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600 E. Boulevard Ave.
  Bismarck, ND 58505-0599
  701.328.7088 phone
  701.328.3700 fax
  877.328.7088 toll-free

Oil and Gas Tax Frequently Asked Questions

Q: What is the current severance tax rate for oil and gas produced in North Dakota?

Q: What tax incentives are available in North Dakota?

Q: How do I certify a well for an exemption?

Q: Which agency do I contact to verify a government royalty?

Q: If the due date for filing a return falls on a holiday or weekend when is the return due?


Q: What is the current severance tax rate for oil and gas produced in North Dakota?

A: The gross production tax rate on gas is subject to a price index change on July 1 each year, the rate through June 30, 2014 is $.0833 per mcf. The gross production tax rate on oil is 5% of the gross value and the oil extraction tax rate is 6.5% of the gross value; 4% if the well qualifies for a reduced rate; 2% from qualifying wells in the Bakken formation; and 0% if the well qualifies for an exemption.

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Q: What tax incentives are available in North Dakota?

A: Various reduced rates and/or exemptions apply for new vertical and horizontal wells, new wells drilled on Indian land, workover wells, stripper wells, two-year inactive wells, horizontal reentry wells, enhanced recovery wells, and qualifying Bakken formation wells.

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Q: How do I certify a well for an exemption?

A: An application to qualify a well must be submitted to the North Dakota Industrial Commission (NDIC). Contact the NDIC at (701)328-8020. The NDIC will issue a letter certifying that the well does meet the qualifications to be eligible for an exemption. The NDIC letter must then be submitted to the Office of State Tax Commissioner within 18 months of completion, recompletion, or other qualifying date to be eligible for the exemption.

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Q: Which agency do I contact to verify a government royalty?

A: To verify a federal government royalty (Minerals Management Service royalty) contact the North Dakota Auditor's Office at (701)250-4681. To verify a state or municipality government royalty contact the North Dakota Land Department at (701)328-2800.

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Q: If the due date for filing a return falls on a holiday or weekend when is the return due?

A: The return is due on the next North Dakota state government working day.

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