As used herein, Production Taxes are taken to be any State or Local Government Tax levied upon the owner of Oil and Gas interests, that is determined from the volume (or value) of production (or sales). State oil and gas taxes are quite simple in some states and extremely complicated in others. Several U.S. States impose "ad valorem" taxes which may or may not be significant. This tabulation is intended for use as a method of approximating State Production taxes when performing oil and gas evaluations. Ad valorem taxes are normally considered as an operating expense, and have not been included in this tabulation. The taxes included for each State are noted in the comments column. This tabulation is a condensation of information taken from the referenced documents.
Many States have tax incentive programs. These programs are constantly being revised. Many programs with time limits are being extended while others have expired. Many States allow tax exemptions to qualified wells and projects but stipulate unique criteria for "qualification" or "certification". No attempt has been made to describe all of the various qualifications or, for that matter, to include all special tax exemptions, especially those exceptions so specific that they require more knowledge than the date of first production and the producing rate of the property being evaluated. This report is not to be used as a source of computing taxes due.
An attempt has been made to define "stripper" for each of those States that grant tax rate reductions or exemptions to stripper production. Small miscellaneous taxes have frequently been omitted from this report, especially when they are based upon a different rate than the primary tax, such as a mills/Bbl. tax in addition to a percentage of income base tax rate.
No consideration has been given to any pending legislation regarding production taxes. USA Indian Tribal Taxes when applicable, are in most cases in addition to and not in lieu of State Taxes.
This Summary of Oil & Gas Production Taxes, COPAS and Section 29 Credits was prepared by the Society of Petroleum Evaluation Engineers for the use of its membership and it assumes no responsibility for the accuracy or timeliness of information contained herein. Users of this report are advised to verify the accuracy, current status, and completeness of all tax information with a tax expert or the appropriate State Tax Agency in question. Tax rate approximations are the responsibility of the evaluator.
Source Documents
1. "State Tax Handbook", Commerce Clearing House, Inc.
2. "Summary of State Statutes and Regulations for Oil and Gas Production", Interstate Oil Compact Commission.
3. "COPAS Oil & Gas Severance Tax Guide", COPAS Tax Committee.
4. "Letter TC-10", American Petroleum Institution.
5. Relevant Agency or Commission, individual States.
6. "State Tax Reporter", Commerce Clearing House, Inc. |
