Bill Text: PA HB33 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for taxation of natural gas drilling and for transfers and distributions.

Spectrum: Strong Partisan Bill (Democrat 64-6)

Status: (Introduced - Dead) 2011-05-25 - Re-referred to FINANCE [HB33 Detail]

Download: Pennsylvania-2011-HB33-Introduced.html

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PRINTER'S NO. 536
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 33 Session of2011
INTRODUCED BY VITALI, GEORGE, SANTARSIERO, DERMODY, HANNA, FRANKEL, STURLA, BUXTON, B. BOYLE, K. BOYLE, BRADFORD, BRENNAN, BRIGGS, V. BROWN, CALTAGIRONE, CARROLL, COHEN, CURRY, DAVIDSON, DEASY, DeLUCA, DePASQUALE, FABRIZIO, FREEMAN, DELISSIO, GOODMAN, HALUSKA, HARKINS, GERBER, HARPER, HORNAMAN, JOHNSON, JOSEPHS, KIRKLAND, KORTZ, MAHONEY, McGEEHAN, MIRABITO, MUNDY, MURPHY, MURT, MYERS, D. O'BRIEN, M. O'BRIEN, PASHINSKI, PAYTON, READSHAW, ROEBUCK, SABATINA, SAMUELSON, SHAPIRO, K. SMITH, J. TAYLOR, WAGNER, WHEATLEY, YOUNGBLOOD, SANTONI, DAVIS AND KAVULICH, FEBRUARY 9, 2011
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 9, 2011
AN ACT
Amending Title 72 (Taxation and Fiscal Affairs) of the
Pennsylvania Consolidated Statutes, providing for taxation of
natural gas drilling and for transfers and distributions.
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
EFFECTS OF NATURAL GAS DRILLING
Sec.
1501. Scope of chapter.
1502. Definitions.
1503. Imposition of tax.
1504. Return and payment.
1505. Natural gas severance tax registration.
1505.1. Meters.
1506. Assessments.
1507. Time for assessment.
1508. Extension of assessment period.
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. Accounts established.
1528. Transfers and distributions.
1529. Appropriation.
§ 1501. Scope of chapter.
This chapter shall relate to the ability of all counties
within this Commonwealth to ameliorate the effects of natural
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gas drilling that occur within their borders.
§ 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:
"Account." The Natural Gas Severance Tax Account.
"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." The rate under section 1503(b) (relating to
imposition of tax).
"Coal bed methane." Gas which 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 this
Commonwealth, the United States or any other state, territory or
foreign country or dependency.
"Department." The Department of Revenue of the Commonwealth.
"Meter." A device to measure the passage of volumes of gases
or liquids past a certain point.
"Municipality." A city, borough, incorporated town or
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
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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
coal bed methane.
"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
severed.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Sever." To extract or otherwise remove natural gas from the
soil or water of this Commonwealth.
"Severance." The extraction or other removal of natural gas
from the soil or water of this Commonwealth.
"Severing." Extracting or otherwise removing natural gas
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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.
"Tax." The tax imposed under this chapter.
"Tax rate adjustment index." The amount calculated under
section 1503(b) (relating to imposition of tax) by which the
rate of the tax imposed under section 1503(b) is adjusted
annually.
"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 for the measurement of gas under varying pressures with
deviations as follows:
(1) The average absolute atmospheric pressure shall be
assumed to be 14.4 pounds to the square inch, regardless of
elevation or location of point of delivery above sea level or
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 is installed and not operating properly, an
average flowing temperature of 60 degrees Fahrenheit shall be
used in computing gas volume.
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(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 privilege tax on every
producer that severs natural gas.
(b) Rate.--The tax imposed in subsection (a) shall be 5% of
the gross value of units severed at the wellhead during a
reporting period, plus 4.6¢ per unit severed.
§ 1504. Return and payment.
(a) Requirement.--Every producer is required to file a
return with the department, on a form prescribed by the
department, which shall include all of the following:
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(1) The number of natural gas units severed by the
producer for the reporting period.
(2) The number of producing sites used by the producer
for the severance of natural gas 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 days following the end of a
reporting period.
(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 producing sites and
nonproducing sites used by the producer for the severance of
natural gas. The declaration shall include copies of wellhead
meter 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
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there is a change in the status of a producing site or
nonproducing site or when the producer uses a different
accredited laboratory to issue a 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
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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 in the payment of the fine, 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 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.
§ 1505.1. Meters.
