MCA Chapter 25

in effect

Miss. Code Ann. § 27-25-1 Tax levied.

There is hereby assessed and levied a privilege tax upon each person engaged within this state in the business of growing, felling, cutting, severing and producing logs or any timber products from the soil or water, for sale, profit or commercial use; or purchasing, logging, or selling logs or timber products for commercial purposes. The tax shall be as follows: For timber, all species used in the manufacture of lumber, veneer, chips or other products: One Dollar ($1.00) per thousand board feet, or Twelve Cents ($.12) per ton, for pine and other soft woods; Seventy-five Cents ($.75) per thousand board feet, or Eight Cents ($.08) per ton, for hardwoods; For lumber, all species and kinds, including crossties: Seventy-five Cents ($.75) per thousand board feet actual board measure; For poles, piling, posts, stanchions and like timber products not manufactured into lumber: Three Dollars and Sixty Cents ($3.60) per one hundred (100) cubic feet; For timber products purchased by cubic feet other than those listed in paragraph (c): Fifty-five Cents ($.55) per one hundred (100) cubic feet for pine and other soft woods; Forty-one Cents ($.41) per one hundred (100) cubic feet for hardwoods; For pulpwood, all species and kinds except pine: Twenty-two and One-half Cents ($.22-1/2) per cord of one hundred twenty-eight (128) cubic feet; For pine pulpwood: Thirty Cents ($.30) per cord of one hundred twenty-eight (128) cubic feet; For stumpwood, lightwood or other distillate wood: Twenty-five Cents ($.25) per ton of two thousand (2,000) pounds; For turpentine crude gum: Thirty Cents ($.30) per barrel of four hundred (400) pounds; For all other timber products not hereinabove specified: Seventy-five Cents ($.75) per thousand board feet or Thirty-seven and One-half Cents ($.37-1/2) per cord of one hundred twenty-eight (128) cubic feet. If the tax has been paid by the producer, grower or vendor, then the purchaser shall report the purchases to the commissioner. This report shall be filed monthly by purchasers and shall give the following information: name and address of producer, grower or vendor, timber severance tax permit number, quantity purchased and quantity from each county in which timber products were severed. If tax has not been paid by producer, grower, or vendor, the tax shall be the liability of the purchaser and shall be paid by him. The tax hereby levied is primarily assessed against the grower of timber products or against the owner of the land from which the products were severed. The owner or owners of timber products produced or severed from the soil or water are hereby made proportionately responsible and liable for payment of any tax herein levied, and if the tax due is unpaid, then the taxes shall be paid to the commissioner by owner or owners. The tax shall operate as a first lien and privilege upon the timber products. The lien and privilege shall follow the timber products into the hands of the ultimate manufacturer or person or dealer.

Miss. Code Ann. § 27-25-3 Definitions.

The following words, terms and phrases, when used in this article, shall have the meanings as defined in this section, except where the context clearly indicates otherwise: “Commissioner, ” “State Tax Commissioner” or “Tax Commissioner” means the Commissioner of Revenue of the Department of Revenue. “Grower” means any person owning or leasing lands on which timber or timber products are grown or produced. “Logs” means stems or trunks of trees cut into convenient lengths for the manufacture of lumber or other timber products. “Lumber” means products sawed or hewed from logs, and shall be measured by actual board measure in units of board feet, but does not mean other products manufactured from logs such as veneer sheets, tight or slack cooperage, hardwood shuttle blocks, hickory, furniture or handle dimension blanks. “Person” means any individual, firm, copartnership, association, corporation, receiver, trustee or any other group or combination acting as a unit, and the plural as well as the singular. “Producer” means any person engaging in or continuing to engage in this state in the business of severing or purchasing timber or timber products form the soil or water. “Pulpwood” means any timber or timber products severed, produced or used by the manufacturers in the production of pulp and pulp products and shall be measured in units of cords four (4) feet high, four (4) feet wide, and eight (8) feet long, containing one hundred twenty-eight (128) cubic feet, and shall be measured green with bark, as at the date of severance. “Sever” means to cut, fell, or otherwise separate or produce from the soil or water any timber or timber products. “Timber” means timber after severance or production. “Timber products” means timber of all kinds, species, or sizes, after severance, including logs, lumber, poles, piling, posts, blocks, bolts, cordwood, and pulpwood, pine stumpwood, pine knots or other distillate wood, crossties, turpentine (crude gum), and all other products derived from timber which have a sale or commercial value.

Miss. Code Ann. § 27-25-5 Measure of tax.

The measure of this tax is the quantity of timber or timber products at the date of severance or production. If the timber is manufactured into lumber and the tax cannot be computed from weight or measured volume, because no record is used or available or the producer or purchaser does not maintain adequate records to show the measure of the tax by weight or measured volume, the tax shall be paid upon the number of board feet of lumber manufactured from the timber. The commissioner may prescribe rules and regulations for ascertaining the quantity of timber or timber products for the purposes of this article.

Miss. Code Ann. § 27-25-7 Measure of tax; shipment out of state without sale.

If any person liable for any tax under this article shall ship or transport his timber or timber products, or any part thereof, out of the state, without making a sale, then the quantity or value thereof, as the case may be, in the condition or form in which they existed immediately before transportation out of the state, shall be the basis for the assessment of the tax imposed by this section.

Miss. Code Ann. § 27-25-9 Persons exempt.

The tax herein levied shall not apply to, nor shall such tax be required of, those individual owners of timber who occasionally sever or cut the same from their own premises, to be utilized by them in the construction or repair of their own structures, buildings or improvements, or for home consumption or used in the processing of any farm products, or to a purchaser or consumer of timber, or its products, on which the tax herein levied has been paid.

Miss. Code Ann. § 27-25-11 Collection and disposition of tax; apportionment among counties.

All taxes herein levied shall be collected by the state tax commissioner and shall be deposited in the state treasury in accordance with Section 7-9-21. For the 1984 fiscal year and each fiscal year thereafter, eighty percent (80%) of such collections shall be credited to the forest resources development fund and twenty percent (20%) of such collections shall be returned to the counties from which the timber or its products was severed. The state treasurer upon receipt of said funds shall transfer those funds to be credited to the forest resources development fund and shall remit the counties’ share of said funds on or before the fifteenth day of the month next succeeding the month in which such collections are made. The commissioner shall determine amounts due the counties from which the timber or its products was severed and shall certify to the state treasurer the amount due each county or special fund. The state treasurer shall requisition moneys from such accounts in such amounts as determined and certified by the commissioner. The state auditor shall deliver the warrant to the state treasurer, who shall transfer such funds to each county or special fund by warrant or by electronic funds transfer on the due date. The commissioner shall deliver on or before the fifteenth day of the month next succeeding the month in which such collections are made, a report to the county receiving said funds, showing from whom said tax was collected. Upon receipt of said funds the county shall place same to the credit of its general fund, to be expended as follows: The moneys placed in the general fund of the counties by this article, not required by law to be otherwise expended, may, in the discretion of the boards of supervisors, be expended in maintaining county roads and bridges or for retiring general county bonds and they are hereby authorized to apportion these funds to the various taxing districts of the county in a just and equitable manner for the payment of bonds and interest, or school and road maintenance purposes, in proportion to the amount of timber or its products severed therefrom. Provided further, that any additional funds which accrue to any county as a result of the increase in tax provided in this article shall not be chargeable to the county in determining the state funds needed annually to support the minimum educational program under Section 37-19-37.

Miss. Code Ann. § 27-25-13 Timber severed from government lands.

Liability for the tax imposed by this article shall apply to any person who shall sever any timber or timber products from government-owned land or lands, either state or federal, in event the timber or timber products severed enter commercial channels of trade or competitive markets.

Miss. Code Ann. § 27-25-15 Title in dispute.

When the title to any timber or timber products being produced or severed from the soil or water, is in dispute, or whenever the purchaser of such timber or timber products, or any person engaged in the producing or severing of timber or timber products from the soil or water, shall be withholding payments on account of litigation, or for any other reason, such purchaser of timber or timber products, or person actually engaged in producing or severing such timber or timber products, is hereby authorized, empowered and required to deduct from the gross amount thus held the amount of the tax herein levied, and to make remittance thereof to the commissioner, as provided by this article.

Miss. Code Ann. § 27-25-17 Returns; records; penalty.

