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 calculating the withholding amount and exceptions for those receiving less than $1,000 annually.

Additionally, the bill requires lessees to remit the withheld taxes to the Tax Commissioner on behalf of the nonresidents and allows for refunds in cases of overpayment. It establishes annual reporting requirements, including the submission of withholding statements and reconciliations, and mandates electronic filing for lessees with 25 or more lessors. The bill also outlines penalties for non-compliance 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.

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