2007 Oregon Code - Chapter 324 :: Chapter 324 - Oil and Gas Tax
Chapter 324 —
Oil and Gas Tax
2007 EDITION
OIL AND GAS TAX
REVENUE AND TAXATION
GENERAL PROVISIONS
324.050Â Â Â Â Definitions
IMPOSITION OF TAX
324.070Â Â Â Â Imposition
of tax; rate; basis of levy
324.080Â Â Â Â Exemptions
of gross sales value
324.090Â Â Â Â State
and local government interests exempt; credit of taxes imposed by state and
local governments
COLLECTION OF TAX
324.110Â Â Â Â Quarterly
payment of tax; computation of prevailing cash price
324.120Â Â Â Â Statement
by taxpayer; other required information
324.130Â Â Â Â Statement
of producer; filing of statement
324.140Â Â Â Â Penalty
for delinquent reports; report of claimed exempt royalties
324.170Â Â Â Â Audit;
interest on delinquent tax or deficiency
324.180Â Â Â Â Notice
to person liable for unpaid tax
324.190Â Â Â Â Collection
of unpaid tax
324.200Â Â Â Â Release
of lien on real estate
324.210Â Â Â Â Status
of taxes, interest and penalties as debt; limitation on time of collection
324.240Â Â Â Â Payment
of tax when oil or gas in litigation
ADMINISTRATION
324.310Â Â Â Â Powers
of department
324.320Â Â Â Â Rulemaking
authority of department
DISPOSITION OF REVENUE
324.340Â Â Â Â Net
revenue payable to Common School Fund
CIVIL PENALTY
324.410Â Â Â Â Prohibited
conduct; civil penalty
MISCELLANEOUS
324.510Â Â Â Â Content
of statement or settlement sheet
324.520Â Â Â Â Duty
to provide information to department; penalty
GENERAL PROVISIONS
     324.050
Definitions. As used in this
chapter, unless the context requires otherwise:
     (1) “Department” means the Department of
Revenue.
     (2) “Gas” means natural gas and casinghead
gas.
     (3) “Gross value” or “gross sales value”
means the actual cash price prevailing for oil or gas of the kind, character
and quality of the oil or gas subject to the tax imposed under this chapter at
the time such oil or gas is produced, as determined by the department.
     (4) “Gross production” means the total
volume of oil or gas extracted from a well, including oil or gas extracted but
not sold. “Gross production” does not include the extraction from a well of any
oil or gas reinjected therein for storage.
     (5) “Produced and saved” means extracted
and sold, extracted and used or extracted and retained for later sale or use.
     (6) “Oil” means petroleum, crude oil,
mineral oil and casinghead gas.
     (7) “Person” includes partnership,
corporation, association, fiduciary, trustee and any combination of individuals.
     (8) “Quarter” and “quarterly” mean
calendar quarters. [1981 c.889 §1]
IMPOSITION OF
TAX
     324.070
Imposition of tax; rate; basis of levy. (1) A privilege tax of six percent of the gross value at the well is
levied upon the production of oil and gas within the State of
     (2) The tax levied shall be measured by
the value of the whole production, including what is commonly known as the
royalty interest. [1981 c.889 §2; 1991 c.459 §322]
     324.080
Exemptions of gross sales value. An exemption from the tax levied on oil or gas imposed by ORS 324.070
is granted upon the first $3,000 in gross sales value of the gross production
each calendar quarter from each well. [1981 c.889 §3]
     324.090
State and local government interests exempt; credit of taxes imposed by state
and local governments. (1)
Any royalty or other interest in oil or gas owned by the state, counties,
cities, towns, school districts or other municipal corporations or political
subdivisions, is exempt from the gross production tax imposed by ORS 324.070.