Every person producing or severing timber or timber products from the soil or water in this state, shall, when making the reports required by this article, file with the commissioner a statement, under oath, on forms prescribed by him of the business conducted by such person during the period for which the report is made, showing the kind of timber or timber products and the gross quantity and value thereof so severed or produced, and such other reasonable and necessary information pertaining thereto as the commissioner may require for the proper enforcement of the provisions of this article. All persons engaged in the business of purchasing or manufacturing, in whole or in part, any timber or timber products in this state, shall make and keep for a period of three years, a complete and accurate record showing the gross quantity of timber or timber products purchased, the value thereof, the names of the persons from whom purchased, the time of purchase, the county in which severed and any other information which the commissioner may require. Any person failing to make the report required by this section shall be guilty of a misdemeanor and be punished by a fine of not less than Fifty Dollars ($50.00), nor more than Five Hundred Dollars ($500.00), for each such offense.

Miss. Code Ann. § 27-25-19 Carriers; records; removal from state without permit or payment of tax penalized.

When requested by the commissioner, all transporters (railroads, motor vehicles, or other interstate commerce carriers) of timber or timber products which are subject to the tax herein imposed, out of, within, or across the State of Mississippi, shall be required to furnish the commissioner such information relative to the transportation of such timber or timber products as may be necessary to carry out the provisions of this article. The commissioner shall have authority to inspect bills of lading, waybills, or other similar documents, and such books and records as may relate to the transportation of timber or timber products in the hands of such transporter out of, within, or across the state; and the commissioner shall further be empowered to demand the production of such bills of lading, waybills, or other similar documents and books and records relating to the transportation of timber or timber products at any point in the State of Mississippi which he may designate. The removal by the owner or owners, transporters, purchasers, or producers of timber or timber products, except interstate commerce carriers, from the state without first paying all severance tax that might be due, or obtaining from the commissioner or his duly authorized agent, in advance, written approval or permit to remove from the state any of the timber resources taxed by this article, shall be guilty of a misdemeanor and, upon conviction, be fined not less than Fifty Dollars ($50.00), nor more than Five Hundred Dollars ($500.00), for each such offense. The commissioner, or his duly authorized agent, shall have the right and authority to assess and collect any severance tax found to be due and unpaid, at the point of removal from the state, upon all timber or timber products found being removed from the state and shall assess, in addition to the tax found due, interest at the rate of six per centum (6%) per annum, together with penalties and damages in an amount not to exceed Fifty Dollars ($50.00), and not to be less than Five Dollars ($5.00), upon any severer, producer, owner, purchaser, or transporter (except interstate commerce carriers), found to be removing timber or timber products from the state. Provided, however, that in cases of interstate commerce carriers, duly qualified as such and having a permit to conduct such operations, using bills of lading or waybills prescribed or approved by the interstate commerce commission, such common carriers shall only be required to keep the usual records at an office or offices in this state where such records are usually kept.

Miss. Code Ann. § 27-25-21 Additional information.

The commissioner shall have the power to require any person engaged in producing or severing timber or timber products, from the soil or water, to furnish any additional information deemed by him to be necessary for the purpose of computing the amount of said tax. The commissioner shall have the power to examine the books, records, letters, papers, documents, and all files of such persons for the purpose of assessing the tax; and, to that end, shall have the power to examine witnesses, and if any such witness shall fail or refuse to appear at the request of the commissioner, or refuse access to books, records, letters, papers, documents and files, said commissioner shall have the power and authority to proceed as provided by the Mississippi Sales Tax Law.

Miss. Code Ann. § 27-25-23 When tax due and payable; returns; penalty; administration.

The taxes levied hereunder shall be due and payable in monthly installments, on or before the fifteenth day of the month next succeeding the month in which the tax accrues. The person liable for the tax shall, on or before the fifteenth day of the month, make out a return on the form prescribed, showing the amount of the tax for which he is liable for the preceding month, and shall mail or send the same, together with a remittance for the amount of the tax, to the office of the commissioner. Provided, however, that when the total tax for which any person is liable under this article does not exceed the sum of Three Thousand Six Hundred Dollars ($3,600.00) a year, a quarterly return and remittance, in lieu of the monthly return, may be made on or before the fifteenth day of the month next succeeding the end of the quarter for which the tax is due. Such return shall be signed by the taxpayer or a duly authorized agent of the taxpayer. All administrative provisions and definitions of the Mississippi Sales Tax Law, including those imposing penalties, interest and damages for failure to pay taxes imposed, and all other requirements and duties imposed upon taxpayers under said chapter, shall apply with like force and effect to all persons liable for taxes under the provisions of this article, and the commissioner shall exercise all power and authority and perform all the duties with respect to taxpayers under this article as are provided in said Mississippi Sales Tax Law. In case of conflict between the provisions of this article and any provisions of said sales tax law, then the provisions of this article shall control. Provided, that in the case of persistent or willful failure to make any return and pay the tax shown to be due, damages of not less than ten percent (10%), nor more than twenty-five percent (25%), shall be assessed and collected by the commissioner, in addition to all other penalties. All damages collected on timber or timber products hereunder shall be disbursed to the state and counties on the basis of one half to the county in which severed, and one half to the state.

Miss. Code Ann. § 27-25-25 Procedure where owner pays tax direct to tax commissioner; withholding tax in case of purchases by supervisors.

If any person engaged in the business of felling, logging, manufacturing, processing or otherwise handling of timber or timber products severed from the soil or water, or in purchasing timber or timber products shall fail to remit to the commissioner, as required, the tax imposed by this article for the reason that the owner of such timber or timber products is paying the tax direct to the tax commissioner, then such person shall report to the commissioner, on forms prescribed by him, the kinds and quantities of timber or timber products upon which the tax was not paid. Such reports shall be made at the end of each calendar month. When any board of supervisors, or any members thereof, of any county in the state shall purchase any timber or timber products upon which the tax has not been paid, then the said board of supervisors shall file the reports and remit the tax due to the commissioner in the same manner as is required of other taxpayers.

Miss. Code Ann. § 27-25-27 Exemption from ad valorem taxes.

On and after December 31, 1955, all growing, standing timber, trees and shrubs in the State of Mississippi, or any county, municipality, levee district, or other taxing district therein, shall be exempt from all ad valorem taxes. And such timber, trees and shrubs after severance shall be exempt from ad valorem taxes so long as such timber, trees, or shrubs shall remain in the log state, or unmanufactured condition and so long as the title thereto shall remain in any person other than the manufacturer or processor thereof.

Miss. Code Ann. § 27-25-301 Short title.

This article may be cited as the “Mississippi Salt Severance Tax Law.”

Miss. Code Ann. § 27-25-303 Definitions.

The words, terms and phrases used in this article shall have the meanings ascribed to them herein. “Tax commission, ” “State Tax Commission” or “department” means the Department of Revenue of the State of Mississippi. “Commissioner” or “Chairman of the State Tax Commission” means the Commissioner of Revenue of the Department of Revenue. “Person” means and includes any individual, firm, copartnership, joint venture, association, corporation, estate, trust or other group or combination acting as a unit, and includes the plural as well as the singular in number. “Taxpayer” means any person liable for or having paid any tax to the State of Mississippi under the provisions of this article. “Producer” means any person who produces or severs or who is responsible for the production of salt from the earth or water for sale, profit or commercial use. “Production” means the total amount or quantity of marketable salt produced by whatever measurement used. “Value” means and includes the purchase price or royalty, cost, and any other expense as determined by generally accepted accounting principles of underground mining and handling of production to the point where processing begins. “Processing” means an activity of an industrial or commercial nature wherein labor or skill is applied, by hand or machinery, to raw materials so that a more useful product or substance of trade or commerce is produced for sale. “Engaging in business” means any act or acts engaged in by producers, or parties at interest which results in the production of salt from the soil or water, for storage, transport or further processing. “Salt” means a substance which is chemically classified as sodium chloride.

Miss. Code Ann. § 27-25-305 Tax levied.

There is hereby levied and assessed, and shall be collected by the commissioner, privilege taxes upon every person engaging or continuing within this state in the business of mining, severing or otherwise producing salt or causing it to be produced, for sale, profit or commercial use. The amount of such tax shall be three percent (3%) of the value of the entire production in this state. The tax is hereby levied upon the entire production in this state regardless of the place of sale or the fact that delivery may be made to points outside the state, and the tax shall accrue at the time such salt is severed from the soil or water, and in its natural, unrefined or unprocessed state. The tax levied hereunder shall be a lien upon all products produced within this state and such lien shall be entitled to preference over all judgments, executions, encumbrances or liens whensoever created.

Miss. Code Ann. § 27-25-307 Ad valorem exemptions.

All salt under the ground or salt produced or processed on producing properties and owned by the producer and all leases in production, including mineral rights in producing properties, shall be exempt from all ad valorem taxes now levied or hereafter levied by the State of Mississippi, or any county, or any other taxing district within this state.

