[HISTORY: Adopted and amended as indicated in text (Ch. 156 of the 1984 Code).]
[1970, ch. 711, sec. 527-1]
Levy; computation. There is hereby levied a distribution and production tax on the business or occupation of collecting, distributing and producing natural gas or other gases taken from the earth in Allegany County computed as follows: A tax shall be paid on the gas produced and saved for commercial purposes within Allegany County, accounting from January 1, 1969, equivalent to 7% of the wholesale market value thereof as and when produced, provided that the amount of such tax shall never be less than 11/150 of 1% per 1,000 cubic feet.
Exceptions. In calculating the tax herein levied, there shall be excluded the following:
Calculation of tax. The market value of gas produced in Allegany County shall be the value thereof at the mouth of the well; however, in case gas is sold for cash only, the tax shall be computed on the producer's gross cash receipts. In all cases where the whole or a part of the consideration for the sale of gas is a portion of the products extracted from the producer's gas or a portion of the residue gas, or both, the tax shall be computed on the gross value of all things of value received by the producer, including any bonus or premium, provided that, notwithstanding any other provision herein to the contrary, where gas is processed for the liquid hydrocarbon content and the residue gas is returned by cycling methods, as distinguished from repressuring or pressure maintenance methods, to some gas-producing formation, the taxable value of such gas shall be 3/5 of the gross value of all liquids extracted, separated and saved from such gas, such value to be determined upon separation and extraction and prior to absorption, refining or processing of such hydrocarbons, and the quantity of the products shall be measured by the total yield of the processing plant from such gas.
First purchaser; payments. The first purchaser of gas shall pay the total tax on all gas purchased, making the payments of tax to the County Commissioners of Allegany County by legal tender or cashier's check payable to said County Commissioners. The first purchaser shall be entitled to deduct the proportionate amount of the tax chargeable to the producer and royalty owner from the amount due the producer from whom such gas is purchased, and such producer shall be entitled to deduct the proportionate amount of the tax chargeable to any other producer owning an interest in such gas from the amount due such other producer and shall be entitled to deduct the proportionate amount of the tax chargeable to any royalty owner from the amount due such royalty owner, and such moneys so deducted from payments due producers for the payment of this tax shall be held by the purchaser in trust for the use and benefit of Allegany County and shall not be co-mingled with any other funds held by said purchaser and shall be remitted to the County Commissioners, together with the purchaser's proportion of said tax, in accordance with the terms and provisions of this chapter, and it shall be the duty of each such purchaser to keep accurate records of all such gas purchased.
Due date; report; responsibility for payment. The tax herein levied shall be due and payable at the office of the County Commissioners of Allegany County on the last day of April, July, October and January of each calendar year, based on the amount of gas produced, saved and collected during the calendar quarter ending on the last day of March, June, September and December, respectively, and on or before such date, each purchaser shall make and deliver to the County Commissioners a verified report, on forms prescribed by them, showing the gross amount of gas produced and collected, less the exclusions and at the pressure base set out herein, upon which the tax herein levied accrues, together with details as to amount of gas, from what leases said gas was produced and collected, the correct names and addresses of the producer and purchaser of said gas and such other information as the County Commissioners may require. In no event shall a producer or purchaser be relieved of responsibility for the tax until same shall have been paid, provided that in the event the amount of the tax herein levied as the producer's proportion thereof shall be withheld by a purchaser from payments due a producer and said purchaser fails to make payment of the tax to the County Commissioners as provided herein and said producer pays said tax himself, the producer may bring legal action against such purchaser to recover the amount of tax so withheld, together with penalties and interest which may have accrued by failure to make such payment, and shall be entitled to reasonable attorney's fees and court costs incurred by legal action.
Delinquent tax; penalty. Unless such payment of tax on all gas produced and collected during any quarter or fractional part thereof shall be made on or before the date due as hereinabove specified, such payment shall become delinquent, and a penalty of 10% of the amount of the tax shall be added. Such tax and penalty shall bear interest at the rate of 6% per annum from the date due until the date paid.
