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 nonresidents 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 nonresident lessors, 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 the payment of withheld taxes to the Tax Commissioner and the process for nonresidents to claim refunds for any overpayments.

Additionally, the bill requires lessees to provide annual withholding statements to lessors, file withholding returns, and adhere to electronic filing requirements under certain conditions. It includes provisions for civil and criminal penalties for noncompliance and allows the Tax Commissioner to propose rules for implementation. The effective date for these provisions is set for taxable years beginning after December 31, 2026. Overall, the bill seeks to create a structured approach to ensure tax compliance for nonresident income related to natural resources in West Virginia.

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