Form Rpd-41284 - Quarterly Oil And Gas Proceeds Withholding Tax Return (Page 3 of 3) in pdf

RPD-41284

STATE OF NEW MEXICO - TAXATION AND REVENUE DEPARTMENT

Rev. 07/2010

Quarterly Oil and Gas Proceeds Withholding Tax Return Instructions

Page 2 of 2

What are gross oil and gas proceeds?

"Oil and gas proceeds" means any amount derived from oil and gas production from any well located in New Mexico and

payable as royalty interest, overriding royalty interest, production payment interest, working interest or any other obligation

expressed as a right to a specified interest in the cash proceeds received from the sale of oil and gas production or in the

cash value of that production.

"Gross oil and gas proceeds" means the amount of oil and gas proceeds subject to oil and gas proceeds withholding tax

and includes amounts deducted by the remitter for expenses and severence taxes, but does not include amounts deducted

for expenses or taxes prior to receipt by the remitter. If a taxpayer receives a Form 1099-MISC for its oil and gas proceeds,

the gross amount is the amount reported on federal Form 1099-Misc in box 2, royalties, and in box 7 non-employee com-

pensation.

The following payments are not subject to the oil and gas proceeds withholding tax:

•

"net profits interest" and other types of interest which cannot be linked to a specified share of the oil and gas produc-

tion.

•

advance royalty payments, bonus payments, minimum royalty payments, shut-in payments and rental payments,

provided that the payments are not offset against a share of future production.

The well must be located in New Mexico, but if the production is from a well subject to a unit or communitization agree-

ment whose area crosses state boundaries, the amount attributable to "oil and gas production from any well located in New

Mexico" may be derived through the allocation methodology set out in the agreement.

A remitter is not required to deduct and withhold under the Oil and Gas Proceeds Withholding Tax Act from:

•

any payment to a remittee that is less than ten dollars, but a remitter may withhold from payments less than $10 without

creating a right of action by the remittee against the remitter;

•

a remittee with a New Mexico address*. The relevant address is the address to which any federal Form 1099-MISC

is mailed, or the address that is shown on federal Form W-9, Request for Taxpayer Identification and Certification or

a similar form. If the remitter is not required to file federal Form 1099-MISC to the remittee, and the remitter has not

received a federal Form W-9 or similar form, the relevant address is the address to which the oil and gas proceeds

are mailed;

•

the United States, New Mexico or any agency, instrumentality or political subdivision thereof;

•

any federally recognized Indian nation, tribe or pueblo or any agency, instrumentality or political subdivision thereof;

•

organizations that have been granted exemption from the federal income tax by the United States commissioner of

internal revenue as an organization described in Section 501(c)(3) of the United States Internal Revenue Code of 1986,

as amended. Acceptable proof that a remittee is a 501(c)(3) organization includes a copy of the remittee's federal Form

W-9, or a copy of the determination letter from the Internal Revenue Service granting the remittee 501(c)(3) status;

•

a remittee whose payment is subject to further distribution by the remittee as a remitter to working interest owners,

royalty interest owners, overriding royalty interest owners and/or production payment interest owners. Acceptable proof

includes --but is not limited to-- written notification from a remittee or internal documentation such as signed division

orders demonstrating that the payment is subject to further distribution by the remittee as a remitter to working interest

owners, royalty interest owners, overriding royalty interest owners and/or production payment interest owners, or

•

a remittee who has provided the remitter with a notarized Form RPD-41286, New Mexico Nonresident Recipient of Oil

and Gas Proceeds Income Tax Agreement, indicating that the remittee will report and pay tax on any amount remit-

ted.

*The remitter may rely on a New Mexico address supplied by the remittee for up to 30 days after receiving written notice

from the remittee of a change in address to an address outside New Mexico.

Form Rpd-41284 - Quarterly Oil And Gas Proceeds Withholding Tax Return Page 3

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