Producer's proportion of tax. The producer's proportion of the tax herein levied shall be borne ratably by all interested parties, including royalty interests, lessor's interest or any other interest, whether by lease, contract or otherwise, except the purchaser's interest, and the purchaser is hereby authorized and required to withhold from any payment due any interested parties the proportionate tax due and remit the same as above provided.
Operator's responsibilities. The operator of each well from which gas is produced, saved and collected in Allegany County shall also make and deliver to the County Commissioners of Allegany County on or before the due date of the payments provided above a report of all gas produced and sold from each well during the preceding quarter, together with details as to amounts of gas, the name or location of the well, the correct names and addresses of the producer and purchaser of said gas and such other information as the County Commissioners may require.
Legal effect of tax. The tax hereby imposed is in lieu of all other County taxes upon the gas, the property rights attached thereto or inherent therein and the values created thereby upon all leases or rights to develop and operate any lands for gas, the values created thereby and the property right attached thereto. Nothing in this section is intended to affect taxation by the State of Maryland.
[1970, ch. 711, sec. 572-2]
As used in this chapter, the following terms shall have the meanings indicated:
- BUSINESS OF COLLECTING, DISTRIBUTING OR PRODUCING GAS
- Shall apply to any person in the business of purchasing or producing gas for resale to domestic and industrial consumers and shall include any person who has voluntarily submitted to the regulations of the Federal Power Commission or the Public Service Commission regulations of the State of Maryland.
- The owner, operator or manager of any means of transporting gas or any instrumentality that may now be used or come into use for such purpose.
- CASING-HEAD GAS
- Any gas and/or vapor indigenous to an oil stratum and produced from such stratum with oil.
- CUBIC FOOT OF GAS
- The volume of gas expressed in cubic feet and computed at a base pressure of four ounces per square inch above the average barometric pressure of 14.4 pounds per square inch, a standard base and flowing temperature of 60° F. Correction shall be made for pressure according to Boyle's Law and for specific gravity according to tests made by the balance method.
- FIRST PURCHASER
- Any person purchasing gas from the producer, and shall include any producer which is a utility retailing gas in Allegany County and any producer who does not sell his gas in Allegany County but transports it outside of the County before sale.
- Natural and casing-head gas or other gas taken from the earth or waters, regardless of whether produced from a gas well or from a well also productive of oil, distillate and/or condensate or other product.
- The person having the active management and operation of the well.
- Includes any person, firm, concern, receiver, trustee, executor, administrator, agent, institution, association, partnership, company, corporation and persons acting under declarations of trust, as well as the trustees acting under such declarations of trust.
- Any person owning, controlling, managing or leasing any gas well and/or any person who produces in any manner any gas by taking it from the earth or waters in Allegany County, and shall include any person owning any royalty or other interest in any gas or its value, whether produced by him or by some other person on his behalf, either by lease, contract or otherwise.
- PRODUCTION or TOTAL GAS PRODUCED
- The total gross amount of gas produced, including all royalty or other interest; that is, the amount for the purpose of the tax imposed by this chapter shall be measured or determined by meter readings showing 100% of the full volume expressed in cubic feet.
- Any report required to be furnished in this chapter or that may be required by the County Commissioners in the administration of this chapter.
- ROYALTY OWNERS
- Includes all persons owning any mineral rights under any producing leasehold within Allegany County, other than the working interest, which working interest is that of the person having the management and operation of the well.
- SUBSEQUENT PURCHASER
- Any person who purchases gas for any purpose whatsoever when said gas is purchased from any person other than the producer.
- Any person subject to the tax herein levied.
[1970, ch. 711, sec. 572-3]
Erroneous payment. When it shall appear that a taxpayer to whom the provisions of this chapter shall apply has erroneously paid more taxes than were due during any tax-paying period, either on account of a mistake of fact or law, it shall be the duty of the Director of Finance, upon order of the County Commissioners, to credit the total amount of taxes due by such taxpayer for the current period with the total amount of taxes so erroneously paid or to make refund in a proper case.
