Sulfur production tax; basis and rate of tax.

An excise tax is hereby levied upon every person who severs sulfur in this state for sale, transport, storage, profit, or commercial use. Except as otherwise provided in this part, such tax shall be levied on the basis of the entire production of sulfur in this state, including any royalty interest. Such tax shall accrue at the time of severance of the gas from which the sulfur is produced and shall be a lien on production regardless of the place of sale, to whom sold, or by whom used and regardless of the fact that delivery may be made outside the state.

(1) The amount of tax shall be determined by the long tons of sulfur produced or recovered by a producer during the month from the hydrogen sulfide gas contained in oil or gas production from a well, measured at the point where the sulfur is in its molten, elemental state, and is capable of being sold, delivered, transported, or stored, subject to the sulfur tax rate established in this section. For each fiscal year, the sulfur tax rate shall be the sulfur base rate times the sulfur base rate adjustment for the fiscal year, as calculated by the department under subsection (3).

(2) The sulfur base rate shall be $2.71 per long ton.

(3)(a) On or before May 15, 1987, and annually thereafter, the department shall determine the sulfur base rate adjustment and the resulting sulfur tax rate for the fiscal year beginning on the following July 1.

(b) The sulfur base rate adjustment is a fraction, the numerator of which is the annual average of the sulfur producer price index, Commodity Code 06130272.99, as calculated and published by the United States Department of Labor, Bureau of Labor Statistics, for the previous calendar year, and the denominator of which is 100.0.

(c) The department shall provide the sulfur base rate adjustment and the sulfur tax rate for the fiscal year, as determined under this subsection, to affected producers by written notice mailed on or before June 1.

(d) If the index used to determine the sulfur base rate adjustment is substantially revised, or if the base year for the index is changed, the department shall make appropriate adjustment to the method used to determine the sulfur base rate adjustment to ensure a result which is reasonably consistent with the result which would have been obtained had the index not been substantially revised or the base year changed.

(e) If the sulfur producer price index is discontinued, a comparable index shall be selected by the department and adopted by rule.

(4) Sulfur production shall be measured and expressed in long tons.

(5) The tax imposed under this section shall be administered, collected, and enforced by the department.