This bill amends the Code of West Virginia by adding a new section, 11-21-71c, which establishes a withholding tax on income derived from natural resources royalty payments made to nonresident lessors by lessees of West Virginia real estate. The legislation aims to address the significant loss of tax revenue due to the absence of an effective mechanism for collecting state taxes from out-of-state lessors. It mandates that lessees withhold West Virginia personal income tax from royalty payments made to nonresidents, with specific provisions for calculating the withholding amount and exceptions for those receiving less than $1,000 annually. The bill also outlines the responsibilities of lessees regarding tax payments, annual statements, and reconciliation requirements.

Additionally, the bill provides for penalties for non-compliance, defines key terms related to natural resources and royalty payments, and grants the Tax Commissioner authority to propose rules for implementation. The provisions of this section will take effect for all taxable years beginning after December 31, 2025. Overall, the bill seeks to ensure equitable tax collection from nonresident lessors while providing a structured framework for compliance and enforcement.

Statutes affected:
Introduced Version: 11-21-71c
Committee Substitute: 11-21-71c