     (2) There shall be allowed as a credit
against taxes imposed by this chapter all ad valorem taxes imposed by the
state, counties, cities, towns, school districts and other municipal
corporations and political subdivisions upon any property rights attached to or
inherent in the right to produce oil and gas, upon producing oil and gas
leases, upon machinery, appliances and equipment used in and around any well
producing oil or gas and actually used in the operation of the well, upon oil
and gas produced in the state and upon any investment in any property mentioned
or described in this subsection. [1981 c.889 §4]
COLLECTION OF
TAX
     324.110
Quarterly payment of tax; computation of prevailing cash price. (1) The gross production tax on oil or gas
imposed by this chapter shall be paid on a quarterly basis. The tax shall
become due on the 45th day following the preceding quarterly period on all oil
or gas produced in and saved during the preceding quarterly period, and, if the
tax is not paid on or before the end of the 45th day, it shall become
delinquent and shall be collected as provided in this chapter. The Department
of Revenue, upon request and a proper showing of the necessity therefor, may
grant an extension of time, not to exceed 30 days, for paying the tax and when
such a request is granted the tax shall not be delinquent until the extended
period has expired.
     (2) On oil or gas sold at the time of
production, the gross production tax shall be paid by the purchaser, and the
purchaser shall and is authorized to deduct in making settlements with the
producer or royalty owner, the amount of tax so paid. In the event oil on which
the gross production tax becomes due is not sold at the time of production but
is retained or used by the producer, the tax on the oil not so sold shall be
paid by the producer, including the tax due on royalty oil not sold. In
settlement with the royalty owner, the producer shall have the right to deduct
the amount of the tax so paid on royalty oil or to deduct royalty oil
equivalent in value at the time the tax becomes due with the amount of the tax
paid.
     (3) The amount of gas produced and used
for fuel or otherwise used in the operation of any lease or premises in the
drilling for or production of oil or gas, or for repressuring, shall not be
considered for the purpose of this chapter as gas actually produced and saved.
     (4) When oil or gas is sold at a sale
price that does not represent the cash price prevailing for oil or gas of like
kind, character or quality in the field from which such product is produced,
the department may require the tax to be paid upon the basis of the prevailing
cash price then being paid at the time of production in the field for oil, or
gas of like kind, quality and character. [1981 c.889 §5]
     324.120
Statement by taxpayer; other required information. (1) The tax imposed by this chapter shall be
paid to the Department of Revenue and the person paying the tax shall file with
the department at the time the tax is required to be paid, a statement, under
oath, on forms prescribed by the department, giving, with other information
required, the following:
     (a) Full description of the property by
lease name, subdivision of quarter section, section, township and range from
which the oil or gas was produced;
     (b) The name of the producer;
     (c) The gross amount of the oil or gas
purchased;
     (d) The total value of the oil or gas at
the price paid, if purchased at time of production;
     (e) The formation from which the oil or
gas is produced; and
     (f) The prevailing market price of oil or
gas sold at time of production.
     (2) If a purchaser of oil or gas pays the
tax, the producer of the oil or gas for which the tax is being paid shall make
available to the purchaser all information required under subsection (1) of
this section. In lieu of the statement, a purchaser, at time of production, may
furnish a true verified copy of the regular settlement sheet in use by such
purchaser, if the sheet contains all the information required. [1981 c.889 §6]
     324.130
Statement of producer; filing of statement. (1) Any person engaged in the production within this state of oil or gas
shall, on or before the 45th day following the preceding quarterly period, file
with the Department of Revenue a statement under oath, upon forms prescribed by
the department, giving, along with other information required, the following:
     (a) The name of the property and the
description by subdivision of quarter section, section, township and range;
     (b) The gross amount of oil or gas
produced and saved;
     (c) The name of the purchaser and the
price paid by the purchaser; and
     (d) The formation from which the oil or
gas is produced.