Miss. Code Ann. § 27-25-309 Records.

Every person engaged in the business of producing salt in this state, or who is in charge of production operations, and who is required to pay the tax imposed by this article, shall make and keep, for a period of three (3) years, a complete and accurate record to substantiate all taxes accrued hereunder, showing the gross quantity of salt produced and the value of same, the names of the person or persons from whom purchased and the county in which located. All records shall be subject to examination by the commissioner. The commissioner may promulgate such rules and regulations not inconsistent with this article and the Mississippi Sales Tax Law for keeping records, making returns and for the ascertainment, assessment and collection of the tax imposed hereunder as he may deem necessary to enforce its provisions.

Miss. Code Ann. § 27-25-311 Distribution of tax.

All taxes, damages or interest collected hereunder shall be paid into the state treasury by the state tax commission on the same day collected by it. The chairman of the state tax commission shall apportion such funds with one-half (1/2) going to the county in which the salt was produced and he shall certify such apportionment at the end of each month. The state treasurer shall remit to the county its share of said taxes, damages and interest on or before the twentieth day of the month next succeeding the month in which such collections were made. The amount returned to the county may be divided among the supervisors districts by the board in consideration of the needs of the various districts and used for any authorized purpose.

Miss. Code Ann. § 27-25-313 Returns.

The taxes levied by this article shall be due and payable on or before the twentieth day of the month next succeeding the month in which the tax accrues. The taxpayer shall make a return on a form provided by the commissioner showing the period covered, the amount and value of the production for the period, the county in which produced and such other information as the commissioner may require. The taxpayer shall compute the tax due for the period and file the return, together with remittance to cover.

Miss. Code Ann. § 27-25-315 Administration.

All administrative provisions of the Mississippi Sales Tax Law, including those which fix damages, penalties and interest for nonpayment of taxes and for noncompliance with the provisions of said chapter, and all other requirements and duties imposed upon taxpayers, shall apply to all persons liable for taxes under the provisions of this article, and the commissioner shall exercise all the power and authority and perform all the duties with respect to taxpayers under this article as are provided in said Mississippi Sales Tax Law, except where there is conflict, then the provisions of this article shall control. Any adjustment of taxes, damages or interest with any county necessary to correct any error, may be made on a subsequent disbursement to that county.

Miss. Code Ann. § 27-25-501 Definitions.

Whenever used in this article, the following words and terms shall have the definition and meaning ascribed to them in this section, unless the intention to give a more limited meaning is disclosed by the context: “Tax commission” or “department” means the Department of Revenue of the State of Mississippi. “Commissioner” means the Commissioner of Revenue of the Department of Revenue. “Annual” means the calendar year or the taxpayer’s fiscal year when permission is obtained from the commissioner to use a fiscal year as a tax period in lieu of a calendar year. “Value” means the sale price, or market value, at the mouth of the well. If the oil is exchanged for something other than cash, or if there is no sale at the time of severance, or if the relation between the buyer and the seller is such that the consideration paid, if any, is not indicative of the true value or market price, then the commissioner shall determine the value of the oil subject to tax, considering the sale price for cash of oil of like quality. With respect to salvaged crude oil as hereinafter defined, the term “value” shall mean the sale price or market value of such salvaged crude oil at the time of its sale after such salvaged crude oil has been processed or treated so as to render it marketable. “Taxpayer” means any person liable for the tax imposed by this article. With respect to the tax imposed upon salvaged crude oil as hereafter defined, the term “taxpayer” shall mean the person having title to the salvaged crude oil at the time it is being processed or treated so as to render it marketable. “Oil” means petroleum, other crude oil, natural gasoline, distillate, condensate, casinghead gasoline, asphalt or other mineral oil which is mined, or produced, or withdrawn from below the surface of the soil or water, in this state. Any type of salvaged crude oil which, after any treatment, becomes marketable shall be defined as crude oil which has been severed from the soil or water. “Severed” means the extraction or withdrawing from below the surface of the soil or water of any oil, whether such extraction or withdrawal shall be by natural flow, mechanically enforced flow, pumping or any other means employed to get the oil from below the surface of the soil or water, and shall include the withdrawing by any means whatsoever of oil upon which the tax has not been paid, from any surface reservoir, natural or artificial, or from a water surface. Provided, however, that in the case of salvaged crude oil, “severed” means the process of treating such oil so that it will become marketable and the time of severance shall occur upon completion of the treatment. “Person” means any natural person, firm, copartnership, joint venture, association, corporation, estate, trust or any other group, or combination acting as a unit, and the plural as well as the singular number. “Producer” means any person owning, controlling, managing or leasing any oil property, or oil well, and any person who produces in any manner any oil by taking it from the earth or water in this state, and shall include any person owning any royalty or other interest in any oil or its value, whether produced by him, or by some other person on his behalf, either by lease contract or otherwise. “Engaging in business” means any act or acts engaged in (personal or corporate) by producers, or parties at interest, the result of which, oil is severed from the soil or water, for storage, transport or manufacture, or by which there is an exchange of money, or goods, or thing of value, for oil which has been or is in process of being severed, from the soil or water. “Barrel” for oil measurement, means a barrel of forty-two (42) United States gallons of two hundred thirty-one (231) cubic inches per gallon, computed at a temperature of sixty (60) degrees Fahrenheit. “Production” means the total gross amount of oil produced, including all royalty or other interest; that is, the amount for the purpose of the tax imposed by this article shall be measured or determined by tank tables compiled to show one hundred percent (100%) of the full capacity of tanks without deduction for overage or losses in handling. Allowance for any reasonable and bona fide deduction for basic sediment and water, and for correction of temperature to sixty (60) degrees Fahrenheit will be allowed. If the amount of oil produced has been measured or determined by tank tables compiled to show less than one hundred percent (100%) of the full capacity of tanks, then such amount shall be raised to a basis by one hundred percent (100%) for the purpose of the tax imposed by this article. “Gathering system” means the pipelines, pumps and other property used in gathering oil from the property on which it is produced, the tanks used for storage at a central place, loading racks and equipment for loading oil into tank cars or other transporting media, and all other equipment and appurtenances necessary to a gathering system for transferring oil into trunk pipelines. “Discovery well” means any well producing oil from a single pool in which a well has not been previously produced in paying quantities after testing. “Development wells” means all oil producing wells other than discovery wells and replacement wells. “Replacement well” means a well drilled on a drilling and/or production unit to replace another well which is drilled in the same unit and completed in the same pool. “Three-dimensional seismic” means data which is regularly organized in three (3) orthogonal directions and thus suitable for interpretation with a three-dimensional software package on an interactive work station. “Two-year inactive well” means any oil or gas well certified by the State Oil and Gas Board as having not produced oil or gas in more than a total of thirty (30) days during a twelve-consecutive-month period in the two (2) years before the date of certification. “Horizontally drilled well” means a well in which the deviation of the borehole is at least eighty degrees (80°) from vertical so that the borehole penetrates a productive formation in a manner parallel to the formation and in which there is at least one thousand (1,000) feet of lateral penetration through productive reservoirs. “Horizontally drilled recompletion well” means an existing well in which the deviation of the borehole is at least eighty degrees (80°) from vertical so that the borehole penetrates a productive formation in a manner parallel to the formation and in which there is at least one thousand (1,000) feet of lateral penetration through productive reservoirs.

Miss. Code Ann. § 27-25-503 Privilege tax levied; exemptions [Paragraph (1)(c) repealed effective July 1, 2023].

