Read the full stored bill text
21LSO-0218
2021
STATE OF WYOMING
21LSO-0218
Numbered
2.0
HOUSE BILL NO. HB0224
Severance and sales and use taxes.
Sponsored by: Representative(s) Harshman
A BILL
for
AN ACT relating to taxation; modifying various severance tax rates; specifying requirements for establishing values for tax rates; providing for the imposition of an additional sale and use tax; specifying requirements for imposition of the additional tax; providing for distribution of funds; making conforming amendments and amending obsolete provisions relating to sales and use tax rates; and providing for an effective date.
Be It Enacted by the Legislature of the State of Wyoming:
Section 1
.
W.S. 39
‑
14
‑
204(a)(intro), by creating new paragraphs (v) and (vi) and by creating a new subsection (b), 39
‑
14
‑
205(a), (h) and (n), 39
‑
14
‑
211(a), 39
‑
14
‑
801(b)(intro), 39
‑
15
‑
104(h)(intro) and by creating a new subsection (j), 39
‑
15
‑
211(b)(intro) and by creating a
new subsection (r), 39
‑
15
‑
303(b)(iii), 39
‑
15
‑
306(b)(i) and (v), 39
‑
16
‑
104 by creating a new subsection (g), 39
‑
16
‑
107(a)(vi), 39
‑
16
‑
111 by creating a new subsection (p), 39
‑
16
‑
303(b)(iii) and 39
‑
16
‑
306(b)(i) and (v) are amended to read:
39
‑
14
‑
204.
Tax rate.
(a)
Except as otherwise provided by this section and W.S. 39
‑
14
‑
205, the total severance tax on crude oil, lease condensate or natural gas shall be
six percent (6%), comprising one and one
‑
half percent (1.5%) imposed by the Wyoming constitution article 15, section 19 and the remaining amount
the amounts
imposed by
Wyoming statute
this section
. The tax shall be distributed as provided in W.S. 39
‑
14
‑
211 and is imposed as follows:
(v)
For crude oil and lease condensate when the index value of the product extracted is:
(A)
Less than thirty
‑
five dollars ($35.00) per barrel the tax shall be two percent (2%) of the value of the gross product;
(B)
At least thirty
‑
five dollars ($35.00) per barrel and less than forty dollars ($40.00) per barrel the tax shall be three percent (3%) of the value of the gross product;
(C)
At least forty dollars ($40.00) per barrel and less than forty
‑
five dollars ($45.00) per barrel the tax shall be four percent (4%) of the value of the gross product;
(D)
At least forty
‑
five dollars ($45.00) per barrel and less than fifty dollars ($50.00) per barrel the tax shall be five percent (5%) of the value of the gross product;
(E)
At least fifty dollars ($50.00) per barrel and less than fifty
‑
five dollars ($55.00) per barrel the tax shall be six percent (6%) of the value of the gross product;
(F)
At least fifty
‑
five dollars ($55.00) per barrel and less than sixty dollars ($60.00) per barrel
the tax shall be seven percent (7%) of the value of the gross product;
(G)
At least sixty dollars ($60.00) per barrel and less than seventy dollars ($70.00) per barrel the tax shall be seven and one
‑
half percent (7.5%) of the value of the gross product;
(H)
At least seventy dollars ($70.00) per barrel and less than eighty dollars ($80.00) per barrel the tax shall be eight percent (8%) of the value of the gross product;
(J)
Eighty dollars ($80.00) or more per barrel the tax shall be nine percent (9%) of the value of the gross product.
(vi)
For natural gas when the index value of the product extracted is:
(A)
Less than two dollars and twenty
‑
five cents ($2.25) per MCF the tax shall be two percent (2%) of the value of the gross product;
(B)
At least two dollars and twenty
‑
five cents ($2.25) per MCF and less than two dollars and fifty cents ($2.50) per MCF the tax shall be three and one
‑
half percent (3.5%) of the value of the gross product;
(C)
At least two dollars and fifty cents ($2.50) per MCF and less than two dollars and ninety
‑
five cents ($2.95) per MCF the tax shall be five percent (5%) of the value of the gross product;
(D)
At least two dollars and ninety
‑
five cents ($2.95) per MCF and less than three dollars and twenty
‑
five cents ($3.25) per MCF the tax shall be six percent (6%) of the value of the gross product;
(E)
At least three dollars and twenty
‑
five cents ($3.25) per MCF and less than three dollars and fifty cents ($3.50) per MCF the tax shall be seven percent (7%) of the value of the gross product;
(F)
At least three dollars and fifty cents ($3.50) per MCF and less than four dollars ($4.00) per MCF
the tax shall be eight percent (8%) of the value of the gross product;
(G)
Four dollars ($4.00) or more per MCF the tax shall be nine percent (9%) of the value of the gross product.