A producer shall provide for and maintain a discrete wellhead
meter where natural gas is severed. A producer shall ensure that
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the meters are maintained according to industry standards. Any
wellhead meter installed after the effective date of this
section shall be a digital meter.
§ 1506. Assessments.
(a) Authorization and requirement.--The department is
authorized and shall make the 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.
§ 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
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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 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 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 producer without a natural gas
severance tax registration certificate. The penalty shall be
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$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:
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(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
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.
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§ 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 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:
(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
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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 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 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
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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 the 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
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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 or extraction taxes
lawfully imposed by any other state, provided that the other
state recognizes and enforces the tax imposed under this
chapter.
§ 1518. Service.
A producer is deemed to have appointed the Secretary of the
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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
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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 of the Tax Reform
Code of 1971 within the time limits of section 3003.1 of the Tax
Reform Code of 1971. The filing of a petition for refund under
the provisions of this subsection shall not affect the abatement
of interest, additions or penalties to which the person may be
entitled by reason of his payment of the assessment.
§ 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
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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 the tax, shall keep
records, including those enumerated in subsection (b), render
statements, make returns and comply with the rules and
regulations as the department may prescribe regarding matters
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
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
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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 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
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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 $1,000 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,
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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 or his 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
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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. Accounts established.
(a) Natural Gas Severance Tax Account.--
(1) The Natural Gas Severance Tax Account is established
as a restricted account within the General Fund.
(2) The proceeds of the tax imposed under section 1503
(relating to imposition of tax) and penalties and interest
imposed under this chapter, less the amounts appropriated
under section 1529 (relating to appropriation), shall be
deposited into the account.
(3) The money in the account shall only be used in
accordance with section 1528 (relating to transfers and
distributions).
(b) Local Government Services Account.--
(1) The Local Government Services Account is established
as a restricted account within the General Fund.
(2) The allocation under section 1528(a)(3) shall be
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deposited into the Local Government Services Account and
shall be distributed as provided in section 1528(b).
§ 1528. Transfers and distributions.
(a) Monthly transfers and distributions.--On the last
business day of each calendar month, the State Treasurer shall
make the following transfers and distributions of the money in
the Natural Gas Severance Tax Account:
(1) Thirty-two percent to the General Fund.
(2) Twenty-nine and six-tenths percent to the
Environmental Stewardship Fund.
(3) Thirty-two percent to the Local Government Services
Account, to be further distributed by the State Treasurer
under subsection (c).
(4) One and six-tenths percent to the Hazardous Sites
Cleanup Fund.
(5) One and three-tenths percent to the Conservation
District Fund for distribution to county conservation
districts pursuant to guidelines established by the State
Conservation Commission.
(6) One and four-tenths percent to the Pennsylvania Fish
and Boat Commission.
(7) One and three-tenths 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.
(8) Eight-tenths of one percent to the Department of
Environmental Protection for State dam removal, restoration
and repair projects.
(b) Quarterly distributions.--On the last business day of
each period of three calendar months, the State Treasurer shall
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make the following distributions from the money in the Local
Government Services Account:
(1) Thirty percent to counties with producing sites to
be used as provided in subsection (c). The money under this
subparagraph shall be distributed to each eligible county
based on the following formula:
(i) Divide:
(A) the number of producing sites in the county;
by
(B) the total number of producing sites in all
of the counties in this Commonwealth.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount of money available for
distribution under this paragraph.
(2) Forty-five percent to municipalities with producing
sites. Subject to paragraph (3), the money under this
paragraph shall be distributed to each eligible municipality
based on the following formula:
(i) Divide:
(A) the number of producing sites in the
municipality; by
(B) the total number of producing sites in all
municipalities in this Commonwealth.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount of money available for
distribution under this paragraph.
(3) All of the following apply to the distribution under
paragraph (2):
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(i) The amount distributed to a municipality shall
not exceed 50% of the municipality's total budget for
fiscal year 2011-2012, adjusted for inflation in
subsequent years by an amount not to exceed an annual
cost-of-living adjustment calculated by applying the
Annual Percent Change in the Consumer Price Index for all
Urban Consumers immediately prior to the date the
adjustment is due to take effect. The amount distributed
under this subparagraph shall be used for the following
purposes:
(A) Reconstruction, maintenance and repair of
municipal roadways and bridges, which the
municipality has determined have been or are being
used extensively to transport natural gas or
equipment related to the production of natural gas.
(B) Preservation and improvement of municipal
water supplies.
(C) Maintenance and capital improvements to
municipal waste and sewage systems.
(D) Preservation and reclamation of the surface
waters of the municipality.
