Kansas Repeals 24-Month Severance Tax Exemption for Oil and Gas Production

DALLAS, June 13, 2012 /PRNewswire/ -- Kansas's House Bill 2117 ("HB 2117"), recently signed by Governor Sam Brownback, repealed the state's 24-month severance tax exemption for gas wells and oil wells that produce more than 50 barrels of oil per day. Only production after June 30, 2012 is affected.

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Kansas imposes an 8% tax on the gross value of oil and gas produced in the state. Under current law, a new gas or oil well is exempt from severance tax for the first 24 months of production. The well must be kept in production for at least two years from the date production begins. HB 2117 repeals the 24-month severance tax exemption for wells that begin production after June 30, 2012.

HB 2117 provides a new, limited exemption for the production of oil. The exemption applies to the production of oil from a new well that begins production on or after July 1, 2012 and produces more than 50 barrels a day. Further, the well must be in continuous production of at least 24 months. The new exemption is valid for the first 24-month period following the month in which the oil was first produced.

Other severance tax exemptions currently provided for under Kansas law are not affected by HB 2117.

Ryan is an award-winning global tax services firm, with the largest indirect tax practice in North America and the seventh largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a two-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 925 professionals and associates serves over 6,500 clients in 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

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