This bill proposes the addition of a new section, 11-21-71c, to the Code of West Virginia, which establishes a withholding tax on income derived from natural resources royalty payments made to nonresident lessors by lessees. 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 to the Tax Commissioner, including the requirement for annual withholding statements and reconciliation.

Additionally, the bill includes provisions for refunds to nonresidents for any overpayments, establishes penalties for non-compliance, and allows for rule-making by the Tax Commissioner to implement these provisions. The effective date for the new withholding tax regulations is set for taxable years beginning after December 31, 2025. Overall, the bill seeks to create a more equitable and efficient tax collection process for natural resources royalty payments made to nonresidents.

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