File No. 35147
This rule was published in the September 1, 2011, issue (Vol. 2011, No. 17) of the Utah State Bulletin.
Tax Commission, Auditing
Section R865-15O-1
Oil and Gas Severance Tax Pursuant to Utah Code Ann. Sections 59-5-102 and 59-5-104
Notice of Proposed Rule
(Amendment)
DAR File No.: 35147
Filed: 08/11/2011 02:35:30 PM
RULE ANALYSIS
Purpose of the rule or reason for the change:
The proposed amendment deletes outdated language.
Summary of the rule or change:
The proposed amendment deletes language referring to an annual exemption from oil and gas severance tax since this exemption no longer exists in statute, and makes technical changes.
State statutory or constitutional authorization for this rule:
- Section 59-5-104
- Section 59-5-102
Anticipated cost or savings to:
the state budget:
None--The amendment deletes outdated language.
local governments:
None--The amendment deletes outdated language.
small businesses:
None--The amendment deletes outdated language.
persons other than small businesses, businesses, or local governmental entities:
None--The amendment deletes outdated language.
Compliance costs for affected persons:
None--The amendment deletes outdated language.
Comments by the department head on the fiscal impact the rule may have on businesses:
This update to a statutory reference will create no fiscal impact.
Michael Cragun, Commissioner
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:
Tax CommissionAuditing
210 N 1950 W
SALT LAKE CITY, UT 84134
Direct questions regarding this rule to:
- Christa Johnson at the above address, by phone at 801-297-3901, by FAX at 801-297-3907, or by Internet E-mail at cj@utah.gov
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
10/03/2011
This rule may become effective on:
10/10/2011
Authorized by:
Michael Cragun, Tax Commissioner
RULE TEXT
R865. Tax Commission, Auditing.
R865-15O. Oil and Gas Tax.
R865-15O-1. Oil and Gas Severance Tax Pursuant to Utah Code Ann. Sections 59-5-102 and 59-5-104.
[A.](1) Definitions
[1.](a) "Person" means any individual, partnership,
company, joint stock company, association, receiver, trustee,
executor, administrator, guardian, fiduciary agent or other
representative of any kind.
[2.](b) "Operator" means any person engaged in the
business of operating oil or gas wells, whether as a working
interest owner, an independent contractor, or otherwise. An
operator who is also a working interest owner shall be referred to
as a producer.
[B. The proportion of the annual exemption an operator is
entitled to shall be reduced by any exempt royalties.
C. Owners who take production in kind and report and pay
their own tax shall receive a proportionate share of each
operator's exemption from whom production in kind is
taken.
D. For those who are required to report and pay the tax
on a quarterly basis, the annual exemption taken for each
quarterly installment shall be the lesser of one-fourth of the
annual exemption, or an amount that reduces the installment to
zero.
E.](2) For purposes of filing the statement required under
Section 59-5-104, if working interest owners engage in a
unitization agreement or other business arrangement in which
someone other than themselves are conducting the operations of an
oil or gas lease,[then]:
[1.](a) Each [such] working interest owner[,] who receives a share of production in kind[,] must file the statement required in Section
59-5-104. The operator of the well must inform the [Tax Commission]commission, on forms provided by the [Tax Commission]commission, of any party taking production in kind.
[2.](b) A working interest owner may enter into an agreement
with the lease operator requiring the lease operator to distribute
the proceeds from the purchase or sale of oil and gas production to
the working interest owners and any other parties claiming an
interest through them.
[3.](c) Working interest owners who are parties to the
unitization agreement or other business arrangement may designate
the operator as the person who shall file the statement on behalf
of all working interest owners. For [such]these arrangements to be recognized by this state, the
designated operator must also be empowered to deduct, from the
share of each interest owner, the tax imposed under Title 59,
Chapter 5, Part 1.
[4.](d) If a designated operator fails to file the tax return,
or files a false, fraudulent, or otherwise inaccurate statement, or
fails to pay the full amount of the tax due, the primary and
ultimate liability for the statement and the tax shall rest solely
upon the producers or interest owners.
[a)](i) If the designated operator fails to file and pay the tax
due, the state shall hold a hearing and is no longer bound by any
arrangement between the parties.
[b)](ii) Nothing in Subsections (2)
(b) through [(4)](d) shall deprive the [Tax Commission]commission of the authority to require each working interest
owner to file the required statement where the [Tax Commission]commission determines that a jeopardy situation exists.
[F.](3) A person entering into an agreement during the taxable
year shall file a return covering independent production prior to
entering the agreement.[
The allowable exemption on the independent production is
one-twelfth of the prorated annual exemption for each full month of
independent operation during the year.]
KEY: taxation, petroleum, petroleum industries
Date of Enactment or Last Substantive Amendment: [1987]2011
Notice of Continuation: March 19, 2007
Authorizing, and Implemented or Interpreted Law: 59-5-101 through 59-5-115
Additional Information
The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull-pdf/2011/b20110901.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.
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For questions regarding the content or application of this rule, please contact Christa Johnson at the above address, by phone at 801-297-3901, by FAX at 801-297-3907, or by Internet E-mail at cj@utah.gov.