Revenue Withholding REV268

This program calculates withholding and reports on Detail Sales Ledger (DSL) items that are subjected to withholding for State Withholding. In Post mode, Detail Sales Ledger (DSL) items are created and General Ledger transactions are created which are then processed by Revenue Check Processing - REV200. Before you process in Post mode, run the process in Verify mode to obtain summary and/or detail reports of the Detail Sales items subject to withholding. Revenue Backup Withholding - REV266 must be run before REV268 Revenue Withholding. Please see the documentation for Revenue Withholding Defaults - REV298 for setup and processing logic.

Overview

Oklahoma implemented a law effective October 2000, which requires all non-working interest owners who do not live in Oklahoma to have 6.75% of their gross on Oklahoma wells withheld from their revenue checks. This excludes federally recognized charities, Indian Tribes, state, and federal owners.

Oklahoma Senate bill 495 amended the withholding requirements effective June 1, 2001 for out-of-state owners to include corporations and other entities. The bill also eliminated the withholding on all overriding royalty interests. As a result, owners with Corporate Tax ID 2N - 7N (99-9999999) have been eliminated from the withholding requirements.

New Mexico has implemented a law effective October 1, 2003, which requires all interest owners who do not live in New Mexico to have the current rate of their gross on New Mexico wells, withheld from their checks.

California has passed a new law that excludes nonresident owners from taxes if they received less than $1500.00 during the previous year.

Montana enacted legislation to create a 'Royalty Owner Withholding tax' effective with payments to owners after 12/31/2007. This withholding tax applies to both residents and non-residents in Montana. Working interests are exempt.

North Dakota enacted legislation to create a ‘Non-resident royalty owner Withholding tax’ effective with payments after 1/1/2014. Working interests are exempt. However, if a WI owner has both a working and royalty interest, the RI will be withheld. Government entities can be exempted in REV120C. Detailed setup is required in REV298. The calculation is on Net value.

All payments to a non-resident royalty owner made within a calendar year (regardless of sale date) are accumulated to add up to the annual $1000.00 threshold if setup in REV298. If the quarterly $600.00 threshold is set in REV298, each quarter must meet the threshold unless the annual threshold has already been met. The non-resident royalty owner is exempt from withholding until one or both of the thresholds is met. Threshold calculations are optional (see REV120) If thresholds are not setup, then all ND nonresident royalty owners are withheld.

Utah has a requirement for Producer’s to deduct and withhold from payments being made to any person for production of minerals in Utah, but not including that to which the producer is entitled, an amount equal to 5% of the amount which would otherwise be payable to the person entitled to the payment. This requirement is filed on the Statement of Utah Tax Withheld on Mineral Production (Form TC-675R).

Credit must be claimed for the tax withheld on a Utah individual income tax return, or a Utah corporation franchise tax return, with a copy of Form TC-675R attached to substantiate the amount claimed. Copies of this statement are furnished to each person who is entitled to credit for taxes withheld each calendar year. If a working interest owner or royalty owner received payment on more than one well or property from the same producer, the production amount and mineral production withholding tax amount can be grouped together. Information is drawn from distribution records for a given date range, for specific (or all) owners, and for specific Utah severance tax components.

In addition to the state withholding, the capability for federal withholding for owners with no tax ID (FD) and Foreign Owner Withholding (FOW) for out of country residents, a federal law, is included.

Excluded DSLs

Selection of DSLs to be processed are for all states setup in REV298 and the following DSLs are excluded:

DSLs already run for the withholding option specified.
DSLs whose "well state" does not exist in the state master file.
DSLs whose state withholding company is not the same as the current company.
DSLs whose type interest category is exempt for the state as specified in REV298.
DSLs whose owner is flagged to suppress withholding when specified in REV120.
DSLs whose owner has an insider company reference specified in REV120.
DSLs whose pay balance is less than 0.
DSLs whose pay category is 'M'inimum and the pay balance is less than the minimum pay amount.

Additional Exclusions

For State Withholding:

DSLs with a pay code that has a type category of "X", release with no pay.
DSLs whose owner state is the same as the "well state."
DSLs who have a corporate tax id format.

If individual states are selected:

DSLs whose state is different from the states selected.

For Foreign Withholding:

DSLs whose state has a valid API number.
DSLs who have a tax id.