ORS Chapter 324
Chapter 324 — Oiland Gas Tax
2009 EDITION
OILAND GAS TAX
REVENUEAND TAXATION
GENERALPROVISIONS
324.050 Definitions
IMPOSITIONOF TAX
324.070 Impositionof tax; rate; basis of levy
324.080 Exemptionsof gross sales value
324.090 Stateand local government interests exempt; credit of taxes imposed by state andlocal governments
COLLECTIONOF TAX
324.110 Quarterlypayment of tax; computation of prevailing cash price
324.120 Statementby taxpayer; other required information
324.130 Statementof producer; filing of statement
324.140 Penaltyfor delinquent reports; report of claimed exempt royalties
324.170 Audit;interest on delinquent tax or deficiency
324.180 Noticeto person liable for unpaid tax
324.190 Collectionof unpaid tax
324.200 Releaseof lien on real estate
324.210 Statusof taxes, interest and penalties as debt; limitation on time of collection
324.240 Paymentof tax when oil or gas in litigation
ADMINISTRATION
324.310 Powersof department
324.320 Rulemakingauthority of department
DISPOSITIONOF REVENUE
324.340 Netrevenue payable to Common School Fund
CIVILPENALTY
324.410 Prohibitedconduct; civil penalty
MISCELLANEOUS
324.510 Contentof statement or settlement sheet
324.520 Dutyto provide information to department; penalty
GENERALPROVISIONS
324.050Definitions.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 foroil or gas of the kind, character and quality of the oil or gas subject to thetax imposed under this chapter at the time such oil or gas is produced, asdetermined 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 notinclude the extraction from a well of any oil or gas reinjected therein forstorage.
(5)“Produced and saved” means extracted and sold, extracted and used or extractedand 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 andany combination of individuals.
(8)“Quarter” and “quarterly” mean calendar quarters. [1981 c.889 §1]
IMPOSITIONOF TAX
324.070Imposition of tax; rate; basis of levy. (1) A privilege tax of six percent ofthe gross value at the well is levied upon the production of oil and gas withinthe State of Oregon. The gross value at the well shall be reduced by the valueof any part thereof, the ownership or right to which is exempt from taxation.
(2)The tax levied shall be measured by the value of the whole production, includingwhat is commonly known as the royalty interest. [1981 c.889 §2; 1991 c.459 §322]
324.080Exemptions of gross sales value. An exemption from the tax levied on oilor gas imposed by ORS 324.070 is granted upon the first $3,000 in gross salesvalue of the gross production each calendar quarter from each well. [1981 c.889§3]
324.090State and local government interests exempt; credit of taxes imposed by stateand local governments. (1) Any royalty or other interest in oil or gasowned by the state, counties, cities, towns, school districts or othermunicipal corporations or political subdivisions, is exempt from the grossproduction tax imposed by ORS 324.070.
(2)There shall be allowed as a credit against taxes imposed by this chapter all advalorem taxes imposed by the state, counties, cities, towns, school districtsand other municipal corporations and political subdivisions upon any propertyrights attached to or inherent in the right to produce oil and gas, uponproducing oil and gas leases, upon machinery, appliances and equipment used inand around any well producing oil or gas and actually used in the operation ofthe well, upon oil and gas produced in the state and upon any investment in anyproperty mentioned or described in this subsection. [1981 c.889 §4]
COLLECTIONOF TAX
324.110Quarterly payment of tax; computation of prevailing cash price. (1) The grossproduction tax on oil or gas imposed by this chapter shall be paid on aquarterly basis. The tax shall become due on the 45th day following thepreceding quarterly period on all oil or gas produced in and saved during thepreceding quarterly period, and, if the tax is not paid on or before the end ofthe 45th day, it shall become delinquent and shall be collected as provided inthis chapter. The Department of Revenue, upon request and a proper showing ofthe 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 bedelinquent until the extended period has expired.
(2)On oil or gas sold at the time of production, the gross production tax shall bepaid by the purchaser, and the purchaser shall and is authorized to deduct inmaking 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 atthe time of production but is retained or used by the producer, the tax on theoil not so sold shall be paid by the producer, including the tax due on royaltyoil not sold. In settlement with the royalty owner, the producer shall have theright to deduct the amount of the tax so paid on royalty oil or to deductroyalty oil equivalent in value at the time the tax becomes due with the amountof the tax paid.
