$4995. Withholding; depositary requirements

(a) Withholding by purchaser

(1) Withholding required

Except to the extent provided in regulations prescribed by the Secretary

(A) the first purchaser of any domestic crude oil shall withhold a tax equal to the amount of the tax imposed by section 4986 with respect to such oil from amounts payable by such purchaser to the producer of such oil, and

(B) the first purchaser of such oil shall be liable for the payment of the tax required to be withheld under subparagraph (A) and shall not be liable to any person for the amount of any such payment.

(2) Determination of amount to be withheld

(A) In general

The purchaser shall determine the amount to be withheld under paragraph

(1)

(i) on the basis of the certification furnished to the purchaser under section 6050C, unless the purchaser has reason to believe that any information contained in such certification is not correct, or

(ii) if clause (i) does not apply, under regulations prescribed by the Secretary.

(B) Net income limitation not to be applied

For purposes of determining the amount to be withheld under paragraph (1), subsection (b) of section 4988 shall not apply.

(3) Adjustments for withholding errors

(A) In general

To the extent provided in regulations prescribed by the Secretary, withholding errors made by a purchaser with respect to the crude oil of a producer shall be corrected by that purchaser by making proper adjustments in the amounts withheld from subsequent payments to such producer for crude oil.

(B) Withholding error

For purposes of subparagraph (A), there is a withholding error if the amount withheld by the purchaser under paragraph (1) with respect to any payment for any crude oil exceeds (or is less than) the tax imposed by section 4986 with respect to such oil (determined without regard to section 4988(b)).

(C) Voluntary withholding

The Secretary may by regulations provide for withholding under this subsection of additional amounts from payments by any purchaser to any producer if the purchaser and producer agree to such withholding. For purposes of this title, any amount withheld pursuant to such an agreement shall be treated as an amount required to be withheld under paragraph (1).

The producer of any domestic crude oil shall be treated as having paid any amount withheld with respect to such oil under this subsection.

(B) Time payment deemed made

For purposes of this chapter (and so much of subtitle F as relates to this chapter), the producer shall be treated as having made any payment described in subparagraph (A) on the last day of the first February after the calendar year in which the oil is removed from the premises.

(5) Producer required to file return only to extent provided in regulations

Except to the extent provided in regulations, the producer of crude oil with respect to which withholding is required under paragraph (1) shall not be required to file a return of the tax imposed by section 4986 with respect to such oil.

(6) Purchaser's quarterly returns to contain sum

mary

The purchaser's return of tax under this chapter for any calendar quarter of any calendar year shall contain such information (with respect to such quarter and the prior quarters of such calendar year) as may be necessary to facilitate the coordination of the withholding of tax by such purchaser with respect to each producer with the determination of the tax imposed by section 4986 with respect to such producer.

(7) Election for purchaser and operator to have operator take place of purchaser

(A) In general

If the purchaser of domestic crude oil and the operator of the property from which the crude oil was produced make a joint election under this paragraph with respect to such property (or portion thereof)—

(i) the operator shall be substituted for the purchaser for purposes of applying this subsection and subsection (b) (and so much of subtitle F as relates to such subsections), and

(ii) if the operator is not an integrated oil company, the operator shall be treated as having the same status as the purchaser for purposes of applying subsection (b) with respect to amounts withheld by the operator by reason of such election.

(B) Regulations may limit election

The Secretary may by regulations limit the circumstances under which an election under this paragraph may be made to situations where substituting the operator for the purchaser is administratively more practicable.

(8) No assessments or refunds before close of the year

Except to the extent provided in regulations prescribed by the Secretary, in the case

of any oil subject to withholding under this subsection

(A) no notice of any deficiency with respect to the tax imposed by section 4986 may be mailed under section 6212, and

(B) no proceeding in any court for the refund of the tax imposed by section 4986 may be begun,

before the last day of the first February after the calendar year in which such oil was removed from the premises.

(9) Adjustments to take into account royalty exemption

The Secretary shall prescribe such regulations as may be necessary so that the withholding required under this subsection shall be reduced to take into account the exemption provided by section 4991(b)(5) (relating to exempt royalty oil), and he may prescribe such other regulations as may be necessary to administer such exemption.

