Coal Severance Tax
Tax Rates
The coal severance tax is imposed on all coal mined in the state, pursuant to 15-35-103. Producers of more than 50,000 tons of coal per year pay a quarterly severance tax on all production in excess of 20,000 tons. Producers of less than 50,000 tons per year are exempt from the tax. The first 2 million tons of coal produced as "feed stock" for a coal enhancement facility is exempt.
Tax rates depend on the heat content (BTU's per pound) of the coal and the method of extraction.
| Surfaced Mined Coal | Underground Mined Coal | ||
| Under 7,000 BTUs | 10% of value | Under 7,000 BTUs | 3% of value |
| 7,000 and over | 15% of value | 7,000 and over | 4% of value |
Value of Coal: The value of coal to which the severance tax is applied is the "contract sales price". The contract sales price is the price of coal extracted and prepared for shipment f.o.b. mine, less that amount required to pay production taxes. Production taxes include the state severance tax, resource indemnity and groundwater assessment tax (RIGWAT), local gross proceeds taxes, federal reclamation taxes, and the federal Black Lung Tax. The contract sales price includes royalties up to $0.15 per ton paid to federal and state governments, or Indian tribes, and all royalties paid to other mineral rights owners.
Filing Requirements: Coal mine operators are required to file quarterly statements containing information sufficient to calculate the tax due. Tax payments are due at the time of filing (within 30 days following the close of each calendar quarter). We strongly encourage you to file your Coal Severance Tax (CST) online through Tax Payer Access Point (TAP).
Production Incentives: Persons producing less than 50,000 tons of coal in a year is exempt from severance tax. Persons producing in excess of 50,000 tons per year are exempt from severance tax on the first 20,000 tons produced. Effective calendar year 1995, a person is not liable for any severance tax upon the first 2,000,000 tons of coal produced as feedstock for an approved coal enhancement facility. This exemption terminates December 31, 2005.