(3)The amount of gas produced and used for fuel or otherwise used in the operationof any lease or premises in the drilling for or production of oil or gas, orfor repressuring, shall not be considered for the purpose of this chapter asgas actually produced and saved.
(4)When oil or gas is sold at a sale price that does not represent the cash priceprevailing for oil or gas of like kind, character or quality in the field fromwhich such product is produced, the department may require the tax to be paidupon the basis of the prevailing cash price then being paid at the time ofproduction in the field for oil, or gas of like kind, quality and character. [1981c.889 §5]
324.120Statement by taxpayer; other required information. (1) The taximposed by this chapter shall be paid to the Department of Revenue and theperson paying the tax shall file with the department at the time the tax isrequired to be paid, a statement, under oath, on forms prescribed by thedepartment, 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 ofproduction;
(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 forwhich the tax is being paid shall make available to the purchaser allinformation required under subsection (1) of this section. In lieu of thestatement, a purchaser, at time of production, may furnish a true verified copyof the regular settlement sheet in use by such purchaser, if the sheet containsall the information required. [1981 c.889 §6]
324.130Statement of producer; filing of statement. (1) Any person engaged in theproduction within this state of oil or gas shall, on or before the 45th dayfollowing the preceding quarterly period, file with the Department of Revenue astatement under oath, upon forms prescribed by the department, giving, alongwith 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 toproduct and county. [1981 c.889 §7; 2005 c.94 §112]
324.140Penalty for delinquent reports; report of claimed exempt royalties. (1) Reports requiredunder ORS 324.120 and 324.130 from either the purchaser or producer, as thecase may be, shall be delinquent after the last day fixed for filing, and everyperson required to file a report shall be subject to penalty of $25 per day foreach property upon which the person fails or refuses to file a report. Thepenalties prescribed by this section shall be for failure to file reports andshall be in addition to the interest and penalty imposed for delinquent tax,and shall likewise constitute a lien against the assets of the person failingor refusing to file a report. The penalties prescribed under this section shallbe collected in the same manner as gross production taxes and shall bedeposited 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 whichclaims of exemption are based and other information as the Department ofRevenue may require shall be furnished in the report. [1981 c.889 §8; 1983c.740 §98]
324.170Audit; interest on delinquent tax or deficiency. (1) Theprovisions of ORS chapters 305 and 314 as to the audit and examination ofreports and returns, determination of deficiencies, assessments, claims forrefund, conferences and appeals to the Oregon Tax Court, and the proceduresrelating thereto, shall apply to the determination of taxes, penalties andinterest under this chapter, except where the context requires otherwise.
(2)A delinquent tax or deficiency shall bear interest at the rate establishedunder ORS 305.220 for each month, or any fraction thereof, from the time thetax was due. [1981 c.889 §10; 1982 s.s.1 c.16 §24; 1995 c.650 §48]
324.180Notice to person liable for unpaid tax. If any person neglects or refuses tomake a return required to be made by this chapter, the Department of Revenue isauthorized to determine the tax due, based upon any information in itspossession or that may come into its possession. The department shall give theperson liable for the tax written notice by registered mail or by certifiedmail with return receipt of the tax and delinquency charges and the tax anddelinquency charges shall be a lien from the time of production. If the tax anddelinquency 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 ORS324.190. [1981 c.889 §11; 1991 c.249 §27]
324.190Collection of unpaid tax. (1) If any tax imposed by this chapter, or anyportion of such tax, is not paid within 30 days after the date that the writtennotice and demand for payment required under ORS 305.895 is mailed, theDepartment of Revenue shall issue a warrant, directed to the sheriff of anycounty of the state, commanding the sheriff to levy upon and sell the real andpersonal property of the person owing the tax, found within that county, forthe payment in the amount thereof, with the added penalties, interest and costof executing the warrant, and to return the warrant to the department and topay to it the money collected by virtue thereof, within 60 days after receiptof the warrant. A copy of the warrant shall be mailed or delivered to thetaxpayer by the department at the taxpayer’s last-known address.
