Senate Bill No. 122

Introduced By gage

By Request of the Department of Revenue

A Bill for an Act entitled: "An Act making operators personally liable for the payment of oil and natural gas production taxes; requiring operators to deduct taxes from all other owners; amending section

15-36-310, MCA; and providing an effective date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 15-36-310, MCA, is amended to read:

"15-36-310.   Operator responsible for payment -- deduction of taxes from royalty other owner payments -- personal liability. (1) Each operator required to pay the oil and natural gas production tax under this part shall pay the tax in full for the operator's own account and for the account of each of the other owners of the gross value of product or in kind of all the marketable oil or natural gas produced and sold. Other owners include an owner or owners of working interest, royalty interest, overriding royalty interest, carried working interest, production payments, and all other interest or interests owned or carved out of the total gross value of product or in kind of the extracted marketable oil or natural gas.

(2)  Unless otherwise provided in a contract or lease, the pro rata share of any royalty other owner or owners must be deducted from any settlements under the lease or leases or division of proceeds orders or other contracts.

(3) Each operator shall hold in trust for the state the amounts deducted or otherwise received by the operator on account of the other owners under the provisions of subsection (2).

(4) With respect to the tax, including penalties and interest, imposed under this part, the operator is the taxpayer.

(5) The individual, corporation, or partnership or the officer or employee of a corporation or the member or employee of a partnership whose duty it is to collect, account for, and pay the tax imposed under this part and who fails to pay the tax is personally liable for the amount of tax and penalty and interest due."

NEW SECTION. Section 2.  Effective date. [This act] is effective July 1, 1997.