     (2) Each report required by this section
shall be filed on separate forms as to product and county. [1981 c.889 §7; 2005
c.94 §112]
     324.140
Penalty for delinquent reports; report of claimed exempt royalties. (1) Reports required under ORS 324.120 and
324.130 from either the purchaser or producer, as the case may be, shall be
delinquent after the last day fixed for filing, and every person required to
file a report shall be subject to penalty of $25 per day for each property upon
which the person fails or refuses to file a report. The penalties prescribed by
this section shall be for failure to file reports and shall be in addition to
the interest and penalty imposed for delinquent tax, and shall likewise
constitute a lien against the assets of the person failing or refusing to file
a report. The penalties prescribed under this section shall be collected in the
same manner as gross production taxes and shall be deposited in the suspense
account referred to in ORS 324.340.
     (2) When royalty is claimed to be exempt
from taxation by law, the facts on which claims of exemption are based and
other information as the Department of Revenue may require shall be furnished
in the report. [1981 c.889 §8; 1983 c.740 §98]
     324.170
Audit; interest on delinquent tax or deficiency. (1) The provisions of ORS chapters 305 and
314 as to the audit and examination of reports and returns, determination of
deficiencies, assessments, claims for refund, conferences and appeals to the
Oregon Tax Court, and the procedures relating thereto, shall apply to the
determination of taxes, penalties and interest under this chapter, except where
the context requires otherwise.
     (2) A delinquent tax or deficiency shall
bear interest at the rate established under ORS 305.220 for each month, or any
fraction thereof, from the time the tax was due. [1981 c.889 §10; 1982 s.s.1
c.16 §24; 1995 c.650 §48]
     324.180
Notice to person liable for unpaid tax. If any person neglects or refuses to make a return required to be made
by this chapter, the Department of Revenue is authorized to determine the tax
due, based upon any information in its possession or that may come into its
possession. The department shall give the person liable for the tax written
notice by registered mail or by certified mail with return receipt of the tax
and delinquency charges and the tax and delinquency charges shall be a lien
from the time of production. If the tax and delinquency charges are not paid
within 30 days from the mailing of the notice, the department shall proceed to
collect the tax in the manner provided in ORS 324.190. [1981 c.889 §11; 1991
c.249 §27]
     324.190
Collection of unpaid tax.
(1) If any tax imposed by this chapter, or any portion of such tax, is not paid
within 30 days after the date that the written notice and demand for payment
required under ORS 305.895 is mailed, the Department of Revenue shall issue a
warrant, directed to the sheriff of any county of the state, commanding the
sheriff to levy upon and sell the real and personal property of the person
owing the tax, found within that county, for the payment in the amount thereof,
with the added penalties, interest and cost of executing the warrant, and to
return the warrant to the department and to pay to it the money collected by
virtue thereof, within 60 days after receipt of the warrant. A copy of the
warrant shall be mailed or delivered to the taxpayer by the department at the
taxpayerÂ’s last-known address.
     (2) The sheriff shall, within five days
after the receipt of the warrant, record a copy with the county clerk, and
thereupon the clerk shall enter in the County Clerk Lien Record the name of the
person mentioned in the warrant, and the amount of the tax or portion thereof
and penalties for which the warrant is issued and the date when the copy is
recorded. Thereupon the amount of the warrant so recorded shall become a lien
upon the title to and interest in real property of the person against which it
is issued, in the same manner as a judgment that creates a judgment lien under
ORS chapter 18. The sheriff thereupon shall proceed upon the warrant in all
respects, with like effect, and in the same manner prescribed by law in respect
to executions issued against property upon judgments of a court of records, and
shall be entitled to the same fees for services in executing the warrant, to be
added to and collected as a part of the warrant liability.
     (3) In the discretion of the department a
warrant of like terms, force and effect may be issued and directed to any agent
of the department authorized by it to collect this tax. In the execution of the
warrant, such agent has the powers conferred by law upon sheriffs, but is
entitled to no fee or compensation in excess of actual expenses paid in the
performance of such duty.
     (4) If a warrant is returned not satisfied
in full, the department shall have the same remedies to enforce the claim for
taxes against the owner as if the state had a recorded judgment against the
owner for the amount of the tax. [1981 c.889 §12; 1983 c.696 §18; 1985 c.761 §22;
1989 c.625 §79; 2003 c.576 §206]
     324.200
Release of lien on real estate.
