Release No.:

Transmittal No.:

Dated:

Document title:

For further information, contact:

Explanation of material transmitted:

Filing instructions:

Chief, Rules and Publications Staff

Royalty Management Program

Transmittal Sheet

Solid Minerals Payor Handbook

1.0

01

02/27/97

Cindi Smith-Wells, Royalty Valuation Division, 303-275-7216

Release 1.0 of the Solid Minerals Payor Handbook.

Please note: This new handbook replaces chapters 1–9 and all appendixes of the AFS Payor

Handbook—Solid Minerals. Chapter 10, Coal Product Valuation, of that handbook is still in effect

and is not being replaced at this time.

Replace chapters 1–9 and all appendixes of the AFS Payor Handbook—Solid Minerals

(Release 1.0 dated 08/31/90) with the attached new handbook.

The Minerals Management Service (MMS) recommends that you retain superseded releases of

MMS handbooks for possible use in future reviews of transactions that occurred and were 

reported while that release was in effect.

David S. Guzy [original signature on file]
U.S. Department of the Interior

Minerals Management Service

Royalty Management Program

Solid Minerals Payor 

Handbook

Royalty Management Program
U.S. Department of the Interior

Minerals Management Service

Royalty Management Program

Written by:

American Management Systems

Operations Corporation, Inc.

under Contract No. 14-35-0001-30550

Prepared by:

Solid Minerals Payor 

Handbook

Royalty Management Program

February 20, 1997

Release 1.0

Royalty Valuation Division

Solid Minerals Valuation and Reporting Branch
ii

The use of trade names does not constitute

endorsement by the U.S. Department of the Interior.
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

iii

Abbreviations 

ACH Automated Clearing House

AFS Auditing and Financial System

AID accounting identification (number)

AML abandoned mine land

ARC adjustment reason code

BIA Bureau of Indian Affairs

BLM Bureau of Land Management

BOM Bureau of Mines

b.o.y. beginning of year

Btu British thermal unit

CFR Code of Federal Regulations

CPI Consumer Price Index

CY calendar year

EFT electronic funds transfer

e.o.y end of year

FCLAA Federal Coal Leasing Amendments Act of 1975

FERC Federal Energy Regulatory Commission

Fedwire Federal Reserve Wire

f.o.b. free on board

Form MMS-2014 Report of Sales and Royalty Remittance

FR Federal Register

GNP-IPD Gross National Product-Implicit Price Deflator

IRS Internal Revenue Service

LMU logical mining unit

MMS Minerals Management Service

MMYY month/year

MS mail stop

MSHA Mine Safety and Health Administration

NPS net profit share
Abbreviations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

iv

OCS Outer Continental Shelf

OMB Office of Management and Budget

OMM Offshore Minerals Management

P2O5 phosphorus pentoxide

PAAS Production Accounting and Auditing System

PADN payor-assigned document number

PCR Payor Confirmation Report

PIF Payor Information Form

PUC Public Utility Commission

REA Rural Electrification Administration

RMP Royalty Management Program

ROI return on investment

rom run of mine

RVD Royalty Valuation Division

S&P Standard & Poor

SMFR Solid Minerals Facility Report

SMOR Solid Minerals Operations Report

TC transaction code

TFCS Treasury Financial Communications System

U3O8 uranium oxide

U.S.C. United States Code
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

v

Contents

Page

1. About This Handbook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1

1.1 Using the Solid Minerals Payor Handbook . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3

1.2 Regulatory Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4

1.3 Use of MMS Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4

1.4 Handbook Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5

1.5 Handbook Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5

2. Reporting Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

2.1 Who Must Report and Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

2.2 Which Forms to Submit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

2.3 Which Leases to Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2

2.4 How to Submit Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2

2.5 How to Make Payments for Federal Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3

2.6 How to Make Payments for Indian Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4

2.7 When to Submit Forms and Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5

2.8 How to Contact MMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6

2.9 Bills for Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9

2.10 Administrative Appeal Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10

3. How to Complete the PIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1

3.1 Payor Confirmation Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2

3.2 PIF Data Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2

3.2.1 Payor code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2

3.2.2 Lease number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

3.2.3 Revenue source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

3.2.4 Product code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

3.2.5 Selling arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

3.3 Filling Out the PIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4

3.4 PIF Examples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11

Nonproducing PIF example. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-11

Producing PIF example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-15

Producing PIF revision example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-21
Contents

