Severance Tax and Royalty Services

Helping the upstream industry navigate the compliance complexities of oil and gas production taxes and royalties.

Brian Culvey

Brian Culvey

Managing Director, State and Local Tax, KPMG US

+1 713 319 3831

Some of the largest taxes borne by the upstream industry are crude oil and natural gas production taxes, also known as severance taxes. In addition, operators producing on federal or state leases pay significant royalties. Understanding the complexity of severance taxes and royalties in order to increase the benefit of incentives and deductions is vital to delivering on the full value of upstream assets.

Oil and gas operators often operate in multiple state jurisdictions, each with their own approach to taxing oil and gas production. This complexity can lead to large compliance burdens, administrative overhead, and tax or royalty overpayments.

Our team can help. The KPMG Severance Tax and Royalty Services practice has deep, multistate experience with adding value to operations in oil and gas producing states and the Gulf of Mexico.  Our dedicated and experienced professionals specialize in assisting organizations reach their tax and royalty management goals. Our professionals have extensive knowledge of applicable laws and procedures and we maintain professional relationships with various regulatory and tax agencies – helping us to keep you informed of any changing policies or current developments.

Our range of services fall into these categories:

Consulting: Our consulting services assist operators with helping to minimize severance taxes through incentive and marketing costs studies, tax efficient organizational structures, and identifying tax efficiencies.

Compliance: Many organizations see value in co-sourcing or fully outsourcing the severance tax compliance process. Our use of proprietary technology combined with the work of our experienced professionals helps to deliver compliance results that include real-time identification and utilization of incentives and deductions, increasing value by reducing taxes on the return.

Recovery: The complexities of severance tax compliance often lead to missed incentives and deductions. Our detailed recovery process led by experienced professionals identifies and recovers overpaid severance taxes, resulting in cash recovery and potential lower taxes going forward.

Technology: KPMG has developed proprietary technology using advanced data analytics and machine learning. Our technology allows us to perform real-time deduction analysis, incentive qualification, and benchmarking.

Royalty Services: Our royalty consulting practice assists operators with increasing deductions and improving compliance through company-owned asset reviews, transportation and processing studies, and royalty recovery reviews. Our team can also assist in audit defense and data mining reviews.