Oil and Gas

(K.S.A. 79-329)  For the purpose of valuation and taxation, all oil and gas leases and all oil and gas wells, producing or capable of producing oil or gas in paying quantities, together with all casing, tubing or other material therein, and all other equipment and material, used in operating the oil or gas wells are hereby declared to be personal property and shall be assessed and taxed as such.

(K.S.A. 79-332a)   Provides for any person, corporation or association owning oil and gas leases or engaged in operating for oil or gas who fails to make and file the oil/gas tax statement rendition on or before April 1 in the office of the County Appraiser in and for the county which has jurisdiction of the lease, shall be subject to penalties for late filing and/or for failure to file.  The statute also notes that the lease operator may request an extension of the filing time, but it must be in writing, and it must be filed prior to the April 1 deadline. 

Penalties are assessed to the operator based on the total value of the royalty interest plus the working interest.  The Kansas State Board of Tax Appeals is the sole authority for the relief of the assessed penalty.

Late Filing Penalties 5% - 25%

If within one year following the April 1st filing deadline, the appraiser must apply a late filing penalty to the assessed value of the property. The penalty for late filing is 5% per month up to a maximum of 25%. The penalties are applied as follows, according to K.S.A. 79-1422:

Date Rendition Filed  Penalty 
 April 2nd - May 1st  5% 
 May 2nd - June 1st  10%
 June 2nd - July 1st  15%
 July 2nd - August 1st  20% 
 August 2nd - March 31st of following year   25%

Failure to File Penalties [50%]

If within one year following the April 1st filing deadline, the county discovers a taxpayer failed to file a rendition or failed to file a complete rendition, the county appraiser must determine the assessed value of the property and apply a 50% penalty. In instances where the taxpayer fails to file a complete rendition, the penalty is applied only to the omitted or under reported property.

If the county appraisers discover property that was omitted from the tax roll after June 15th of the current tax year (the date the appraiser certifies the tax roll to the county clerk), but prior to the April 1st of the following tax year, the county clerk must place the property on the tax roll as an added tax and apply a 50% penalty to the assessed value.

Note: If a failure to file penalty is applied to the taxpayer's value then the taxpayer later files his rendition within one year of April 1st, the failure to file penalty is no longer applicable. Therefore, the appraiser must apply the appropriate late filing penalty to the assessed value in place of the failure to file penalty.

(K.S.A. 79-201t)  Property exempt from taxation: Oil leases.  The following described property, to the extent specified, shall be and here is hereby exempt from all property or ad valorem taxes levied under the laws of the State of Kansas.

All oil leases, other than royalty interests therein, the average daily production from which is three barrels or less per producing well, or five barrels or less per producing well which has a completion depth of 2,000 feet or more.

The exemption must be approved by the Kansas State Board of Tax Appeals.

Tax Exemption

The administration of the ad valorem property tax is the jurisdiction of the County Appraiser’s office, in and for the county, in which the oil or gas lease is located.  The Kansas Department of Revenue, division of property valuation prescribes the oil and gas guide and rendition forms.  For copies, please contact the County Appraiser’s office for which the property is located or download one of the following:

Guide
Oil Rendition
Gas Rendition

Any question regarding the oil and gas valuation process, please contact our office at 620-257-3611.