Solid Minerals Payor Handbook

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Page

4. How to Complete the Form MMS-2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1

4.1 Reporting Tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1

4.1.1 Payor code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2

4.1.2 AID number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2

4.1.3 Product code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

4.1.4 Selling arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

4.1.5 Transaction codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

4.2 Filling Out the Form MMS-2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

4.2.1 Header information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

4.2.2 Royalty line information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7

4.2.3 Trailer information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-11

4.3 Model 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14

5. Explanations of Different Reporting Situations . . . . . . . . . . . . . . . . . . . . . . . 5-1

5.1 How to Report and Pay Lease-Level Transactions . . . . . . . . . . . . . . . . . . . . 5-1

5.1.1 Reporting and paying rent—TCs 04 and 05. . . . . . . . . . . . . . . . . . 5-1

Rent reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3

5.1.2 Reporting and taking a rent recoupment—TC 25 . . . . . . . . . . . . . 5-4

Rent recoupment reporting example. . . . . . . . . . . . . . . . . . . . . 5-6

5.1.3 Reporting and paying advance royalty—TC 32 . . . . . . . . . . . . . . . 5-7

Advance royalty reporting example . . . . . . . . . . . . . . . . . . . . . 5-9

5.1.4 Reporting and taking an advance royalty recoupment—TC 33 . 5-10

Advance royalty recoupment reporting example . . . . . . . . . . 5-12

5.1.5 Reporting and paying minimum royalty—TC 02. . . . . . . . . . . . . 5-12

Minimum royalty reporting example . . . . . . . . . . . . . . . . . . . 5-14

5.2 How to Report and Pay Royalties—TC 01 . . . . . . . . . . . . . . . . . . . . . . . . . . 5-14

Royalty reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-16

5.3 How to Report and Take Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-17

5.3.1 Claiming an allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-17

5.3.2 Reporting a transportation allowance—TC 11. . . . . . . . . . . . . . . 5-19

Transportation allowance reporting example . . . . . . . . . . . . 5-20

5.3.3 Reporting a processing (washing) allowance—TC 15 . . . . . . . . . 5-21

Processing allowance reporting example . . . . . . . . . . . . . . . . 5-23

5.4 Reporting Tax Credits on Indian Leases—TC 12 . . . . . . . . . . . . . . . . . . . . 5-24

Tax credit reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-26

5.5 Reporting No Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-26
Contents

Solid Minerals Payor Handbook

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Page

6. Adjustments, Recoupments, and Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

6.1 Reporting an Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2

6.2 Payor-Initiated Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5

Payor-initiated adjustment example . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-6

6.3 Other Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7

Duplicate reporting adjustment example . . . . . . . . . . . . . . . . . . . . . . . . . 6-8

6.4 Audit Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-9

Audit adjustment example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-10

6.5 Adjustments Involving More Than One Reason . . . . . . . . . . . . . . . . . . . . . 6-11

Multiple reason adjustment example . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-12

6.6 Indian Recoupments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-13

Tribal recoupment example. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-14

Tribal recoupment example with allowances taken. . . . . . . . . . . . . . . . 6-16

Allotted recoupment example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-18

Allotted recoupment example with allowances taken . . . . . . . . . . . . . . 6-20

6.7 Federal Recoupments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22

Federal onshore recoupment example . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22

6.8 Indian Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-23

6.9 Federal Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-23

6.10 Bidding Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25

Bidding rights example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26

7. Special Instructions for Major Minerals Other Than Coal . . . . . . . . . . . . . . 7-1

7.1 Sodium/Potassium Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1

Sodium reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2

Potash reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4

7.2 Lead/Zinc/Copper Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-6

Lead/zinc/copper reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8

Net smelter return method reporting example . . . . . . . . . . . . . . . . . . . 7-10

Unprofitable NPS Indian copper lease example . . . . . . . . . . . . . . . . . . 7-13

Profitable NPS Indian copper lease example . . . . . . . . . . . . . . . . . . . . . 7-14

7.3 Phosphate Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-15

Western phosphate lease example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-17

7.4 Development Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-18

7.5 Uranium Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-18
Contents

Solid Minerals Payor Handbook

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Page

8. Special Instructions for Coal Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1

8.1 Leases with Pre-1976 Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1

Pre-1976 lease example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2

8.2 Leases with Post-1976 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3

Post-1976 lease example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4

8.3 Advance Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4

Advance royalties reporting example . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6

8.4 Retroactive Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8

8.5 Logical Mining Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8

Appendix A. Lease Prefix Conversion Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Appendix B. Product Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

Appendix C. Transaction Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

Appendix D. Adjustment Reason Codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

Appendix E. Payment Method Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

Appendix F. Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index-1

Release History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Release History-1

Figures

3-1 Filling out the PIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10

3-2 Nonproducing PIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12

3-3 PCR for nonproducing PIF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13

3-4 Producing PIF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16

3-5 PCR for producing PIF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-17

3-6 Producing PIF revision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-22

3-7 PCR for producing PIF revision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23
Contents

Solid Minerals Payor Handbook

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Page

4-1 Form MMS-2014 header information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-6

4-2 Form MMS-2014 royalty line information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10

4-3 Form MMS-2014 trailer information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13

4-4 Model 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-15

Tables

1-1 Agency responsibilities during the life of a lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2

2-1 Due dates for forms and payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6

A-1 Federal lease prefix conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

A-2 Indian lease prefix conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

1-1

1. About This Handbook 

The purpose of this Solid Minerals Payor Handbook is to help you, the 

designated payor for a lease, correctly report and pay royalties due on

your solid minerals production.

Three Federal agencies are involved in performing various lease 

activities and in collecting and disbursing lease revenues:

1. The Minerals Management Service (MMS) Royalty Management

Program (RMP), within the U.S. Department of the Interior, is 

responsible for collecting, accounting for, and disbursing royalties

from Federal and Indian mineral leases. MMS collects revenues 

from Federal leases and disburses them to the appropriate Federal 

or State agency. 

2. The Bureau of Indian Affairs (BIA) collects revenues from Indian

leases and disburses them to the appropriate Indian agency, Tribe, 

or allottee. 

3. The Bureau of Land Management (BLM) issues Federal leases and

performs field activities during the life of a lease. 

Table 1-1 summarizes the responsibilities of these three agencies.

NOTE

This new handbook replaces only chapters 1–9 of

the AFS Payor Handbook—Solid Minerals. 

Chapter 10 of that handbook, “Coal Product

Valuation,” is still in effect and is not being 

replaced at this time.
1. About This Handbook

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

1-2

This handbook explains how to prepare the following two forms, which 

you must complete and send to MMS:

1. Payor Information Form (PIF) (Form MMS-4030). We use the 

data from your PIF to establish your reporting obligation on our 

Auditing and Financial System (AFS).

2. Report of Sales and Royalty Remittance (Form 

MMS-2014). You report and pay Federal royalty obligations—

including rent, minimum royalty, advance royalty, and production 

royalties—on Form MMS-2014. For Indian royalty obligations, you 

report to, but do not pay, MMS using this form; instead, you pay the 

appropriate BIA agency or Indian Tribe (BIA in turn pays royalties 

directly to the allottees).

a. Offshore Minerals Management

b. MMS/RMP provides accounting support for Indian solid minerals leases.

