Information Release

XT 2007-02 - Severance Tax Increase on Coal - Issued March 2007

The purpose of this release is to address an amendment to Ohio Revised Code section (R.C.) 5749.02 that increases the severance tax on coal mined in this state (see Sub. H.B. 443). The severance tax is imposed on the entity extracting natural resources.  It is possible that each mine could be subject to a different tax rate depending on the mining method and the amount of the bond posted for each location. The Ohio Department of Natural Resources will provide the information necessary to determine the tax rate that is applicable to each of your locations. All of the following tax rate changes are effective April 1, 2007:

- The base severance tax rate imposed on all coal severed in Ohio will increase from nine cents ($0.09) per ton to ten cents ($0.10) per ton. 

- An additional tax of one and two-tenths cents ($0.012) per ton is imposed on all coal severed using the surface mining method. 

- An additional tax in the amount of fourteen cents ($0.14) per ton is imposed on all permit holders that have not posted a full-cost bond for the acreage on which the mining operation is being conducted. R.C. 1513.08 provides that this tax shall not be levied if a permitted location carries a bond sufficient to cover the reclamation costs without reliance on the reclamation forfeiture fund. The rate of this levy may be adjusted every two years. This rate may increase up to a maximum of sixteen cents ($0.16) per ton or decrease to a minimum of twelve cents ($0.12) per ton, depending on the balance in the reclamation forfeiture fund at the end of each fiscal biennium. 

The severance tax return has been redesigned to include a schedule that taxpayers can use to report the quantity of coal extracted from each mining location and to apply the applicable tax rate to each location. 

Please contact the Excise Tax Section of this department with any questions.

Ohio Department of Taxation

Excise Tax Section

P.O. Box 530

Columbus, Ohio 43216-0530

Telephone:  (855) 466-3921

Fax:  (206) 350-6722

Web site:  tax.ohio.gov