Revenue Administrative Bulletin 1989-14
Approved: April 4, 1989
FILING SEVERANCE TAX
RETURNS
RAB-89-14. The purpose of this Bulletin is to explain
the requirements for the filing of severance tax returns.
The Michigan Severance Tax Act, MCL 205.302(l), requires every
corporation, association, person, common carrier, pipe line
company or common purchaser who receives, purchases or transports
severed oil or gas to make a report on or before the 25th day of
each month showing the amount of oil and gas received, purchased,
stored or transported during the preceding month. Other
information such as the value of the severed oil and gas is also
required to be reported. Michigan severance tax returns that are
not filed timely by the 25th of the month following the
production and/or sale of the severed product are subject to the
late filing penalty and interest provisions of the Michigan
Revenue Act, MCL 205.1 et seq.
Due to the nature of the industry of severing gas and oil from
the soil, it may be difficult for a taxpayer to gather the needed
data to allow a timely filing of the return. Consideration should
be given to the following filing procedures as a solution of this
situation:
- File a current return timely with an estimated tax
payment equal to one month's average tax liability,
i.e., file the August 1987 return with a payment
equal to the last 12-month average monthly payment.
- File the September 1987 return timely based upon the
actual production/sales for August 1987 with a
payment of the tax shown due, and so on.
- The Department will require the taxpayer to conduct
periodic reviews of this procedure. If the average
monthly liability reaches an amount greater than the
above-determined estimated payment, then the estimate
will be adjusted accordingly.
A taxpayer may elect to use the above method to assure the
timely filing of the severance tax return and payment of the
severance tax. The election is made by the taxpayer signing a
letter to this effect indicating the above terms and the amount
of the estimated payment. This letter must be mailed to the
Administrator of the Severance Tax at the following address:
Motor Fuel, Cigarette and
Miscellaneous Taxes Division
Treasury Building
Lansing, Michigan 48922
