TIP #09B07-03
DATE ISSUED: June 18, 2009
Tertiary Oil
Severance Tax
Tertiary Oil
Persons who sever oil by a tertiary method are subject to a new tax rate beginning July 1, 2009. The new tax rate varies based on the value or market price of a barrel of oil at the mouth of the well in its natural, unrefined condition. Such tax shall accrue at the time the oil is severed and shall be a lien on production regardless of the place of sale, to whom sold, or by whom used, and regardless of the fact that delivery of the oil may be made outside the state.
The term "tertiary oil" means the excess barrels of oil produced, or estimated to be produced, as a result of the actual use of a tertiary recovery method in a qualified enhanced oil tertiary recovery project, over the barrels of oil which could have been produced by continued maximum feasible production methods in use prior to the start of tertiary recovery. A "qualified enhanced oil tertiary recovery project" means a project for enhancing recovery of oil which meets the requirements of 26 U.S.C. s. 43(c)(2), or substantially similar requirements.
Beginning July 1, 2009
- The tax rate will be one percent (1%) of the gross value if the value of oil is $60 and below.
- The tax rate will be seven percent (7%) of the gross value if the value of oil is above $60 and below $80.
- The tax rate will be nine percent (9%) of the gross value if the value of oil is $80 and above.
- The tax rate of five percent (5%) for small well oil remains in effect.
Reference: Section 211.02, Florida Statutes as amended by 2009-139, Laws of Florida
FOR MORE INFORMATION
This document is intended to alert you to the requirements contained in Florida laws and administrative rules. It does not by its own effect create rights or require compliance.
For forms and other information, visit our Internet site at www.myflorida.com/dor or call Taxpayer Services, 8:00 a.m. to 7:00 p.m., ET, Monday through Friday, excluding holidays, at 800-352-3671.
For a detailed written response to your questions, write the Florida Department of Revenue, Taxpayer Services, Mail Stop 3-2000, 5050 West Tennessee Street, Tallahassee, FL 32399-0112.