OKLAHOMATAXCOMMISSION

Demonstration of the New Gross Production Tax Reporting System

November 13, 2014

Thank you for attending today’s demonstration of the new gross production tax reporting system. If you have any questions during the meeting, feel free to ask them at any time. If you have any questions or comments after the meeting, please feel free to contact Mark Hendrix or Morgan Lankford by phone at (405) 521-3133, or by email at and .

Forms and file layouts for the new gross production tax system are available on the Tax Commission’s website: This website will be updated with new information as it becomes available. Below are the discussion topics for today’s meeting:

Discussion Topics

Introduction

  • History of Gross Production Reporting
  • Broad overview of new system
  • Will no longer accept EDI, Magmedia, or old report forms after February 1, 2015.
  • 2014 Legislative Changes

Paper 300R

  • Shorter Form
  • Removal of some requirements

300C

  • SOER and OERB fees are now on the 300C

Payments

  • Electronic – ACH Debit or Credit
  • Hard Copy – Check
  • No Wire Transfers

New Reporting System

  • How to login
  • Electronic 300R
  • Discussion of how to file an electronic 300R
  • How to Upload a .CSV
  • Edits
  • 300C

.CSV/Upload

  • How to create a .CSV file
  • Header requirements
  • Walk through sample .CSV file

Questions

GROSS PRODUCTION TAXES

HB 2562– Effective July 1, 2014

Section 1

Amends 68 O.S. § 1001 by reducing the tax rate for all new production from wells, spudded on or after 7/1/15, to 2% for the first 36 months. Thereafter, the tax rate increases to 7%. The legislation extends the horizontal, deep well, new discovery, and 3-D seismic incentives to July 1, 2015. The legislation also extends the enhanced recovery, inactive well, and production enhancement incentives to July 1, 2020. Effective July 1, 2015, the bill modifies the current refund process for production and provides that the incentives are not available for production taxed at the 2% rate. It also provides that no claims for rebates for production occurring before 2003 are permitted after the effective date of the bill, July 1, 2014.

Section 2

Extends the economically-at-risk incentive to July 1, 2020. The legislation also proposes to amend 68 O.S. § 1001.3a by providing that no claims regarding the economically-at-risk leases shall be permitted after December 31, 2015 for production periods occurring between calendar years 2005 through 2013.

Section 3

Amends 68 O.S. § 1004 by providing for apportionment of revenue from oil and gas under the new 2% tax rate.

New 300R versus Old 300R

Blocks 1 & 2 remain the same.

Block 3 relates to part A of old Block 7.

Block 4 relates to part B of old Block 7.

Block 5 relates to part A of old Block 3.

Block 6 relates to old Block 5.

Block 7 relates to old Block 6.

Block 8 relates to old Block 10.

Block 9 relates to old Block 11.

Block 10 relates to old Block 12.

Block 11 relates to old Block 13.

Block 12 relates to old Block 16.

Note: we changed from codes to actual rate: 1, 2, 4 or 7.

Block 13 relates to old Block 23.

Block 14 relates to old Block 24.

Block 15 relates to old Block 25.

Block 16 relates to old Block 26.

Block 17 relates to old Block 27.

Block 18 relates to old Block 28.

Block 19 relates to old Block 29.

Block 20 relates to old Block 30.

Blocks 21 through 24 will be only on last page for total report.

