Bill Text: MI HB4885 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Taxation; severance; tax on production of oil and gas produced by enhanced recovery projects; reduce. Amends sec. 3 of 1929 PA 48 (MCL 205.303) & adds sec. 11a. TIE BAR WITH: HB 5254'14, HB 5255'14
Spectrum: Partisan Bill (Republican 16-0)
Status: (Passed) 2014-04-17 - Assigned Pa 82'14 With Immediate Effect [HB4885 Detail]
Download: Michigan-2013-HB4885-Engrossed.html
HB-4885, As Passed House, February 13, 2014
SUBSTITUTE FOR
HOUSE BILL NO. 4885
A bill to amend 1929 PA 48, entitled
"An act levying a specific tax to be known as the severance tax
upon all producers engaged in the business of severing oil and gas
from the soil; prescribing the method of collecting the tax;
requiring all producers of such products or purchasers thereof to
make reports; to provide penalties; to provide exemptions and
refunds; to prescribe the disposition of the funds so collected;
and to exempt those paying such specific tax from certain other
taxes,"
by amending section 3 (MCL 205.303), as amended by 1996 PA 135, and
by adding section 11a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
3. (1) Except as provided in subsections (2), and (3),
and (4), the severance tax required to be paid by each producer at
the time of rendering each monthly report, or by a pipeline
company, common carrier, or common purchaser, for and on behalf of
a producer, shall be in the amount of 5% of the gross cash market
value of the total production of gas or 6.6% of the gross cash
market value of the total production of oil during the preceding
monthly period, exclusive of the production or proceeds from the
production
attributable to the this state, the government of the
United
States, or a political subdivision of the this state or
government of the United States. The value of all production shall
be computed as of the time when and at the place where the
production was severed or taken from the soil immediately after the
severance. Except as otherwise provided in this section, the
payment of the severance tax shall be required of each producer. If
the production is sold or delivered to a pipeline company and is
transported by the pipeline company through lines connected with
the oil or gas well of the owner, or of a common purchaser, the
pipeline company, or common purchaser shall receive and accept all
the
oil and gas, subject to a lien, as prescribed in section 8, and
the pipeline company shall withhold out of the proceeds or price to
be paid for the products severed, the proportionate parts of the
tax due by the respective owners of the oil and gas at the time of
severance and, at the time required for the filing of the monthly
reports required in section 2, shall pay to the department of
revenue
treasury all the tax money collected or withheld. Each
pipeline company, common carrier, or common purchaser shall deduct
from the purchase price paid to a producer from whom it may receive
the oil or gas the amount of the severance tax levied in this
section before making the payment. If under the terms of a contract
the pipeline company, common carrier, or common purchaser is
required to reimburse a producer of oil or gas for the amount of
the severance tax or a part of the severance tax, the tax
reimbursement shall not be considered a part of the gross cash
market value of the total production of the oil or gas.
(2) The severance tax required to be paid by each producer at
the time of rendering each monthly report, or by a pipeline
company, common carrier, or common purchaser, for and on behalf of
a producer, on stripper well crude oil, as defined in former
section 8 of the emergency petroleum allocation act of 1973, 15
U.S.C.
USC 757 and on crude oil from marginal properties as
defined
in former part 212, subpart D, of chapter II of title 10 of the
code of federal regulations 10 CFR 212.72 to 212.77, shall be in
the amount of 4% of the gross cash market value of the total
production of the oil, during the preceding monthly period,
exclusive of the production or proceeds from the production
attributable
to the this state, the government of the United
States,
or a political subdivision of the this state or government
of the United States. The value of all production shall be computed
as of the time when and at the place where the production was
severed or taken from the soil immediately after the severance.
(3) A producer is not required to pay a severance tax on
income received from the hydrocarbons produced from devonian or
antrim shale qualifying for the nonconventional fuel credit
contained
in section 29 45k of the internal revenue code, of
1986,
26
U.S.C. 29 USC 45k and acquired pursuant to a royalty interest
sold
by the this state under section 503 of the natural resources
and environmental protection act, 1994 PA 451, MCL 324.503.
(4) For carbon dioxide secondary or enhanced recovery projects
approved after March 30, 2014, the severance tax required to be
paid by each producer at the time of rendering each monthly report,
on oil or gas produced from a carbon dioxide secondary or enhanced
recovery project, shall be 4.0% of the gross cash market value for
oil and 4.0% of the gross cash market value for natural gas.
Sec. 11a. As used in this act, "carbon dioxide secondary or
enhanced recovery project" means operations designed to increase
the amount of oil or natural gas recoverable from a reservoir by
injection of carbon dioxide, either alone or as a primary component
of a mixture with other substances, provided the project has been
approved as a secondary or enhanced recovery project by order of
the supervisor of wells under the authority of part 615 of the
natural resources and environmental protection act, 1994 PA 451,
MCL 324.61501 to 324.61527, or part 617 of the natural resources
and environmental protection act, 1994 PA 451, MCL 324.61701 to
324.61738.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 97th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No.____ (request no.
04519'13).
(b) Senate Bill No.____ or House Bill No.____ (request no.
04520'13).