(2)The sheriff shall, within five days after the receipt of the warrant, record acopy with the county clerk, and thereupon the clerk shall enter in the CountyClerk Lien Record the name of the person mentioned in the warrant, and theamount of the tax or portion thereof and penalties for which the warrant isissued and the date when the copy is recorded. Thereupon the amount of thewarrant so recorded shall become a lien upon the title to and interest in realproperty of the person against which it is issued, in the same manner as ajudgment that creates a judgment lien under ORS chapter 18. The sheriffthereupon shall proceed upon the warrant in all respects, with like effect, andin the same manner prescribed by law in respect to executions issued againstproperty upon judgments of a court of records, and shall be entitled to thesame fees for services in executing the warrant, to be added to and collectedas a part of the warrant liability.
(3)In the discretion of the department a warrant of like terms, force and effectmay be issued and directed to any agent of the department authorized by it tocollect this tax. In the execution of the warrant, such agent has the powersconferred by law upon sheriffs, but is entitled to no fee or compensation inexcess of actual expenses paid in the performance of such duty.
(4)If a warrant is returned not satisfied in full, the department shall have thesame remedies to enforce the claim for taxes against the owner as if the statehad a recorded judgment against the owner for the amount of the tax. [1981c.889 §12; 1983 c.696 §18; 1985 c.761 §22; 1989 c.625 §79; 2003 c.576 §206]
324.200Release of lien on real estate. (1) Any person having a lien upon orany interest in real estate against which the amount of the warrant providedfor in ORS 324.190 has become a lien, notice of which has been recorded inaccordance with the laws of the state prior to the filing of the warrant, mayrequest the Department of Revenue in writing to release the real estate fromthe lien of the warrant. If, upon such request the department finds that a saleof the property would not result in satisfaction of the taxes due in whole orin part, the department shall execute a release of the lien as to such propertyand such release shall be conclusive evidence of the extinguishment of the lienas to that property. If the department fails to act upon a request for releaseof 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 thewarrant has become a lien may make the department a party to any proceedingbrought to enforce any interest in or lien upon such real property, and thedetermination of the court in such proceeding shall be conclusive and bindingupon the department and the State of Oregon.
(2)In addition to the release of the lien provided for in subsection (1) of thissection, the department may execute releases in the following cases, whichreleases 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 beensatisfied.
(b)If the department finds that the fair market value of that part of the propertyremaining subject to the lien is at least double the amount of the liabilityremaining unsatisfied in respect of such tax and the amount of all prior liensupon the property.
(c)If there is furnished to the department a bond, in such form and with thesecurity the department considers sufficient, or an irrevocable letter ofcredit issued by an insured institution, as defined in ORS 706.008, in eithercase conditioned upon the payment of the amount of the warrant, together withall 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 thewarrant an amount not less than the value, as determined by the department, ofthe interest of the State of Oregon in the part of the property to be sodischarged. In determining such value the department shall give considerationto the fair market value of the part of the property to be so discharged and tosuch liens thereon as have priority to the lien of the State of Oregon. [1981c.889 §13; 1991 c.331 §55; 1997 c.631 §460]
324.210Status of taxes, interest and penalties as debt; limitation on time ofcollection.All taxes, interest and penalties due and unpaid under this chapter, shallconstitute a debt due the State of Oregon from the person liable for the tax andmay be collected, together with interest, penalty and costs, by appropriatejudicial proceeding, which remedy is in addition to all other existingremedies. However, no proceeding for the collection of taxes under this sectionshall be instituted after the expiration of six years from the date such taxeswere due. [1981 c.889 §14]
324.240Payment of tax when oil or gas in litigation. When oil or gas subject to grossproduction tax under this chapter is in litigation or dispute involvingownership of the oil or gas, and the oil or gas is sold, the usual grossproduction tax, as provided by law, shall be paid from the proceeds or funds inthe hands of the purchaser of the oil or gas and in lieu of payment for theproduction, to the extent of the tax. The receipt of the Department of Revenuetherefor shall be accepted in lieu of money in settlement of the purchase priceof 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 alien upon the interest assigned, which shall be paramount to the indebtednessfor which the assignment is made, and if the tax becomes delinquent, the usualpenalty shall apply. [1981 c.889 §16]
ADMINISTRATION
324.310Powers of department.The Department of Revenue may:
(1)Require any producer of oil or gas, purchaser of oil or gas, agent or employeeof any producer or purchaser or the owner of any royalty interest in oil or gasto furnish any additional information considered by the department to benecessary for the purpose of correctly computing the amount of tax imposed bythis chapter;
(2)Examine the books, records and files of any producer, purchaser or royaltyowner;
(3)Administer oaths and compel the attendance of witnesses and the production ofbooks, records and papers of any person by subpoena; and
(4)Make any investigation considered necessary to a full and completedetermination as to the amount of production from any oil or gas location, orof any producer of oil or gas, and as to the correct determination of taxes dueunder this chapter. [1981 c.889 §9; 1995 c.650 §49]
324.320Rulemaking authority of department. (1) The Department of Revenue isauthorized to adopt all necessary rules for the purpose of making and filingall reports required under this chapter and otherwise necessary to theenforcement of this chapter.