(b) Depositary requirements

(1) Integrated oil companies

In the case of an integrated oil company, deposit of the estimated amount of

(A) withholding under subsection (a) by such company, and

(B) such company's liability for the tax imposed by section 4986 with respect to oil for which withholding is not required, shall be made twice a month.

(2) Persons who are not integrated oil companies In the case of a person, other than an integrated oil company

(A) Deposits of withheld amounts

Deposit of the amounts required to be withheld under subsection (a) shall be made not later than

(i) except as provided in clause (ii), 45 days after the close of the month in which the oil was removed, or

(ii) in the case of oil purchased under a contract therefor by an independent refiner under which no payment is required to be made before the 46th day after the close of the month in which the oil is purchased, before the first day of the 3rd month which begins after the close of the month in which such oil was removed.

(B) Estimated section 4986 tax

Deposits of the estimated amount of such person's liability for the tax imposed by section 4986 with respect to oil for which withholding is not required shall be made not later than 45 days after the close of the month in which the oil was removed from the premises.

(3) Integrated oil company defined

For purposes of this subsection, the term "integrated oil company" means a taxpayer described in paragraph (2) or (4) of section 613A(d) who is not an independent refiner. (4) Independent refiner

For purposes of this subsection, the term "independent refiner" has the same meaning

as in paragraph (3) of section 3 of the Emergency Petroleum Allocation Act of 1973 (as in effect on January 1, 1980), except that "the preceding calendar quarter" shall be substituted for "November 27, 1973" in applying such paragraph for purposes of this paragraph.

(c) Cross reference

For provision authorizing the Secretary to establish by regulations the mode and time for collecting the tax imposed by section 1986 (to the extent not otherwise provided in this chapter), see section 6302(a).

(Added Pub. L. 96-223, title I, § 101(a)(1), Apr. 2, 1980, 94 Stat. 244, and amended Pub. L. 97-34, title VI, § 601(b)(3), Aug. 13. 1981, 95 Stat. 337; Pub. L. 97-448, title II, § 201(g), Jan. 12, 1983, 96 Stat. 2393.)

REFERENCES IN TEXT

Paragraph (3) of section 3 of the Emergency Petroleum Allocation Act of 1973, referred to in subsec. (b)(4), is classified to section 752(3) of Title 15, Commerce and Trade.

AMENDMENTS

1983-Subsec. (a)(3)(A). Pub. L. 97-448, § 201(g)(1), struck out "removed during any calendar year" and "removed during the same calendar year" following "crude oil of a producer" and "such producer for crude oil", respectively.

Subsec. (a)(3)(C), (D). Pub. L. 97-448, § 201(g)(2), redesignated subpar. (D) as (C). Former subpar. (C), which provided that no adjustment be required under subpar. (A) with respect to any payment for any crude oil to the extent that such adjustment would result in amounts withheld from such payment in excess of the windfall profit from such crude oil, was struck out.

Subsec. (a)(4)(B). Pub. L. 97-448, § 201(g)(3), substituted "For purposes of this chapter (and so much of subtitle F as relates to this chapter), the producer" for "The producer".

1981-Subsec. (a)(9). Pub. L. 97-34 added par. (9).

EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223, to which such amendment relates, see section 203(a), (b) of Pub. L. 97-448, set out as a note under section 4988 of this title.

EFFECTIVE DATE OF 1981 Amendment Amendment by Pub. L. 97-34 applicable to oil removed after Dec. 31, 1981, see section 601(c)(3) of Pub. L. 97-34, set out as a note under section 4991 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6050C, 6076, 6211, 6302, 6501, 6511, 6654, 6655 of this title.

§ 4996. Other definitions and special rules

(a) Producer and operator

For purposes of this chapter(1) Producer

(A) In general

Except as provided in subparagraphs (B) and (C), the term "producer" means the holder of the economic interest with respect to the crude oil.

(B) Net profits interests (i) In general

Except to the extent otherwise provided by regulations, in the case of any property, all cost recovery oil covered by a net profits agreement (within the meaning of subsection (h)) shall be treated as produced by the parties to such agreement in proportion to their respective shares (determined after reduction for such cost recovery oil) of the production of the crude oil covered by such agreement.

