HARRISBURG – The Senate approved Sen. Camera Bartolotta’s (R-46) bill today to give hardworking Pennsylvanians the same tax benefits afforded to investors. The bill was also amended to include language describing the tax code for the state budget.
Senate Bill 654 would bring Pennsylvania law in line with Internal Revenue Service (IRS) tax laws relating to the depletion of wells and mines. It would allow long-time landowners to claim the same depletion rate on their royalties as businesses that purchased mineral rights.
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 IRS 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.
“A retired public school teacher and farmer living in Washington County brought this important issue to my attention and deserves the credit for the financial benefits families will soon enjoy that investors already claim,” Bartolotta said. “Special thanks to him for taking the time to advocate for this change. I hope others are inspired to share their state-related concerns too.”
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.
The bill was also amended to include legislative language Bartolotta originally drafted as Senate Bill 629 that would exempt the removal of waste grease from various facilities, including from grease traps, from Sales and Use Tax (SUT). Currently, the Pennsylvania Department of Revenue determined this to be a form of maintenance and therefore subject to SUT. Unlike maintenance, the hauling and removal of general waste from building sites is exempt.
The bill also received approval from the House of Representatives and advances to the governor’s desk for consideration.
CONTACT: Katrina Hanna, 717-787-1463