Severance taxes are taxes imposed on the removal of natural resources within a taxing jurisdiction. Resources that typically incur severance taxes when extracted include oil, natural gas, coal, uranium, and timber. The 100 counties receiving direct coal severance tax. A severance tax is imposed on the privilege of engaging within this state in severing, extracting, reducing to possession or producing coal, limestone, sandstone, timber, coalbed methane, waste coal, oil, gas and other natural resources for sale, profit, or commercial use. Changed one of the temporary one cent tax levies on coal to permanent.
The coal severance tax kentucky center for economic policy. Since the first commercial coal mine opened in 1820 coal has gained both economic importance and controversy regarding its environmental consequences. Please note that some of the screens and information required in the payment system have changed. Kentucky, including natural gas and natural gas liquids. The kentucky online tax system is currently available for coal severance taxpayers who are registered with the kentucky department of revenue. There are two, somewhat distinct aspects of the program, one for coal severance receipts and one for noncoal minerals receipts. Enter the percentage of the countys share of the coal severance tax for which the county granted an exemption, and multiply the amount on line 14 by that percentage. In 1984, the general assembly exempted fluorspar, lead, zinc, barite, and tar sands from the tax. The decline of central appalachian coal and the need for.
Severance tax severance tax history of major changes cont 1999 changed the distribution of the oil and natural gas taxes to 90% to the oil and gas well fund and 10% to the general mapping fund. The tax must normally be reported and remitted on a monthly basis. Tax base the tax is levied on the weight or volume of certain natural resources extracted from the soil or water of ohio. This decline is due to additional federal government regulations that made it harder to open new coal mines and for existing power plants to. Diversifying the economy of appalachian kentucky will require financial resources to pay for needed new investments. Return and payment are due the 20th of each month for the previous month.
However, coal severance money is not tied to a plan for economic diversification. In 2015, coal severance tax receipts were just 62 percent of what they were at their peak in. Coal county services harmed by severance tax collapse at time. The impact of federal coal royalty reform on prices, production.
All are invited to be a part of our organization, which consists of proud kentuckians as well as residents from beyond our borders. Accordingly, beginning july 1, 2017, payment of coal workers pneumoconiosis benefits will come from kemi. Coal severance tax north dakota office of state tax. Commonwealth of kentucky department of revenue coal severance tax return name of person to contact regarding problems with this report. Ky coal facts severance tax by county coal education. As of 2010 there were 442 operating coal mines in the state, and as of 2017 there are less than 4,000 underground coalminers. Coal and oil were specifically excluded due to taxation under other statutes. Box 2308, santa fe, nm 875042308 on or before the 25th day of the month following the month in which the taxable event occurs. Coal severance tax 081 office of state tax commissioner sfn 25831 102015 north dakota century code ch.
These forms to be filed for oil, gas, coalbed methane, and other natural. The tax is levied on taxpayers engaged in the business of severing or processing natural resources in kentucky, except that no tax is levied on the processing of ball clay. Coal markets electric power plants, located in 21 states, accounted for almost 94% of the kentucky coal sold during 2009. Apr 25, 20 diversifying the economy of appalachian kentucky will require financial resources to pay for needed new investments. Severance tax tazewell county, virginia, code of ordinances page 2 of 3 sec. Coal markets electric power plants, located in 25 states, accounted for almost 67% of the kentucky coal sold during 2002. Declining coal severance taxes are just one cause of erosion in the states general fund. Thisworkwascommissionedbyourclient,prairieriversnetworkprn. The lgeaf returns a portion of state collected coal and noncoal mineral severance taxes to eligible local governments in accordance with krs 42. Part i tax computation check one block to indicate activity or activities covered by this report.