TABLE 1-1. Agency responsibilities during the life of a solid minerals lease

Responsibility Federal 

onshore leases

Federal 

offshore leases

Indian 

leases

Issue leases BLM MMS/OMMa BIA

Collect bonuses BLM MMS/OMM BIA

Collect rents BLM the first 

year; MMS/RMP 

the second year 

and thereafter.

MMS/OMM the 

first year; 

MMS/RMP the 

second year and 

thereafter.

BIA

Collect royalties MMS/RMP MMS/RMP BIA and 

Tribeb

Issue lease 

termination 

notices

BLM MMS/OMM BIA
1. About This Handbook

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1.1 Using the Solid Minerals Payor Handbook

This handbook is divided into the following topics:

• Chapter 2, Reporting Overview, covers the basics of reporting and 

paying royalties. It defines who must report and pay; identifies the 

types of leases on which you must report; and tells you how, when, 

and where to submit your reports and payments. It also briefly 

discusses bills for collection and appeal rights.

• Chapter 3, How to Complete the PIF, includes field-by-field 

instructions and examples of completed PIFs. It also discusses the 

Payor Confirmation Report (PCR).

• Chapter 4, How to Complete the Form MMS-2014, includes 

field-by-field instructions and examples of completed Forms 

MMS-2014. It also describes the Model 2014.

• Chapter 5, Explanations of Different Reporting Situations, 

describes how to report common transactions such as rent, advance 

royalty, minimum royalty, production royalties, and allowances.

• Chapter 6, Adjustments, Recoupments, and Refunds, explains how 

to make adjustments to your Form MMS-2014 and gives 

step-by-step instructions on how to select and use the appropriate 

adjustment reason codes.

• Chapter 7, Special Instructions for Major Minerals Other Than 

Coal, explains how to report sodium, potassium, lead, zinc, copper, 

phosphate, and uranium.

• Chapter 8, Special Instructions for Coal Leases, discusses pre-1976 

leases, post-1976 leases covered by the Federal Coal Leasing 

NOTE This handbook deals only with reporting royalty

data to our AFS computer system. Our 

Production Accounting and Auditing System 

(PAAS) monitors production data; if you need 

information on reporting production, please refer 

to the PAAS Solid Minerals Reporter Handbook.
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Amendments Act of 1975 (FCLAA), advance royalty provisions, 

retroactive price adjustments, and logical mining units.

• Appendixes A through F contain tables to help you convert 

agency-assigned lease numbers to MMS lease numbers, various 

codes you will need to complete your forms, and blank PIFs and 

Forms MMS-2014 that you may copy and use.

1.2 Regulatory Authority

Regulations are cited throughout the text of this handbook. The 

regulatory authority for solid minerals royalty reporting is located in 

the Minerals Leasing Act of 1920, as amended. Please refer to the 

following sources for additional guidance:

• Reporting. Mineral Resources, Title 30 Code of Federal 

Regulations (CFR) Part 218—Collection of Royalties, Rentals, 

Bonuses and Other Monies Due to the Federal Government, 

Subpart E—Solid Minerals—General.

• Federal Lease Operations and Other Leasing Activities.

– Public Lands: Interior, Title 43 CFR Part 3400—Coal 

Management: General.

– Public Lands: Interior, Title 43 CFR Part 3500—Leasing of 

Solid Minerals Other Than Coal and Oil Shale. For oil shale, 

refer to the Minerals Leasing Act of 1920, as amended.

• Indian Lease Operations and Other Leasing 

Activities. Indians, Title 25 CFR Part 200—Terms and 

Conditions: Coal Leases, and Part 211—Leasing of Tribal Lands 

for Mining.

1.3 Use of MMS Forms

All MMS forms used to collect information from both the public and 

industry are subject to approval by the Office of Management and 
1. About This Handbook

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Budget (OMB). OMB approves forms for a 3-year period. You may 

continue to use the forms beyond the OMB expiration date unless we 

send you revised forms. You may make as many copies of the forms as 

you need (see app. F for blank forms), or contact us for additional forms. 

The information you submit on these forms is confidential under the 

Freedom of Information Act and other applicable laws and regulations.

1.4 Handbook Distribution

MMS is solely responsible for distributing payor handbooks. Only 

payors with valid and active payor codes receive the first paper copy of 

a handbook and any revisions at no cost. We charge an administrative 

fee for additional paper copies or for copies requested by other 

interested parties. Companies with multiple payor codes that have the 

same name and address will receive only one copy free of charge.

To order additional payor handbooks:

• Call the Solid Minerals Reporting Section at 1-888-201-6416, or 

• Call the RMP handbook order line at (303) 231-3090, or

• Send a written request to the correspondence address listed on 

page 2-9.

This handbook is also available on the Internet at 

http://www.rmp.mms.gov.

1.5 Handbook Maintenance

MMS periodically issues revisions to payor handbooks. You are 

responsible for adding or replacing pages according to the filing 

instructions on the transmittal sheet.

We recommend that you keep superseded releases of MMS handbooks 

for your use in future reviews and/or audits of transactions that 

occurred and were reported while the release was in effect.
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We appreciate any suggestions for changes to this handbook and will 

acknowledge them in writing within 45 days of receipt. Please send your 

written comments or requests to the correspondence address listed on 

page 2-9.
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2. Reporting Overview

This chapter covers the basics of reporting, including who must report 

and pay; which forms to submit; which leases to report; and how, when, 

and where to send your forms and payments. This chapter also 

discusses bills for collection and appeal rights.

2.1 Who Must Report and Pay

If you are a lessee or a designated payor on any Federal or Indian solid 

minerals lease, you are responsible for reporting and paying applicable 

royalties to MMS.