(b)
In determining the index values under subsection (a) of this section, the department shall use the preceding three (3) month rolling average based on the monthly average of daily spot prices for West Texas Intermediate (WTI) per barrel of oil and the monthly average of daily spot prices for Henry hub per thousand cubic feet of natural gas for the three (3) month period immediately preceding the month of production from the well. The department shall post the most recent monthly average and the three (3) month rolling average for the calculated prices on its website. The method of determining index values shall be established by rule of the department.
39
‑
14
‑
205.
Exemptions.
(a)
Stripper production is exempt from
the
one
‑
third (1/3) of the
severance taxes imposed by W.S.
39
‑
14
‑
204(a)(iii)
39
‑
14
‑
204(a)(v)(B) through (H)
.
(h)
Crude oil produced from previously shut
‑
in wells is exempt from
the
all
severance taxes imposed by W.S.
39
‑
14
‑
204(a)(ii), (iii) and (iv)
39
‑
14
‑
204(a) except one and one
‑
half percent (1.5%) of value
for the first sixty (60) months of renewed production or until the average price received by the producer for the renewed production is equal to or exceeds twenty
‑
five dollars ($25.00) per barrel of oil for the preceding six (6) months, whichever sooner occurs.
(n)
Crude oil and natural gas production resulting from any well that is drilled on or after July 1, 2020 and prior to December 31, 2025 as certified, by the oil and gas conservation commission,
is exempt from the severance taxes
shall be taxed at the lower of the rates
imposed by W.S.
39
‑
14
‑
204(a)(iv) as provided in this subsection
39
‑
14
‑
204(a)(v) and (vi) or the alternative rates provided in this subsection
. Subject to subsection (o) of this section, the
exemption
alternative rates
under this
subsection shall not apply to natural gas production when the
twelve (12)
three (3)
month rolling average of the Henry hub spot price for natural gas is two dollars and ninety
‑
five cents ($2.95) or more per thousand cubic feet at the time of first production from the well and shall not apply to the production of crude oil when the
twelve (12)
three (3)
month rolling average of the West Texas Intermediate (WTI) spot price of sweet crude oil is fifty dollars ($50.00) or more per barrel at the time of first production from the well. If the
exemption
alternative rate
under this subsection is applicable to a new well based upon the oil or gas price at the time of first production, the
exemption
rate
shall be
an exemption of the full two percent (2%) tax rate under W.S. 39
‑
14
‑
204(a)(iv)
four percent (4%) of value
for the first six (6) months of production and
shall reduce the rate under W.S. 39
‑
14
‑
204(a)(iv) to one percent (1%)
five percent (5%) of value
for the next six (6) months of production.
39
‑
14
‑
211.
Distribution.
(a)
The state treasurer shall transfer the revenue collected from the severance tax imposed by W.S.
39
‑
14
‑
204(a)(i)
39
‑
14
‑
204(a)(v) and 39
‑
14
‑
204(a)(vi) equal to a one and one
‑
half percent (1.5%) severance tax
into the permanent Wyoming mineral trust fund. The state treasurer shall transfer
the
all other
revenue collected from the severance tax imposed by W.S.
39
‑
14
‑
204(a)(ii), (iii) and (iv)
39
‑
14
‑
204(a)
into the severance tax distribution account.
39
‑
14
‑
801.
Severance tax distributions; distribution account created; formula.
(b)
Before making distributions from the severance tax distribution account under subsections (c) through (e) of this section, an amount equal to two
‑
thirds (2/3) of the amount of tax collected under W.S. 39
‑
14
‑
104(a)(i) and (b)(i) and
39
‑
14
‑
204(a)(i)
an amount equal to a one percent (1%) tax rate under W.S. 39
‑
14
‑
204(a)
for the same period shall be deposited into the permanent Wyoming mineral trust fund, except for the period from March 15, 2016 through June 30, 2022 these funds shall be deposited as follows:
39
‑
15
‑
104.
Taxation rate.
(h)
In addition to
the
other
sales tax under
subsections (a) and (b) of
this section there is imposed an assessment upon the sale of lodging services of five percent (5%) as follows:
(j)
In addition to other sales tax under this section there is imposed an additional sales tax of up to one percent (1%) which shall be administered as if the sales tax rate under subsections (a) and (b) of this section were increased from four percent (4%) to four percent (4%) plus the amount imposed pursuant to this subsection.