(E) Other lawful purposes reasonably related to
the health, welfare and safety consequences of
severing natural gas in the municipality.
(ii) Any funds not distributed to the municipalities
in a county because of the budgetary limitations under
subparagraph (i) shall be distributed to the county to be
used solely for grants to municipalities to defer the
cost of regional cooperation endeavors undertaken by the
municipalities within the county.
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(4) Fifteen percent to municipalities with no producing
sites located in a county with producing sites. Subject to
paragraph (5), the money under this paragraph shall be
distributed to each eligible municipality based on the
following formula:
(i) Divide:
(A) the number of producing sites in the county;
by
(B) the total number of producing sites in all
counties in this Commonwealth.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount of money available for
distribution under this paragraph.
(5) All of the following apply to the distribution under
paragraph (4):
(i) Subject to the limitation in subparagraph (ii),
the State Treasurer shall distribute an equal share to
each eligible municipality within the same county.
(ii) The amount distributed to a municipality shall
not exceed 50% of the municipality's total budget for
fiscal year 2011-2012, adjusted for inflation in
subsequent years by an amount not to exceed an annual
cost-of-living adjustment calculated by applying the
Annual Percent Change in the Consumer Price Index for all
Urban Consumers immediately prior to the date the
adjustment is due to take effect. The amount distributed
under this subparagraph shall be used for the following
purposes:
(A) Reconstruction, maintenance and repair of
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municipal roadways and bridges, which the
municipality has determined have been or are being
used extensively to transport natural gas or
equipment related to the production of natural gas.
(B) Preservation and improvement of municipal
water supplies.
(C) Maintenance and capital improvements to
municipal waste and sewage systems.
(D) Preservation and reclamation of surface
waters of the municipality.
(E) Other lawful purposes reasonably related to
the health, welfare and safety consequences of
severing natural gas in municipalities within the
county.
(iii) Any funds not distributed to the
municipalities in a county because of the budgetary
limitations under subparagraph (ii) shall be distributed
to the county to be used solely for grants to
municipalities to defer the cost of regional cooperation
endeavors undertaken by the municipalities within the
county.
(6) Ten percent to the Pennsylvania Emergency Management
Agency to be distributed to fire and ambulance services in
counties with producing sites in accordance with the
procedures established in 35 Pa.C.S. Ch. 78 (relating to
grants to volunteer fire companies and volunteer services).
(7) Only producing sites and nonproducing sites on which
the tax is levied under section 1503(a) (relating to
imposition of tax) during the three-month period for which
transfers and distributions are made shall be included in any
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of the calculations made under paragraphs (1), (2) and (4)
for that three-month period.
(c) Distributions to counties.--
(1) The governing body of counties receiving
distributions under subsection (b)(1) shall administer the
funds received. The governing body shall give priority to the
reconstruction, repair and maintenance of county roadways and
bridges, which the governing body has determined have been or
are being used to transport natural gas or equipment related
to the production of natural gas. The governing body shall
allocate the remainder to the county or its municipalities
for any of the purposes enumerated in subsection (b)(3) or
(5). A simple majority vote of all of the members of the
governing body shall be required for any action under this
paragraph.
(2) Commencing in 2013, before February 1, each county
receiving distributions under subsection (b)(1) shall prepare
and deliver a report to the Governor, the Secretary of the
Senate and the Chief Clerk of the House of Representatives
detailing the expenditure of funds. The Department of
Community and Economic Development shall have the authority
to audit a county's use of such funds and each county
receiving funds shall make their financial records and other
documents relating to its use of funds available to the
department.
(d) Distributions to municipalities.--
(1) Commencing in 2013, before February 1, each
municipality receiving distributions under subsection (b)(2)
or (4) shall prepare and deliver a report to the Governor,
the Secretary of the Senate and the Chief Clerk of the House
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of Representatives detailing the expenditure of funds.
(2) The Department of Community and Economic Development
shall have the authority to audit a municipality's use of the
funds. Each municipality receiving funds shall make financial
records and other documents relating to its use of the funds
available to to the Department of Community and Economic
Development.
(e) Administration.--The department shall make the
calculations required for the transfers and distributions under
this section and shall submit the calculations to the State
Treasurer in sufficient time for the State Treasurer to make the
transfers and distributions as required by this section.
§ 1529. Appropriation.
The amount of the proceeds from the tax imposed by this
chapter as shall be necessary for the payment of refunds,
enforcement or administration under this chapter is hereby
appropriated to the department for those purposes.
Section 2. This act shall take effect immediately.
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