BILL NUMBER: AB 336 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Villaraigosa
FEBRUARY 9, 1995
An act to add Part 21 (commencing with Section 42001) to Division
2 of the Revenue and Taxation Code, relating to taxation, to take
effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 336, as introduced, Villaraigosa. Oil severance tax.
Existing law provides for an ad valorem property tax of 1% of full
cash value, as defined.
This bill would enact the Oil Severance Tax Law, which would
impose an oil severance tax on certain producers of oil at a rate of
6% of gross market value, as defined, for the privilege of severing
oil, as specified, on and after January 1, 1996. The bill would
provide that the tax imposed by that law is in addition to, among
other things, ad valorem property taxes or any local business license
taxes. The bill would require the State Board of Equalization to
enforce the tax imposed by that law. All amounts collected pursuant
to that law would be deposited in the General Fund.
This bill would take effect immediately as a tax levy.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 21 (commencing with Section 42001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 21. OIL SEVERANCE TAX
42001. This part shall be known and may be cited as the "Oil
Severance Tax Law."
42002. For purposes of this part, the following definitions shall
apply:
(a) "Oil" means petroleum, or other crude oil, condensate,
casinghead gasoline, or other mineral oil that is mined, produced, or
withdrawn from below the surface of the soil or water in this state.
(b) "Producer" means any person owning, controlling, managing, or
leasing any oil well in excess of 30,000 barrels during any month of
the current or preceding calendar year, or any person who produces or
extracts in any manner any oil in excess of 30,000 barrels during
any month of the current or preceding calendar year by taking it from
the earth or water in this state, or any person who acquires in
excess of 30,000 barrels during any month of the current or preceding
calendar year the severed oil from a person or agency exempt from
property taxation under the Constitution or laws of the United States
or under the Constitution or laws of the State of California, and
shall include any person owning any royalty or other interest in any
oil or its value in excess of 30,000 barrels during any month of the
current or preceding calendar year whether produced by him or her, or
by some other person on his or her behalf, either by lease,
contract, or otherwise.
(c) "Production" means the total gross amount of oil produced,
including the gross amount thereof attributable to a royalty
interest.
(d) "Severed" or "severing" means the extraction or withdrawing
from below the surface of the earth or water of any oil, whether
extraction or withdrawal shall be by natural flow, mechanical flow,
forced flow, pumping, or any other means employed to get the oil from
below the surface of the earth or water and shall include the
withdrawing by any means whatsoever of oil upon which the tax has not
been paid, from any surface reservoir, natural or artificial, or
from a water surface.
(e) "Gross value" means the sale price at the mouth of the well in
the case of oil. If oil is exchanged for something other than cash,
or if there is no sale at the time of severance or if the relation
between the buyer and the seller is such that the consideration paid,
if any, is not indicative of the true value or market price, then
the board shall determine the value of the oil subject to tax, based
on the cash price paid to producers for like quality oil in the
vicinity of the well.
(f) "Barrel of oil" means 42 United States gallons of 231 cubic
inches per gallon computed at a temperature of 60 degrees Fahrenheit.
(g) "Board" means the State Board of Equalization.
42010. On and after January 1, 1996, there is hereby imposed an
oil severance tax upon the privilege of severing oil from the earth
or water in this state for sale, transport, consumption, storage,
profit, or use. The tax shall be borne ratably by all persons within
the term "producer" as that term is defined in subdivision (b) of
Section 42002. The tax shall be applied equally to all portions of
the gross value of each barrel of oil severed, and shall be imposed
at the rate of 6 percent.
42011. Except as otherwise provided in this part, the tax shall be
upon the entire production in this state, regardless of the place of
sale or to whom sold or by whom used, or the fact that the delivery
may be made to points outside the state.
42012. The tax imposed by this part shall be in addition to any ad
valorem taxes imposed by the state, or any of its political
subdivisions, or any local business license taxes which may be
incurred as a privilege of severing oil from the earth or doing
business in that locality. No equipment, material, or property shall
be exempt from payment of ad valorem tax by reason of the payment of
the gross severance tax pursuant to this part.
42014. Two or more producers that are corporations and are owned
or controlled directly or indirectly, as defined in Section 25105, by
the same interests, shall be considered as a single producer for
purposes of application of the tax prescribed in Section 42010.
42015. There is exempted from the imposition of the oil severance
tax imposed pursuant to this part all oil owned or produced by any
political subdivision of the state, including that political
subdivision's proprietary share of oil produced under any unit,
cooperative, or other pooling agreement.
42020. The tax imposed by this part shall be due and payable to
the board on a monthly basis.
42022. The board may prescribe the forms and reporting
requirements as necessary to implement the tax, including, but not
limited to, information regarding the location of the well by county,
the gross amount of oil produced, the price paid therefor, the
prevailing market price of oil, and the amount of tax due.
42112. In all proceedings under this part, the board may act on
behalf of the people of the State of California.
42145. The board shall enforce the provisions of this part and may
prescribe, adopt, and enforce rules and regulations, including, but
not limited to, the payment of interest, the imposition of penalties,
and any other action permitted by Sections 6451 to 7176, inclusive,
or Sections 38401 to 38901, inclusive, whichever are most applicable
as determined by the board, relating to the application,
administration, and enforcement of this part.
42166. All taxes, interest, penalties, and other amounts collected
pursuant to this part, other than that required for the cost of the
administration of this tax by the board, shall be deposited in the
General Fund.