Except as otherwise provided in this section, there is levied, to be collected as provided in this article, annual privilege taxes upon every person engaging or continuing within this state in the business of producing, or severing oil from the soil or water for sale, transport, storage, profit or for commercial use. The amount of the tax shall be measured by the value of the oil produced, and shall be levied and assessed at the rate of six percent (6%) of the value of the oil at the point of production. The tax shall be levied and assessed at the rate of three percent (3%) of the value of the oil at the point of production on oil produced by an enhanced oil recovery method in which carbon dioxide is used; provided, that such carbon dioxide is transported by pipeline to the oil well site and on oil produced by any other enhanced oil recovery method approved and permitted by the State Oil and Gas Board on or after April 1, 1994, pursuant to Section 53-3-101 et seq. The tax shall be levied and assessed at the rate of one and three-tenths percent (1.3%) of the value of the oil at the point of production on oil produced from a horizontally drilled well or from any horizontally drilled recompletion well from which production commences from and after July 1, 2013, for a period of thirty (30) months beginning on the date of first sale of production or until payout of the well cost is achieved, whichever first occurs. Thereafter, the tax shall be levied and assessed as provided for in paragraph (a) of this subsection. Payout of a horizontally drilled well or horizontally drilled recompletion well shall be deemed to have occurred the first day of the next month after gross revenues, less royalties and severance taxes, equal to the cost to drill and complete the well. Each operator must apply by letter to the State Oil and Gas Board for the reduced rate provided in this paragraph (c), and shall provide the board with the status of payout on a semiannual basis of any horizontally drilled well or horizontally drilled recompletion well by signed affidavit executed by a company representative. This paragraph (c) shall be repealed from and after July 1, 2023; however, any horizontally drilled well or horizontally drilled recompletion well from which production commences before July 1, 2023, shall be taxed as provided for in this paragraph (c) notwithstanding that the repeal of this paragraph (c) has become effective. The tax is levied upon the entire production in this state regardless of the place of sale or to whom sold, or by whom used, or the fact that the delivery may be made to points outside the state, and the tax shall accrue at the time the oil is severed from the soil, or water, and in its natural, unrefined or unmanufactured state. Oil produced from a discovery well for which drilling or re-entry commenced on or after April 1, 1994, but before July 1, 1999, shall be exempt from the taxes levied under this section for a period of five (5) years beginning on the date of first sale of production from such well, provided that the average monthly sales price of such oil does not exceed Twenty-five Dollars ($25.00) per barrel. The exemption for oil produced from a discovery well as described in this paragraph (a) shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be exempt for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Oil produced from development wells or replacement wells drilled in connection with discovery wells for which drilling commenced on or after January 1, 1994, but before July 1, 1999, shall be assessed at the rate of three percent (3%) of the value of the oil at the point of production for a period of three (3) years. The reduced rate of assessment of oil produced from development wells or replacement wells as described in this paragraph (a) shall be repealed from and after January 1, 2003, provided that any such production for which drilling commenced before January 1, 2003, shall be assessed at the reduced rate for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. Oil produced from a discovery well for which drilling or re-entry commenced on or after July 1, 1999, shall be assessed at the rate of three percent (3%) of the value of the oil at the point of production for a period of five (5) years beginning on the date of first sale of production from such well, provided that the average monthly sales price of such oil does not exceed Twenty Dollars ($20.00) per barrel. The reduced rate of assessment of oil produced from a discovery well as described in this paragraph (b) shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be assessed at the reduced rate for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Oil produced from development wells or replacement wells drilled in connection with discovery wells for which drilling commenced on or after July 1, 1999, shall be assessed at the rate of three percent (3%) of the value of the oil at the point of production for a period of three (3) years. The reduced rate of assessment of oil produced from development wells or replacement wells as described in this paragraph (b) shall be repealed from and after January 1, 2003, provided that any such production for which drilling commenced before July 1, 2003, shall be assessed at the reduced rate for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. Oil produced from a development well for which drilling commenced on or after April 1, 1994, but before July 1, 1999, and for which three-dimensional seismic was utilized in connection with the drilling of such well shall be assessed at the rate of three percent (3%) of the value of the oil at the point of production for a period of five (5) years, provided that the average monthly sales price of such oil does not exceed Twenty-five Dollars ($25.00) per barrel. The reduced rate of assessment of oil produced from a development well as described in this paragraph (a) and for which three-dimensional seismic was utilized shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be assessed at the reduced rate for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Oil produced from a development well for which drilling commenced on or after July 1, 1999, and for which three-dimensional seismic was utilized in connection with the drilling of such well shall be assessed at the rate of three percent (3%) of the value of the oil at the point of production for a period of five (5) years, provided that the average monthly sales price of such oil does not exceed Twenty Dollars ($20.00) per barrel. The reduced rate of assessment of oil produced from a development well as described in this paragraph (b) and for which three-dimensional seismic was utilized shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be assessed at the reduced rate for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Oil produced before July 1, 1999, from a two-year inactive well as defined in Section 27-25-501 shall be exempt from the taxes levied under this section for a period of three (3) years beginning on the date of first sale of production from such well, provided that the average monthly sales price of such oil does not exceed Twenty-five Dollars ($25.00) per barrel. The exemption for oil produced from an inactive well shall be repealed from and after July 1, 2003, provided that any such production which began before July 1, 2003, shall be exempt for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. Oil produced on or after July 1, 1999, from a two-year inactive well as defined in Section 27-25-501 shall be exempt from the taxes levied under this section for a period of three (3) years beginning on the date of first sale of production from such well, provided that the average monthly sales price of such oil does not exceed Twenty Dollars ($20.00) per barrel. The exemption for oil produced from an inactive well shall be repealed from and after July 1, 2003, provided that any such production which began before July 1, 2003, shall be exempt for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. [Repealed] The State Oil and Gas Board shall have the exclusive authority to determine the qualification of wells defined in paragraphs (n) through (t) of Section 27-25-501.

Miss. Code Ann. § 27-25-505 Distribution of tax.

[With regard to any county which is required to operate on a countywide system of road administration as described in Section 19-2-3, this section shall read as follows:] All taxes levied in this article and collected by the Department of Revenue shall be paid into the State Treasury on the same day collected. Except as otherwise provided in this section, the commissioner shall apportion all the tax collections made pursuant to this article to the state and to the county in which the oil was produced, in accordance with the following schedule and so certify such apportionment to the State Treasurer at the end of each month: On the first Six Hundred Thousand Dollars ($600,000.00) or any part thereof, sixty-six and two-thirds percent (66-2/3%) to the state and thirty-three and one-third percent (33-1/3%) to the county. Above and exceeding Six Hundred Thousand Dollars ($600,000.00), or any part thereof, ninety percent (90%) to the state and ten percent (10%) to the county through June 30, 1989; eighty-five percent (85%) to the state and fifteen percent (15%) to the county from July 1, 1989, through June 30, 1990; eighty percent (80%) to the state and twenty percent (20%) to the county from July 1, 1990, through June 30, 2015; seventy-nine percent (79%) to the state and twenty-one percent (21%) to the county from July 1, 2015, through June 30, 2016; seventy-eight percent (78%) to the state and twenty-two percent (22%) to the county from July 1, 2016, through June 30, 2017; seventy-seven percent (77%) to the state and twenty-three percent (23%) to the county from July 1, 2017, through June 30, 2018; seventy-six percent (76%) to the state and twenty-four percent (24%) to the county from July 1, 2018, through June 30, 2019; and seventy-four percent (74%) to the state and twenty-six percent (26%) to the county for each fiscal year thereafter. The state’s share of all oil severance taxes collected pursuant to this article shall be deposited as provided for in Section 27-25-506. The commissioner shall apportion all the tax collections made pursuant to the tax levied in Section 27-25-503(1)(c) to the county in which the oil was produced. The State Treasurer shall remit the county’s share of the taxes collected pursuant to this article on or before the twentieth day of the month next succeeding the month in which the collections were made, for division among the municipalities and taxing districts of the county. He shall accompany his remittance with a report to the county receiving the funds prepared by the commissioner showing from whom the tax was collected. Upon receipt of the funds, the board of supervisors of the county shall allocate the funds to the municipalities and to the various maintenance and bond and interest funds of the county and school districts, as provided in this subsection. Except as provided in subsection (8) of this section, when there are any oil producing properties within the corporate limits of any municipality, then the municipality shall participate in the division of the tax returned to the county in which the municipality is located, in the proportion which the tax on production of oil from any properties located within the municipal corporate limits bears to the tax on the total production of oil in the county. In no event, however, shall the amount allocated to municipalities exceed one-third (1/3) of the tax produced in the municipality and returned to the county. Any amount received by any municipality as a result of the allocation provided in this subsection shall be used only for such purposes as are authorized by law. Except as provided in subsection (8) of this section, the balance remaining of any amount of tax returned to the county after the allocation to municipalities shall be divided among the various maintenance and bond interest funds of the county and school districts, in the discretion of the board of supervisors, and the board shall make the division in consideration of the needs of the various taxing districts. The funds so allocated shall be used only for purposes as are authorized by law. Any amount above and exceeding Six Hundred Thousand Dollars ($600,000.00) that is remitted to the county that is more than twenty percent (20%) of the taxes above and exceeding Six Hundred Thousand Dollars ($600,000.00) collected on oil produced in the county, shall be utilized by the county for infrastructure repairs.

Miss. Code Ann. § 27-25-506 Special fund for deposit of state’s share of oil and gas severance taxes collected; deposits into Budget Contingency Fund.

