The bill introduced on March 20, 2025, aims to amend 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 nonresidents by lessees. The legislation outlines the necessity for this tax due to the significant loss of tax revenue from out-of-state lessors and provides definitions for key terms such as "lessor," "natural resource," and "natural resources royalty payment." It mandates that lessees withhold West Virginia personal income tax from royalty payments to nonresident lessors, with specific provisions for exceptions based on the amount received. The bill also stipulates that withheld taxes must be paid to the Tax Commissioner on behalf of the nonresidents, and it allows for refunds in cases of overpayment.

Additionally, the bill requires lessees to furnish annual withholding statements to lessors, file withholding returns, and adhere to electronic filing requirements under certain conditions. It establishes penalties for non-compliance and grants the Tax Commissioner the 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 create a structured approach to tax collection from nonresident lessors, ensuring equitable tax compliance and revenue generation for the state.

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