2.2 Which Forms to Submit

You must send two forms to MMS at various times during the life of 

your lease:

1. Payor Information Form (PIF) (Form MMS-4030). Before we 

can accept your reports and payments, you must send us a PIF (see 

fig. 3-1 on p. 3-10) to establish your financial accounts on our 

computer system.

2. Report of Sales and Royalty Remittance (Form MMS-2014). 

You must send Form MMS-2014 (see fig. 4-1 on p. 4-6) with your 

monthly Federal royalty payment. (See pages 2-3 and 2-4 for 

payment instructions.) This form itemizes the sales activities of your 

Federal or Indian lease for the following types of payments and 

recoupments:

• Royalty payments and adjustments (sales value, sales quantity, 

and royalty value).

• Processing or transportation allowances.
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• Lease-level payments (rentals, minimum royalties, advance 

royalties, and recoupable balances).

2.3 Which Leases to Report

You must submit PIFs and Forms MMS-2014 for the following Federal 

and Indian leases (do not submit for State or fee leases): 

• All Federal mineral leases or permits on public domain, acquired, 

and military lands, regardless of which Federal agency administers 

the surface activities.

• All Outer Continental Shelf (OCS) solid minerals leases.

• All producing leases, permits, and contracts on Indian Tribal and 

allotted lands (see Note on p. 3-2).

2.4 How to Submit Forms

Mail or fax your signed PIFs to us at the MMS address or fax number 

listed on page 2-7. Our analysts will enter the PIF data into our 

computer system and will contact you if any questions arise.

Mail your Forms MMS-2014 with your payment to the address listed on 

page 2-7. (For payment instructions, see “How to Make Payments for 

Federal Leases” below.) Submit your Form MMS-2014 in one of four 

authorized reporting formats:

1. A blank Form MMS-2014 provided by us.

NOTE

Send the first year’s advance rental or bonus 

payments for OCS leases to the MMS Offshore 

Minerals Management (OMM) Program—not 

the MMS Royalty Management Program.
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2. Our computer-generated Model 2014, which we send to you each 

month (see “Model 2014” on p. 4-14).

3. Your own MMS-approved, computer-generated facsimile of 

Form MMS-2014. (You may use a facsimile only if MMS approved it 

before October 1996.)

4. Electronically. If you want to submit your Form MMS-2014 by 

diskette or electronic mail, please contact us at the phone number 

listed on page 2-8.

2.5 How to Make Payments for Federal Leases

Follow these instructions for payments on Federal leases:

• Ensure that the payment equals 100 percent of your percentage of 

royalties due.

• Pay by electronic funds transfer (EFT) to the extent that it is cost 

effective and practical. Currently, our EFT use is limited to the 

ACH (Automated Clearing House) and Fedwire (Federal Reserve 

Wire) networks. For complete instructions on paying by EFT, 

contact our General Ledger Section at the phone number listed on 

page 2-8. Also refer to Title 30 Code of Federal Regulations (CFR) 

218.51.

• If you cannot use EFT, pay by check, money order, or bank draft 

(not cash). Attach these types of payments to your 

Form MMS-2014.

• Include your five-character MMS solid minerals payor code (see 

“Payor code” on p. 3-2) and your payor-assigned document number 

(PADN) (see p. 4-5) for the related Form MMS-2014. Do not use an 

oil and gas payor code for solid minerals reporting. MMS requires 

separate payments, as well as separate forms, for solid minerals. 

Only solid minerals payor codes begin with MA.
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• Include appropriate inscriptions on any check, money order, or 

bank draft as follows:

2.6 How to Make Payments for Indian Leases

Follow these instructions for payments on Indian leases:

• Send your payment to the appropriate BIA office. Contact that 

office to ask about its approved payment method, and then comply 

with that method. Do not send cash.

• Include your five-character MMS solid minerals payor code (see 

“Payor code” on p. 3-2) and your payor-assigned document number 

(PADN) (see p. 4-5) for the related Form MMS-2014. Do not use an 

oil and gas payor code for solid minerals reporting. MMS requires 

separate payments, as well as separate forms, for solid minerals. 

Only solid minerals payor codes begin with MA.

• List all payments on the Form MMS-2014 that you send to MMS, 

but send the money to the appropriate Tribe or agency.

• Include appropriate inscriptions on any check, money order, or 

bank draft as follows:

For Indian allotted leases:

Department of the Interior

Minerals Management Service

Payor Code MA ___ ___ ___

Payor-Assigned Document Number ___________

Department of the Interior

_________________________________(Allottee)

[Enter the name of the BIA agency/area office responsible for this lease.]

Payor Code MA ___ ___ ___

Payor-Assigned Document Number ___________
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For Indian Tribal leases:

2.7 When to Submit Forms and Payments

Your Forms MMS-2014 and all payments are due by 4 p.m. mountain 

standard time or mountain daylight saving time on or before the due 

date specified in table 2-1 below. If that day falls on a weekend or 

Federal holiday, the report and payment are due by 4 p.m. mountain 

standard time or mountain daylight saving time the next business day.

If we receive your payment after the due date, we consider it to be 

delinquent and may assess a late-payment charge in accordance with 

late-payment regulations (30 CFR 218.202).

Department of the Interior

_________________________________(Tribe)

[Enter the name of the Tribe that owns the lease.]

Payor Code MA ___ ___ ___

Payor-Assigned Document Number ___________

NOTE MMS considers forms and payments “on time” 

when we actually receive them. The postmark 

date does not apply.
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2.8 How to Contact MMS

Direct your correspondence, forms, payments, and questions regarding 

Federal solid minerals royalty obligations to the addresses, facsimile 

numbers, and phone numbers listed below.

TABLE 2-1. Due dates for forms and payments 

Form Type of 

payment Due date

PIF 

(revised or 

original)

— Within 30 days after any change 

in lease activity (as described in 

chapter 3).