(ii) Clause (i) not to apply before payout

In the case of any property, clause (i) shall only apply for

(I) the first taxable period in which, under the agreement with respect to such property, one or more persons receives a share described in subsection (h)(1)(B), and

(II) all subsequent taxable periods to which such agreement applies.

(C) 3 Partnerships

(i) In general

If (but for this subparagraph) a partnership would be treated as the producer of any crude oil

(I) such crude oil shall be allocated among the partners of such partnership, and

(II) any partner to whom such crude oil is allocated (and not the partnership) shall be treated as the producer of such crude oil.

(ii) Allocation

Except to the extent otherwise provided in regulations, any allocation under clause (i)(I) shall be determined on the basis of a person's proportionate share of the income of the partnership.

(C) Subchapter S corporations (i) In general

If (but for this subparagraph) an S corporation would be treated as a producer of any crude oil

(I) such crude oil shall be allocated among the shareholders of such corporation, and

(II) any shareholder to whom such crude oil is allocated (and not the S corporation) shall be treated as the producer of such crude oil.

(ii) Allocation

Except to the extent otherwise provided in regulations, any allocation under clause (i)(I) shall be determined on the basis of the shareholder's pro rata share (as determined under section 1377(a)) of the income of the corporation.

(2) Operator

(A) In general

Except as provided in subparagraph (B), the term "operator" means the person pri

"So in original. A second subpar. (C) follows.

marily responsible for the management and operation of crude oil production on a property.

(B) Designation of other person

Under regulations prescribed by the Secretary, the term "operator" means the person (or persons) designated with respect to a property (or portion thereof) as the operator for purposes of this chapter by persons holding operating mineral interests in the property.

(b) Other definitions

For purposes of this chapter

(1) Crude oil

The term "crude oil" has the meaning given to such term by the June 1979 energy regulations. In the case of crude oil which is condensate recovered off the premises by mechanical separation, such crude oil shall be treated as removed from the premises on the date on which it is so recovered. (2) Barrel

The term "barrel" means 42 United States gallons.

(3) Domestic

The term "domestic", when used with respect to crude oil, means crude oil produced from a well located in the United States or in a possession of the United States.

(4) United States

The term "United States" has the meaning given to such term by paragraph (1) of section 638 (relating to Continental Shelf areas). (5) Possession of the United States

The term "possession of the United States" has the meaning given to such term by paragraph (2) of section 638.

(6) Indian tribe

The term "Indian tribe" has the meaning given to such term by section 106(b)(2)(C)(ii) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3316(b)(2)(C)(ii)).

(7) Taxable period

The term "taxable period" means

(A) March 1980, and

(B) each calendar quarter beginning after March 1980.

(8) Energy regulations

(A) In general

The term "energy regulations" means regulations prescribed under section 4(a) of the Emergency Petroleum Allocation Act of 1973 (15 U.S.C. 753(a)).

(B) March 1979 energy regulations

The March 1979 energy regulations shall be the terms of the energy regulations as such terms existed on March 1, 1979. (C) June 1979 energy regulations

The June 1979 energy regulations

(i) shall be the terms of the energy regulations as such terms existed on June 1, 1979, and

(ii) shall be treated as including final action taken pursuant thereto before June 1, 1979, and as including action taken before, on, or after such date with respect to incremental production from qualified tertiary enhanced recovery projects.

(D) Continued application of regulations after decontrol

Energy regulations shall be treated as continuing in effect without regard to decontrol of oil prices or any other termination of the application of such regulations. (c) Severance tax adjustment

For purposes of this chapter

(1) In general

The severance tax adjustment with respect to any barrel of crude oil shall be the amount by which

(A) any severance tax imposed with respect to such barrel, exceeds

(B) the severance tax which would have been imposed if the barrel had been valued at its adjusted base price.

(2) Severance tax defined

For purposes of this subsection, the term "severance tax” means a tax

(A) imposed by a State with respect to the extraction of oil, and

(B) determined on the basis of the gross value of the extracted oil.

(3) Limitations

(A) 15 percent limitation

A severance tax shall not be taken into account to the extent that the rate thereof exceeds 15 percent.