(1) Any person having a lien upon or any interest in real estate against which
the amount of the warrant provided for in ORS 324.190 has become a lien, notice
of which has been recorded in accordance with the laws of the state prior to
the filing of the warrant, may request the Department of Revenue in writing to
release the real estate from the lien of the warrant. If, upon such request the
department finds that a sale of the property would not result in satisfaction
of the taxes due in whole or in part, the department shall execute a release of
the lien as to such property and such release shall be conclusive evidence of
the extinguishment of the lien as to that property. If the department fails to
act upon a request for release of a lien under this subsection within 60 days
from the date of the request, any person having a lien upon or interest in the
property against which the warrant has become a lien may make the department a
party to any proceeding brought to enforce any interest in or lien upon such
real property, and the determination of the court in such proceeding shall be
conclusive and binding upon the department and the State of Oregon.
     (2) In addition to the release of the lien
provided for in subsection (1) of this section, the department may execute
releases in the following cases, which releases shall be conclusive evidence of
the extinguishment of the lien:
     (a) If the department finds that the
liability for the amount of the warrant, together with all interest, penalties
and costs in respect thereto has been satisfied.
     (b) If the department finds that the fair
market value of that part of the property remaining subject to the lien is at
least double the amount of the liability remaining unsatisfied in respect of
such tax and the amount of all prior liens upon the property.
     (c) If there is furnished to the
department a bond, in such form and with the security the department considers
sufficient, or an irrevocable letter of credit issued by an insured
institution, as defined in ORS 706.008, in either case conditioned upon the
payment of the amount of the warrant, together with all interest in respect
thereof, within 60 days after the issuance of the release.
     (d) If there is paid to the department in
partial satisfaction of the amount of the warrant an amount not less than the
value, as determined by the department, of the interest of the State of
     324.210
Status of taxes, interest and penalties as debt; limitation on time of
collection. All taxes,
interest and penalties due and unpaid under this chapter, shall constitute a
debt due the State of
     324.240
Payment of tax when oil or gas in litigation. When oil or gas subject to gross production tax under this chapter is
in litigation or dispute involving ownership of the oil or gas, and the oil or
gas is sold, the usual gross production tax, as provided by law, shall be paid
from the proceeds or funds in the hands of the purchaser of the oil or gas and
in lieu of payment for the production, to the extent of the tax. The receipt of
the Department of Revenue therefor shall be accepted in lieu of money in
settlement of the purchase price of the production. If oil or gas is assigned
as security for debt or otherwise, the tax shall be likewise paid by the
assignee, and the tax shall constitute a lien upon the interest assigned, which
shall be paramount to the indebtedness for which the assignment is made, and if
the tax becomes delinquent, the usual penalty shall apply. [1981 c.889 §16]
ADMINISTRATION
     324.310
Powers of department. The
Department of Revenue may:
     (1) Require any producer of oil or gas,
purchaser of oil or gas, agent or employee of any producer or purchaser or the
owner of any royalty interest in oil or gas to furnish any additional
information considered by the department to be necessary for the purpose of
correctly computing the amount of tax imposed by this chapter;
     (2) Examine the books, records and files
of any producer, purchaser or royalty owner;
     (3) Administer oaths and compel the
attendance of witnesses and the production of books, records and papers of any
person by subpoena; and
     (4) Make any investigation considered
necessary to a full and complete determination as to the amount of production
from any oil or gas location, or of any producer of oil or gas, and as to the
correct determination of taxes due under this chapter. [1981 c.889 §9; 1995
c.650 §49]
     324.320
Rulemaking authority of department. (1) The Department of Revenue is authorized to adopt all necessary
rules for the purpose of making and filing all reports required under this
chapter and otherwise necessary to the enforcement of this chapter.
