Legislation Update: Pennsylvania and New Mexico

PA HB178 was introduced January 28, 2019 and is in the House Environmental Resources and Energy Committee.  This Bill institutes a natural gas severance tax beginning July 1, 2019.  The severance tax rate is 3.5% of the gross value of natural gas and natural gas liquids.  The tax rate will be adjusted annually on July 1 based on the Pennsylvania hub price.  When the average Pennsylvania hub price in the prior calendar year is between $0 and $2.50 , the adjusted tax rate is 3% of the gross value; when the average hub price is between $2.51 and $3.00, the adjusted tax rate is 4% of the gross value; and when the average Pennsylvania hub price in the prior calendar year is greater than $3.00, the adjusted tax rate is 5% of the gross value.  Exemptions include stripper well; natural gas sold and delivered by an operator at or within five miles of the producing well for the processing or manufacture of tangible person property; natural gas provided free of charge to the surface owner; and natural gas, dry natural gas, or natural gas liquids severed from a storage field.  Credits for impact fees are allowed.

 

NM SB0358 was introduced January 25, 2019 and is in the Senate Corporations and Transportation Committee.  Although this Bill focuses on a wide variety of taxes, Section 37 references the amount of time to claim a tax credit or a refund of overpaid taxes decreases from three years to one year. The filing of a fully completed amended oil and gas tax return that shows a lesser tax liability than the original return constitutes the filing of a claim for refund for the difference in tax due.  See Section 37 pages 111 through 119.