A severance tax is an excise tax that state or tribal governments apply on the volume of nonrenewable natural resources. These can be in the form of oil, natural gas, metal, and timber. However, each tax jurisdiction runs unique laws for natural resource severance. Now, this can be incredibly challenging for businesses to navigate tax rates. These are based on rules and incentives, types of resources extracted, and a company’s operational facts.
However, a minor oversight may lead to a significant calculation, which might direct to tax liability. Therefore, to make sure things go the right way, severance tax services help businesses and organizations evaluate the principle.
Moreover, severance tax services help businesses acknowledge and pursue potential tax refunds, manage compliance, and explore process improvement to avoid draining precious time and resources when addressing the severance tax obligations.
Refund Opportunities
It should never be an option to miss out on opportunities for tax refunds. It can be overlooked as the complexities of the severance tax are left to the person that may not have access to all tax laws and regulations. Conducting a thorough process, reviews of jurisdictions under the guidance of professionals helps secure more amounts in tax refunds. Also, it reduces audit assessments for individual businesses. Besides, this often leads to lowering effective production tax rates by 1% to 3%.
Any expert will work with the taxing authorities in order to verify both refund claims and audit reduction savings. The key areas include
● Analyzing any technical concerns proposed by the taxing authorities relates to recoveries and audit reductions
● Preparation of response and collection of additional documentation in order to validate recoveries or audits
● Partnering with vendors in order to validate any recoveries or audit reductions
The Process
Severance tax services include professionals who work with businesses ranging from major integrated companies to small independent operators and owners. Likewise, when you take a phased approach to projects, this allows experts to guide you through each step of the process. Again, here’s how the process goes on
● Initial scoping
This is the initial phase as it is dedicated time to understand its specific facts and process.
● Assessment
In taxation matters, one needs to develop a clear understanding of the project vision and its potential value. With the help of professionals, your organization can closely work and explore the possibilities. Likewise, the personnel equally ensures that business goals align with the next steps.
● Tax Reporting
Essentially a sales and property tax on oil and gas extract can be extremely complicated. Moreover, every state has its own requirements. Therefore, this is one of the areas where you need to have a thorough understanding of the accounting system, especially for reporting purposes. explore process improvement to avoid draining precious time and resources when addressing the severance tax obligations.
Final Wrap
Now processing months or years of corrections on every well that is under operation will undoubtedly require far more time and money. It’s also more about settling things up correctly from the get-go. Else things can have a significant effect on your business.
