Cost Recovery Fee Processing

The Cost Recovery Fee is a fee created by Ohio Senate Bill 165. It is an additional fee of .10/bbl and .005/mcf. It is effective July 1, 2010, and is based on the date the minerals are removed from the ground. When those rates plus the existing severance tax rates for oil/gas are added together, it must equal a minimum average of $15/well per quarter. If the minimum is not met then an additional fee is charged to bring the amount up to $15/well per quarter. The $15/well per quarter is an average for all of your wells.

The additional tax can be calculated on a tax table with the default processing within the software. The benefit of this reporting module is that it allows you to print/preview a worksheet that shows the total taxes calculated for each well and lists if any adjustments are needed. If adjustments are needed, then it can create the adjusmtents for you so that the tax minimums are met. You can then print forms SV 3A (Cost Recovery Schedule) and SV 3 (Severance Tax Return) directly from the software on blank paper.

In order to use the Cost Recovery Report Processing, you must have wells in the state of Ohio that have the taxes being calculated for them with a tax table. The normal Severance tax and additional Recovery fee will be calculated and then distributed to the investors on each run closing. Then at the end of each quarter, you can view the Cost Recovery Fee Worksheet to see if all of your wells reached the mandatory $15 minimum. If no adjustments are needed, then you don't need to do anything else, just print the SV3 and SV3A reports for the state and remit payment. If adjustments are needed, then you can view the Cost Recovery Fee Worksheet with the option marked to "Create adjusting entries based on worksheet numbers" and it will create some entries on the new run for the wells using OTAX4 (Oil Tax 4). These adjustments will be reflected on the SV3 and SV3A reports for the state that you send in with your payment.

Refer to the Ohio Department of Taxation website for deadlines and any additional information that is needed.

Print Form SV3 & SV3A
Remove Cost Recovery Adjustments

More Information: