Severance Tax

Severance tax—an excise tax that state or Tribal governments apply to the value or volume of nonrenewable natural resources, such as oil; natural gas; metals; and timber—can be among a business’s largest expenses for those in these industries.

Each tax jurisdiction has unique laws for natural resource severance, making it incredibly challenging for businesses to navigate the varying tax rates based on a state’s laws and incentives, type of resources extracted, and a company’s operational facts. Even small oversights can lead to massive errors in the calculation of the tax liability.

Evaluate and pursue potential tax refunds, manage compliance, explore process improvements, and avoid draining precious time and resources when our professionals help address your severance tax obligations.

Refund Opportunities and Process Improvements

Avoid missing out on opportunities for tax refunds that can be overlooked when the complexities of severance tax are left to your personnel that may not have access to all tax laws and regulations.

Conducting thorough process reviews of jurisdictions in which businesses operate and the specifics of their business operations, our professionals have helped secure more than $100 million in tax refunds and reduced audit assessments for individual businesses—and often reduce effective production tax rates by 1% to 3%.

Build better processes that eliminate errors and can help develop simplified, accurate reporting with our guidance—so you can correct ongoing overpayments or underpayments.

How the Process Works

We work with businesses ranging from major integrated companies to small independent operators and owners.

Taking a phased approach to projects allows our professionals to guide you through each step of the process—so you’re informed and build confidence and knowledge as you progress.

  • Initial Scoping. The first phase dedicates time to understand the specific facts and processes of your company.
  • Collaborative Assessment. Develop a clear understanding of the project vision and its potential value as our professionals work closely with your management team and personnel to make sure your business goals align with next steps.
  • Project Delivery. Incorporate recurring assessments into each project plan so you’re consistently aware of the status of deliverables.
  • Knowledge Transfer. Build your own expertise with our insights so you obtain the necessary knowledge to manage severance taxes moving forward.

Expansive Jurisdiction and Industry Expertise

As the largest accounting, consulting, and wealth management firm headquartered in the West, our professionals are immersed in many of the top energy production regions, including Texas and the Rocky Mountains—representing the companies that produce approximately 50% of the oil and gas in Colorado and Utah.

Matching our industry savvy with tax expertise, we take the time to understand the specifics of your business and contextualize your needs among the greater industry landscape.

We also work closely with governments and trade associations to advise on new laws and regulations, developing a deep u­­nderstanding for their nuances and how they could impact your business.

Our clients aren’t the only industry leaders who look to us for guidance. We frequently collaborate with influential industry organizations such as the Texas Independent Producers and Royalty Owners Association, Colorado Petroleum Association, Utah Petroleum Association, and Council of Petroleum Accountants Societies.

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