Reporting Instructions Form For Oil And Gas Taxes - North Dakota Office Of State Tax Commissioner Page 20
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42PROCEDURE FOR REPORTING ENHANCED RECOVERY
GENERAL DEFINITIONS
Incremental Production: Incremental production equals the volume of oil produced from the recovery project that exceeds
the projected volume from the production decline curve each production month.
Nonincremental Production: Nonincremental production each production month equals the lesser of (1) the projected volume
from the production decline curve, or (2) the volume of oil produced from the recovery project.
Exempt Period for the Incremental Oil Exemption: A 5-year exempt period from the oil extraction tax is applicable to
incremental oil produced from a certified secondary recovery project, beginning on the first day of the first month in which
incremental oil is produced from the project and extending for 60 consecutive months. A 10-year exempt period is applicable to
incremental oil produced from a certified tertiary recovery project, beginning on the first day of the first month in which
incremental oil is produced from the project and extending for 120 consecutive months.
Beginning Inventory at Start of Exempt Period: The volume of oil stored in lease tanks as beginning inventory on the first day of
the exempt period will be treated as sold on a first-in, first-out basis during the initial months of the exempt period. This oil must
be reported on the T-12 Oil Report using the well code applicable before the incremental oil exempt period began.
Tax Rate for Incremental Production After Exempt Period: After the 5-year or 10-year exempt period expires, nonexempt
incremental production is subject to a reduced tax rate of 4%. Producers of units with nonincremental production taxed at 6.5%
must continue to file theT-80 Report and Schedule T-81 to compute incremental volumes taxed at 4%. Producers of units
qualifying for the 4% tax rate may discontinue filing the T-80 Report and Schedule T-81. The producer can request a waiver of
their T-12 oil reporting requirements and the responsibility for payment of taxes can be returned to the purchaser.
Ending Inventory After Exempt Period: Producers of units qualified for the 4% tax rate on nonincremental production may
have oil stored in lease tanks as ending inventory on the last day of the exempt period. This oil was taxed at the time of
production. Producers and purchasers, paying tax on sales volumes, should reduce sales volumes by the ending inventory
volumes on a first-in, first-out basis. Producers of units who continue to report on the T-80 Report and Schedule T-81 will
not have an ending inventory issue until the nonincremental production qualifies for the 4% tax rate.
FILE AND REMIT TAX
Oil Producer: The unit operator of a secondary or tertiary recovery project, eligible for the incremental oil incentives, must file
the T-80 Report and Schedule T-81. Without exception, the unit operator or the unit’s working interest owners must remit the
gross production and oil extraction tax. Tax is not remitted with the T-80 Report and Schedule T-81. Tax is remitted with a
separately filed T-12 Oil Report.
Oil Purchaser: The purchaser must file a T-12 Oil Report for oil from a secondary or tertiary recovery project eligible for the
incremental oil incentive. Do not complete lines 3 through 13 when filing on qualifying projects. Use well code ER in Block B.
FORMS REQUIRED
•
T-80 Unit Operator Report of Oil Production from a Secondary or Tertiary Recovery Project calculates the barrels of
oil taxed at 4% and 6.5% oil extraction tax rates.
•
T-81 Unit Operator Schedule of Production from a Secondary or Tertiary Recovery Project accounts for oil produced
from individual project wells by well code.
•
T-82 Operator Schedule of Take In-Kind Owners provides the percentages being reported by working interest owners
when a unit originally qualifies. An updated Schedule T-82 needs to be submitted when take-in-kind ownership or
percentages change (see Exhibits).
•
T-12 Oil Report is used to file and remit the gross production and oil extraction taxes due on a qualifying recovery project.
The due date of the T-12 Oil Report, T-80 Report, and Schedule T-81 is on or before the twenty-fifth day of the month following the
month of production.
Page 18
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