Company Registration

The Gross Production Reporting System is a closed registration system, meaning that companies must first contact the Oklahoma Tax Commission for account setup. The registration contact for the Gross Production Reporting System is:

Tobie Sanders

Oklahoma Tax Commission

Compliance/Audit Division

Gross Production – Payments

405-522-3206

John Cottengim

Oklahoma Tax Commission

Compliance/Audit Division

Gross Production – Claims

405-522-6093

The Oklahoma Tax Commission will ensure the company exists within the system, will determine if the company is authorized to report and will setup the necessary Company Administrator accounts. Once the Company Administrator(s) have completed the registration process, additional Company User accounts can be setup by the Company Administrator(s) for additional users of the system. When requesting access to the system from the Oklahoma Tax Commission, ensure the following information is provided for the necessary Company Administrator(s):

First Name

Last Name

Email Address

Company Name

Taxpayer FEIN/SSN

Company Reporting Number

You will be emailed an initial password, which is a temporary password utilized during the registration process, and will be directed to visit the Gross Production Reporting System homepage to complete the registration process. Once the Company Administrator account(s) has been setup by the Oklahoma Tax Commission, you will need to complete the following steps to complete the remaining registration process:

  1. Visit the Gross Production Reporting System Homepage

  1. Enter the email provided to the Oklahoma Tax Commission, under the ‘New User?’ section where it states “Enter Email Address below to Register:” and click the ‘Register’ button to continue to the next step.

  1. Enter the initial password provided by the Oklahoma Tax Commission in the ‘Initial Password’ field and click the ‘Continue’ button.

  1. Re-enter the email address provided to the Oklahoma Tax Commission, 10-digit phone number, create a username, create a new password, confirm the new password, select security questions, provide answers to security questions and click the ‘Submit’ button to complete the registration process.
  1. The account has been created and activated. The system will send an automated email so that you can verify your email address, but this is not a required step to complete registration. Click the ‘Return to Gross Production Reporting System’ button to return to the Gross Production Reporting System homepage.

  1. Enter the username and password created during the registration process,and then click the ‘Login’ button.

How to Enter a 300R Form or Upload a 300R .CSV File

  1. Once logged in, the main menu screen will appear. To enter or upload a new 300R, click the ‘Gross Production Tax’ button.
  1. This screen gives the user the option to upload a 300R .CSV file or to manually enter a 300R form. Also on this screen, the user will be able to see the reports that have errors and warnings, reports that have not been submitted, and reports that have been submitted.
  1. To upload a 300R .CSV file, click ‘Browse’ and then select the .csv file from your computer. Once the file is selected, click ‘upload.’

Instructions for Completing .CSV Format for the New Form 300

The new Gross Production Reporting System Version 2.0 will provide the capability of uploading a .CSV, or comma delimited, flat file into the system using a dynamic upload feature. A Microsoft Excel spreadsheet template will be provided for download from the system for those who wish to complete it out manually. The file will need to be in the following format. The first row of the spreadsheet will contain the column titles. The GPRS system will not read this row, however it will expect the data to be in the correct columns.

*Note: Commas cannot be included in any field as the system counts the columns by comma separators.

*Note: Null fields need to have a ‘0’ in them for columns 8-20 only. Header rows under columns 1-7 need to be blank unless the Header information is changing for the PUNs. Report Total columns 21-24 need to be blank after the first row of report totals is completed.

The columns are as follows:

  • Columns 1-7 header information: Company Reporting Number, FEIN/SSN, Type of Report, Report Filed By, Product Code, Date of Production Month, Date of Production Year. You will only need to fill these columns out once per group of PUNs.
  • Columns 8-20 PUN detail: Production Unit Number, Purchaser/Producer Report Number, Gross Volume, Gross Value, Qualifying Tax Rate, Exemption Code, Decimal Equivalent, Exempt Volume, Exempt Value, Taxable Volume, Taxable Value, Gross Production Tax Due, Petroleum Excise Tax Due. Complete as many rows of these columns as needed for every PUN that is associated with the header information.
  • Columns 21-24 Report Totals: Report Total Taxable Volume, Report Total Taxable Value, Report Total Gross Production Tax Due, Report Total Petroleum Excise Tax Due. Complete these columns on the first row of the report only.

