Senate Committee Passes Bartolotta Bill to Instill Tax Fairness

HARRISBURG – The Senate Finance Committee passed legislation sponsored by Sen. Camera Bartolotta (R-46) that would reduce the tax burden faced by farmers and landowners who have leased their mineral rights, giving them the same tax benefits afforded to investors.

Investors who buy mineral rights have the appraised value of gas as the basis for the well depletion allowance provided in Pennsylvania while most landowners do not, as appraisals are cost prohibitive.

Because of this, the Internal Revenue Service and some states, including neighboring West Virginia and Ohio, allow a simple percentage depletion allowance that is accessible to everyone paying tax on 85% of royalties.

Senate Bill 654 would amend Pennsylvania’s Tax Reform Code to provide for the cost, or percent, depletion of mines, oil and gas wells, and other natural deposits, in conformity with federal law.

“My bill would afford the same opportunity to families – often who struggle to pay their mortgages, taxes and living expenses – as investors already enjoy. It’s about treating fairly the landowners with oil and gas interests, often who have been on their family farms for years prior to the start of the Marcellus development in my district,” Bartolotta said. “It would be a true community investment, and any money back is good for the local economy.”

Currently, Pennsylvania law does not provide this kind of depletion deduction. While a regulation adopted in 2006 appears to provide for a cost depletion method for mines, oil and gas wells, other natural deposits, and timber, the documents required by the regulation make it unworkable for most taxpayers who otherwise would be able to take the deduction.

Senate Bill 654 now moves to the full Senate for consideration.

Click here for Bartolotta’s remarks on the bill.

CONTACT: Katrina Hanna, 717-787-1463

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