MMS-2014 Royalty As specified by the lease terms, 

on or before the last day of the 

month following the sales month 

or quarter, as applicable. Unless 

your lease provides otherwise, 

MMS requires monthly royalty 

payments and reports.

MMS-2014 Minimum 

royalty

At the expiration of each lease 

year, as specified by the lease 

terms.

MMS-2014 Rentals and

Advance

royalties

Once each year on or before the 

due date, as specified by the lease 

terms.

NOTE For immediate answers to questions regarding 

forms or payments, call this toll-free 

number: 1-888-201-6416.
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PIFs.

Minerals Management Service

Royalty Management Program

Solid Minerals Reporting Section, MS 3153

P.O. Box 25165

Denver, CO 80225-0165

Fax: (303) 275-7227

Bonus and rental courtesy notices and payments.

Minerals Management Service

Royalty Management Program

P.O. Box 5860

Denver, CO 80217-5860

Forms MMS-2014 and payments.

Mailing address:

Minerals Management Service

Royalty Management Program

P.O. Box 5810

Denver, CO 80217-5810

Delivery address (via courier or private overnight mail):

Minerals Management Service

Royalty Management Program

Building 85, Denver Federal Center

Room A-212, Document Control Staff

Denver, CO 80225
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Valuation questions and allowance applications.

Minerals Management Service

Royalty Management Program

Solid Minerals Valuation and Reporting Branch, MS 3153

P. O. Box 25165

Denver, CO 80225-0165

Fax: (303) 275-7227

Phone: (303) 275-7210

Toll free: 1-888-201-6416

Questions regarding adjustments, recoupments, and refunds.

Solid Minerals Reporting Section Accountant

Phone: 1-888-201-6416

Change of company address. If your company’s address, phone 

number, or contact name changes, mail or fax the information, 

including the effective date, on your company letterhead to:

Minerals Management Service

Royalty Management Program

Solid Minerals Reporting Section, MS 3153

P.O. Box 25165

Denver, CO 80225-0165

Fax: (303) 275-7227

Payment by EFT. For instructions on paying by EFT using ACH or 

Fedwire, contact:

General Ledger Section

Phone: (303) 231-3574

Reporting by diskette or electronic mail.

Phone: 1-800-525-0309
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All other correspondence.

Minerals Management Service

Royalty Management Program

Solid Minerals Reporting Section, MS 3153

P.O. Box 5760

Denver, CO 80217-5760

Fax: (303) 275-7227

2.9 Bills for Collection

If you fail to report and pay all amounts in accordance with your lease 

terms, we may issue you a Bill for Collection (bill) and an Order to Pay 

letter. We issue bills for:

• Late-payment (interest) charges,

• Erroneous reporting assessments, and

• Nonpayment.

Late-payment (interest) charges. An interest charge is not a 

penalty. It is an assessment to compensate the Government for the time 

value of money. As published at 30 CFR 218.200, lease terms govern 

due dates for solid minerals leases. We assess interest charges by 

authority of 30 CFR 218.202.

Erroneous reporting assessments. We no longer assess for 

erroneous reporting unless the monthly industry error rate rises above 

a predetermined level. If it does, we may then charge an assessment not 

to exceed $10 for each incorrect report line.

Nonpayment. We bill for nonpayment of lease-level obligations (rent, 

minimum royalty, and advance royalty) 3 months after you should have 

paid them.
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Pay all bills by the indicated due date to avoid further interest charges 

or other enforcement actions. These actions include:

• Demanding payment from the lessee(s) of record if different from 

the payor or lease surety.

• Reporting the delinquency to a credit bureau.

• Referring the debt to the Department of Justice for litigation.

• Initiating action to cancel the related lease, right-of-way, permit, or 

license.

To ensure proper credit, return all rent or royalty payments with a 

properly completed Form MMS-2014 and the remittance copy of the bill. 

For interest or penalty payments, return only the remittance copy of the 

bill.

2.10 Administrative Appeal Rights

Payors/lessees have certain rights to appeal MMS orders (30 CFR 290). 

You must file the notice of appeal at the issuing office within 30 days of 

your receipt of the order. Address your notice of appeal to the Director, 

MMS. We will accept faxed appeals, if they are within the 30-day 

timeframe.

A written narrative justifying reversal or modification of the billing 

action or order must accompany your notice of appeal. Within the same 

30-day period described above, you may file additional statements of 

reason or written briefs. You may also request to present oral 

arguments to the Director. File your request with the Director who may, 

at his or her discretion, schedule a hearing at the time and place of his 

or her choosing.

With the exception of the length of time for filing a notice of appeal, the 

time for filing any documents in connection with an appeal may be 

extended by the Director of MMS. You must file the request for an 

extension of time (within the 30-day period described above) with the 

original issuing office.
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We will not suspend your payment obligation because you have 

submitted an appeal (30 CFR 243.2). You may post surety for the 

amount being appealed instead of paying, pending the outcome of a 

timely filed appeal. You may also request a stay of payment pending 

appeal within 30 days of your receipt of the order. File the stay request 

with the office issuing the bill.

If we receive your appeal within 40 days after you received the Order to 

Pay—and you transmitted the appeal within 30 days—we will consider 

the appeal timely.
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3. How to Complete the PIF

To establish or update an account on our automated system, you must 

file a Payor Information Form (PIF) (Form MMS-4030) for each lease on 

which you pay rentals, advance royalties, minimum royalties, or 

production royalties. We use the PIF to establish and maintain the 

payor accounts required for processing your monthly Report of Sales 

and Royalty Remittance (Form MMS-2014).