(B) Increases after March 31, 1979, must apply equally

The amount of the severance tax taken into account under paragraph (1) shall not exceed the amount which would have been imposed under a State severance tax in effect on March 31, 1979, unless such excess is attributable to an increase in the rate of the severance tax (or to the imposition of a severance tax) which applies equally to all portions of the gross value of each barrel of oil subject to such tax.

(d) Alaskan oil from Sadlerochit reservoir For purposes of this chapter

(1) Removal price determined on monthly basis

The removal price of Sadlerochit oil removed during any calendar month shall be the average of the producer's removal prices for such month.

(2) Sadlerochit oil defined

The term "Sadlerochit oil" means crude oil produced from the Sadlerochit reservoir in the Prudhoe Bay oilfield.

(e) Special rules for post-1978 transfers of property

In the case of a transfer after 1978 of any portion of a property, for purposes of this chapter (including the application of the June 1979 energy regulations for purposes of this chap

ter), after such transfer crude oil produced from any portion of such property shall not constitute oil from a stripper well property, newly discovered oil, or heavy oil, if such oil would not be so classified if the property had not been transferred.

(f) Adjustment of removal price

In determining the removal price of oil from a property in the case of any transaction, the Secretary may adjust the removal price to reflect clearly the fair market value of oil removed.

(g) No exemptions from tax

No taxable crude oil, and no producer of such crude oil, shall be exempt from the tax imposed by this chapter except to the extent provided in this chapter or in any provision of law enacted after the date of the enactment of this chapter which grants a specific exemption, by reference to this chapter, from the tax imposed by this chapter.

(h) Terms used in subsection (a)(1)(B)

For purposes of subsection (a)(1)(B) and this subsection

(1) Net profits agreement

The term "net profits agreement" means an agreement entered into (or renewed) after March 31, 1982, and providing for sharing part or all of the production of crude oil from a property where

(A) 1 or more persons are to be reimbursed for qualified costs by the allocation of cost recovery oil, and

(B) 1 or more persons are to receive a share of any production of crude oil from the property remaining after reduction for the cost recovery oil referred to in subparagraph (A).

(2) Cost recovery oil defined

The term "cost recovery oil" means crude oil produced from the property which is allocated to a person as reimbursement for qualified costs paid or incurred with respect to the property. The Secretary shall by regulation prescribe rules for allocating the cost recovery oil to the oil produced from the property. (3) Qualified costs

The term "qualified costs" means any amount paid or incurred for exploring for, or developing or producing, 1 or more oil or gas wells on the property.

(4) Scope of agreement

A net profits agreement shall be treated as covering only shares of production of crude oil held by persons who hold economic interests in the property (determined without regard to subsection (a)(1)(B)).

(i) Cross reference

For the holder of the economic interest in the case of a production payment, see section 636.

(Added Pub. L. 96-223, title I, § 101(a)(1), Apr. 2, 1980, 94 Stat. 247, and amended Pub. L. 97-248, title II, § 284(a), Sept. 3, 1982, 96 Stat. 569; Pub. L. 97-354, § 3(b)(1), Oct. 19, 1982, 96

§ 201(h)(1)(B), substituted "subparagraphs (B) and (C)" for "subparagraph (B)”.

Subsec. (a)(1)(B), (C). Pub. L. 97-448, § 201(h)(1)(A), added subpar. (B), and redesignated former subpar. (B) as (C).

Subsec. (b)(1). Pub. L. 97-448, § 201(h)(2)(A), added provision that in the case of crude oil which is condensate recovered off the premises by mechanical separation, such crude oil shall be treated as removed from the premises on the date on which it is so recovered. Subsec. (b)(3). Pub. L. 97-448, § 201(h)(2)(B), substituted "a well" for "an oil well".

Subsecs. (h), (i). Pub. L. 97-448, § 201(h)(1)(C), added subsec. (h), and redesignated former subsec. (h) as (i). 1982-Subsec. (a)(1)(C). Pub. L. 97-354 added subpar.

(C).

