W. Va. Code R. § 110-13AB-4

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-13AB-4 - Reduction of Severance Tax rates

4.1. Coal mined in compliance with W. Va. Code '11-13A-3(f) and this rule shall be allowed a reduced tax rate according to average coal seam thickness as follows:

37 inches to 45 inches (inclusive) -	2% of gross value of coal produced from the seam
less than 37 inches -	1% of gross value of coal produced from the seam

4.1.1. The reduced tax rate includes the .35% Severance Tax for Counties and Municipalities.

4.1.2. If a coal processor purchases coal from a qualified thin seam mine, the additional processing activities associated with such coal would be subject to the same reduced tax rate as applicable to the initial severance activity. However, such processors must maintain a log with records of the following information: mine name, operator's name, mine permit number, dates purchased and sold, and qualified tons and receipts subject to alternative tax rates.

4.2. Average coal seam thickness shall be determined by a professional engineer using isopach maps developed in accordance with generally accepted standards and techniques of the geological and/or engineering profession.

4.2.1. Isopach maps must be of a scale of 1" = 100' to 1' = 400'.

4.2.2. Isopach maps must show actual mine works and mining advance during the Severance Tax reporting year. All coal measurement data points must be posted on the map showing the mine works, in their proper location. Isopach maps must contain 36 inch and 45 inch contour lines if applicable and contour lines at three inch intervals, for all areas mined, unless all coal measurements are less than 37", in which case no contours are required.

4.2.3. Coal measurement data points must be located at intervals of 200 feet or less along the direction of mining advance. Coal measurement data points must show the actual section being mined, including any rock such as: roof rock, 2.5 inches/ coal, 10 inches/ bone, 2 inches/ shale, 3.8 inches/ coal, 26 inches/ floor rock, 2 inches.

4.2.4. Maps must be submitted on paper.

4.2.5. Maps must be certified by a professional engineer.

4.2.6. The following formula will be used for calculating average coal seam thickness:

Ave. Coal Seam = Aa + Bb + Cc . . . + Nn

Thickness A + B + C . . . + N,

when A, B and C are areas between two contiguous isopach lines (planimeter blocks), and a,b, and c are the corresponding arithmetic average thicknesses (in inches) of the coal seam between two such lines (for instance, isopach line 1 = 42", isopach line 2 = 39", average thickness = 40.5") and N and n are subsequent items (if any) in the series.

For example, where the thicknesses of a seam of coal are a = 28.5 in., b = 31.5 in. and c = 39.5 in., and the corresponding areas are A = 100,000 in²., B = 100,000 in². and C = 50,000 in².,

Ave. coal seam thickness=100,000 in.² x 28.5 in. + 100,000 in.² x 31.5 in. + 50,000 in.² x 34.5 in.

100,000 in.² + 100,000 in.² + 50,000 in.²

= 2,850,000 in.³ + 3,150,000 in.³ + 1,725,000 in.³ = 7,725,000 in.³ 250,000 in.² 250,000 in.²

= 30.9 in., which is taxable at the 1% rate.

Planimeter blocks should be numbered to correlate with the block numbers provided on the supporting tax schedule.

4.2.7. If an area of coal which is mined terminates less than halfway between two contiguous isopach lines, the average thickness shall be calculated by subtracting the difference between the two contiguous lines, dividing that difference by four, and subtracting that value from the value of the isopach line in the direction from which the mining area proceeded. For instance, if mining from isopach line 1 which is 42 in. and mining toward isopach line 2 which is 39 in.,

line 1 - line 2 = 42 in. - 39 in.

4 = 4 = 0.75 in.

Ave. coal seam thickness = 42 in. - 0.75 in. = 41.25 in.

4.3. Reduced Severance Tax rates for thin seams of coal are allowed only if the eligible taxpayer submits with its annual Severance Tax return a copy of a signed and dated professional engineer's report stamped with the "registered professional engineer" seal. The report shall certify the accuracy of the average coal seam thickness(es) of the mine from which coal is severed during the tax year of the return, and shall include the figures, the calculations and the isopach map(s) upon which such figures and calculations are based.

4.4. Taxpayers eligible for the reduced Severance Tax rates for thin seams of coal are those producing coal from (1) one or more new underground mines, or (2) from one or more existing mine(s) that did not produce coal from a thin seam of coal between October 14, 1996 and April 11, 1997, inclusive, or from both new underground mines and existing underground mines that did not produce coal from a thin seam of coal during that period of time.

4.5. Taxpayers eligible for the reduced Severance Tax rates are allowed those rates for their Severance Tax years which begin after April 11, 1997.

4.6. Taxpayers eligible for the reduced Severance Tax rates for thin seams of coal are also subject to the Minimum Severance Tax on Coal, and are subject to the regular State Severance Tax on coal for any coal mined which is not eligible for the reduced Severance Tax rates, so these taxpayers must separately account for coal receipts at all of the tax rates which are applicable. Failure to adequately document coal receipts at the lower rate for thin seams of coal will result in all gross receipts from coal being taxed at the regular Severance Tax rate.

W. Va. Code R. § 110-13AB-4