(2)The department may, at its option and discretion, require a sufficient bondfrom any person charged with the making and filing of reports and the paymentof the taxes imposed by this chapter. The bond shall run to the State of Oregonand shall be conditioned upon the making and filing of reports as required bylaw, upon compliance with the rules of the department, and for the promptpayment, by the principal, of all taxes justly due the state by virtue of theprovisions of this chapter.
(3)When any reports required have not been filed, or may be insufficient tofurnish all the information required by the department, the department shallinstitute, in the name of the State of Oregon, upon relation of the department,any necessary action or proceedings in the court having jurisdiction, to enjointhe person from continuing operations until the reports have been filed asrequired, and in all proper cases, injunction shall issue without bond from theState of Oregon.
(4)Upon showing that the state is in danger of losing its claims or the propertyis being mismanaged, dissipated or concealed, a receiver shall be appointed atthe suit of the state. [1981 c.889 §18]
DISPOSITIONOF REVENUE
324.340Net revenue payable to Common School Fund. (1) The revenues derived fromthe tax imposed by this chapter including interest and penalties, shall bedeposited in a suspense account created pursuant to ORS 293.445. After paymentof refunds and the expenses of the Department of Revenue incurred in theadministration of this chapter, the remaining revenues shall be paid into theCommon School Fund and are continuously appropriated to the Department of StateLands for the purposes for which other moneys in the Common School Fund may beused.
(2)The amount of moneys necessary to pay refunds and expenses of the Department ofRevenue incurred in the administration of this chapter are continuouslyappropriated to the Department of Revenue from the suspense account referred toin subsection (1) of this section. [1981 c.889 §20]
CIVILPENALTY
324.410Prohibited conduct; civil penalty. (1) No person, or officer or employeeof a corporation, or a member or employee of a partnership, shall, with intentto evade any requirement of this chapter, or any lawful requirement of theDepartment of Revenue pursuant to this chapter:
(a)Fail to pay any tax or to make, sign or verify any return or to supply anyinformation 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 ofa partnership who violates subsection (1) of this section is liable to a civilpenalty of not more than $10,000, to be recovered by the Attorney General, inthe name of the state, in any court of competent jurisdiction. The penaltyprovided in this subsection shall be in addition to all other penalties in thischapter. [1981 c.889 §19]
MISCELLANEOUS
324.510Content of statement or settlement sheet. All statements or settlementsheets for oil or gas shall have stamped or written thereon the followingwords: “Gross production tax deducted and paid, and payee accepts suchdeduction and authorizes payment to the State of Oregon.” [1981 c.889 §17]
324.520Duty to provide information to department; penalty. (1) It shall bethe duty of every person engaged in the production of oil and gas in this stateto furnish to the Department of Revenue, upon forms prescribed by thedepartment, any and all information relative to the production of oil or gassubject to gross production tax that may be required to properly enforce theprovisions of this chapter. The department may require any person to installsuitable measuring devices to enable the person to include in the reports thequantity of oil or gas produced in the State of Oregon.
(2)It shall be the duty of every person engaged in the operation of a refinery forthe processing of oil or gas in the State of Oregon to furnish quarterly to thedepartment, upon forms prescribed by the department, any and all informationrelative to the amount of oil or gas subject to gross production tax that hasbeen processed by it during the quarterly per