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

RPD-41284

STATE OF NEW MEXICO - TAXATION AND REVENUE DEPARTMENT

Rev. 06/13/2011

Quarterly Oil and Gas Proceeds Withholding Tax Return Instructions

Page 1 of 3

ABOUT THIS TAX: Effective October 1, 2003, remitters of

proceeds subject to oil and gas proceeds withholding tax and

oil and gas proceeds from oil and gas production from a well

includes amounts deducted by the remitter for expenses and

located in New Mexico must deduct and withhold tax from

severance taxes, but does not include amounts deducted for

each payment of oil and gas proceeds to a nonresident of

expenses or taxes prior to receipt by the remitter. If a taxpayer

New Mexico (remittee). To calculate the withholding amount

receives a Form 1099-MISC for its oil and gas proceeds,

multiply the effective rate for the reporting period by the

the gross amount is the amount reported on federal Form

gross amount of oil and gas proceeds that otherwise would

1099-Misc in box 2--royalties, and in box 7--non-employee

have been payable to the remittee. Effective January 1, 2011,

compensation.

legislation combines reporting and withholding provisions for

The following payments are not subject to the oil and gas

pass-through entities with the Oil and Gas Proceeds With-

proceeds withholding tax:

holding Tax Act. The name of the act changes to the Oil and

•

"net profits interest" and other types of interest which

Gas Proceeds and Pass-Through Entity Withholding Tax

cannot be linked to a specified share of the oil and gas

Act. Bulletin B-100.22, 2010 Legislative Summary, provides

production.

a summary of all changes that occurred with this legislation.

•

advance royalty payments, bonus payments, minimum

Important: Effective January 1, 2011, a remitter may no

royalty payments, shut-in payments and rental pay-

longer use Form RPD-41286, New Mexico Nonresident

ments, provided that the payments are not offset against

Recipient of Oil and Gas Proceeds Income Tax Agree-

a share of future production.

ment, to avoid withholding from oil and gas proceeds.

The well must be located in New Mexico, but if the production

IMPORTANT DEFINITIONS:

is from a well subject to a unit or communitization agreement

"Remittee" means a person who is entitled to payment of oil

whose area crosses state boundaries, the amount attribut-

and gas proceeds by a remitter.

able to "oil and gas production from any well located in New

"Remitter" means a person who pays oil and gas proceeds

Mexico" may be derived through the allocation methodology

to any remittee.

set out in the agreement.

"Oil and gas" means crude oil, natural gas, liquid hydrocarbons

Adjustments to the amount withheld: If a remitter receives

or any combination thereof, or carbon dioxide.

oil and gas proceeds from which an amount has been de-

For definitions of "Oil and gas proceeds" see "What are gross

ducted and withheld pursuant to the Oil and Gas Proceeds

oil and gas proceeds?" in these instructions.

and Pass-Through Entity Withholding Tax Act, the remitter

may take credit for that amount in determining the amount

What are gross oil and gas proceeds?

the remitter must withhold and deduct. When an adjustment

"Oil and gas proceeds" means any amount derived from oil

occurs, include on line 2, the gross oil and gas proceeds

and gas production from any well located in New Mexico

from the eligible transaction to which the tax withheld was

and payable as royalty interest, overriding royalty interest,

computed, thereby excluding that amount from oil and gas

production payment interest, working interest or any other

proceeds subject to withholding in line 3.

obligation expressed as a right to a specified interest in the

cash proceeds received from the sale of oil and gas production

Exceptions to the requirement to withhold.

or in the cash value of that production. Oil and gas proceeds

1. If the amount to be withheld from the payment is less

excludes "net profits interest" and other types of interest the

than ten dollars or if the sum of all payments made to that

extent of which cannot be determined with reference to a

remittee by the remitter, including the subject payment,

specified share of the oil and gas production and excludes

in the calendar quarter is thirty dollars or less.

any amounts deducted by the remitter from payments to in-

2. At the option of a remitter, a remitter may agree with the

terest owners or paid by interest owners to the remitter that

remittee that the remittee pay the amount that the remitter

are for expenses related to the production from the well or

would have been required to withhold and remit to the

cessation of production from the well for which the interest

Department on behalf of the remittee pursuant to the Oil

owner is liable.

and Gas Proceeds and Pass-Through Entity Withhold-

ing Tax Act. The remittee remits the tax required to be

"Gross oil and gas proceeds" means the amount of oil and gas

Oil and Gas Proceeds Withholding Tax Rate Table

If your report period falls between:

the effective rate is:

6.75%

Oct 1, 2003

and

Dec 31, 2004..............................................................

5.70%

Jan 1, 2005

and

Dec 31, 2005 ............................................................

5.30%

Jan 1, 2006

and

Dec 31, 2006 .............................................................

5.30%

Jan 1, 2007

and

Dec 31, 2007 ...........................................................

4.90%

Jan 1, 2008

and

Thereafter ..................................................................

Form Rpd-41284 - Quarterly Oil And Gas Proceeds Withholding Tax Return - 2011 Page 2

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