Alabama § 40-20-3 - Tax Levied Upon Producers in Proportion to Ownership at Time of Severance; by Whom Tax Paid; Lien.

§ 40-20-3. Tax Levied Upon Producers in Proportion to Ownership at Time of Severance; by Whom Tax Paid; Lien.

(a) The privilege tax hereby imposed is levied upon the producers of such oil or gas in the proportion of their ownership at the time of severance, but, except as otherwise herein provided, the tax shall be paid by the person in charge of the production operations, who is hereby authorized, empowered, and required to deduct from any amount due to producers of such production at the time of severance the proportionate amount of the tax herein levied before making payments to such producers. The tax shall become due and payable as provided by this article and such tax shall constitute a first lien upon any of the oil or gas so produced when in the possession of the original producer or any purchaser of such oil or gas in its unmanufactured state or condition. In the event the person in charge of production operations or the purchaser fails to pay the tax, then the department shall proceed against the producer or the purchaser to collect the tax in the manner hereinafter provided by this article.

(b) When any person in charge of production operations shall sell the oil or gas produced by him, the purchaser shall account for the tax.

(c) When any person in charge of production operations shall use or dispose of the oil or gas for fuel or any other purpose, he shall withhold the tax imposed by this article; and, if he is required to pay other interest holders, he is hereby authorized, empowered, and required to deduct from any amounts due them the amount of tax levied and due under the provisions of this article before making payment to them.

(d) Every person in charge of production operations by which oil or gas is severed from the soil or waters, or from beneath the soil or waters, of the State of Alabama who fails to deduct and withhold, as required herein, the amount of tax from sale or purchase price, when such oil or gas is sold or purchased under contract or agreement, or on the open market, or otherwise, shall be liable to the state for the full amount of taxes, interest and penalties due the state; and the department shall proceed to collect the tax from the person in charge of production operations, under the provisions of this article, as if he were the producer of the oil or gas.