas well." As defined in 58 Pa.C.S. § 2301
(relating to definitions). The term does not include a vertical
gas well.
"Unit." One thousand cubic feet of natural gas measured at
the wellhead at a temperature of 60 degrees Fahrenheit and an
absolute pressure of 14.73 pounds per square inch in accordance
with American Gas Association Standards and according to Boyle's
Law for the measurement of gas under varying pressures with
deviations as follows:
(1) The average absolute atmospheric pressure shall be
assumed to be 14.4 pounds per square inch, regardless of
elevation or location of point of delivery above sea level or
variations in atmospheric pressure.
(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
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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
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. The results of the tests shall be used in
computing the volume of gas delivered under this chapter.
"Vertical gas well." As defined in 58 Pa.C.S. § 2301
(relating to definitions).
"Wellhead meter." A meter that measures the volume of
natural gas severed from an unconventional gas well.
§ 1603. Imposition of tax.
(a) Establishment.--Beginning July 1, 2015, there shall be
levied a natural gas severance tax payable on every producer.
The tax shall not be imposed on units severed from a stripper
well unless:
(1) The stripper well is one of multiple producing sites
or nonproducing sites, the combined volumes of gas produced
by all of which sites are measured by a single wellhead meter
as provided in section 1605 (relating to meters).
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(2) The combined volumes of gas produced by all the
producing sites or nonproducing sites described in paragraph
(1) is more than 90,000 cubic feet of natural gas per day.
(a.1) Exemptions.--The fee shall not be imposed on the
following:
(1) Units severed by a producer and sold and delivered
to a manufacturer of tangible personal property for the
manufacturer's use within this Commonwealth if the units have
been severed from one or more producing sites or nonproducing
sites on property owned by the manufacturer.
(2) Units provided free of charge to the owner of the
surface under which the gas is severed if the surface owner
is the end user of the gas.
(b) Base rate.--The base rate shall be 10¢ per unit severed
at the wellhead.
(c) Return and payment.--Every producer subject to the
provisions of this chapter shall file a return with the
department, on a form prescribed by the department, which shall
include the following:
(1) The number of natural gas units severed by the
producer for the reporting period and the gross value of the
units.
(2) The amount of tax due under subsection (b).
(3) Other information reasonably required by the
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
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date.
§ 1603.1. Rate adjustment index.
(a) Annual adjustment.--The base rate shall be adjusted
annually by the amount of the rate adjustment index as
calculated under subsection (c), provided that the adjusted rate
shall never be less than the base rate. The adjusted rate shall
be effective for the next fiscal year.
(b) Determination of adjustment.--On or before April 30 of
each year following the effective date of this section, the
department shall calculate and determine the amount of the rate
adjustment index.
(c) Calculation of adjustment.--The rate adjustment index
shall be determined as follows:
(1) If 8% of the average annual price of natural gas is
less than the base rate, the rate adjustment index shall be
zero and the adjusted rate shall be the base rate.
(2) If 8% of the average annual price of natural gas is
greater than the base rate, the rate adjustment index shall
be 60% of the difference between 8% of the average annual
price of natural gas and the base rate. The adjusted rate
shall be the resulting rate adjustment index plus the base
rate rounded to the nearest whole cent.
(d) Publication of adjustment.--The department shall forward
the amount of the rate adjustment index and the adjusted 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 by written notice. Failure to publish or provide to
producers the amount of the rate adjustment index and the
adjusted rate shall not affect the applicability of the adjusted
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rate under subsection (b).
(e) Discontinuance of data.--If publication of the NYMEX
Henry Hub average monthly natural gas price data is
discontinued, the adjusted rate then in effect shall not be
adjusted until a comparable method for determining the rate
adjustment index is adopted by the General Assembly.
(f) Other adjustments.--If the base data of the NYMEX Henry
Hub average monthly natural gas price is substantially revised,
the department shall, when determining the amount of the rate
adjustment index under subsection (c), make appropriate changes
to ensure that the rate adjustment index is reasonably
consistent with the result that would have been attained had the
substantial revision not been made. If the department is unable
to make reasonable changes sufficient to ensure a consistent
result, the adjusted rate then in effect shall not be adjusted
until a comparable method for determining the rate adjustment
index is adopted by the General Assembly.
(g) Application of fee determinations.--The provisions of
this section shall affect only the determination of the tax
imposed under section 1603 (relating to imposition of tax). The
provisions of this section are not intended nor shall they be
construed to affect any other determination, including, but not
limited to, the determination of royalty due under mineral
leases. Notwithstanding any other provision of law, the tax
imposed under section 1603 shall not reduce any royalty payments
due under mineral leases, and the producer shall 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.
§ 1604. Registration.
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(a) Application.--Before a producer severs natural gas or
continues to sever natural gas in this Commonwealth after
December 31, 2014, 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,
the department shall issue a registration certificate to the
producer. The registration certificate is nonassignable. A
registrant is required to renew the registration certificate on
a staggered renewal system established by the department. After
the initial staggered renewal period, a registration certificate
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
shall contain a statement that the refusal, suspension or
revocation may be made public. The notice shall be made by
first class mail.
(3) 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
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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
basis for refusal, suspension or revocation.
(d) Violation.--
(1) A person that severs natural gas in this
Commonwealth in violation of subsection (a) commits a summary
offense and shall, upon conviction, be sentenced to pay a
fine of 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 secretary may designate employees of the
department to enforce the provisions of this subsection. The
employees shall exhibit proof of and be within the scope of
the designation when instituting proceedings as provided by
the Pennsylvania Rules of Criminal Procedure.
