CHAPTER 11. TAXATION.

§11-13EE-3. Rebate allowable.

(a) Rebate allowable. — Eligible taxpayers shall be allowed a rebate for a portion of state severance taxes imposed by §11-13A-3 of this code on the privilege of severing, extracting, reducing to possession and producing coal for sale, profit or commercial use that is attributable to the increase in the production of coal that is attributable to and the consequence of the taxpayer’s capital investment in new machinery and equipment used at the coal mine, or coal preparation and processing facility. The amount of this rebate shall be determined and applied as hereinafter provided in this article.

(b) Amount of rebate. — The amount of rebate allowable is determined by multiplying the amount of the taxpayer’s capital investment in new machinery and equipment directly used in the production of coal at a coal mining operation in this state by 35 percent. The product of this computation establishes the maximum amount of rebate allowable under this article for the capital investment in new machinery and equipment.

(c) Application of rebate amount. — The amount of rebate allowable is determined by applying the rebate amount determined in subsection (b) of this section against 80 percent of the state portion of the severance tax paid on the privilege of severing, extracting, reducing to possession and producing coal for sale, profit or commercial use that is directly attributable to the increased production of coal at the mine due to taxpayer’s capital investment in new machinery and equipment at the mine or coal processing and preparation plant.

(d) The amount of severance tax attributable to the increase in coal production at a mine due to the capital investment in new machinery and equipment shall be determined by comparing (1) the state portion of the severance tax due under §11-13A-3 of this code on coal produced from the mine during calendar year 2018, before allowance of any tax credits, except as provided in subsection (e) of this section (d), (2) with the state severance tax due on coal produced at the mine during the then current calendar year in which the capital investment in new mining machinery and equipment is placed in service or use, before allowance for any tax credits. When the amount in subdivision (2) of this section is greater than the amount in subdivision (1) of this section, the difference is the amount of state severance tax due to the increase in coal production at the mine that is attributable to the capital investment in new machinery and equipment: Provided, That when the producer of the coal operates more than one mine in this state, or is a member of a controlled or affiliated group that operates one or more coal mines in this state, no credit shall be allowed unless the total coal production from all mines operated by the taxpayer or by members of the affiliated or controlled group in this state has increased by at least the increase in production at the mine at which the capital investment in new machinery and equipment was made: Provided, however, That in no case shall the severance tax attributable to any mine other than the specific mine at which capital investment in new machinery and equipment is directly used in a coal mining operation has been placed in service or use be offset by this rebate.

(e) When the eligible taxpayer is a new business that has produced coal in this state for 2 years before making the capital investment in new machinery and equipment, then, for purposes of item (1) in subsection (d), the base shall be the amount of state severance tax due under §11-13A-3 of this code on coal produced in this state during the second year of this two-year period.

(f) When the operator of the coal mine at which capital investment in new machinery and equipment was made operates one or more other coal mines in this state, the operator may not cease production of coal, or reduce the production of coal, at one or more of those mines during the tax years for which rebate is allowed under this article. The Tax Commissioner shall promulgate a legislative rule providing exceptions to this subsection.

(g) When the operator of the coal mine at which capital investment in new machinery and equipment was made is a member of a controlled or affiliated group that operates one or more other coal mines in this state, then the controlled or affiliated group, as the case may be, may not cease production of coal, or reduce the production of coal, at one or more of those mines during the tax years for which rebate is allowed under this article. The Tax Commissioner shall promulgate a legislative rule providing exceptions to this subsection.

(h) No rebate shall be allowed under this article when credit is claimed under any other article of this chapter for capital investment in the new machinery and equipment. No credit shall be allowed under any other article of this chapter when rebate is allowed under this article for the capital investment in new machinery and equipment.