The tax under this subsection shall be imposed on a calendar year basis and shall only be imposed if the governor determines that the total amount of all severance taxes collected pursuant to chapter 14 of title 39 of the Wyoming statutes in the immediately preceding fiscal year was less than the total amount of all such taxes collected for the fiscal year ending 2020.
If the governor so determines, he shall certify to the department his determination of the difference.
The department shall estimate the amount of sales and use tax imposed under this subsection and W.S. 39
‑
16
‑
104(g) necessary to generate revenue equal to the difference and order the imposition of that amount of
sales and use tax under this subsection and W.S. 39
‑
16
‑
104(g) to generate that amount.
The tax shall be imposed in increments of not less than one
‑
quarter percent (1/4%) as necessary to produce, but not exceed, the difference.
In no event shall the tax imposed pursuant to this subsection exceed an additional sales tax of one percent (1%).
The governor shall make any certification under this subsection not later than October 1 of each year.
If the governor makes a certification under this subsection the department shall order the tax imposed under this subsection to be effective the following January 1 and ending on December 31 of that same year.
39
‑
15
‑
111.
Distribution.
(b)
Revenues earned under W.S. 39
‑
15
‑
104 during each fiscal year shall be recognized as revenue during that fiscal year for accounting purposes. Except as otherwise provided in
subsection
subsections
(p)
and (r)
of this section, for all revenue collected by the department under W.S. 39
‑
15
‑
104 the department shall:
(r)
All revenue collected by the department under W.S. 39
‑
15
‑
104(j) shall be distributed:
(i)
One
‑
third (1/3) to the school foundation program reserve account; and
(ii)
Two
‑
thirds (2/3) to the budget reserve account.
39
‑
15
‑
303.
Imposition.
(b)
Taxpayer.
The following shall apply:
(iii)
To secure payment of sales taxes by nonresident prime contractors, each nonresident contractor shall file with the department of revenue a surety bond or legal security equal to
three percent (3%)
four percent (4%)
, plus the increased rate under W.S.
39
‑
15
‑
104(b)
39
‑
15
‑
104(j)
if the tax under that
section
subsection
is in effect, of the payments due under the contract or an amount determined by the department. The bond shall be conditioned upon the payment of all sales taxes which become due and payable to this state under the contract or in the real
property development. This bond requirement does not apply for a nonresident contractor who has furnished a surety bond as provided by W.S. 39
‑
15
‑
306(b)(v);
39
‑
15
‑
306.
Licenses; permits; bonding.
(b)
Bonding.
The following shall apply:
(i)
To secure payment of sales taxes by nonresident prime contractors, each nonresident contractor shall file with the department of revenue a surety bond or legal security equal to
three percent (3%)
four percent (4%)
, plus the increased rate under W.S.
39
‑
15
‑
104(b)
39
‑
15
‑
104(j)
if the tax under that
section
subsection
is in effect, of the payments due under the contract or an amount determined by the department. The bond shall be conditioned upon the payment of all sales taxes which become due and payable to this state under the contract or in the real property development. This bond requirement does not apply for a nonresident contractor who has furnished a surety bond as provided by paragraph (v) of this subsection;
(v)
Whenever a nonresident general or prime contractor or nonresident subcontractor furnishes a surety bond for the faithful performance of his contract or subcontract there is imposed an additional obligation upon the surety company to the state of Wyoming and the department as its agent that the nonresident contractor shall pay all sales taxes which become due in the performance of the contract. In the case of a nonresident general or prime contractor this additional obligation includes liability to pay the department all sales taxes which have not been paid to a licensed vendor or the department by the nonresident contractor. The nonresident general or prime contractor or his surety company is authorized to recover from the nonresident subcontractor the amount of sales taxes accruing with respect to purchases made by the nonresident subcontractor which were paid to the department by the nonresident contractor or the surety company, or an amount equal to the sales taxes so paid by the nonresident contractor may be withheld from payments made under the contract. The liability of the surety company under this section is limited to
three percent (3%)
four percent (4%)
, plus the increased rate
under W.S.
39
‑
16
‑
104(b)
39
‑
16
‑
104(g)
if the tax under that
section
subsection
is in effect, of the contract price;
39
‑
16
‑
104.
Taxation rate.
