​Severance Tax Services

Severance tax services are a special type of tax compliance and advisory service designed to reduce your overall tax burden, especially in states that impose severance taxes on minerals extracted from natural resource wells. This type of review is unique in that it identifies state-specific exemptions and reductions that can significantly lower your severance tax bill.

Identify tax savings opportunities through lease operating expense, capital spend, and production data analysis. Provide position-substantiating documentation for client management and legal counsel as they navigate the severance tax process. Get more info on severance services by clicking this link.

Create a comprehensive severance tax profile for Client’s operations and ensure proper filings. Analyze the impact of state and federal severance tax legislation to develop strategic positions for optimal client outcomes.

Prepare and file severance tax returns, including the Oil and Gas Production Tax (OGPT), in all states that levy them. For oil producing states, these taxes are based on the value of the oil produced or the volume of production.

Maximize severance tax revenue through a strategic approach
Severance and production taxes are an important source of tax revenue for oil and gas states. However, these taxes are volatile in nature because they depend on the price and production of a state’s resources. Many states are experiencing an economic downturn, which can cause severance and production tax collections to drop.

In 2017, severance and production tax revenues totaled $9 billion in the United States. These revenues are distributed to a variety of local governments, including school districts and police departments, as well as state agencies.

Depending on the state, these revenues are used to fund programs and initiatives that protect the environment, conserve natural resources, promote energy efficiency, or reduce the burden of home energy costs. In some cases, these funds are used to pay for the cost of building public infrastructure.

The severance and production tax system has changed dramatically over the past few years, as states have developed new strategies for generating revenue from oil and gas production. While these new approaches vary by state, they generally consist of various rate schemes and methodologies that are based on the value or volume of oil and gas produced. The commercial real estate property tax company offers severance tax services.

Apply incentives to encourage new drilling and production
Incentives are often used to reduce severance and production taxes, which can be a powerful tool for attracting new investment and promoting growth in the energy industry. In addition, some states offer credits to offset the local taxes that are imposed on oil and gas production, which can help to keep severance and production taxes competitive with other tax sources.

A severance and production tax review is a complex process that requires detailed knowledge of natural resource field operations as well as state-specific tax codes. It involves a multifaceted approach that includes meetings with your personnel, extracting relevant data from your internal systems, and obtaining access to the appropriate state reporting software.

Zoom out: Understand the Client’s severance and production tax posture, strengths, and blind spots to uncover opportunities for increased profitability. Check out this post for more details related to this article: https://en.wikipedia.org/wiki/Property_tax.

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