Ky coal facts history of coal kentucky coal education. The tax base was increased in 1978 to tax both the severance and processing of coal in kentucky. Starting in the 1960s coal seams in both kentucky coal fields have been increasingly accessed via a method known as mountaintop removal mining, which is a form of surface mining that involves the topographical alteration andor removal of a summit, summit ridge, or significant portion of a mountain, hill, or ridge in order to obtain a desired geologic material. Im sure rupplexington center need a renovation and nothing would please me more. I cant say that i know but, would assume i dont like to assume it is spent where ever our government wants to spend it. In 2015, coal severance tax receipts were just 62 percent of what they were at their peak in 2009, and. Allocated to each coal producing county based on mining industry statistics krs 42. For coal used for burning solid waste the tax is limited to the lesser of 4 percent of the selling price or fifty cents per ton. Kentucky is giving this coal company tax breaks worth. Applies to the owner or owners of the coal at the time of severance. Severance taxes are most commonly imposed in oil producing states within the united states. Tax expenditure analysis 51 the coal severance tax was enacted in 1972. A deduction from gross value is also allowed for coal purchased for the purpose of processing if the.
The revenue cabinet may permit or require returns or tax payments for periods other than monthly. The kentucky department of revenue has recently partnered with a new vendor to provide epayment services. Additionally, the coal severance tax generates hundreds of millions of dollars in state revenues across the region every year, with tens of millions of dollars being distributed to counties and. Coal severance tax receipts, which are transferred into the lgedf, are allocated quarterly among participating counties according to a formula specified by krs 42. But what role has the severance tax played in helping the regions economy transition, and what role can it play in the. While the states general fund has been adversely effected due to declines in coal severance taxes, so have the budgets of coal producing counties which share a portion of the severance tax. The legislation imposed no minimum rate of tax per unit as is the case with the coal severance tax. Section one provides a brief history of the severance tax in west. Kentucky collects a severance tax, a tax imposed on a nonrenewable resource that is severed or extracted within a specified taxing jurisdiction, on coal at a current rate of 4.
The other half has been spent on a wide assortment of. Some jurisdictions use other terms like gross production tax. At friends of coal, were a volunteer organization that is dedicated to informing and educating kentucky citizens about the coal industry and its vital role in the states future. State severance taxes are paid on all coal extracted, or severed from the earth in each. Coal severance tax return name of person to contact regarding problems with this report. About half of coal severance dollars go into the states general fund. Approximately 72% of the coal produced in kentucky is sold outofstate each year. The coal severance tax is one of the largest pools of economic development resources in the region. The minimum tax does not apply in the case of taxpayers who only process coal. Severance tax incentives in the form of credits or lower tax rates in order to encourage the production and expansion of oil and gas operations.
To file andor pay the coal severance tax online, please go to the cts web portal. Coal used to make metallurgical coke has made up a very small portion of eastern kentucky coal production compared to the. Unfortunately, given the tight budget situation kentucky faces, many others have come. Kentucky is giving this coal company tax breaks worth millions to keep 250 jobs.
Maced coal severance tax brief mountain association for. County expenditures of coal severance tax revenue, fy 2011. Apr 24, 2018 kentucky is giving this coal company tax breaks worth millions to keep 250 jobs. Grants are made from this program, commonly referred to as the local government economic development fund lgedf, to assist eligible counties in diversifying their local economies beyond coal production and meet other community development needs. A steep decline in the production of coal in recent years has reduced severance tax dollars going to kentuckys general fund and back to coal counties, stretching already tight state and local budgets even further. Taxation of unmined coal in kentucky uknowledge university of. The allocation formula provides that onethird of program funds be reserved for projects benefiting two or. The local government economic assistance fund lgeaf is a program of revenue sharing for kentucky counties and cities. This site allows registered users to view their tax account information, file coal severance tax returns and make payments online. Coal severance taxes are administered according to the 1971 coal severance tax title 40, chapter, article 1, sections 110 and 1977 coal and lignite severance tax title 40, chapter, article 2, sections 3036. We support the collection of coal severance taxes on every ton of coal mined and demand an increasing return of severance tax funds to promote sustainable economic development in coalfield counties. The 188 counties represent a total enumeration of significant coal producing counties defined as having an average production of 100,000 tons per year for 18711980. The coal conversion facilities privilege tax is imposed on electrical generating plants that have at least one generating unit with a capacity of 10,000 kilowatts or more, other coal conversion facilities that consume 500,000 tons or more of coal per year, and coal beneficiation plants.
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