Amendment to Natural Gas Property Tax Bill is Adopted

The House version of the bill would have resulted in a $9.1 million property tax revenue loss to county governments and county school systems.

SEATTLE (Oil Monster):  A compromise was reached between the West Virginia Senate and the House of Delegates on a bill creating a better property tax valuation system for oil and natural gas wells and effect tax revenue for counties.

House Bill 2581, providing for the valuation of natural resources property and an alternate method of appeal of proposed valuation of natural resources property, unanimously passed the Senate Saturday on the final day of the 2021 legislative session.

HB 2581 would provide a revised methodology to value oil and natural gas properties by the State Tax Commissioner in response to a West Virginia Supreme Court of Appeals decision in 2019 that struck down part of the methodology the department uses to value active oil and natural gas well sites.

The Senate version of the bill stripped from the version passed by the House a formula to value oil and natural gas property by using a weighted average price from regional markets, less the actual expenses as reported by the taxpayer. Instead, the Senate version directed the State Tax Department to promulgate regulations the Legislature can review and approve.

An amendment offered Saturday by state senators Mike Maroney, R-Marshall, Patricia Rucker, R-Jefferson, and Eric Nelson, R-Kanawha, expanded the bill by including property producing natural gas liquids.

The amendment requires the State Tax Department to base the fair market value of property producing oil, natural gas, and natural gas liquids through the process of applying a yield capitalization model to the net proceeds, defined as the actual gross receipts on a sales volume basis determined from the actual price received by the taxpayers as reported on the taxpayer’s returns, less royalties, and less actual annual operating costs as reported on the taxpayer’s returns.

The House version of the bill would have resulted in a $9.1 million property tax revenue loss to county governments and county school systems. Natural gas-producing counties in the Northern Panhandle and North Central West Virginia would bear most of that loss.

 Courtesy: www.weirtondailytimes.com