Dauphin News

The Senate has approved Sen. Camera Bartolotta’s (R-46) bill aimed at providing landowners with the same tax benefits as investors. The legislation, known as Senate Bill 654, seeks to align Pennsylvania law with Internal Revenue Service (IRS) tax laws concerning the depletion of wells and mines. This would enable long-time landowners to claim the same depletion rate on their royalties as businesses that have purchased mineral rights.

Currently, investors who purchase mineral rights can use the appraised value of gas for the well depletion allowance in Pennsylvania. However, most landowners do not benefit from this provision due to prohibitive appraisal costs. As a result, some states like West Virginia and Ohio, along with the IRS, allow a simple percentage depletion allowance accessible to all taxpayers paying taxes 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 stated. “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.”

Pennsylvania law currently does not offer such a depletion deduction. Although a regulation adopted in 2006 appears to provide a cost-depletion method for mines, oil and gas wells, other natural deposits, and timber, it remains impractical for most taxpayers due to required documentation.

The bill also includes legislative language initially drafted by Bartolotta as Senate Bill 629. This amendment would exempt waste grease removal from various facilities from Sales and Use Tax (SUT). The Pennsylvania Department of Revenue currently categorizes this activity as maintenance subject to SUT; however, general waste hauling from building sites is exempt.

Senate Bill 654 has received approval from both the House of Representatives and now advances to the governor’s desk for consideration.

For further information, contact Katrina Hanna at 717-787-1463.

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