Oil and Gas Proceeds Withholding Tax 

Anyone who makes payments of amounts derived from oil and gas production from a well located in New Mexico (the “remitter”) to a nonresident of New Mexico must withhold tax from those payments.

Set by Department directive, the rate of withholding may not exceed the higher of the maximum bracket rate set by Section 7-2-7 NMSA 1978 of the Personal Income Tax Act, or Section 7-2A-5 NMSA 1978 of the Corporate Income and Franchise Tax Act for the tax year. The pass-through entities must be given 90 days notice of a change in the rate. For current rate information, please review the instructions for Form RPD-41284.

The remitter must file a form RPD-41284, Quarterly Oil And Gas Proceeds Withholding Tax Return on the 25th day of the month following the end of the calendar quarter in which the taxes are withheld. For tax years beginning on or after January 1, 2011, the form has been revised and additional annual filing requirements are required. See Bulletin B-200.13 for a description of the changes.

The remitter also must file a form RPD-41283, Annual Summary of Oil and Gas Proceeds Withholding Tax with the Department by the last day of February of the year following the calendar year in which withholding occurs. Copies of form RPD-41285, Annual Statement of Withholding of Oil and Gas Proceeds or federal form 1099-MISC for each recipient must accompany the annual summary. For tax years beginning on or after January 1, 2011, the annual reporting requirements are expected to change. The Department plans to release the new forms in the last quarter of 2011.

There are exceptions and adjustments to the requirement to withhold from a remittee. Please refer to form RPD-41284, Quarterly Oil and Gas Proceeds Withholding Tax Return Instructions.

Contact Information

New Mexico Taxation and Revenue Department
P.O. Box 25127
Santa Fe, NM 87504-5127
 
For assistance, call (505) 827-0825. 
Or for tax return help, email us at CIT.TaxReturnHelp@state.nm.us

Links

Manage your account online 
Forms 
Bulletins 
Statutory Reference: Look for Chapter 7, Article 3A NMSA 1978 in the New Mexico State Statutes.

Frequently Asked Questions

What is the Oil and Gas Proceeds Withholding Tax?

Answer:
The oil and gas proceeds withholding tax is a withholding tax on the amount paid to nonresidents of New Mexico from oil and gas wells located in New Mexico.

Q. What does “oil and gas proceeds” mean?

Answer:
Oil and gas proceeds are amounts derived from production and payable to recipients (remittees) as royalty interest, overriding royalty interest, production payment interest, working interest, or any other amount expressed as a right to a specified interest either in the cash proceeds from the sale of oil and gas production, or in the cash value of that production.

Q. Who must withhold?

Answer:
The remitter (the person, whether an individual or a business) who makes an oil and gas proceeds payment to a nonresident of New Mexico must withhold from that payment. The recipient must be a qualified remittee.

Q. Who is a qualified remittee?

Answer:
A qualified remittee is a person who receives oil and gas proceeds from New Mexico wells and who is not a resident of New Mexico. As proof of a New Mexico residence, the Taxation and Revenue Department (TRD) will accept a New Mexico address provided by the remittee as the address to mail federal form 1099-MISC. If the recipient supplies no address for form 1099-MISC, then TRD will accept a New Mexico address to which the actual payment is mailed as proof that the recipient is a New Mexico resident.

Q. How much do I withhold?

Answer:
Withhold at the top personal income tax bracket rate, which is 4.90% of payments made after January 1, 2008. Please see Form RPD-41284, Quarterly Oil and Gas Proceeds Withholding Tax Return  for current rates.
  • Message from the Secretary It’s that time of the year again when New Mexicans are getting ready to file their 2011 tax returns. I want to encourage everyone to file tax returns online. Not only will you receive your refund check faster… Read More ​

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