Frequently Asked Questions
Severance Tax on Oil and Gas
-
How do I register for oil and gas severance tax?
To register for a severance tax account, go to LDR’s website at www.revenue.louisiana.gov/Businesses/BusinessRegistration, and click on the appropriate registration link to either register a new business or add a revenue account. Please note: If you are a purchaser withholding tax from the sever you must obtain a severance tax account to report and remit the withheld tax.
Prior to severing or removing natural resources from their natural state, oil and gas severers must first obtain a permit from the Department of Natural Resources (DNR), Office of Conservation. Their office can be contacted at (225) 342-5540 or you can visit their website at http://www.dnr.louisiana.gov/ for additional information. After the Office of Conservation has assigned a producer code, you must then register with the Louisiana Department of Revenue (LDR) and obtain a 10-digit account number.
-
How do I file oil and gas severance tax returns?
Oil and gas severance tax returns must be filed electronically using the Louisiana Department of Revenue Severance Application. Once you have obtained your 10-digit revenue account number, go to www.revenue.louisiana.gov/EServices/SeveranceNotice and follow the prompts to register for the Oil and Gas Severance Application. Here you will create a user-id and password that will enable you to file the monthly returns that are required by all producers, purchasers, and other persons dealing in oil or gas severed from the soil or water in Louisiana.
-
After I submit my return on the Severance Application, when will it be posted?
After submitting the return, please allow 1-2 business days to review the return in LaTAP.
-
What is the severance tax rate for oil and condensate?
The severance oil and condensate tax rates are as follows:
Full Rate 12.5 percent of value Incapable Rate 6.25 percent of value Stripper Rate 3.125 percent of value Half Rate – Inactive Oil 6.25 percent of value Quarter Rate – Orphan Oil 3.125 percent of value Reclaimed Oil 3.125 percent of value Horizontal Rate 7/22 through 6/23 5.0 percent of value 7/23 through 6/24 5.0 percent of value Stripper oil is exempt for any taxable period during which the average taxable value is less than $20 per barrel per LA R.S. 47:633(7)(c)(i)(bb).
LA R.S. 47:633(7)(d)(i) provides that the Secretary shall determine the oil price upon which the exemption for a horizontal well that produces oil be based on July First of each year for the ensuing twelve months based upon the average New York Mercantile Exchange Price per barrel of crude oil per month on the close of business June Thirtieth for the prior twelve months. The amount of the exemption for a horizontal well that produces oil shall be as follows:
- The exemption shall be 100% if the price of oil is at or below $70 per barrel.
- The exemption shall be 80% if the price of oil is above $70 and at or below $80 per barrel.
- The exemption shall be 60% if the price of oil is above $80 and at or below $90 per barrel.
- The exemption shall be 40% if the price of oil is above $90 and at or below $100 per barrel.
- The exemption shall be 20% if the price of oil is above $100 and at or below $110 per barrel.
- There shall be no exemption in effect if the price of oil exceeds $110 per barrel.
LA R.S. 47:633(7)(a) provides that the taxable value of oil shall be the higher of (1) the gross receipts received from the first purchaser, less charges for trucking, barging and pipeline fees, or (2) the posted field price. In the absence of an arms-length transaction or posted field price, the value shall be the severer’s gross income from the property as determined by LA R.S. 47:158(C).
LA R.S. 47:633(8) provides that the tax rate for distillate, condensate, or similar natural resources severed from the soil or water either with oil or gas is 12.5 percent of its gross value at the time and place of severance.
-
What is the severance tax rate for natural gas?
LA R.S. 47:633(9) provides that the tax rate for natural gas and equivalent gas volumes of natural gasoline, casinghead gasoline, and other natural gas liquids including ethane, methane, butane or propane is per 1,000 cubic feet at a base pressure of 15.025 pounds per square inch absolute and at 60 degrees Fahrenheit is adjusted annually on July 1 and may never be less than 7 cents.
The tax rates for the last five fiscal years are as follows:
Full Rate Per MCF 7/19 through 6/20 $.125 7/20 through 6/21 $.0934 7/21 through 6/22 $.091 7/22 through 6/23 $.177 7/23 through 6/24 $.251 Incapable oil well gas $.03 Incapable gas well gas $.013 Half Rate – Inactive gas Per MCF 7/19 through 6/20 $.0625 7/20 through 6/21 $.0467 7/21 through 6/22 $.0455 7/22 through 6/23 $.0885 7/23 through 6/24 $.1255 Quarter Rate – Orphan Gas Per MCF 7/19 through 6/20 $.03125 7/20 through 6/21 $.02335 7/21 through 6/22 $.02275 7/22 through 6/23 $.04425 7/23 through 6/24 $.06275 Horizontal Rate Per MCF 7/22 through 6/23 $.0354 7/23 through 6/24 $.0502 LA R.S. 47:633(7)(d)(ii) provides that the Secretary shall determine the natural gas price upon which the exemption for a horizontal well that produces natural gas be based on July First of each year for the ensuing twelve months based upon the average New York Mercantile Exchange Price per million BTU per month on the close of business June Thirtieth for the prior twelve months. The amount of the exemption for a horizontal well that produces natural gas shall be as follows:
- The exemption shall be 100% if the price of natural gas is at or below $4.50 per million BTU.
- The exemption shall be 80% if the price of natural gas is above $4.50 per million BTU and at or below $5.50 per million BTU.
- The exemption shall be 60% if the price of natural gas is above $5.50 million BTU and at or below $6.00 per million BTU.
- The exemption shall be 40% if the price of natural gas is above $6.00 and at or below $6.50 per million BTU.
- The exemption shall be 20% if the price of natural gas is above $6.50 and at or below $7.00 per million BTU.
- There shall be no exemption in effect if the price of natural gas exceeds $7.00 per million BTU.
-
When the natural gas severance tax rate is adjusted annually on July 1st, which month is the first month affected by the change?
The new natural gas severance tax rate applies to July gas production, which is reported and paid on or before September 25th.
-
How do I amend my oil and gas returns?
The taxpayer should log into the Severance Application and select the taxable period that needs to be amended. You must file an amendment reversing the line item(s), As Reported, and showing another line item, As Should be Reported.
-
What supporting documentation is required when filing a claim for refund of severance tax paid on oil and gas?
An amended return must be filed electronically. Supporting documentation for verifying overpayments include: 1. Horizontal Well, Deep Well, and Orphan Well Rework Exemptions: i) O-5’s & G-5’s ii) Oil and gas purchase statements, division of interest order, a detailed list of lease operating expenses, approved well certification, and payout statement. Note: This information should only be furnished upon request from LDR. 2. Reduced Rates: i) Incapable oil and Stripper oil a. Monthly Reduced Rate Report (O-3) ii) Incapable oil well gas and Incapable gas well gas a. Monthly Reduced Rate Report (G-3) iii) Half Rate – Inactive oil and gas, Quarter Rate – Orphan oil and gas a. Monthly Oil/Gas Report for Exempt Wells (O-5 & G-5) 3. Volume or Value Change (Upon request from LDR) i) Purchase Statements 4. Transportation (Upon request from LDR) i) Crude Oil Purchase Agreement or ContractLDR may contact the taxpayer to request additional information to complete the refund review process.
top of page