Chapter 7.10
SEVERANCE TAX

Sections:

7.10.010    Definitions.

7.10.020    Resources subject to tax.

7.10.030    Exemptions.

7.10.040    Collection and administration.

7.10.050    Enforcement and penalties.

7.10.060    Severance tax return verification.

7.10.070    Confidentiality.

7.10.080    Liability for and collection of severance tax.

7.10.090    Penalties and interest.

7.10.010 Definitions.

In this chapter:

A.    “Calendar quarter” means any one of the following three-month periods beginning July 1st after the date of the setting of the mill levy: July 1st to September 30th, October 1st to December 31st, January 1st to March 31st, and April 1st to June 30th.

B.    “Gross production value” means the value per unit measured according to industry standards at the point of severance multiplied by the number of recovered units of the natural resource sold during the calendar quarter.

C.    “NABC” means Northwest Arctic Borough Code of ordinances.

D.    “PILOT agreement” means an agreement for payments in lieu of taxes.

E.    “Point of severance” for purposes of computing the tax is defined as:

1.    The mine site at the point where the resource is initially prepared for transport in the case of resources as defined in NABC 7.10.020(A);

2.    The scale at the pit, quarry or mine in the case of resources as defined in NABC 7.10.020(B).

F.    “Recovered units” means all units measured according to industry standards mined, extracted, or removed whether produced directly or contractually during the period of production.

G.    “Severer” means a person, company, corporation or other entity engaged in the business of severing natural resources. (Ord. 09-06 § 1, 2009)

7.10.020 Resources subject to tax.

There is levied in the borough, on any severer of certain natural resources, an excise tax, denominated as a severance tax. Unless the assembly shall by July 1st adopt an alternative borough-wide mill levy, the tax rate shall be 30 mills, which will be multiplied by the gross production value of resources severed for the calendar quarter resulting from the following activities:

A.    Mining, extracting, harvesting, removing or producing for sale, profit, or commercial use any copper, gold, silver, zinc, lead, molybdenum, or other metallic mineral product, compound, or combination of mineral products;

B.    Gravel mining, quarrying, or producing for sale, profit, or commercial use any sand, gravel, rock or coal. (Ord. 09-06 § 1, 2009)

7.10.030 Exemptions.

A.    A severer shall be exempt from taxation under this chapter if the annual gross production value of severed natural resources from all locations or sources within the borough owned or controlled by the severer or harvester does not equal or exceed the amount of $1,000,000 annually.

B.    Execution of a PILOT agreement between the borough and a severer shall exempt the severer from taxation under this chapter consistent with the terms of the PILOT agreement.

C.    Severance of oil and gas is exempt from taxation under this chapter. (Ord. 09-06 § 1, 2009)

7.10.040 Collection and administration.

A.    Every severer of resources subject to tax shall register with the finance director prior to beginning a severance activity.

B.    Every severer shall submit to the finance director a severance tax return, under oath, at the time the tax is paid, containing the following information:

1.    A description of the property from which the resource was severed or harvested by legal description or borough-assigned account number.

2.    The gross amount of recovered units severed or harvested during the calendar quarter.

3.    The gross sales value of all recovered units severed and sold during the calendar quarter.

C.    The return or tax statement along with all taxes due the borough for the calendar quarter must be received by the finance director on or before the last business day of the month following the end of the calendar quarter for which the return or statement is required.

D.    This tax constitutes a lien chargeable against the property owned by the severer. The borough may foreclose the lien in the same manner as any other lien against real or personal property. (Ord. 09-06 § 1, 2009)

7.10.050 Enforcement and penalties.

A.    The superior court, upon the request of the treasurer, shall issue an injunction requiring compliance with the provisions of this chapter. In the alternative, the treasurer may determine the severance tax on parties who have not filed a return in an amount based on historical data and the best information available.

B.    A person who fails, refuses, or neglects to file a severance tax return in compliance with this chapter shall, in addition to any other penalties provided by law, be liable for a penalty of 10 percent of the tax. (Ord. 09-06 § 1, 2009)

7.10.060 Severance tax return verification.

The treasurer or designee may:

A.    Require a person engaged in natural resource extraction, production, or transportation, any agent or employee of the person, or the purchaser of natural resources taxed under this chapter to furnish any additional information reasonably necessary to compute the amount of the tax or to determine if a tax is due;

B.    Examine the books, records, and files of any such person;

C.    Conduct hearings and compel the attendance of witnesses and the production of books, records, and papers of any person; and

D.    Make an investigation or hold any inquiry reasonably necessary to a disclosure of facts as to:

1.    The amount of extraction or production of a natural resource of an extractor, producer, or seller;

2.    The purchaser of the natural resource; and

3.    Transportation of the resource. (Ord. 09-06 § 1, 2009)

7.10.070 Confidentiality.

Information and materials in the possession of the borough that disclose the particulars of the business or affairs of the payer of taxes under this chapter will be kept confidential by the borough except in connection with an official investigation by the borough or other agency enforcing the laws of the borough or of the state. The borough may publish statistics in a manner that prevents identification of particular returns and may publish tax lists showing the names, taxes, penalties, and interest with respect to taxpayers who are delinquent to assist in the collection of taxes. (Ord. 09-06 § 1, 2009)

7.10.080 Liability for and collection of severance tax.

The severer of the resources assessed under this chapter is liable for the amount of taxes, interest and penalties due. The tax, together with penalties and interest, may be collected in a personal action brought in the name of the borough. (Ord. 09-06 § 1, 2009)

7.10.090 Penalties and interest.

All taxes due under this chapter but not timely paid as required are subject to a penalty of 10 percent of the tax due. Interest shall accrue on the tax due including penalties and interest at the rate of 12 percent per year from the date such taxes are due. Partial payments shall be applied first to accrued penalties, then to interest and then to principal. A payment is timely paid when mailed to the borough postage prepaid bearing a postmark date no later than the due date. (Ord. 09-06 § 1, 2009)