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.
What is the Oil and Gas Proceeds Withholding Tax?
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Oil and Gas Proceeds Withholding Tax
What does “oil and gas proceeds” mean?
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...
Who must withhold?
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.
Who is a qualified remittee?
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...
How much do I withhold?
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.
Must both parties withhold if the recipient is someone who pays oil and gas proceeds to another recipient subject to withholding?
What proof does TRD accept that an oil and gas proceeds payment is subject to further distribution by the recipient?
Acceptable proof of redistribution of oil and gas proceeds includes – but is not limited to – written notification from a recipient, or such internal documentation as signed division orders showing that the recipient must make payments to another person.
Who is not a qualified remittee?
The United States of America, the State of New Mexico and any agencies, instrumentalities or political subdivisions of either government are not qualified, nor are 501(c)(3) nonprofit organizations. The payer does not need to withhold from oil and gas proceeds paid to...
How do I pay the Oil and Gas Proceeds Withholding Tax?
Submit Form RPD-41284, Quarterly Oil and Gas Proceeds Withholding Tax Return with payment on or before the 25th day of the month following the close of the calendar quarter in which tax was withheld.
Are there any other report requirements?
For tax years beginning January 1, 2011, Form RPD- 41283, Annual Summary of Oil and Gas Proceeds Withholding Tax, is no longer required to be mailed to the Department. Form RPD-41283 should be completed and retained by the remitter. Form RPD-41283 reconciles the total...