(e) Failure to obtain 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.
§ 1605. Meters.
A producer shall provide for and maintain a discrete wellhead
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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.
§ 1606. Assessments.
(a) Authorization and requirement.--The department is
authorized and shall make inquiries, determinations and
assessments of the tax imposed under this chapter, including
interest, additions and penalties imposed under this chapter.
(b) Notice.--The notice of assessment and demand for payment
shall be mailed to the taxpayer. The notice shall set forth the
basis of the assessment. The department shall send the notice of
assessment to the taxpayer at 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.
§ 1607. Time for assessment.
(a) Requirement.--An assessment as provided under section
1606 (relating to assessments) shall be made within three years
after the date when the return provided for by section 1603(c)
(relating to imposition of tax) 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
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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 occur last, the department may
issue an assessment to recover a refund or credit made or
allowed erroneously.
§ 1608. Extension of assessment period.
Notwithstanding the provisions of this chapter, the
assessment period may be extended in the event a taxpayer has
provided written consent before the expiration of the period
provided in section 1607 (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.
§ 1609. 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.
§ 1610. 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.
§ 1611. Criminal acts.
(a) Fraudulent return.--Any person with intent to defraud
the Commonwealth who willfully makes or causes to be made a
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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 making 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 the tax imposed under this chapter
with respect to any pertinent facts.
(ix) Making, uttering or issuing a false or
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fraudulent statement.
(2) The penalties imposed by this section shall be in
addition to other penalties imposed by this chapter.
§ 1612. 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.
§ 1613. 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.
§ 1614. Collection upon failure to request reassessment, review
or appeal.
(a) Power of department.--The department may collect the tax
imposed under this chapter:
(1) If an assessment of the tax is not paid within 30
days after notice to the taxpayer when no petition for
reassessment has been filed.
(2) Within 60 days of the reassessment, if no petition
for review has been filed.
(3) If no appeal has been made, within 30 days of:
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(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.
§ 1615. Tax liens.
(a) Lien imposed.--If any taxpayer neglects or refuses to
pay the tax imposed under this chapter for which the taxpayer is
liable under this chapter after demand, the amount, including
interest, addition or penalty, together with additional costs
that may accrue, shall be a lien in favor of the Commonwealth
upon the real and personal property of the taxpayer, but only
after the same has been entered and docketed on the 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
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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 on the 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 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, further provided that the lien
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shall have no effect upon any stock of goods, wares or
merchandise regularly sold or leased in the ordinary course of
business by the taxpayer against whom the lien has been entered,
unless and until a writ of execution has been issued and a levy
made upon the stock of goods, wares and merchandise.
(d) Penalty.--A prothonotary who intentionally violates this
section commits a misdemeanor of the third degree 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.
(e) Priority.--
(1) Except as provided in this chapter, if there is
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.
(2) 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
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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.
§ 1616. Tax suit reciprocity.
The courts of the Commonwealth shall recognize and enforce
liabilities for natural gas severance or extraction taxes
lawfully imposed by any other state, provided that the other
state recognizes and enforces the tax imposed under this
chapter.
§ 1617. 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.
§ 1618. 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
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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.
§ 1619. 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 1618 (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 1606 (relating to assessments)
shall be made only where the person who has paid the tax files
with the department a petition for 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
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or penalties to which the person may be entitled by reason of
the person's payment of the assessment.
§ 1620. 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.
§ 1621. Recordkeeping.
(a) General rule.--Every person liable for any tax imposed
by this chapter, or for the collection of the tax, shall keep
records, 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 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
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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 any other 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 under this chapter.
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.
§ 1622. 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
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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
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.
§ 1623. 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 $1,000 and costs of prosecution or to
imprisonment for not more than one year, or both.
§ 1624. Cooperation with other governments.
Notwithstanding the provisions of section 1616 (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
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to either of their authorized representatives 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.
§ 1625. 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 1603 (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
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shall give notice to the taxpayer specifying the amount of the
bond required. The taxpayer shall file the bond within five days
after notice is given by the department unless, within five
days, the taxpayer shall request in writing a hearing before the
secretary or the secretary's representative. At the hearing, the
necessity, propriety and amount of the bond shall be determined
by the secretary or the secretary's representative. The
determination shall be final and the taxpayer shall comply with
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, 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 1615 (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 the taxpayer does not
owe any payment to the department.
§ 1626. Deposit of proceeds.
The proceeds of the tax imposed under section 1603 (relating
to imposition of tax) and penalties and interest imposed under
this chapter, shall be deposited into the General Fund and shall
be allowed annually as follows:
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(1) After the payment of refunds of the tax and the
expense of administering and enforcing the tax, the first
$300,000,000 of revenue shall be allocated to the Low-Income
Home Energy Assistance Program.
(2) Any remaining revenue shall be allocated to property
tax or rent rebate under Chapter 13 of the act of June 27,
2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer
Relief Act.
§ 1627. Penalties.
The department shall enforce the following penalties:
(1) A penalty against a producer without a registration
certificate required under section 1604 (relating to
registration). 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 1603(c) (relating to
imposition of tax). 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 1603(d). The penalty shall
be 5% of the amount of tax due for each day beyond the
payment date that the tax is not paid.
Section 2. Repeals are as follows:
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(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of 72
Pa.C.S. Ch. 16 (relating to natural gas severance tax).
(2) The provisions of 58 Pa.C.S. § 2318 (relating to
expiration) are repealed.
Section 3. This act shall take effect in 60 days.
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