0001| HOUSE BILL 185 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| JERRY W. SANDEL | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| RELATING TO TAXATION; AMENDING THE NATURAL GAS PROCESSORS TAX | 0012| ACT TO CHANGE THE BASIS ON WHICH THE TAX IS IMPOSED; AMENDING | 0013| AND REPEALING SECTIONS OF THE NMSA 1978. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. Section 7-33-2 NMSA 1978 (being Laws 1963, | 0017| Chapter 179, Section 2, as amended) is amended to read: | 0018| "7-33-2. DEFINITIONS.--As used in the Natural Gas | 0019| Processors Tax Act: | 0020| |A. "average annual taxable value" means the | 0021| average of the taxable value per mcf, determined pursuant to | 0022| Section 7-31-5 NMSA 1978, of all natural gas produced in New | 0023| Mexico for the specified calendar year as determined by the | 0024| department;| | 0025| ~[A. "commission"]~ |B.| "department" | - 1 - 0001| ~["division" or "oil and gas accounting division"]~ means the | 0002| taxation and revenue department, the secretary of taxation and | 0003| revenue or any employee of the department exercising authority | 0004| lawfully delegated to that employee by the secretary; | 0005| ~[B. "processor" means a person who: | 0006| (1) processes natural gas or processes | 0007| hydrocarbons incidental to the processing of natural gas; or | 0008| (2) extracts by-products from natural gas or | 0009| other hydrocarbons incidental to the processing of natural | 0010| gas, individually or any combination thereof. "Processor" | 0011| does not mean a person who refines or processes oil, natural | 0012| gas or liquid hydrocarbons or extracts by-products therefrom | 0013| through a process which is commonly considered a field or | 0014| lease operation, such as well-head separation, dehydration, | 0015| purification, desulfurization, compression or trapping; | 0016| C. "product" means natural gas or liquid | 0017| hydrocarbons, individually or any combination thereof, which | 0018| has been processed by the processor or any by-product which | 0019| has been derived therefrom by the processor. "Product" does | 0020| not include distinct petrochemicals produced from hydrocarbons | 0021| by chemical conversion in a petrochemical plant; | 0022| D. "value" means the actual price received for | 0023| products by the processor at his plant; and]~ | 0024| |C. "fiscal year" means the period starting July 1 | 0025| and ending June 30 of the succeeding calendar year;| | - 2 - 0001| |D. "mcf" means one thousand cubic feet; | 0002| E. "mmbtu" means one million British thermal | 0003| units; | 0004| F. "natural gas" means any hydrocarbon that at | 0005| atmospheric conditions of temperature and pressure is in a | 0006| gaseous state, and includes non-hydrocarbon gases that are in | 0007| combination with hydrocarbon gases; | 0008| G. "natural gas processing plant" means a facility | 0009| used to extract liquid hydrocarbons and non-hydrocarbon | 0010| gaseous or liquid substances, individually or in any | 0011| combination, from natural gas, but does not include a facility | 0012| that refines or processes oil, natural gas or liquid | 0013| hydrocarbons or that extracts substances from natural gas | 0014| through a field or lease operation;| | 0015| ~[E.]~ |H.| "person" means any individual, estate, | 0016| trust, receiver, business trust, corporation, firm, | 0017| copartnership, cooperative, joint venture, association or | 0018| other group or combination acting as a unit; || | 0019| |I. "processor" means a person who operates a | 0020| natural gas processing plant; and| | 0021| |J. "tax" means the natural gas processors tax|." | 0022| Section 2. Section 7-33-4 NMSA 1978 (being Laws 1963, | 0023| Chapter 179, Section 4, as amended) is amended to read: | 0024| "7-33-4. PRIVILEGE TAX LEVIED--COLLECTED BY ~[OIL AND | 0025| GAS ACCOUNTING DIVISION OF THE TAXATION AND REVENUE]~ | - 3 - 0001| DEPARTMENT--RATE.-- | 0002| A. There is levied and shall be collected by the | 0003| ~[oil and gas accounting division of the taxation and | 0004| revenue]~ department a privilege tax on processors for the | 0005| privilege of ~[engaging in the business of processing based on | 0006| the value of their products. The measure of the tax shall be | 0007| forty-five one-hundredths of one percent of the value of the | 0008| products. | 0009| B. This tax does not apply to the value of | 0010| products: | 0011| (1) used for plant fuel by the processor; | 0012| (2) which are returned to the lease from | 0013| which produced; or | 0014| (3) sold to: | 0015| (a) the government of the United | 0016| States, its departments or agencies; | 0017| (b) the state of New Mexico or any of | 0018| its political subdivisions; or | 0019| (c) nonprofit hospitals, religious or | 0020| charitable organizations, when the products are used in the | 0021| conduct of their regular functions. | 0022| C. Every interest owner is liable for this tax to | 0023| the extent of his interest in the value of such products or to | 0024| the extent of his interest as may be measured by the value of | 0025| such products]~ |operating a natural gas processing plant in | - 4 - 0001| New Mexico. This tax may be referred to as the "natural gas | 0002| processors tax"|. | 0003| | B. The tax shall be imposed on the amount of | 0004| mmbtus of natural gas delivered to the processor at the inlet | 0005| of the natural gas processing plant after subtracting the | 0006| mmbtu deductions authorized in Subsection E of this section. | 0007| The tax shall be imposed at the rate per mmbtu determined in | 0008| Subsection C or D of this section, as applicable. | 