[Amended 1-15-1982 by Bill No. 14-81, effective 3-31-1983; 9-17-1982 by Bill No. 7-82, effective 9-30-1982]
Responsibility of first purchaser for payment. The tax hereby levied shall be paid by the first purchaser purchasing the same from the producer, who shall make deduction as aforesaid; provided, however, that the failure of first purchaser from the payment of same, where the first purchaser does not account for and pay said tax, and it shall be the duty of every person purchasing gas produced in Allegany County to satisfy himself or itself that the tax on said gas has been or will be paid by the persons primarily liable therefor.
[1970, ch. 711, sec. 572-4]
The County Commissioners may, through the County Auditors or other auditors and/or other technical assistants employed for the purpose of verifying reports and investigating the affairs of producers and/or purchasers, determine whether the tax is being properly reported and paid. They shall have the power to enter upon the premises necessary in determining the correct tax liability and to examine or cause to be examined any books or records of any person subject to a tax under this chapter and to secure any other information directly or indirectly concerned in the enforcement of this chapter and to promulgate and enforce, according to law, rules and regulations pertinent to the enforcement of this chapter, which shall have full force and effect of law.
[1970, ch. 711, sec. 572-5]
If the County Commissioners are satisfied that the values used in computing the tax do not represent the market value of such gas at the mouth of the well, they shall forthwith so notify the taxpayers concerned, and it shall be the duty of the County Commissioners to set a date for a hearing thereon, giving each taxpayer concerned not less than 10 days' written notice thereof, and to call before them by proper process such persons as, in their judgment, may know the market value of such gas at the mouth of the well, who shall testify under oath as to the market value thereof, and each taxpayer shall have the right to be heard and present evidence. The County Commissioners, after hearing the evidence, shall fix the market value of such gas at the mouth of the well by written findings in accordance with the evidence so introduced, and their findings in such case or cases shall be final unless the taxpayer concerned shall pay the tax herein levied upon the market value so fixed by the County Commissioners under protest within 60 days after such taxpayer has been notified in writing of said findings, or, in the event that said taxpayer does not pay the tax based on the values so determined by the County Commissioners within 60 days after having been notified of such findings, the findings of the County Commissioners shall be final unless such taxpayer shall within 60 days appeal to the Circuit Court of Allegany County. Upon such appeal, the trial shall be de novo, but the findings of the County Commissioners shall be taken as prima facie evidence of the market value of such gas at the mouth of the well, and the burden of proof shall rest upon the taxpayer to establish a lower market value.
[1970, ch. 711, sec. 572-6]
In the event that any person engaged in the business of producing or purchasing any gas in Allegany County shall become delinquent in the payment of the proper taxes herein imposed or fails to file required reports with the County Commissioners, the County Commissioners shall have the right to enjoin any such person who is at fault from producing gas until the delinquent tax is paid or said reports are filed.
[1970, ch. 711, sec. 572-7]
Any person, firm, association or corporation, whose failure, omission, default or violation it may be, shall be subject to a penalty of not less than $100 nor more than $1,000 for failure or omission to keep the records required herein or for the violation of any of the other provisions hereof, and each day's violation shall constitute a separate offense. Allegany County shall have a prior lien for all delinquent taxes, penalties and interests on all property and equipment used by the purchaser of gas in the business of purchasing gas, and if any purchaser of gas shall fail to remit the proper taxes, penalties and interest due or any of them, the County Commissioners may employ auditors or other persons to ascertain the correct amount due, and the purchaser of gas shall be liable, as an additional penalty, for the reasonable expenses of the reasonable value of such services of representatives of the County Commissioners incurred in such investigation and audit, provided that all funds collected for audits and examinations shall be placed in a Natural Gas Audit Fund of Allegany County and shall constitute a revolving fund, which may be used from time to time by the County Commissioners in making such audits, in addition to the general appropriation made for such purposes, and all of said funds to be placed in said funds are hereby appropriated for such purpose. The County Commissioners of Allegany County are hereby authorized to collect all delinquent taxes, penalties and other amounts due and to enforce all liens under this chapter by civil suit.
