Severance Tax

Severance tax is a form of excise tax that state or Indian governments apply to the value or volume of nonrenewable natural resources—such as oil, natural gas, various metals, and timber. It applies whether or not a business is profitable, and it may be one of the largest single expenses for businesses that focus on these activities.

Each taxing jurisdiction has created its own organic law to assess the tax and the calculation. This means tax amounts can vary greatly based on the state’s tax law, the incentives offered by the state, the type of resource being severed, and a company’s operational facts.

For those businesses operating in multiple jurisdictions, the complexity of the law can be daunting. Because the tax applies to almost every dollar of revenue a business earns, small calculation errors can lead to massive adjustments to overall tax liability—often resulting in large refunds for a taxpayer.

We’re Here to Help

Our professionals can help you build a custom internal process, review existing processes, or manage the reporting requirements.

We’ve worked with all forms of severance tax across the United States and have in-depth experience with state audits, field operations, accounting, and industry practices. We also work with taxpayers and governments to advise on the drafting and refining of laws and regulations.

Our Services

  • Providing development and training on reporting processes and requirements
  • Managing the compliance and reporting process
  • Performing refund reviews
  • Providing state tax audit and appeal assistance
  • Conducting voluntary disclosure agreements

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