Mineral Severance Tax
Crude Oil Exemptions
Does this document represent current KDOR policy?
M E M O R A N D U M
TO: Kansas Crude Oil Operators
FROM: Kansas Department of Revenue, Mineral Tax Bureau
DATE: November 2, 1987
SUBJECT: Change in Crude Oil Exemptions
The 1987 Kansas legislature enacted Senate Bill 1, which changes the way crude oil exemptions are determined effective May 1, 1988. Enclosed are the new forms to be used to verify lease exemptions. These forms may be reproduced if you need additional copies.
Following is a brief summary of the changes in crude oil lease exemptions reflected in Senate Bill 1 for wells over 2,000 feet deep:
1. Effective date - May 1, 1988
2. Department computes average price of oil paid during period July 1, 1987 through December 31, 1987.
3. If average price of oil is $30 or less, exemption is four barrels or less per producing well; if average price is $24 or less, exemption is five barrels or less per producing well; if price is $16 or less, exemption is six barrels or less per producing well; if price is $10 or less, exemption is seven barrels or less per producing well.
If lease is a water flood, one barrel is added to each price category increasing exemption level.
4. The average price computed in (2.) above will be used until each subsequent May 1st period when a new average will be computed using the previous July through December average price.
5. This department will require only a six-month qualifying period to verify exempt status.
6. Refunds of tax collected during the qualifying period will not be made, beginning January 1, 1988.
7. An operator without a K.C.C. license will lose exempt status for any period a valid K.C.C. operator's license is not in force.
Please Note: Leases less than 2,000 feet deep will continue to qualify for exempt status using only the average daily production, as they have in previous years. You will be required to use the new forms, however.
Renewal applications will continue to be mailed to you for leases that have been exempt, reflecting the above changes.
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