The PUNs will need to be grouped by the Report Type, Report Filed by, Product Code, Date of Production Month & Date of Production Year fields. The file should look like the following:

  • Row 1: Column Titles
  • Row 2: Columns 1-7 header information, Columns 8-20 first PUN detail data, Columns 21-24 report totals
  • Row 3 – X: Columns 1-7 null, Columns 8-20 PUN detail data, Columns 21-24 null (complete as many rows necessary for PUNs that have the same header information as columns 1-7 in row 2.)
  • Row X1: (New header information, could be a change in Type of Report, Report Filed By, Product Code, Date of Production – Month, Date of Production - Year) Columns 1-7 new group header information, Columns 8-20 first PUN of new header info, Columns 21-24 null
  • Row X2 -XX: Columns 1-7 null, Columns 8-20 PUN detail data, Columns 21-24 null (complete as many rows necessary for PUNs that have the same header information as columns 1-7 in row X1.)

Repeat the above groupings as many times as necessary for the report, changing the header information to reflect the different Type of Report, Report Filed By, Product Code, Date of Production Month, and Date of Production Year as needed for the reporting period.

How to Convert Excel file to .CSV

Below you will find the step-by-step instructions to export an Excel workbook to the CSV format by using Excel's Save As command.

1. In your Excel workbook, switch to the File tab, and then click Save As. Alternatively, you can press F12 to open the same Save As dialog.

2. In the Save as type box, choose to save your Excel file as .CSV (Comma delimited).

This format saves an Excel file as a comma-separated text that can be used in another Windows program or another version of Windows operating system.

Note. The above mentioned format saves only the active Excel sheet. Any additional sheets/tabs will not save.

3. Choose the destination folder where you want to save your Excel file in the .CSV format, and then click Save.

After you click Save, Excel will display two dialogs. These are not error messages.

4. The first dialog reminds you that only the active Excel spreadsheet will be saved to the CSV file format. Click OK.

5. Clicking OK in the first dialog will display a second message informing you that your worksheet may contain features unsupported by the CSV encoding. This is Okay, so simply click Yes.

Gross Production Online Reporting Phase 2.0

300 Detail Report Validation Checks

The following items will be validated by the Gross Production Reporting System prior to the report being submitted. The system will provide the customer with feedback and allow the customer to either upload a corrected file or make the corrections on the existing file and resubmit it for validation check. Once the 300 Detail Report clears the validation check process, the system will then allow a 300C to be generated and allow the customer to submit their GP payment.