     (2) The department may, at its option and
discretion, require a sufficient bond from any person charged with the making
and filing of reports and the payment of the taxes imposed by this chapter. The
bond shall run to the State of
     (3) When any reports required have not
been filed, or may be insufficient to furnish all the information required by
the department, the department shall institute, in the name of the State of
Oregon, upon relation of the department, any necessary action or proceedings in
the court having jurisdiction, to enjoin the person from continuing operations
until the reports have been filed as required, and in all proper cases,
injunction shall issue without bond from the State of Oregon.
     (4) Upon showing that the state is in
danger of losing its claims or the property is being mismanaged, dissipated or
concealed, a receiver shall be appointed at the suit of the state. [1981 c.889 §18]
DISPOSITION
OF REVENUE
     324.340
Net revenue payable to Common School Fund. (1) The revenues derived from the tax imposed by this chapter
including interest and penalties, shall be deposited in a suspense account
created pursuant to ORS 293.445. After payment of refunds and the expenses of
the Department of Revenue incurred in the administration of this chapter, the
remaining revenues shall be paid into the Common School Fund and are
continuously appropriated to the Department of State Lands for the purposes for
which other moneys in the Common School Fund may be used.
     (2) The amount of moneys necessary to pay
refunds and expenses of the Department of Revenue incurred in the
administration of this chapter are continuously appropriated to the Department
of Revenue from the suspense account referred to in subsection (1) of this
section. [1981 c.889 §20]
CIVIL PENALTY
     324.410
Prohibited conduct; civil penalty. (1) No person, or officer or employee of a corporation, or a member or
employee of a partnership, shall, with intent to evade any requirement of this
chapter, or any lawful requirement of the Department of Revenue pursuant to
this chapter:
     (a) Fail to pay any tax or to make, sign
or verify any return or to supply any information required;
     (b) Make, render, sign or verify any false
or fraudulent return or statement; or
     (c) Supply any false or fraudulent
information.
     (2) A person or an officer or employee of
a corporation or a member or employee of a partnership who violates subsection
(1) of this section is liable to a civil penalty of not more than $10,000, to
be recovered by the Attorney General, in the name of the state, in any court of
competent jurisdiction. The penalty provided in this subsection shall be in
addition to all other penalties in this chapter. [1981 c.889 §19]
MISCELLANEOUS
     324.510
Content of statement or settlement sheet. All statements or settlement sheets for oil or gas shall have stamped
or written thereon the following words: “Gross production tax deducted and paid,
and payee accepts such deduction and authorizes payment to the State of
     324.520
Duty to provide information to department; penalty. (1) It shall be the duty of every person
engaged in the production of oil and gas in this state to furnish to the
Department of Revenue, upon forms prescribed by the department, any and all
information relative to the production of oil or gas subject to gross
production tax that may be required to properly enforce the provisions of this
chapter. The department may require any person to install suitable measuring
devices to enable the person to include in the reports the quantity of oil or
gas produced in the State of
     (2) It shall be the duty of every person
engaged in the operation of a refinery for the processing of oil or gas in the
State of Oregon to furnish quarterly to the department, upon forms prescribed
by the department, any and all information relative to the amount of oil or gas
subject to gross production tax that has been processed by it during the
quarterly period, and oil on hand at the close of the period, that may be
required to properly enforce the provisions of this chapter.
     (3) It shall be the duty of every person
engaged in the purchase or storing of oil subject to gross production tax in
the State of Oregon to furnish quarterly a report to the department, upon forms
prescribed by the department, showing the amount of oil in storage, giving,
along with other information required, the location, identity, character and capacity
of the storage receptacle in which the oil is stored.
     (4) All reports required under this
section, shall be filed for each quarter and shall be delinquent if not filed
on or before the 45th day following the preceding quarterly period. The failure
of any person to comply with the provisions of this section shall make the
person liable to a penalty of $25 for each day the person fails or refuses to
furnish a statement or comply with the provisions of this chapter. The penalty
may be recovered at the suit of the state, on relation of the department. Any
penalty so collected shall be deposited in the suspense account referred to in
ORS 324.340. [1981 c.889 §15]
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CHAPTER 325
[Reserved for expansion]
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