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GENERAL INFORMATION

WHAT IS THE COLORADO SEVERANCE TAX?

interest in more than one well or field, you should

receive a separate withholding statement from each

Colorado severance tax is imposed upon nonrenew-

producer or first purchaser. A copy of each with-

able natural resources that are removed from the

holding statement must be attached to your sever-

earth in Colorado. The tax is calculated on the gross

ance tax return (DR 21).

income from oil and gas and carbon dioxide produc-

tion.

The producer or first purchaser also will list your

share of "ad valorem" taxes, if any, on the withhold-

WHO MUST FILE THE COLORADO SEVERANCE TAX

ing statement. Ad valorem taxes are paid by the

OIL AND GAS RETURN (DR 21)?

producer to local governments (cities and counties).

You are allowed a credit against severance tax of

Anyone who receives taxable income from oil or gas

87.5% of your share of ad valorem taxes paid or

produced in Colorado. If you are a producer or own

assessed on actual oil or gas production (not the tax

a working interest, or a royalty interest in any oil or

on facilities or equipment). However, ad valorem

gas (including carbon dioxide) produced in Colo-

taxes on production from "stripper wells" should

rado, or if you receive royalties on Colorado oil shale,

not be included in the credit. Specific instructions

you must pay severance tax to the State of Colorado.

for this deduction are on the "Colorado Oil and Gas

Severance tax might be due even though you do not

and Carbon Dioxide Severance Tax Schedule" (DR

realize a net profit on your investment.

21D). You should verify that the withholding state-

Oil and gas production from "stripper wells" is

ments accurately report the same information as

exempt from severance tax. This includes oil from a

shown on your division of interest statements and

well that produces 15 barrels or less of crude oil per

revenue checks.

day or gas from a well that produces 90,000 cubic feet

or less of gas per day, for the average of all producing

Note: Partners of a General Partnership

days during the taxable year.

Partners of a General Partnership should attach a

copy of the partnership's DR 21W and a schedule

Note: General Partnerships

detailing their individual portion of gross income

Since withholding is required on the individual

and taxes paid or withheld as reported on their

partner (as the entity with the income interest),

individual returns.

each partner, and not the partnership, is required

to file the return.

WHAT IS MY TAX YEAR?

One exception exists to the filing requirement. It is

not necessary to file a Severance Tax return if you

Your federal income tax year or filing period is also

your severance tax year or filing period.

meet both of the following conditions:

your total gross oil and gas income for any

calendar year is less than $500; and

WHEN IS THE COLORADO SEVERANCE TAX

the producer has withheld sufficiently from

RETURN DUE?

your royalty or production payments to cover

You must complete and file a "Colorado Severance

your severance tax liability.

Tax Return" (DR 21) annually. The return and your

payment if any are due by the 15th day of the fourth

month after the close of your taxable year. Therefore,

HOW WILL I KNOW HOW MUCH HAS BEEN

if your taxable year ends on December 31, your

WITHHELD FROM MY OIL AND GAS INCOME

severance tax return is due April 15 of the following

PAYMENTS?

year. The envelope must be postmarked by the due

Producers or first purchasers who disburse funds

date, or the next business day if the deadline falls on

must withhold 1 percent of the gross income of all

a Saturday, Sunday or holiday.

interest owners. This includes royalty, working or

Mail your Colorado severance tax return and, if

any other interest owner.

applicable, tax payment to:

The producer or first purchaser is required to send

Colorado Department of Revenue

you an "Oil and Gas Withholding Statement" (DR

Denver, CO 80261-0007

21W) by March 1 of each year. This form lists your

gross income and the amount of severance tax the

producer has withheld and paid to the state from

your royalty or production payments. If you own an

Form Dr 21s - Application For Extension Of Time To File Colorado Severance Tax Return - 2003

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