(g)
In addition to other use tax under this section there is imposed an additional use tax of up to one percent (1%) which shall be administered as if the use tax rate under subsections (a) and (b) of this section were increased from four percent (4%) to four percent (4%) plus the amount imposed pursuant to this subsection.
The tax under this subsection shall be imposed on a calendar year basis and shall only be imposed if the governor determines that the total amount of all severance taxes collected pursuant to chapter 14 of title 39 of the Wyoming statutes in the immediately preceding fiscal year was less than the total amount of all such taxes collected for the fiscal year ending 2020.
If the governor so determines, he shall certify to the department his determination of the difference.
The department shall estimate the amount of sales and use tax imposed under this section and W.S. 39
‑
15
‑
104(j) necessary to generate revenue equal to the difference and order the imposition of that amount of
sales and use tax under this subsection and W.S. 39
‑
15
‑
104(j) to generate that amount.
The tax shall be imposed in increments of not less than one
‑
quarter percent (1/4%) as necessary to produce, but not exceed, the difference.
In no event shall the tax imposed pursuant to this subsection exceed an additional use tax of one percent (1%).
The governor shall make any certification under this subsection not later than October 1 of each year.
If the governor makes a certification under this subsection the department shall order the tax imposed under this subsection to be effective the following January 1 and ending on December 31 of that same year.
39
‑
16
‑
107.
Compliance; collection procedures.
(a)
Returns, reports and preservation of records.
The following shall apply:
(vi)
Any out
‑
of
‑
state vendor not otherwise subject to this article may voluntarily register with the department and if registered, shall collect and remit the state use tax imposed by W.S.
39
‑
16
‑
104(a)
39
‑
16
‑
104
.
39
‑
16
‑
111.
Distribution.
(p)
All revenue collected by the department under W.S. 39
‑
16
‑
104(g) shall be distributed:
(i)
One
‑
third (1/3) to the school foundation program reserve account; and
(ii)
Two
‑
thirds (2/3) to the budget reserve account.
39
‑
16
‑
303.
Imposition.
(b)
Taxpayer.
The following shall apply:
(iii)
To secure payment of use taxes by nonresident prime contractors, each nonresident contractor shall file with the department of revenue a surety bond or legal security equal to
three percent (3%)
four percent (4%)
, plus the increased rate under W.S.
39
‑
16
‑
104(b)
39
‑
16
‑
104(g)
if the tax under that
section
subsection
is in effect, of the payments due under the contract or an amount determined by the department. The bond shall be conditioned
upon the payment of all use taxes which become due and payable to this state under the contract or in the real property development. This bond requirement does not apply for a nonresident contractor who has furnished a surety bond as provided by W.S. 39
‑
16
‑
306(b)(v);
39
‑
16
‑
306.
Licenses; permits; bonding.
(b)
Bonding.
The following shall apply:
(i)
To secure payment of use taxes by nonresident prime contractors, each nonresident contractor shall file with the department of revenue a surety bond or legal security equal to
three percent (3%)
four percent (4%)
, plus the increased rate under W.S.
39
‑
16
‑
104(b)
39
‑
16
‑
104(g)
if the tax under that
section
subsection
is in effect, of the payments due under the contract or an amount determined by the department. The bond shall be conditioned upon the payment of all use taxes which become due and payable to this state under the contract or in the real property development. This bond requirement does not apply for a nonresident contractor who has furnished a surety bond as provided by paragraph (v) of this subsection;
(v)
Whenever a nonresident general or prime contractor or nonresident subcontractor furnishes a surety bond for the faithful performance of his contract or subcontract there is imposed an additional obligation upon the surety company to the state of Wyoming and the department as its agent that the nonresident contractor shall pay all use taxes which become due in the performance of the contract. In the case of a nonresident general or prime contractor this additional obligation includes liability to pay the department all use taxes which have not been paid to a licensed vendor or the department by the nonresident contractor. The nonresident general or prime contractor or his surety company is authorized to recover from the nonresident subcontractor the amount of use taxes accruing with respect to purchases made by the nonresident subcontractor which were paid to the department by the nonresident contractor or the surety company, or an amount equal to the use taxes so paid by the nonresident contractor may be withheld from payments made under the contract. The liability of the surety company under this section is limited to
three percent (3%)
four percent (4%)
, plus the increased rate under W.S.
39
‑
16
‑
104(b)
39
‑
16
‑
104(g)
if the tax under that
section
subsection
is in effect, of the contract price;
Section 2.
W.S. 39
‑
14
‑
204(a)(i) through (iv) is repealed.
Section 3
.
This act is effective July 1, 2021
.
(END)
1
HB0224