Current through Register Vol. 42, No. 11, August 30, 2024
(1)
Scope - Title 40, Chapter 13, Article 1,
Code of Ala. 1975, levies an
excise and privilege tax on every person severing coal within Alabama. The
distribution of the proceeds from the Coal Severance Tax is provided for in
§
40-13-6,
Code of Ala. 1975. The purpose of this rule is to
provide guidance on the reporting and calculation of the additional severance
tax distribution provided for in Act 2021-120.
(2)
Definitions
(a)
Additional Severance Tax
Distribution - The portion of the coal severance tax distribution
that is attributed to the amount of coal severed in a county that is at least
10 percent greater than the average of coal severed in the county for the
fiscal years 2017-2018, 2018-2019, and 2019-2020 (Fiscal Years
2018-2020).
(b)
1.
Loaded for Shipping in Another
County - When coal is severed from a mine located in one county
and then transported from a different county. Examples include but are not
limited to:
(i) The mouth of the mine is
located in one county; however, the coal is severed from another
county.
(ii) Coal that is
transported on a conveyor belt from the county of severance to another county
for shipment.
2. Loaded
for shipping in another county does not include subsequent shipments of the
coal after the initial shipment outside the county of
severance.
(c)
Three-Year Average - The total gross tonnage in any
county for the fiscal years 2018-2020 divided by three and rounded to the
nearest whole number.
(3)
Reporting Requirements for Additional Severance Tax
Distribution - Effective with the September 2021 Coal Severance
Tax return, which is due no later than October 20, 2021, returns must indicate
whether coal was severed in one county and loaded for shipping in another
county.
(4)
Requirements for Additional Severance Tax Distribution
- Beginning with fiscal year 2021-2022 and every year thereafter, the
additional severance tax distribution equal to the amount that is 10% or
greater than the three-year average will be distributed to the county from
which the coal was severed, unless the coal is loaded for shipping in another
county. If the coal is loaded for shipping in another county, the county where
the coal was severed will receive 75% of the additional severance tax
distribution and the remaining 25% of the additional severance tax distribution
will be disbursed to the county where the coal was loaded for shipping.
(a)
Example of Calculation of
Additional Severance Tax Distribution. The total gross tonnage for
County X is 400,000 tons for fiscal years 2018-2020. The three-year average for
County X is 133,333. In order for the additional severance tax distribution to
occur, the gross tonnage severed in County X during the current fiscal year
must be greater than or equal to 146,666 (133,333*1.10).
(b)
Example of Additional
Severance Tax Distribution When All Coal is Loaded for Shipping in Another
County. Continuing with the previous example, the 75%/25%
distributions between the county of severance and the county where the coal was
loaded for shipping will be calculated as follows:
1. If the previous fiscal year total tons
severed is 200,000 tons, the additional severance tax distribution amount would
be calculated on 53,334 tons (200,000 tons minus 146,666 tons).
2. Multiply the difference in the number of
tons by the $0.135 tax rate to calculate the additional severance tax
distribution amount for County X. Example: 53,334 * $0.135 =
$7,200.09.
3. Calculate the county
of severance 75% share of the additional severance tax distribution, by
multiplying the additional severance tax distribution amount for County X by
0.75. Example: $7.200.09 * 0.75 = $5,400.07.
4. Calculate the 25% loaded for shipping
county share of the additional severance tax distribution, by subtracting the
75% county of severance share from the total additional severance tax
distribution amount. Example: $7,200.09 minus $5,400.07 = $1,800.02.
(c)
Example of
Additional Severance Tax Distribution When a
Portion
of the Coal is Loaded
for Shipping in Another County. Continuing with the previous
examples, the 75%/25% distributions between the county of severance and the
loaded for shipping county will be calculated based upon the percentage of tons
that were severed in one county and loaded for shipping in another county as
follows:
1. Calculate the number of tons that
will be used to compute the additional severance tax distribution amount, by
subtracting the 10% greater tons (146,666) from the previous fiscal year total
tons severed from County X. Example: If the previous fiscal year total tons
severed is 200,000 tons, the additional severance tax distribution amount would
be calculated on 53,334 tons (200,000 tons minus 146,666 tons).
2. Multiply the difference in the number of
tons by the $0.135 tax rate to calculate the additional severance tax
distribution amount for County X. Example: 53,334 * $0.135 =
$7,200.09.
3. If 60% of the coal
severed in County X is not loaded for shipping in another county, then 60% of
the additional severance tax distribution will be disbursed to the county where
the coal was severed. Example: $7,200.09 * .60 = $4,320.05.
4. Calculate the 40% share of the coal that
was loaded for shipping in another county subtract the 60% share of the coal
that was not loaded for shipping from the additional severance tax distribution
amount for County X. Example: $7,200.09 minus $4,320.05 = $2,880.04.
5. The 40% share of the coal that was loaded
for shipping in another county will be distributed in accordance with the
75%/25% additional severance tax distribution formulas.
(i) Calculate the county of severance 75%
share of the additional severance tax distribution, by multiplying the 40%
portion of coal that was loaded for shipping in another county by 0.75.
Example: $2,880.04 * 0.75 = $2,160.03.
(ii) Calculate the 25% loaded for shipping
county share of the additional severance tax distribution, by subtracting the
75% county of severance share from the total additional severance tax
distribution amount. Example: $2,880.04 minus $2,160.03 = $720.01.
(5) The
additional severance tax distribution will be calculated during the first month
following the end of the previous fiscal year and distributed
thereafter.
