§ 39-14-403 — Imposition

Wyoming § 39-14-403

• Jurisdiction: Wyoming
• Title 39: Taxation and Revenue
• Ch. 14: MINE PRODUCT TAXES
• Art. 4: BENTONITE

Text

(a) Taxable event. The following shall apply:
(i) There is levied a severance tax on the value of
the gross product for the privilege of severing or extracting
bentonite in the state. The severance tax imposed by this
article may be in addition to other taxes, including but not
limited to the ad valorem taxes imposed by W.S. 39-13-104.
(b) Basis of tax (valuation). The following shall apply:
(i) Bentonite shall be valued for taxation as
provided in this subsection. Based upon the information
received or procured pursuant to W.S. 39-14-407(a) or
39-14-408(a)(i), the department shall annually value the gross
product for the preceding calendar year, in appropriate unit
measures of all mines and mining claims from which valuable
deposits are produced, at the fair market value of the product
at the mouth of the mine where produced, after the mining or
production process is completed;
(ii) In the event the bentonite is sold at or prior
to the mouth of the mine without further movement or processing,
the fair market value shall be the total mineral sales revenue
received or receivable by the individual producer less amounts
paid or payable by the producer for exempt royalty;
(iii) In the event the bentonite is not sold at the
mouth of the mine by bona fide arms-length sale, or, except as
hereafter provided, if the product of the mine is used without
sale, the department shall determine the fair market value of
bentonite in accordance with paragraph (iv) of this section;
(iv) The department shall determine the value of
bentonite for severance and ad valorem tax purposes as follows:
(A) For bentonite sold away from the mouth of
the mine, the taxable value shall be calculated by adding to
each producer's actual direct cost of mining per unit, an
allocation of indirect costs, overhead and profit, per unit, as
determined by the method prescribed in subdivision (I) of this
subparagraph plus nonexempt royalty and production taxes per
unit:
(I) The allocation of indirect costs,
overhead and profit, shall be determined initially and effective
with the implementation of this section, by first calculating a
bentonite industry wide percentage add-on factor, determined as
prescribed in subdivision (II) of this subparagraph, and second
by multiplying this initial industry factor times each
producer's actual average direct mining costs to mine-mouth per
unit, excluding royalty and production taxes. This add-on
amount shall be computed prospectively for each producer each
year as prescribed in subdivision (III) of this subparagraph;
(II) The industry factor shall initially be
determined by an audit of 1989 production data conducted in
accordance with the provisions of subdivision (IV) of this
subparagraph. The initial industry factor shall be the same for
all producers for 1990 which shall represent the base line year.
The subsequent add-on factors for each producer will be
determined each year as defined in subdivision (III) of this
subparagraph;
(III) Subsequent adjustments to the add-on
amount as initially determined under the provisions of
subdivision (II) of this subparagraph and as subsequently
determined under the provisions of this subdivision shall be
recalculated each year with the base year being the initial year
of this act. The recalculated add-on amount per unit for each
producer shall be determined by multiplying the previous, or
initial, add-on percentage amount by the difference between each
individual bentonite producer's percentage increase or decrease
in mining costs per unit from the percentage increase or
decrease in sales price per unit and then adding this amount to
the initial industry wide or previous percentage add-on factor.
Sales price per unit for purposes of this formula shall be the
weighted average sales price per unit for each producer based on
the actual arms-length sales of milled bentonite used for
taconite, foundry and drilling mud applications (including
crushed and dried shipments), where user destinations are known
to be in the United States and Canada. Packaged sales of
bentonite in these three (3) categories shall be included after
deducting the packaging premium. The packaging premium shall be
calculated by subtracting the weighted average sales price per
ton of bulk sales in these three (3) categories from the
weighted average sales price per ton of package sales in these
three (3) categories. If substantial arms-length transactions,
which are at least five percent (5%) of total transactions in a
particular category, do not exist for a producer in a specific
targeted sales category, average pricing determined from arms-
length transactions in that specific category by all producers
shall be imposed. In no event shall the value of the bentonite
product include any processing functions or operations
regardless of where the processing is performed. As used in
this subsection, direct mining costs include but are not limited
to mining labor including mine foremen and supervisory personnel
whose primary responsibility is extraction of bentonite,
supplies used for mining, mining equipment, fuel, power and
other utilities used for mining, maintenance of mining
equipment, depreciation of mining equipment, reclamation, ad
valorem property taxes on mining equipment, transportation of
bentonite from the point of severance to the point of valuation
and any other costs incurred prior to the point of valuation
that are directly and specifically attributable to the mining
operation. Royalty and production taxes shall be excluded from
mine mouth cost for purposes of computation. In no event and
under no circumstances shall the value of bentonite be less than
the direct mining costs plus nonexempt royalty and production
taxes;
(IV) At four (4) year intervals and for the
base year the taxable value per unit for each producer shall be
revised using the proportionate profits method. Each producer's
add-on factor shall be adjusted to provide the taxable value
equivalent to the value derived using the proportionate profits
method with a direct cost ratio. The direct cost ratio shall be
total direct mining costs divided by total direct mining,
processing and transportation costs. The sales price per unit,
as described in subdivision (III) of this subparagraph, shall
exclude all royalties and production taxes. The taxable value
shall be derived based on an audit of the most current completed
year's data conducted in the producer's offices. Should the
audit not be performed, the producer's factor shall be adjusted
according to subdivision (III) of this subparagraph until the
audit is performed, and then the revised factor shall be applied
prospectively. Thereafter, the revised factor for each producer
shall be adjusted according to subdivision (III) of this
subparagraph.
(v) The value of the gross product shall be the fair
market value of the product at the mouth of the mine where
produced, after the mining or production process is completed;
(vi) Except as otherwise provided, the mining or
production process is deemed completed when mineral product
reaches the mouth of the mine. In no event shall the value of
the mineral product include any processing functions or
operations regardless of where the processing is performed;
(vii) Except as otherwise provided, if the product as
defined in paragraph (vi) of this subsection is sold at the
mouth of the mine, the fair market value shall be deemed to be
the price established by bona fide arms-length sale.
(c) Taxpayer. The following shall apply:
(i) In the case of the gross product of all mines and
mining claims produced under lease, the lessor is liable for the
payment of ad valorem taxes on the product removed only to the
extent of the lessor's retained interest under the lease,
whether royalty or otherwise, and the lessee or his assignee is
liable for all other property taxes due on production under the
lease;
(ii) Any taxpayer paying the taxes imposed by this
article on any valuable deposit may deduct the severance taxes
paid from any amounts due or to become due to the interest
owners of such valuable deposit in proportion to the interest
ownership;
(iii) Any person extracting valuable products subject
to this article and any person owning an interest in the
valuable products to the extent of their interest ownership are
liable for the payment of the severance taxes imposed by this
article together with any penalties and interest.