There is created a special fund in the State Treasury into which the state’s share of proceeds collected under Sections 27-25-505 and 27-25-705 shall be deposited. The state’s share of all oil and gas severance taxes derived from oil and gas resources under state-owned lands or from severed state-owned minerals shall be deposited into the State Treasury to the credit of the trust fund created in Section 206A, Mississippi Constitution of 1890. The following amounts of the remainder of tax collections apportioned to the state shall be deposited to the credit of the trust fund created in Section 206A, Mississippi Constitution of 1890: For fiscal year 1994, all amounts collected in excess of Thirty-five Million Dollars ($35,000,000.00); For fiscal year 1995, all amounts collected in excess of Thirty-two Million Five Hundred Thousand Dollars ($32,500,000.00); For fiscal year 1996, all amounts collected in excess of Thirty Million Dollars ($30,000,000.00); For fiscal year 1997, all amounts collected in excess of Twenty-seven Million Five Hundred Thousand Dollars ($27,500,000.00); For fiscal year 1998, all amounts collected in excess of Twenty-five Million Dollars ($25,000,000.00); For fiscal year 1999, all amounts collected in excess of Twenty Million Dollars ($20,000,000.00); For fiscal year 2000, all amounts collected in excess of Fifteen Million Dollars ($15,000,000.00); For fiscal year 2001 through December 31, 2000, all amounts collected and transferred in excess of Ten Million Dollars ($10,000,000.00); and For fiscal year 2005, all amounts collected in excess of Ten Million Dollars ($10,000,000.00). [Deleted] [Deleted] The monies collected under paragraphs (a) through (i) of this section that are not deposited into the trust fund shall be deposited into the State General Fund. For fiscal year 2005, the monies not deposited into the State General Fund shall be deposited into the Budget Contingency Fund created in Section 27-103-301. For fiscal year 2006 and each fiscal year thereafter, all amounts collected from the remainder of tax collections apportioned to the state shall be deposited into the State General Fund.

Miss. Code Ann. § 27-25-507 Escaped oil; additional collection pending claims of ownership.

When any regular monthly report required from taxpayers by this article, does not disclose the actual source of any oil taxable under this article, but does show such oil to have escaped from a well or wells and to have been recovered from streams, lakes, ravines, or other natural depressions, it shall be the duty of the commissioner to collect, in addition to the privilege tax herein imposed, an additional amount equal to fourteen percent (14%) of the gross value of such escaped oil. The commissioner shall hold such additional collection in a special escrow account for a period of twelve (12) months from the date of the collection, during which time any person or persons who claim to be the rightful owner or owners of any royalty interest in the escaped oil, shall present proper and satisfactory proof of such ownership to the commissioner. If the commissioner shall be satisfied as to the ownership of such escaped oil, then he shall pay to such claimant or claimants a proportionate part of such additional collection held in escrow, according to their proper interest or interests. No payment to any claimant shall be made, however, before it is approved by the attorney general, or before it is ordered by any court having proper jurisdiction. After the lapse of twelve (12) months from the date of any additional collection, if no claim or claims have been made to it, or to the balance remaining of it after the payment by the commissioner of any claim or claims, the commissioner shall distribute the additional collection or any balance of it in the same manner as is herein provided for the distribution of the tax imposed by this article.

Miss. Code Ann. § 27-25-509 Payment of tax; persons liable; lien.

The tax hereby imposed is levied upon the producers of such oil in the proportion of their ownership at the time of severance, but, except as otherwise herein provided, shall be paid by the person in charge of the production operations, who is hereby authorized, empowered and required to deduct from any amount due to producers of such production at the time of severance the proportionate amount of the tax herein levied before making payments to such producer. Said tax shall become due and payable as provided by this article, and such tax shall constitute a first lien upon any of the oil so produced, when in the hands of the original producer, or any purchaser of such oil in its unmanufactured state or condition. In the event the person in charge of production operations fails to pay the tax, then the commissioner shall proceed against the producer to collect the tax in accordance with the provisions made for the collection of delinquent taxes by the Mississippi Sales Tax Law. When any person in charge of the production operations shall sell the oil produced by him to any person under contracts requiring such purchaser to pay all owners of such oil direct, then the person in charge of the production operations may not be required to deduct the tax herein levied, but in which event such deduction shall be made by the purchaser before making payments to each owner of such oil, and the purchaser in that case shall account for the tax; provided that nothing herein shall be construed as releasing the person in charge of production operations from liability for the payment of said tax. When any person in charge of production operations shall sell oil produced by him on the open market, he shall withhold the tax imposed by this article, and if he is required to pay other interest holders, is hereby authorized, empowered and required to deduct from any amount due them, the amount of tax levied and due under the provisions of this article before making payment to them. Every person in charge of production operations by which oil is severed from the soil or water in this state, who fails to deduct and withhold, as required herein, the amount of tax from sale or purchase price, when such oil is sold or purchased under contract, or agreement, or on the open market, or otherwise, shall be liable to the state for the full amount of taxes, interest, and penalties which should have been deducted, withheld and remitted to the state, and the commissioner shall proceed to collect the tax from the person in charge of production operations, under the provisions of this article, as if he were the producer of the oil.

Miss. Code Ann. § 27-25-511 Title in dispute.

When the title to any oil being severed from the soil, or water, is in dispute, or whenever the producer of such oil from the soil, or water, or purchaser thereof, shall be withholding payments on account of litigation, or for any other reason, such producer or purchaser is hereby authorized, empowered, and required to deduct from the gross amount thus held the amount of the tax herein levied and imposed, and to make remittance thereof to the commissioner as provided by this article.

Miss. Code Ann. § 27-25-513 Returns; oath.

Every producer or person in charge of production operations by which oil is severed from the soil, or water, in this state, when making the reports required by this article, shall file with the commissioner a statement, under oath, on forms prescribed by him, of the business conducted by such producer or person in charge of production operations, during the period for which the report is made, showing gross quantity of oil and the value thereof, so severed or produced, and such other reasonable and necessary information pertaining thereto as the commissioner may require for the proper enforcement of the provisions of this article.

Miss. Code Ann. § 27-25-515 Carriers; records.

When requested by the commissioner, all transporters (railroads, motor vehicles, pipe lines, or other carriers) of oil out of, within, or across the State of Mississippi shall be required to furnish the commissioner such information relative to the transportation of such oil, as he may require. The commissioner shall have authority to inspect bills of lading, waybills, or other similar documents, and such books and records as may relate to the transportation of oil in the hands of each transporter herein referred to; and the commissioner shall further be empowered to demand the production of such bills of lading, waybills or other similar documents and books and records relating to the transportation of oil, at any point in the State of Mississippi which he may designate. Provided, however, that in case of common carriers using bills of lading or waybills prescribed or approved by the interstate commerce commission, such common carriers shall only be required to keep the usual records at office or offices in this state where such records are usually kept.

Miss. Code Ann. § 27-25-517 Additional information.

The commissioner shall have the power to require any producer, or person in charge of production operations, or person purchasing any oil from the soil, or water, to furnish any additional information by him deemed to be necessary for the purpose of computing the amount of said tax; and for said purpose to examine the books, records, and all files of such person; and, to that end, the commissioner shall have the power to examine witnesses, and if any such witness shall fail or refuse to appear at the request of the commissioner, or refuse access to books, records and files, said commissioner shall have the power and authority to proceed as provided by the Mississippi Sales Tax Law.

Miss. Code Ann. § 27-25-519 Returns; administration.

The taxes levied hereunder shall be due and payable in monthly installments, on or before the twenty-fifth day of the month next succeeding the month in which the tax accrues. The taxpayer shall, on or before the twenty-fifth day of the month, make out a return showing the amount of the tax for which he is liable for the preceding month, and shall mail or send the same, together with a remittance for the amount of the tax due, to the office of the commissioner. Such monthly return shall be signed by the taxpayer or a duly authorized agent of the taxpayer, and shall be verified by oath. All administrative provisions of the Mississippi Sales Tax Law, including those which fix damages, penalties, and interest for nonpayment of taxes and for noncompliance with the provisions of said chapter, and all other requirements and duties imposed upon taxpayers, shall apply to all persons liable for taxes under the provisions of this article, and the commissioner shall exercise all the power and authority and perform all the duties with respect to taxpayers under this article as are provided in said sales tax law, except where there is conflict, then the provisions of this article shall control. Any damages, penalties, or interest collected by the commissioner for nonpayment of taxes, or for noncompliance with the provisions of this article, shall be paid into the General Fund of the State Treasury by the commissioner. The tax commission may release production information to the State Oil and Gas Board on all oil produced in this state. Such information may include the name of the producer or operator and the total number of barrels produced for specific wells and time periods, but shall not include the value reported or the tax paid on such production. The State Oil and Gas Board shall provide the tax commission with production information for each well, which information shall include field identification, county or counties where the well is located, well name and American Petroleum Institute number, operator name and well status. The information authorized in this section to be transferred between the tax commission and State Oil and Gas Board shall be provided in formats as agreed upon by those agencies.