  1. Valid PUN – the system will check to ensure every PUN submitted is a valid registered PUN with the Oklahoma Tax Commission. This is considered a fatal error and will not allow the report to be submitted until corrected.
  2. Error Message will read: “PUN is invalid. The reported PUN number is not registered with the Tax Commission. Please verify the PUN is valid using the online public PUN search system using the legal description. A correct PUN must be entered before a report can be submitted.”
  3. Valid Registered Tax Rate – The system will give a warning when the reported tax rate for a PUN does not match the registered tax rate for the PUN. The system will allow the customer to correct the error, however the report can still be submitted with correction to this particular error.
  4. Error message will read: “Based on the registration for PUN ______the correct tax rate for the reporting period is ___%. You are reporting a tax rate of ____%. If the well is not correctly registered, the operator must submit a 320C form to properly classify the well. If the Tax Commission well registration is correct, make a correction to the tax amount due.”
  5. Valid Product Code –The GPR system will not accept a code other than what has been provided by OTC. For example: the system will not accept a product code 25. This is considered a fatal error and will not allow the report to be submitted until corrected.
  6. Error message will read: “The product code number reported for PUN ____ is not valid. The valid code choices are 1 – oil, 5 – natural gas, and 6 – natural gas liquids. The code must be corrected before the report can be submitted.”
  7. Valid Exemption Code –The GPR system will not accept an exemption code other than what has been provided by OTC. For example: the system will not accept an exemption code of 50. This is considered a fatal error and will not allow the report to be submitted until corrected.
  8. Error message will read: “The exemption code number reported for PUN ____ is not valid. The code must be corrected before the report can be submitted.”
  9. Valid Qualifying Tax Rate – OTC maintains the valid qualifying tax rates in the GPR system. This is considered a fatal error and will not allow the report to be submitted until corrected.
  10. Error message will read: “The Qualifying Tax Rate percentage reported for PUN ____ is not valid. The valid Qualifying Tax Rate choices are 1.00% - horizontal, 2.00% new well, 4.00% - ultra deep, and 7.00% - base tax rate.”
  11. Product Price – The systems check to make sure the reported price of the production is within an appropriate price range. The price range is determined by dividing the gross value by the gross volume. This will generate a warning message to alert the customer and to allow them to adjust accordingly. However, the system will allow the report to be submitted without correction to this particular error.
  12. Error message will read: “The reported price of the product for PUN _____ calculated to $___. This is outside the expected range of price for this period. Check the volume and value numbers for this PUN an make any necessary corrections.”
  13. Tax Due – The system will auto calculate the tax due. In the event that the auto calculation does not total the amount that the customer has entered/uploaded, it is considered a fatal error and will not allow the report to be submitted until corrected.
  14. Error message will read: “The reported tax due for PUN _____ is $____. The calculated tax due is $____. A correction to the tax due amount is required.”
  15. Required Fields – The system will give an alert when required fields are left blank. This is considered a fatal error and will not allow the report to be submitted until corrected.
  16. Error message will read: “The (Field Name) is a required field and must be reported for this PUN ______.”
  17. Amended Report – The system will check if the report period for an amended return (Type 3) is over 36 months old and the PUN results in a credit instead of tax due. If this occurs, the entry will be considered invalid as it is outside of the statute of limitations. This will not apply if the exemption code for the PUN is 01- State School Exemption. This is considered a fatal error and will not allow the report to be submitted until it is corrected.
  18. Error message will read: “The amendment for PUN ______resulted in a credit and the reporting period is beyond 36 months, outside of the statute of limitations. This entry is not reportable and must be deleted.”
  19. If a decimal is reported in the gross volume for product code 5. – The system will check the gross volume field for items reported under product code 5. This field is a whole number field and should not contain a decimal. This is considered a fatal error and will not allow the report to be submitted until corrected.
  20. Error message will read; “The gross volume for product code 5 – Natural Gas must be reported in whole numbers. This entry for PUN ____ must be reported in whole numbers without a decimal. This entry must be corrected before the report can be submitted.
  21. If a decimal is not reported in the gross volume flied for product code 1 – The system will check the gross volume field for items reported under product code 1. Product code 1 requires a decimal entry for gross volume. This is considered a fatal error and will not allow the report to be submitted until corrected.
  22. Error message will read: “The gross volume for product code 1 – Oil must be reported in decimal form. This entry for PUN _____ must be corrected using a decimal before the report can be submitted. For example 100 barrels would be reported as 100.00.”
  23. Exemption code 7 can only be used for product code 1 – The system will verify that exemption code 7 entries have a product code of 1. If not, this is considered a fatal error and will not allow the report to be submitted until corrected.
  24. Error message will read: “Exemption code 07 – Frac Oil, reported for PUN ____ can only be used for product code 1 – Oil. The exception code or product code must be corrected before report can be submitted.”
  25. Exemption code 08 and 09 can only be used for product code 5 – The system will verify that exemption codes 08 and 09 entries have a product code of 5. If not, this is considered a fatal error and will not allow the report to be submitted until corrected.
  26. Error message will read: “Exemption code 08 – Gas lift, reported for PUN ____ can only be used for product code 5 – Natural Gas. The exemption code or product code must be corrected before report can be submitted”
  27. Error message will read: “Exemption code 09 – Compression & Gathering, reported for PUN ____ can only be used for product code 5 – Natural Gas. The exemption code or product code must be corrected before report can be submitted”