In response to inquiries from producers, IOGAWV has reached out to the West Virginia State Tax Department regarding the payment of severances on marginal oil and natural gas production as newly defined and codified in House Bill 4090 that was signed into law by Governor Justice on March 25, 2020 and becomes effective June 1, 2020. The link to HB-4090 is provided here: http://www.wvlegislature.gov/Bill_Status/bills_text.cfm?billdoc=HB4090%20SUB%20ENR.htm&yr=2020&sesstype=RS&i=4090
As stated in HB-4090, the reduced severance tax payments begins with production “for taxable periods beginning on or after January 1, 2020”. The State Tax Department informs us that while the estimated tax form has not changed to reflect the retroactive change in the severance tax for marginal wells, there are special instructions set forth on the web site to address the retroactive change in rates. These special instructions basically tell producers to multiply their gross proceeds from marginal wells by 50% and add that amount to the gross proceeds from non-marginal wells and enter that amount on Line 3 of the Severance Tax Estimate form for gas wells and line 2 for oil wells. Here is a link to these instructions:
https://tax.wv.gov/Documents/TaxForms/sev400.VerticalWells.Instructions.pdf
If you have questions or seek additional clarification, please contact Lydia McKee at Lydia.S.McKee@wv.gov.