[1970, ch. 711, sec. 572-8]
Admissible evidence. If any purchaser of natural and/or casing-head gas fails or refuses to pay any tax, penalty or interest within the time and manner provided by this chapter and it becomes necessary to bring suit or to intervene in any manner for the establishment or collection of said claim in any judicial proceedings, any report filed in the office of the County Commissioners by such purchaser or producer or representative of said purchaser or producer or a copy thereof certified to by the County Commissioners showing the amount of gas produced on which tax, penalties or interest have not been paid or any audit made by the County Commissioners or their representatives from the books of said purchaser when filed and sworn to by such representative as being made from the records of said purchaser, such report or audit shall be admissible in evidence in such proceedings and shall be prima facie evidence of the contents thereof; provided, however, that the incorrectness of said report or audit may be shown, and provided further that such report or audit may be admitted in evidence only against the party by or from whom it was made.
Prima facie evidence. In the event that the County Commissioners shall file suit or claim for taxes provided for in Subsection A(1) hereof and attach or file as an exhibit any report or audit of said purchaser or producer and an affidavit made by the County Commissioners or their representative that the taxes shown to be due by said report or audit are past due and unpaid and that all payments and credits have been allowed, then unless the party resisting the same shall file an answer in the same form and manner as required by law, said audit or report shall be taken as prima facie evidence thereof.
Production or removal prohibited. Upon notice from the County Commissioners, it shall be unlawful for any person to produce or remove any natural and/or casing-head gas from any lease in Allegany County whenever the owner or operator of said lease has failed to file reports as required under the provisions of this chapter.
Transfer of interest. Whenever any lease producing natural and/or casing-head gas changes hands or any purchaser of gas transfers his interest, it shall be the duty of the owner or operator of said lease and any such purchaser of gas to note on his last report that said lease or interest has been sold or transferred, showing the effective date of said change and the name and address of the individual, firm, association, joint-stock company, syndicate, copartnership, corporation, agency or receiver who will operate said lease or who bought said interest and will be responsible for the filing of reports provided for in this chapter. It further shall be the duty of the new owner or operator of said lease or interest to note on his first report that said lease or interest has been acquired, showing the effective date of said change and the name and address of the individual, firm, association, joint-stock company, syndicate, copartnership, corporation, agency or receiver formerly owning and/or operating said lease or interest.
[1970, ch. 711, sec. 572-9]
Criminal penalty. Whoever shall, as a producer or purchaser or as agent or representative of a producer or purchaser, knowingly make any false entries or fail to make any proper entries in the books required by this chapter with intent to defraud Allegany County, or whoever, as such, shall knowingly make a false or incomplete report as required by the provisions of this chapter, or whoever, as such, shall knowingly fail or refuse to make the report required to be made, or whoever, as such, shall destroy, mutilate or secrete any of the records required to be kept by the provisions of this chapter, or whoever, as such, shall hide or secrete with intent to defraud any of the property upon which a lien is created hereunder shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined in a sum of not less than $100 nor more than $1,000 or be confined in the County jail for not more than 12 months, or be subject to both such fine and imprisonment.
Civil penalty. In addition thereto, such producer or purchaser or agent thereof shall forfeit to Allegany County for any said offense or the violation of any of the provisions hereof or any rule or regulation a penalty of $1,000 for each such offense, to be recovered by Allegany County in a civil suit. The penalties prescribed in this section, both criminal and civil, are in addition to any and all other penalties prescribed in this chapter.
[1970, ch. 711, sec. 572-10]
All receipts from the tax imposed by this chapter shall be accounted for and paid into the general fund of Allegany County.