Subsec. (d). Pub. L. 97-248 redesignated former par. (1)(B) as (1) and in par. (1) as so redesignated substituted "Sadlerochit oil" for "such oil", struck out former par. (1)(A), which had provided that the adjusted base price for any calendar quarter, determined without regard to this subsection, would be increased by the TAPS adjustment, if any, for such quarter provided by former par. (2), struck out former par. (2), which had provided that the TAPS adjustment for a calendar quarter is any excess of $6.26 over the TAPS tariff for the preceding calendar quarter, that such tariff is the average per barrel amount paid for all transportation ending in such quarter of crude oil through the TAPS, and that "TAPS" meant the Trans-Alaska Pipeline System, and redesignated former par. (3) as (2).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by title II of Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223, to which such amendment relates, see section 203(a), (b) of Pub. L. 97-448, set out as a note under section 4988 of this title.

EFFECTIVE DATE OF 1982 AmendmentTS Amendment by Pub. L. 97-354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an Effective Date note under section 1361 of this title.

Section 284(b) of Pub. L. 97-248 provided that: "The amendment made by this section [amending subsec. (d) of this section] shall apply with respect to oil removed after December 31, 1982."

EXCEPTION TO AGREEMENT DATE REQUIREMENT Section 201(h)(1)(E) of Pub. L. 97-448 provided that: "If 90 percent or more of the remaining production referred to in subparagraph (B) of section 4996(h)(1) of the Internal Revenue Code of 1954 is to be received by governmental entities, and organizations described in clause (i), (ii), or (iii) of section 4994(b)(1)(A) of such Code, which do not share in the costs referred to in subparagraph (A) of such section 4996(h)(1), then the requirement of paragraph (1) of section 4996(h) of such Code that the agreement be entered into (or renewed) after March 31, 1982, shall not apply."

NO INTEREST FOR PAST PERIODS RESULTING FROM AMENDMENTts Relating TO COST RECOVERY OIL Section 203(c) of Pub. L. 97-448 provided that: "No interest shall be paid or credited with respect to the

credit or refund of any overpayment of tax imposed by the Internal Revenue Code of 1954, and no interest shall be assessed or collected with respect to any underpayment of tax imposed by such Code, for any period before the date which is 60 days after the date of the enactment of this Act [Jan. 12, 1983), to the extent that such overpayment or underpayment is attributable to the amendments made by section 201(h)(1) [amending subsecs. (a), (h), and (i) of this section and section 4988 of this title and enacting provisions set out as a note under this section]."

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 193, 291, 4988, 6076, 6211, 6429, 6430, 6501 of this title.

§ 4997. Records and information; regulations (a) Records and information

Each taxpayer liable for tax under section 4986, each partnership, trust, or estate producing domestic crude oil, each purchaser of domestic crude oil, and each operator of a well from which domestic crude oil was produced, shall keep such records, make such returns, and furnish such statements and other information (to the Secretary and to other persons having an interest in the oil) with respect to such oil as the Secretary may by regulations prescribe. (b) Regulations

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this chapter, including such changes in the application of the energy regulations for purposes of this chapter as may be necessary or appropriate to carry out such purposes.

(Added Pub. L. 96-223, title I, § 101(a)(1), Apr. 2, 1980, 94 Stat. 249, and amended Pub. L. 97-448, title II, § 201(i)(1), Jan. 12, 1983, 96 Stat. 2395.)

AMENDMENTS

1983-Subsec. (a). Pub. L. 97-448 substituted "furnish such statements and other information" for "furnish such information".

EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97-448 applicable with respect to returns and statements the due dates for which (without regard to extensions) are after Jan. 12. 1983, see section 203(b)(2) of Pub. L. 97-448, set out as a note under section 4988 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6652, 6678 of this title.

§ 4998. Cross references

(1) For additions to the tax and additional amount for failure to file tax return or to pay tax, see section 6651. (2) For additions to the tax and additional amounts for failure to file certain information returns, registration statements, etc., see section 6652.

(3) For additions to the tax and additional amounts for negligence and fraud, see section 6653.

(4) For additions to the tax and additional amounts for failure to make deposit of taxes, see section 6656.

(5) For additions to the tax and additional amounts for failure to collect and pay over tax, or attempt to evade or defeat tax, see section 6672.

(6) For criminal penalties for attempt to evade or defeat tax, willful failure to collect or pay over tax, will