April 10, 2008, Introduced by Reps. Miller, Constan, Polidori, Kathleen Law, Condino and Vagnozzi and referred to the Committee on Tax Policy.
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.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3. (1) Except as provided in subsections (2) and (3), 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 For months ending
before September 30, 2007, 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 state, the
government of the United States, or a political subdivision of the
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 of the internal revenue code, of 1986, 26
U.S.C.
USC 29 and acquired pursuant to a royalty interest sold
by
the state under section 503.