Miss. Code Ann. § 27-25-521 Records; penalty.

Every person engaged in the business of producing or purchasing any oil in this state, or who is in charge of production operations, and who is required to pay the tax imposed by this article, shall make and keep, for a period of three (3) years, a complete and accurate record, in the form required by the commissioner, showing the gross quantity of oil produced and value of same, the names of the persons from whom purchased, and the time of purchase. It is hereby made the duty of such person to file quarterly with the commissioner a statement, under oath, showing the names and addresses of all persons from whom has been purchased any oil, produced or severed from the soil, or water, in Mississippi during the preceding quarter (three (3) months), and the county from which the oil was severed, together with a total gross quantity and value of oil so purchased, and any other information which the commissioner may require. Said report shall begin with the first calendar quarter after this article becomes effective and shall thereafter be filed within thirty (30) days after the expiration of each quarter and shall be made on such forms as may be prescribed by the commissioner. Any person failing to make the report required by this section shall be guilty of a misdemeanor and be punished by a fine of not less than fifty dollars or more than five hundred dollars for each such offense.

Miss. Code Ann. § 27-25-523 Ad valorem exemptions.

All oil produced or under the ground on producing properties within the State of Mississippi and all producing oil equipment, including wells, connections, pumps, derricks and other appurtenances actually owned by and belonging to the producer, and all leases in production, including mineral rights in producing properties, shall be exempt from all ad valorem taxes now levied or hereafter levied by the State of Mississippi, or any county, municipality, levee district, road, school or any other taxing district within this state. This exemption shall not apply to drilling equipment, including derricks, machinery, and other materials necessary to drilling, nor to oil gathering systems, nor to the surface of lands leased for oil production or upon which oil producing properties are situated, but all such drilling equipment, gathering systems, and lands shall be assessed as are other properties and shall be subject to ad valorem tax. However, no additional assessment shall be added to the surface value of such lands by reason of the presence of oil thereunder or its production therefrom. The exemption herein granted shall apply to all ad valorem taxes levied in the year 1944 and each year thereafter.

Miss. Code Ann. § 27-25-525 Constitutionality.

If any clause, sentence, paragraph or part of this article shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, which changes or materially affects the scheme and method of taxation herein provided for, or which in anywise prevents or modifies the exemptions provided for under Section 27-25-523 hereof, then the whole of the article shall be invalid, and every law which this article amends, modifies or repeals shall become operative and in full force and effect.

Miss. Code Ann. § 27-25-701 Definitions.

Whenever used in this article, the following words and terms shall have the definition and meaning ascribed to them in this section, unless the intention to give a more limited meaning is disclosed by the context: “Tax commission” or “department” means the Department of Revenue of the State of Mississippi. “Commissioner” means the Commissioner of Revenue of the Department of Revenue. “Annual” means the calendar year or the taxpayer’s fiscal year when permission is obtained from the commissioner to use a fiscal year as a tax period in lieu of a calendar year. “Value” means the sale price, or market value, at the mouth of the well. If the gas is exchanged for something other than cash, or if there is no sale at the time of severance, or if the relation between the buyer and the seller is such that the consideration paid, if any, is not indicative of the true value or market price, then the commissioner shall determine the value of the gas subject to tax, considering the sale price for cash of gas of like quality in the same or nearest gas-producing field. “Taxpayer” means any person liable for the tax imposed by this article. “Gas” means natural and casinghead gas and any gas or vapor taken from below the surface of the soil or water in this state, regardless of whether produced from a gas well or from a well also productive of oil or any other product; provided, however, the term “gas” shall not include carbon dioxide. “Casinghead gas” means any gas or vapor indigenous to an oil stratum and produced from such stratum with oil. “Severed” means the extraction or withdrawing by any means whatsoever, from below the surface of the soil or water, of any gas. “Person” means any natural person, firm, copartnership, joint venture, association, corporation, estate, trust, or any other group, or combination acting as a unit, and the plural as well as the singular number. “Producer” means any person owning, controlling, managing or leasing any oil or gas property, or oil or gas well, and any person who produces in any manner any gas by taking it from the earth or water in this state, 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. “Engaging in business” means any act or acts engaged in (personal or corporate) by producers, or parties at interest, the result of which gas is severed from the soil or water, for storage, transport or manufacture, or by which there is an exchange of money, or goods, or thing of value, for gas which has been or is in process of being severed from the soil or water. “Production” means 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 article shall be measured or determined by meter readings showing one hundred percent (100%) of the full volume expressed in cubic feet at a standard base and flowing temperature of sixty (60) degrees Fahrenheit and at the absolute pressure at which the gas is sold and purchased; correction to be made for pressure according to Boyle’s law, and for specific gravity according to the gravity at which the gas is sold and purchased or if not so specified, according to test made by the balance method. “Gathering system” means the pipelines, compressors, pumps, regulators, separators, dehydrators, meters, metering installations and all other property used in gathering gas from the well from which it is produced if such properties are owned by other than the operator, and all such properties, if owned by the operator, beyond the first metering installation that is nearest the well. “Discovery well” means any well producing gas from a single pool in which a well has not been previously produced in paying quantities after testing. “Development wells” means all gas-producing wells other than discovery wells and replacement wells. “Replacement well” means a well drilled on a drilling and/or production unit to replace another well which is drilled in the same unit and completed in the same pool. “Three-dimensional seismic” means data which is regularly organized in three (3) orthogonal directions and thus suitable for interpretation with a three-dimensional software package on an interactive work station. “Two-year inactive well” means any oil or gas well certified by the State Oil and Gas Board as having not produced oil or gas in more than a total of thirty (30) days during a twelve-consecutive-month period in the two (2) years before the date of certification. “Horizontally drilled well” means a well in which the deviation of the borehole is at least eighty degrees (80°) from vertical so that the borehole penetrates a productive formation in a manner parallel to the formation and in which there is at least one thousand (1,000) feet of lateral penetration through productive reservoirs. “Horizontally drilled recompletion well” means an existing well in which the deviation of the borehole is at least eighty degrees (80°) from vertical so that the borehole penetrates a productive formation in a manner parallel to the formation and in which there is at least one thousand (1,000) feet of lateral penetration through productive reservoirs.

Miss. Code Ann. § 27-25-703 Privilege tax levied; exemptions [Paragraph (1)(b) repealed effective July 1, 2023].