The Code of Federal Regulations (CFR) at 30 CFR 210.201 and MMS 

require that you file an original or a revised PIF no later than 30 days 

after the occurrence of any of the following:

• Issuance of a new lease

• Assignment of all or part of a lease

• Change in producing status

• Production of a new product

• Change in royalty rate (either by readjustment or royalty rate 

reduction)

• Change in a selling arrangement

• Adoption of a new mining method

• Change in payor

• Permanent cessation of production or lease relinquishment

• Change in an Indian lease or permit number
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Mail or fax your new and revised PIFs to the address listed on page 2-7.

3.1 Payor Confirmation Reports

After processing your PIF, we will send you a Payor Confirmation 

Report (PCR). The PCR details PIF data elements that you must report 

on the Form MMS-2014. Review the PCR data for accuracy. If 

corrections are necessary, mark changes directly on the PCR and return 

it to the correspondence address listed on page 2-9. If you have 

questions or need assistance, call our toll-free number.

3.2 PIF Data Elements

The PIF “data elements” are payor code, lease number, revenue source, 

product code, and selling arrangement. These elements are defined in 

the following sections.

3.2.1 Payor code

A payor is the party who agrees to pay the rental, minimum/advance 

royalty, or production royalty due on a lease. Payors may include 

lessees, sublessees, operators, or purchasers. Each payor is identified by 

a unique, five-character payor code—always beginning with the 

NOTE Some Indian leases (or permits) last only 1 or 

2 years. After the lease expires, the Bureau of 

Indian Affairs (BIA) reissues the lease with a 

new lease number. You must submit the 

appropriate PIFs to close the old lease account 

and begin reporting on the newly issued lease 

number. You will continue to send all rental and 

royalty payments for Indian leases to the 

appropriate BIA or Tribal office.
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letters MA. We assign this code for new payors. You will find the payor 

code on your PCR or in a letter from us. 

3.2.2 Lease number

The Bureau of Land Management (BLM) and the BIA identify each 

Federal and Indian lease with an agency-assigned lease number. MMS 

converts this number to a lease number for use in our automated system 

(see app. A for conversion tables). If you don’t know the 

MMS-converted lease number, enter the agency-assigned number on 

your PIF. We will convert the number for you and inform you through 

the PCR.

3.2.3 Revenue source

This element identifies the source of production from a Federal or 

Indian lease. We require separate revenue sources for each mining type 

(surface, underground, in situ, etc.). We assign a three-digit code to each 

revenue source activity on a lease.

3.2.4 Product code

We identify each specific product extracted or sold from the lease by a 

two-letter code (see app. B).

3.2.5 Selling arrangement

The selling arrangement is a three-digit code that designates the 

method of product disposition. The code is determined by whether the 

product’s royalty is a flat rate (cents-per-unit) for the amount of product 

NOTE Include your payor code on all correspondence.
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mined or sold, or whether the royalty is a percentage of value (ad 

valorem) and the product is disposed of through either an arm’s-length 

or non-arm’s-length contract. (Also see “Calculating royalties using the 

index method” on page 7-16 for special coding instructions for western 

phosphate leases.)

3.3 Filling Out the PIF

If you have questions about filling out the PIF, please contact the Solid 

Minerals Reporting Section (see p. 2-7).

This section explains the information required for each field on the PIF. 

The fields are sequentially numbered and keyed to figure 3-1 on 

page 3-10.

Part 1: Company Data

Complete this part of the PIF for both producing and nonproducing 

leases.

Field

No. Field title Instructions

1 Federal/Indian 

indicator

Check one of the boxes to indicate 

whether you are filling out the form for 

a Federal or an Indian lease.

2 Check if Revised Check here if this is a revision to an 

existing revenue source, a selling 

arrangement, a lease-level obligation, 

or company information.

3 Company 

Name/Address/

City, State, Zip

Enter appropriate company data.

4 Person to 

Contact/Phone 

Number/Extension

Enter the name and phone number of 

the person to contact if we have any 

questions about the information on the 

form.
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Part 2: Lease Data

Complete this part of the PIF for both producing and nonproducing 

leases.

5 Payor Code Enter the five-character code beginning 

with MA assigned to your company. If 

you do not have an MA payor code, leave 

this field blank; we will assign a payor 

code to you and print it on your PCR or 

send it in a letter.

Field

No. Field title Instructions

6 MMS Lease 

Number or 

BLM/BIA 

Number

Enter the BLM/BIA-assigned number 

or, if known, the converted MMS lease 

number. Use a separate PIF for each 

lease number on which you are 

reporting.

7 Lease 

Producing—Y/N

Circle Y or enter Yes if the lease is 

continuously or intermittently 

producing. Circle N or enter No if the 

lease has not begun production or if 

production is permanently halted.

Date of First 

Production

If the lease is producing, enter the date 

of first production in MMYY format. For 

example, if production begins on 

January 25, 1996, enter 0196.

8 MSHA Mine 

Number

Enter the mine number assigned to this 

mining operation by the Mine Safety and 

Health Administration (MSHA).

Field

No. Field title Instructions
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9 Rent Payor?

Y/N

Start Date

End Date

If the lease terms require rentals, enter 

Y and the date your rental responsibility 

begins in the Start Date field. If you are 

an established rental payor and are 

ending your obligation, fill in the End 

Date field. If you are not responsible for 

paying rents, enter N. Enter dates in 

MMYY format. For example, if rent is 

due on January 1, 1996, enter 0196.

10 Minimum Royalty 

Payor? 

Y/N

Start Date

End Date

If the lease terms require minimum 

royalties, enter Y and the date your 

minimum royalty responsibility begins 

in the Start Date field. If you are an 

established minimum royalty payor and 

are ending your obligation, fill in the 

End Date field. If you are not responsible 

for paying minimum royalty, enter N. 

Enter dates in MMYY format. For 

example, if minimum royalty is due by 

January 31, 1996, enter 0196.

11 Advance Royalty 

Payor?