0009| C. The tax rate for the six-month period beginning | 0010| on January 1, 1999 shall be determined by multiplying the rate | 0011| of sixty-five hundredths of one cent ($.0065) per mmbtu by a | 0012| fraction, the numerator of which is the annual average taxable | 0013| value per mcf of natural gas produced in New Mexico during the | 0014| 1997 calendar year and the denominator of which is one dollar | 0015| fifty cents ($1.50) per mcf. The resulting tax rate shall be | 0016| rounded to the nearest one-hundredth of one cent per mmbtu. | 0017| D. The tax rate for each fiscal year beginning on | 0018| or after July 1, 1999 shall be determined by multiplying the | 0019| rate of sixty-five hundredths of one cent ($.0065) per mmbtu | 0020| by a fraction, the numerator of which is the annual average | 0021| taxable value per mcf of natural gas produced in New Mexico | 0022| during the preceding calendar year and the denominator of | 0023| which is one dollar fifty cents ($1.50) per mcf. The | 0024| resulting tax rate shall be rounded to the nearest one- | 0025| hundredth of one cent per mmbtu. | - 5 - 0001| | |E. A processor may deduct from the amount of | 0002| mmbtus of natural gas subject to the tax the mmbtus of natural | 0003| gas that are: | 0004| | |(1) used for natural gas processing by the | 0005| processor;| | 0006| |(2) returned to the lease from which it is | 0007| produced; | 0008| (3) legally flared by the processor; or | 0009| (4) lost as a result of natural gas | 0010| processing plant malfunctions or other incidences of force | 0011| majeur.| | 0012| | F. On or before June 15, 1999 and June 15 of each | 0013| succeeding year, the department shall inform each processor in | 0014| writing of the tax rate applicable for the succeeding fiscal | 0015| year.| | 0016| |G.| Any Indian |nation|, tribe ~[Indian]~ |or| | 0017| pueblo or Indian is liable for ~[this]~ |the| tax to the | 0018| extent authorized or permitted by law." | 0019| Section 3. Section 7-33-6 NMSA 1978 (being Laws 1963, | 0020| Chapter 179, Section 6, as amended) is amended to read: | 0021| "7-33-6. ~[PRICE INCREASE SUBJECT TO APPROVAL OF AGENCY | 0022| OF UNITED STATES OF AMERICA, STATE OF NEW MEXICO OR COURT]~ | 0023| REFUND.--~[When an increase in the value of any product is | 0024| subject to the approval of any agency of the United States of | 0025| America or the state of New Mexico or any court, the increased | - 6 - 0001| value is subject to this tax. In the event the increase in | 0002| value is disapproved, either in whole or in part, then the | 0003| amount of tax which has been paid on the disapproved part of | 0004| the value shall be considered excess tax.]~ Any person who | 0005| has ~[paid any such excess tax]~ |overpaid the tax| may apply | 0006| for a refund of that ~[excess tax]~ |overpayment| in | 0007| accordance with the provisions of Section 7-1-26 NMSA 1978." | 0008| Section 4. Section 7-33-7 NMSA 1978 (being Laws 1963, | 0009| Chapter 179, Section 7) is amended to read: | 0010| "7-33-7. ~[PRODUCTS]~ |NATURAL GAS| ON WHICH TAX HAS | 0011| BEEN LEVIED--REGULATION BY ~[COMMISSION]~ |DEPARTMENT|.-- | 0012| ~[This]~ |The| tax shall not be levied more than once on the | 0013| same ~[product]~ |natural gas|. Reporting of ~[products]~ | 0014| |natural gas| on which ~[this]~ |the| tax has been paid is | 0015| subject to the regulation of the ~[commission]~ |department|." | 0016| Section 5. Section 7-33-8 NMSA 1978 (being Laws 1963, | 0017| Chapter 179, Section 8, as amended) is amended to read: | 0018| "7-33-8. TAX ~[REPORT]~ |RETURN|--TAX REMITTANCE-- | 0019| ADDITIONAL INFORMATION.--~[Within twenty-five days following | 0020| the end of each calendar month, each processor shall in the | 0021| form and manner required by the commission make a return to | 0022| the commission showing the value, volume and kind of products | 0023| sold from each plant for the calendar month. All taxes due or | 0024| to be remitted by the processor shall accompany this return. | 0025| Any additional report or information the commission may deem | - 7 - 0001| necessary for the proper administration of the Natural Gas | 0002| Processors Tax Act may be required.]~ | 0003| |A. Each processor shall submit a return monthly | 0004| to the department in the form and manner required by the | 0005| department showing for the month the total mmbtus of natural | 0006| gas received by the processor at the inlet of the natural gas | 0007| processing plant and the total mmbtus of natural gas deducted | 0008| pursuant to the Natural Gas Processors Tax Act. All tax due | 0009| or to be remittted by the processor shall accompany the | 0010| return. | 0011| B. The return required by this section shall be | 0012| filed on or before the twenty-fifth day of the month after the | 0013| calendar month for which the return is required. | 0014| C. The department may require additional reports | 0015| or information as necessary for the proper administration of | 0016| the Natural Gas Processors Tax Act.|" | 0017| Section 6. TEMPORARY PROVISION--NOTICE.--On or before | 0018| November 30, 1998, the taxation and revenue department shall | 0019| inform each processor in writing of the natural gas processors | 0020| tax rate applicable pursuant to the Natural Gas Processors Tax | 0021| Act for the six-month period beginning January 1, 1999. | 0022| Section 7. REPEAL.--Section 7-33-5 NMSA 1978 (being Laws | 0023| 1963, Chapter 179, Section 5, as amended) is repealed. | 0024| Section 8. EFFECTIVE DATE.--The effective date of the | 0025| provisions of Sections 1 through 5 and 7 of this act is | - 8 - 0001| January 1, 1999. |