Tax questions

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Tax questions

Copy of the tax form

Your tax forms are always available in your owner’s profile in our Online System. You can download a copy as many times as you need.

Tax form date send

Tax forms are issued annually based on federal requirements. These forms are being sent on or about January 31th. Corrections are processed in early April and late July.

Does the owner pay taxes?

Royalty interest owners receiving anually more than $10, and working interest owners receiving annually more than $600. The income reported to the IRS is your gross income prior to any other deductions or taxes. Kindly know that we do not provide to the owner tax advice on how to report the taxes.

Severance/Production taxes

A severance/production tax is a state tax levied against both royalty and working interest owners on their pro rata share of oil and gas production. State governments set owner severance tax rates and levy the tax when natural resources such as oil and gas are "severed" from the earth.

State taxes withheld

State taxes are withheld pursuant to the applicable laws as they apply to either the state of residency or the state of production.

Ad Valorem tax

Ad Valorem taxes on minerals are levied at the county level. Ad Valorem is Latin for "according to value." In Texas (and in some other states), this tax becomes payable only when minerals are producing (as opposed to non-producing), and are billed and collected once per year. Mineral interests are classified as real property, and are taxed based on the appraised fair market value. In its simplest form, fair market value is the price a willing buyer from the open market will pay for a mineral interest within the currently prevailing market conditions.

Federal withheld taxes

Federal Backup Withholding is assessed when the owner does not have the SSN/TIN on the account. A timeframe is given for the owner to send in the W9 form so it can be added to the account. If Federal Backup Withholdings were applied, the owner will need to consult with a tax preparer to see if a refund of it is possible.