Miss. Code § 27-17-423

Current through the 2024 Regular Session

Section 27-17-423 - Local privilege tax on drilling rigs

(1) Wherever the words "drilling rig" are used in this section the same shall be construed to mean the machinery, equipment, tools and appliances usual and necessary in the drilling of wells in exploring for, attempting to obtain and obtaining production of oil, gas, sulphur, salt or any other minerals, but limited to the following:

(a) Derricks or masts and subbases.

(b) Draw works, rotary table, crown and traveling blocks, swivel hooks, Kelly joints, drive bushing, elevators and blow out equipment.

(c) Drill stem and accessories and drill bits.

(d) Engines, gas, butane, steam, diesel and their subbases.

(e) Electric generators and motors and equipment.

(f) Drives and controls and indicators.

(g) Boilers and boiler feed equipment.

(h) Tanks.

(i) Pumps and mud equipment.

(j) Rig houses.

(k) Coring and swabbing equipment.

(l) Tools and lumber actively in use with the rig.

(m) Similar machinery, equipment and tools used in lieu of any listed above or forming an integral part thereof.

Each of the enumerated items making up the "drilling rig" shall be identified by disclosing the manufacturer's name, model and serial number when available.

(2) Every owner or operator of a drilling rig or drilling rigs used, or which may be used, for the purpose of exploring for, attempting to obtain or obtaining production of oil, gas, sulphur, salt or any other minerals in this state shall first apply for and procure from the tax collector of the county in which such rig is to be operated a privilege license authorizing him to operate such drilling rig in the State of Mississippi, and the amount of tax hereinafter set forth is hereby imposed for the privilege of operating such drilling rig. A license shall be obtained by such operator for each well drilled prior to the drilling thereof; the amount of the license fee for each well shall be based upon the schedule hereinafter set forth applied to the total depth for which a permit is obtained from the State Oil and Gas Board.

(3) Upon each person, firm or corporation owning or operating a drilling rig for the purpose of exploring for, attempting to obtain or obtaining production of oil, gas, sulphur, salt or any other minerals, there is hereby levied a privilege tax for the use of each drilling rig and for each well drilled by said rig as follows:

(a) Upon a well drilled to a total depth not exceeding seven thousand (7,000) feet - One and One One-hundredths Cents (1.01¢) per foot for each foot to be drilled.

(b) Upon every well drilled to a total depth exceeding seven thousand (7,000) feet - Four and Twenty-one One-hundredths Cents (4.21¢) per foot for each foot to be drilled.

Payment shall be made upon the total depth of the well drilled, regardless of whether production is obtained from the well or not and regardless of whether production is obtained from a higher stratum or not.

If any person, firm or corporation shall pay the privilege tax hereon on as many as eight (8) wells drilled to a depth of not exceeding seven thousand (7,000) feet in any one (1) calendar year, then no additional privilege taxes shall be assessed or collected against such drilling rig for the calendar year for which such tax is paid regardless of how many additional wells should be drilled.

In the event any person, firm or corporation shall pay the privilege tax hereon on as many as four (4) wells drilled to a depth exceeding seven thousand (7,000) feet in any one (1) calendar year, then no additional privilege taxes shall be assessed or collected against such drilling rig for the calendar year for which such tax is paid, regardless of how many additional wells should be drilled during such calendar year.

In order for any person, firm or corporation to secure the exemption from additional taxes as provided in this subsection, such person, firm or corporation shall obtain statements in writing from the State Oil and Gas Board that such person, firm or corporation has drilled as many as eight (8) wells of not exceeding seven thousand (7,000) feet within the calendar year or has drilled as many as four (4) wells to a depth exceeding seven thousand (7,000) feet within the calendar year, and that the drilling rig is therefore entitled to the exemption from further additional tax as provided in this subsection.

(4) The privilege license shall identify the drilling rig upon which it is issued, and there shall be attached to such license an inventory of the rig. The license shall identify the location of the well for the drilling on which the license was issued. The person utilizing such rig shall keep such license with the rig for the purpose of exhibiting it at any time.

(5) The license issued shall not authorize the person to whom issued to operate any drilling rig other than the rig upon which it is issued and which is described therein. Such license shall be good, valid and usable for the drilling rig to which it is applicable as the same may be maintained and repaired or portions thereof replaced or renewed during the period for which it is issued, regardless of any changes of ownership thereof. The date of any parties to any changes of ownership thereof shall be noted upon the back of the original license issued to the taxpayer and signed by the original taxpayer or the purchaser, and such notation shall operate as a transfer of the privilege license as to the use of such drilling rig.

(6) The tax hereby imposed is levied upon drilling, owning or operating a drilling rig in the State of Mississippi, and there is hereby affixed a lien upon the drilling rig for the payment of the privilege tax; and upon the failure to pay such tax, the tax collector of the county may proceed to enforce the lien for the payment of the tax. If the tax is not paid within a period of twenty (20) days after the completion of the well there is hereby imposed a penalty of fifty percent (50%) of the tax due, which amount shall be collected in the same manner as the tax is collected. The sheriff is hereby authorized to levy upon and seize any property of the person, firm, corporation or association from whom such tax is due, including choses in action or any other form of indebtedness to which the remedies might apply. The sheriff shall be entitled to the same fees for his services in executing such seizure as are now allowed by law for service of warrants, to be collected in the same manner as now provided by law for like service.

(7) The State Tax Commission and the State Oil and Gas Board shall furnish to the tax collector all information available to them to assist in the enforcement and collection of the tax levied in this section.

(8) The taxes collected hereunder shall be paid into the general fund of the county unless the board of supervisors of the county shall, in its discretion, provide that the funds shall be distributed into the different tax funds of the county or of any taxing district or districts therein which, in the board's discretion, would have received taxes from the drilling rig involved had the same been taxed ad valorem.

Miss. Code § 27-17-423

Laws, 1989, ch. 507, § 1, eff. 7/1/1989.