Y/N

Start Date

End Date

If the lease terms require advance 

royalties, enter Y and the date your 

advance royalty responsibility begins in 

the Start Date field. If you are an 

established advance royalty payor and 

are ending your obligation, fill in the 

End Date field. If you are not responsible 

for paying advance royalty, enter N. 

Enter dates in MMYY format. For 

example, if advance royalty is due on 

January 1, 1996, enter 0196.

12 Comments Use this field to describe any relevant 

information that would help us process 

this form. For example, if you are 

submitting a revised PIF because of a 

lease readjustment, please note that in 

this field.

Field

No. Field title Instructions
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Part 3: Producing Lease Detail

Complete this part of the PIF when a lease begins production or changes 

occur to a producing lease.

Field

No. Field title Instructions

13 Action Code Enter A, C, or D to indicate if you are 

Adding, Changing, or Deleting this line. 

Changes and deletions can be made only 

to previously submitted lines.

14 Effective Date Use this field to indicate the start date or 

end date of reporting/payment 

responsibilities. For example, if an 

assignment is approved, the assignor 

must indicate an end date (to end 

responsibility) and the assignee must 

indicate a start date (to begin payment 

responsibility). Another example is a 

readjusted producing coal lease. Enter 

an end date to end the cents-per-ton 

royalty rate selling arrangement and a 

start date on a second line to begin an 

ad valorem royalty rate selling 

arrangement. Enter dates in MMYY 

format. For example, if production 

begins on January 25, 1996, enter 0196.

15 Mining Type 

Code

Enter the code for each type of mining 

on the lease (one code per report line).

Code Mining type

1 Surface mining

2 Underground mining

3 Auger

4 In situ (excluding solution 

mining)

5 Solution mining

6 Modified in situ

7 Other
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16 Royalty Rate, 

Range, or Schedule

Enter the rates applicable to the mining 

type and products as required by lease 

terms; for example, 12.5% or 20 cents per 

ton.

17 MMS Use Only Do not use this field. We use it to 

establish the royalty rate coding 

sequence.

18 Product Enter the full description of the product 

(one product per report line) being 

produced and/or sold from the lease. 

Appendix B lists all products. If you 

don’t find your specific product listed, 

please contact us (see “How to Contact 

MMS” on p. 2-6).

19 Arm’s-Length or 

Non-Arm’sLength Sales?

We require this field for all leases on 

which royalties are computed by 

percentage (ad valorem leases). (See 

“Selling arrangement” on page 4-3 for 

definitions of arm’s-length and 

non-arm’s-length contracts.) 

20 Percent of Sales Enter the estimated percentage of 

product that you will dispose through 

arm’s-length and/or non-arm’s-length 

contracts.

21 Revenue Source Fill in this field if you are submitting a 

revision to an existing line and already 

know the three-digit revenue source 

code. This code is linked to your mining 

method and will preprint on your 

monthly Model 2014. If you don’t know 

your revenue source code, you can find 

it on your PCR.

Field

No. Field title Instructions
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-9

22 Product Code Enter the two-letter code from 

appendix B for each specific product 

being mined and sold from the lease. 

This code must match your description 

in the Product field (18). This code will 

be listed on your PCR and will preprint 

on your monthly Model 2014.

23 Selling 

Arrangement

The selling arrangement is determined 

by the disposition of your product—

whether it is sold through an 

arm’s-length or a non-arm’s-length 

contract and whether or not your lease 

is ad valorem. (See “Selling 

arrangement” on page 4-3 for 

definitions of arm’s-length and 

non-arm’s-length contracts.) Fill in this 

field if you are submitting a revision to 

an existing line and you already know 

the three-digit selling arrangement 

code. If you don’t know your selling 

arrangement code, it is listed on your 

PCR and will preprint on your 

Model 2014.

24 Authorized 

Signature/Date

Provide the signature of the person who 

is responsible for the accuracy of the 

information submitted. Enter the date 

the form was signed.

Field

No. Field title Instructions
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-10

FIGURE 3-1. Filling out the PIF

PAYOR INFORMATION FORM

SOLID MINERALS

U.S.DEPARTMENT OF THE INTERIORMinerals Management ServiceRoyalty Management Program

PART 2: LEASE DATAPART 3: PRODUCING LEASE DETAIL

FORM MMS-4030 (Rev. 9/94)

CHECK 

FEDERAL INDIAN

Comments:

MMS Lease Number or BLM/BIA Number

Lease producing - Y/N Date of First Production

MSHA Mine NumberY/N Start Date End Date

Rent Payor?Minimum Royalty Payor?Advance Royalty Payor?

PART 1: COMPANY DATA

Company NameAddressPerson to Contact

Payor CodeCity, State, ZipPhone Number/Exte

MA

R

S

Action 

Code Effective 

Date

Mining 

Type 

Code

Royalty 

Rate, Range 

or Schedule

MMS 

Use 

Only Product

Arm's Length 

or 

Non-Arm's Length 

Sales?

Percent 

of 

Sales

Authorized Signature Date

Public reporting burden for this form is estimated to average 20 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining data, and comments regarding the burden estimate or any other aspect of this form including suggestions for reducing this burden to the Information Collection Clearance Officer, Mail Stop 2053, Minerals Manage22070; and the Office of Information and Regulatory Affairs, Office of management and Budget, Paperwork Reduction Project (1010-0064), Washington, DC 20503.The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to set up an automated accounting data base for Federal and Indian solid use the information in monitoring and collecting rents and royalties due the government and Indians.WARNING: This is to inform you that failure to report accurately and timely in accordance with the statutes, regulations, or terms of the lease, permit, or contract may result in late payment charges, civiassessed without further notification. Intentional false or inaccurate reporting is subject to criminal prosecution in accordance with applicable Federal law(s).