Except as otherwise provided in this section, there is hereby levied, to be collected as provided in this article, annual privilege taxes upon every person engaging or continuing within this state in the business of producing, or severing gas from below the soil or water for sale, transport, storage, profit or for commercial use. The amount of the tax shall be measured by the value of the gas produced and shall be levied and assessed at a rate of six percent (6%) of the value of the gas at the point of production, except as otherwise provided in subsection (4) of this section. The tax shall be levied and assessed at the rate of one and three-tenths percent (1.3%) of the value of the gas at the point of production on gas produced from a horizontally drilled well or from any horizontally drilled recompletion well from which production commences from and after July 1, 2013, for a period of thirty (30) months beginning on the date of first sale of production or until payout of the well cost is achieved, whichever first occurs. Thereafter, the tax shall be levied and assessed as provided for in paragraph (a) of this subsection. Payout of a horizontally drilled well or horizontally drilled recompletion well shall be deemed to have occurred the first day of the next month after gross revenues, less royalties and severance taxes, equal to the cost to drill and complete the well. Each operator must apply by letter to the State Oil and Gas Board for the reduced rate provided in this paragraph (b), and shall provide the board with the status of payout on a semiannual basis of any horizontally drilled well or horizontally drilled recompletion well by signed affidavit executed by a company representative. This paragraph (b) shall be repealed from and after July 1, 2023; however, any horizontally drilled well or horizontally drilled recompletion well from which production commences before July 1, 2023, shall be taxed as provided for in this paragraph (b) notwithstanding that the repeal of this paragraph (b) has become effective. The tax is levied upon the entire production in this state, regardless of the place of sale or to whom sold or by whom used, or the fact that the delivery may be made to points outside the state, but not levied upon that gas, lawfully injected into the earth for cycling, repressuring, lifting or enhancing the recovery of oil, nor upon gas lawfully vented or flared in connection with the production of oil, nor upon gas condensed into liquids on which the oil severance tax of six percent (6%) is paid; however, if any gas so injected into the earth is sold for such purposes, then the gas so sold shall not be excluded in computing the tax. The tax shall accrue at the time the gas is produced or severed from the soil or water, and in its natural, unrefined or unmanufactured state. Natural gas and condensate produced from any wells for which drilling is commenced after March 15, 1987, and before July 1, 1990, shall be exempt from the tax levied under this section for a period of two (2) years beginning on the date of first sale of production from such wells. Any well which begins commercial production of occluded natural gas from coal seams on or after March 20, 1990, and before July 1, 1993, shall be taxed at the rate of three and one-half percent (3-1/2%) of the gross value of the occluded natural gas from coal seams at the point of production for a period of five (5) years after such well begins production. Any well which begins commercial production of occluded natural gas from coal seams on or after July 1, 2004, and before July 1, 2007, shall be taxed at the rate of three percent (3%) of the gross value of the occluded natural gas from coal seams at the point of production for a period of five (5) years beginning on the date of the first sale of production from such well. Natural gas produced from discovery wells for which drilling or re-entry commenced on or after April 1, 1994, but before July 1, 1999, shall be exempt from the tax levied under this section for a period of five (5) years beginning on the earlier of one (1) year from completion of the well or the date of first sale from such well, provided that the average monthly sales price of such gas does not exceed Three Dollars and Fifty Cents ($3.50) per one thousand (1,000) cubic feet. The exemption for natural gas produced from discovery wells as described in this paragraph (a) shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be exempt for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Natural gas produced from development wells or replacement wells drilled in connection with discovery wells for which drilling commenced on or after January 1, 1994, shall be assessed at a rate of three percent (3%) of the value thereof at the point of production for a period of three (3) years. The reduced rate of assessment of natural gas produced from development wells or replacement wells as described in this paragraph (a) shall be repealed from and after January 1, 2003, provided that any such production for which drilling commenced before January 1, 2003, shall be assessed at the reduced rate for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. Natural gas produced from discovery wells for which drilling or re-entry commenced on or after July 1, 1999, shall be assessed at a rate of three percent (3%) of the value thereof at the point of production for a period of five (5) years beginning on the earlier of one (1) year from completion of the well or the date of first sale from such well, provided that the average monthly sales price of such gas does not exceed Two Dollars and Fifty Cents ($2.50) per one thousand (1,000) cubic feet. The reduced rate of assessment of natural gas produced from discovery wells as described in this paragraph (b) shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be assessed at the reduced rate for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Natural gas produced from development wells or replacement wells drilled in connection with discovery wells for which drilling commenced on or after July 1, 1999, shall be assessed at a rate of three percent (3%) of the value thereof at the point of production for a period of three (3) years. The reduced rate of assessment of natural gas produced from development wells or replacement wells as described in this paragraph (b) shall be repealed from and after January 1, 2003, provided that any such production for which drilling commenced before January 1, 2003, shall be assessed at the reduced rate for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. Gas produced from a development well for which drilling commenced on or after April 1, 1994, but before July 1, 1999, and for which three-dimensional seismic was utilized in connection with the drilling of such well, shall be assessed at a rate of three percent (3%) of the value of the gas at the point of production for a period of five (5) years, provided that the average monthly sales price of such gas does not exceed Three Dollars and Fifty Cents ($3.50) per one thousand (1,000) cubic feet. The reduced rate of assessment of gas produced from a development well as described in this subsection and for which three-dimensional seismic was utilized shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be assessed at the reduced rate for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Gas produced from a development well for which drilling commenced on or after July 1, 1999, and for which three-dimensional seismic was utilized in connection with the drilling of such well, shall be assessed at a rate of three percent (3%) of the value of the gas at the point of production for a period of five (5) years, provided that the average monthly sales price of such gas does not exceed Two Dollars and Fifty Cents ($2.50) per one thousand (1,000) cubic feet. The reduced rate of assessment of gas produced from a development well as described in this paragraph (b) and for which three-dimensional seismic was utilized shall be repealed from and after July 1, 2003, provided that any such production for which a permit was granted by the board before July 1, 2003, shall be assessed at the reduced rate for an entire period of five (5) years, notwithstanding that the repeal of this provision has become effective. Natural gas produced before July 1, 1999, from a two-year inactive well as defined in Section 27-25-701 shall be exempt from the taxes levied under this section for a period of three (3) years beginning on the date of first sale of production from such well, provided that the average monthly sales price of such gas does not exceed Three Dollars and Fifty Cents ($3.50) per one thousand (1,000) cubic feet. The exemption for natural gas produced from an inactive well as described in this subsection shall be repealed from and after July 1, 2003, provided that any such production which began before July 1, 2003, shall be exempt for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. Natural gas produced on or after July 1, 1999, from a two-year inactive well as defined in Section 27-25-701 shall be exempt from the taxes levied under this section for a period of three (3) years beginning on the date of first sale of production from such well, provided that the average monthly sales price of such gas does not exceed Two Dollars and Fifty Cents ($2.50) per one thousand (1,000) cubic feet. The exemption for natural gas produced from an inactive well as described in this paragraph (b) shall be repealed from and after July 1, 2003, provided that any such production which began before July 1, 2003, shall be exempt for an entire period of three (3) years, notwithstanding that the repeal of this provision has become effective. The State Oil and Gas Board shall have the exclusive authority to determine the qualification of wells defined in paragraphs (n) through (t) of Section 27-25-701.

Miss. Code Ann. § 27-25-705 Distribution of tax.

[With regard to any county which is required to operate on a countywide system of road administration as described in Section 19-2-3, this section shall read as follows:] All taxes herein levied in this article and collected by the department shall be paid into the State Treasury on the same day in which the taxes are collected. Except as otherwise provided in this section, the commissioner shall apportion all the tax collections made pursuant to this article to the state and to the county in which the gas was produced, in the proportion of sixty-six and two-thirds percent (66-2/3%) to the state and thirty-three and one-third percent (33-1/3%) to the county. The commissioner shall apportion all the tax collections made pursuant to Section 27-25-703(1)(b) to the county in which the gas is produced. When the producer of gas subject to the tax levied in this article increases the price of the gas sold and the increase is subject to approval by a federal regulatory board or commission, and when the producer of the gas so requests, the State Treasurer is hereby authorized to hold the severance tax collected on the price increase in escrow until such time as the price increase or a portion thereof is finally granted or approved. The severance tax thus held in escrow shall be deposited by the State Treasurer to an account in a state depository to be invested in an interest-bearing account in the manner provided by law. When the price increase in question or a portion thereof is granted or approved, the commissioner shall compute the correct severance tax due on the increase and certify the amount of tax thus computed. This amount and interest earned from the depository shall be distributed to the General Fund and to the county or counties proportionately as provided in this subsection. The balance, if any, of the tax and interest held in escrow on the price increase shall be returned to the taxpayer. The state’s share of all gas severance taxes collected pursuant to this section shall be deposited as provided for in Section 27-25-506. The commissioner shall certify at the end of each month the apportionment to each county to the State Treasurer, who shall remit the county’s share of the funds on or before the twentieth day of the month next succeeding the month in which the collections were made for division among the municipalities and taxing districts of the county. The commissioner shall submit a report to the State Treasurer for distribution to each county receiving the funds showing from whom the tax and interest, if any, were collected. Upon receipt of the funds, the board of supervisors of the county shall allocate the funds to the municipalities and to the various maintenance and bond and interest funds of the county and school districts, as provided in this subsection. When there are any gas producing properties within the corporate limits of any municipality, then the municipality shall participate in the division of the tax and interest, if any, returned to the county in which the municipality is located in the proportion which the tax on production of gas from properties located within the municipal corporate limits bears to the tax on total production of gas in the county. In no event, however, shall the amount allocated to the municipalities exceed one-third (1/3) of the tax and interest produced in the municipality and returned to the county. Any amount received by any municipality as a result of the allocation provided for in this subsection shall be used for such purposes as are authorized by law. The balance remaining of any funds returned to the county after the allocation to municipalities shall be divided among the various maintenance and bond and interest funds of the county and school districts, in the discretion of the board of supervisors, and the board shall make the division in consideration of the needs of the various taxing districts. The funds so allocated shall be used only for such purposes as are authorized by law.

Miss. Code Ann. § 27-25-706 Distribution of tax; pledge of county’s share; issuance of bonds; effect of section.

The board of supervisors of any county in the State of Mississippi bordering on the Pearl River and having a population according to the 1970 census of not less than forty thousand (40,000) and not more than fifty thousand (50,000), and through which Interstate Highway 20 runs, and wherein there is being constructed or has been constructed a plant for the extracting of sulphur from natural gas, and the board of supervisors of any county in the State of Mississippi bordering on the Pearl River and having a population according to the 1970 census of not less than nineteen thousand (19,000) and not more than twenty-one thousand (21,000) and wherein U.S. Highway 49 and Mississippi Highway 28 intersect and wherein there is being constructed or has been constructed a plant for the extracting of sulphur from natural gas, are hereby authorized and empowered, in their discretion, to pledge all or any part of the county’s share of the severance tax on gas extracted, handled or processed through such extraction plant, as additional security for the payment of bonds issued for the purpose of constructing, reconstructing, overlaying and/or repairing, an access road or roads or publicly owned railroads to and from such sulphur extraction plant. The amount so pledged for the payment of the principal of and the interest on such bonds shall be deducted and set aside by such board of supervisors prior to the distribution of such severance taxes in the manner provided by law, and only the amount of such severance taxes remaining after such deduction shall be subject to such distribution. The board of supervisors in such counties may pledge only up to fifty percent (50%) of such severance taxes as their respective county may receive to retire the bonds and interest pursuant to the authority of this section. The required local contribution of said counties to the cost of the minimum foundation education program shall not be reduced nor shall the obligation of the state under said minimum foundation program to said counties be increased because of the passage of this section. Such bonds shall be issued under the provisions of Section 19-9-1 through Section 19-9-19.

Miss. Code Ann. § 27-25-707 Payment of tax; persons liable; lien.

The tax hereby imposed is levied upon the producers of such gas in the proportion of their ownership at the time of severance, but except as otherwise herein provided, shall be paid by the person in charge of the production operations, who is hereby authorized, empowered and required to deduct from any amount due to producers of such production at the time of severance the proportionate amount of the tax herein levied before making payments to such producer. Said tax shall become due and payable as provided by this article, and such tax shall constitute a first lien upon the property from which the gas was produced. In the event the person in charge of production operations fails to pay the tax, then the commissioner shall proceed against the producer to collect the tax in accordance with the provisions made for the collection of delinquent taxes by the Mississippi Sales Tax Law. When any person in charge of the production operations shall sell the gas produced by him to any person under contracts requiring such purchaser to pay all owners of such gas direct, then the person in charge of the production operations may not be required to deduct the tax herein levied, but in which event such deduction shall be made by the purchaser before making payments to each owner of such gas, and the purchaser in that case shall account for the tax; provided that nothing herein shall be construed as releasing the person in charge of production operations from liability for the payment of said tax. When any person in charge of production operations shall sell gas produced by him on the open market, he shall withhold the tax imposed by this article, and if he is required to pay other interest holders, is hereby authorized, empowered and required to deduct from any amount due them, the amount of tax levied and due under the provisions of this article before making payment to them. Every person in charge of production operations by which gas is severed from the soil or water in this state, who fails to deduct and withhold, as required herein, the amount of tax from sale or purchase price, when such gas is sold or purchased under contract or agreement, or on the open market, or otherwise, shall be liable to the state for the full amount of taxes, interest, and penalties which should have been deducted, withheld and remitted to the state, and the commissioner shall proceed to collect the tax from the person in charge of production operations, under the provisions of this article, as if he were the producer of the gas.

Miss. Code Ann. § 27-25-709 Title in dispute.

When the title to any gas being severed from the soil, or water, is in dispute, or whenever the producer of such gas from the soil, or water, or purchaser thereof, shall be withholding payments on account of litigation, or for any other reason, such producer or purchaser is hereby authorized, empowered, and required to deduct from the gross amount thus held the amount of the tax herein levied and imposed, and to make remittance thereof to the commissioner as provided by this article.

Miss. Code Ann. § 27-25-711 Returns; oath.

Every producer or person in charge of production operations by which gas is severed from the soil, or water, in this state, when making the reports required by this article, shall file with the commissioner a statement, under oath, on forms prescribed by him, of the business conducted by such producer or person in charge of production operations, during the period for which the report is made, showing gross quantity of gas and the value thereof, so severed or produced, and such other reasonable and necessary information pertaining thereto as the commissioner may require for the proper enforcement of the provisions of this article.

Miss. Code Ann. § 27-25-713 Transporters; records.

When requested by the commissioner, all transporters of gas out of, within, or across the State of Mississippi shall be required to furnish the commissioner such information relative to the transportation of such gas, as he may require. The commissioner shall have authority to inspect all meter and other charts, documents, books and records as may relate to the transportation of gas in the hands of each transporter herein referred to. The commissioner shall further be empowered to demand the production of such charts, documents, and books and records relating to the transportation of gas at any point in the State of Mississippi which he may designate.

Miss. Code Ann. § 27-25-715 Additional information.

The commissioner shall have the power to require any producer or person in charge of production operations, or person purchasing any gas from the soil, or water, to furnish any additional information by him deemed to be necessary for the purpose of computing the amount of said tax; and for said purpose to examine the meter and other charts, books, records, and all files of such person; and, to that end, the commissioner shall have the power to examine witnesses, and if any such witness shall fail or refuse to appear at the request of the commissioner, or refuse access to books, records and files, said commissioner shall have the power and authority to proceed as provided by the Mississippi Sales Tax Law.

Miss. Code Ann. § 27-25-717 Returns; administration.

The taxes levied hereunder shall be due and payable in monthly installments on or before the twenty-fifth day of the month next succeeding the month in which the tax accrues. The taxpayer shall, on or before the twenty-fifth day of the month, make out a return showing the amount of the tax for which he is liable for the preceding month and shall mail or send the same, together with a remittance for the amount of the tax due, to the office of the commissioner. Such monthly return shall be signed by the taxpayer or a duly authorized agent of the taxpayer and shall be verified by oath. All administrative provisions of the Mississippi Sales Tax Law, including those which fix damages, penalties, and interest for nonpayment of taxes and for noncompliance with the provisions of said chapter, and all other requirements and duties imposed upon taxpayers shall apply to all persons liable for taxes under the provisions of this article, and the commissioner shall exercise all the power and authority and perform all the duties with respect to taxpayers under this article as are provided in said Mississippi Sales Tax Law, except where there is conflict, then the provisions of this article shall control. Provided, however, the statute of limitations for examining returns or to recover taxes and interest on funds held in escrow on price increases shall be three (3) years from the time the tax and interest is withdrawn from the State Depository for distribution to the State Treasury and to the county or counties in which the gas was produced. Any damages, penalties, or interest collected by the commissioner for nonpayment of taxes or for noncompliance with the provisions of this article shall be paid into the General Fund of the State Treasury by the commissioner. The tax commission may release production information to the State Oil and Gas Board on all gas produced in this state. Such information may include the name of the producer or operator and the total number of million cubic feet produced for specific wells and time periods, but shall not include the value reported or the tax paid on such production. The State Oil and Gas Board shall provide the tax commission with production information for each well, which information shall include field identification, county or counties where the well is located, well name and American Petroleum Institute number, operator name and well status. The information authorized in this section to be transferred between the tax commission and State Oil and Gas Board shall be provided in formats as agreed upon by those agencies.

Miss. Code Ann. § 27-25-719 Records.

Every person engaged in the business of producing or purchasing any gas in this state, or who is in charge of production operations, and who is required to pay the tax imposed by this article, shall make and keep, for a period of three (3) years, a complete and accurate record, in the form required by the commissioner showing the gross quantity of gas produced and value of same, the names of the persons from whom purchased, and the time of purchase.

Miss. Code Ann. § 27-25-721 Ad valorem exemptions.

All gas and carbon dioxide produced or under the ground on producing properties within the State of Mississippi and all producing gas or carbon dioxide equipment, including wells, connections, pumps, derricks and other appurtenances actually owned by and belonging to the producer, and all leases in production, including mineral rights in producing properties, shall be exempt from all ad valorem taxes now levied or hereafter levied by the State of Mississippi, or any other taxing district within this state. This exemption shall not apply to drilling equipment, including derricks, machinery, and other materials necessary to drilling, nor to gas or carbon dioxide gathering systems, nor to the surface of lands leased for gas or carbon dioxide production or upon which gas or carbon dioxide producing properties are situated, but all such drilling equipment, gathering systems, and lands shall be assessed as are other properties and shall be subject to ad valorem tax. However, no additional assessment shall be added to the surface value of such lands by reason of the presence of gas or carbon dioxide thereunder or its production therefrom. The exemption herein granted shall apply to all ad valorem taxes levied in the year 1948 and each year thereafter.

Miss. Code Ann. § 27-25-723 Constitutionality.

If any clause, sentence, paragraph or part of this article shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, which changes or materially affects the scheme and method of taxation herein provided for, or which in anywise prevents or modifies the exemptions provided for under Section 27-25-721 hereof, then the whole of the article shall be invalid, and every law which this article amends, modifies or repeals shall become operative and in full force and effect.