➂ 1

➂ 2

➂ 3➂ 3➂ 4

➂ ➂ 

➂ 

➂ 6

➂ 7

➂ 8

➂ 9

➂ 9

➂ 9

➂10

➂10

➂10

➂11

➂11

➂11

➂12

➂13

➂14

➂15

➂16

➂17

➂18

➂19

➂20

➂24

FOR ILLUSTRATION

ONLY
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-11

3.4 PIF Examples

The following three examples illustrate how to complete a PIF. The first 

two describe a New Mexico potash lease for which XYZ Chemicals is the 

lessee, operator, and payor. The third example shows the changes ABC 

Coal, Inc. makes for a readjusted lease.

Nonproducing PIF example

Figure 3-2 on page 3-12 shows the PIF initially submitted by XYZ 

Chemicals to establish lease-level reporting obligations on its 

nonproducing potash lease. According to the lease terms, rent and 

advance royalty are due annually. Figure 3-3 on page 3-13 shows the 

PCR returned by MMS to XYZ Chemicals with the converted reporting 

codes.
Solid Minerals Payor Handbook

MMS/RMP Release 1.0◆ 02/20/97

3-12

FIGURE 3-2. Nonproducing PIF 

PAYOR INFORMATION FORM

SOLID MINERALS

U.S.DEPARTMENT OF THE INTERIORMinerals Management ServiceRoyalty Management Program

PART 2: LEASE DATAPART 3: PRODUCING LEASE DETAIL

FORM MMS-4030 (Rev. 9/94)

CHEC

FEDERAL INDIAN

Comments:

MMS Lease Number or BLM/BIA Number

Lease producing - Y/N Date of First Production

MSHA Mine NumberY/N Start Date End Date

Rent Payor?Minimum Royalty Payor?Advance Royalty Payor?

PART 1: COMPANY DATA

Company NameAddressPerson to Contact

Payor CodeCity, State, ZipPhone Number/Ext

MA

R

S

Action 

Code Effective 

Date

Mining 

Type 

Code

Royalty 

Rate, Range 

or Schedule

MMS 

Use 

Only Product

Arm's Length 

or 

Non-Arm's Length 

Sales?

Percent 

of 

Sales

Authorized Signature Date

Public reporting burden for this form is estimated to average 20 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining data, and comments regarding the burden estimate or any other aspect of this form including suggestions for reducing this burden to the Information Collection Clearance Officer, Mail Stop 2053, Minerals Manag22070; and the Office of Information and Regulatory Affairs, Office of management and Budget, Paperwork Reduction Project (1010-0064), Washington, DC 20503.The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to set up an automated accounting data base for Federal and Indian solid use the information in monitoring and collecting rents and royalties due the government and Indians.WARNING: This is to inform you that failure to report accurately and timely in accordance with the statutes, regulations, or terms of the lease, permit, or contract may result in late payment charges, civassessed without further notification. Intentional false or inaccurate reporting is subject to criminal prosecution in accordance with applicable Federal law(s).

LC-03421

N 02900123

Y 01/91NY 01/96

X

XYZ Chemicals 111P.O. Box 45 Dry Hole, NM 7G. Allen Olsen (555) 555-5555

G. Allen Olsen 12/08/90

FOR ILLUSTRATION ONLY
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-13

FIGURE 3-3. PCR for nonproducing PIF 

FIGURE 3 3.

UNITED STATES DEPARTMENT OF THE INTERIOR

MINERALS MANAGEMENT SERVICE

ROYALTY MANAGEMENT PROGRAM

PAYOR CONFIRMATION REPORT

PAYOR IDENTIFICATION INFORMATION

COMPANY NUMBER: MA111 XYZ CHEMICALS

P.O. BOX 45

DRY HOLE, NM 77777

LEASE NUMBER: M39-003421-0

PAYOR RESPONSIBLE FOR: RENTAL

AS OF: 01/01/91

ENDING:

MMS USE ONLY

 DOCUMENT ID: PIF172760518

 ACCEPTANCE DATE: 12/13/90
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-14

FIGURE 3-3. PCR for nonproducing PIF (continued)

REPORT ID: RPI14OR1

RUN DATE: 06/16/94

RUN TIME: 22:41:58

PACKET PAGE NUMBER: 867

UNITED STATES DEPARTMENT OF THE INTERIOR 

MINERALS MANAGEMENT SERVICE 

ROYALTY MANAGEMENT PROGRAM

PAYOR CONFIRMATION REPORT

PAYOR IDENTIFICATION INFORMATION

COMPANY NUMBER: MA111 XYZ CHEMICALS

P. O. BOX 45

DRY HOLE, NM 77777

MMS USE ONLY

 DOCUMENT ID: PIF172760581

 ACCEPTANCE DATE: 12/13/90

LEASE NUMBER: M39-003421-0

PAYOR RESPONSIBLE FOR: ADVANCE ROYALTY

AS OF: 01/01/96

ENDING:
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-15

Producing PIF example

Figure 3-4 on page 3-16 shows the PIF submitted by XYZ Chemicals to 

establish a royalty account in order to report and pay royalties on 

production that began in February 1996. 

• XYZ Chemicals pays 100 percent of the royalties accruing from this 

lease.

• Production and sales began on February 24, 1996.

• All mining is underground (mining type code 2).

• Two royalty rates apply to the lease:

– A 2- to 5-percent sliding scale applies to the standard and 

granular muriate (product codes JD and JL).

– A standard 5 percent applies to the standard potassium sulfate 

and salt (product codes PN and SA).

• XYZ Chemicals disposes of approximately 20 percent of the 

muriates through non-arm’s-length arrangements.

The PCR returned by MMS (fig. 3-5, p. 3-17) shows the converted 

reporting codes that XYZ Chemicals must report on its monthly 

Form MMS-2014 when reporting and paying production royalties.

NOTE

We leave the “Purchase Information” on the PCR 

blank, or we identify your company as the seller. 

The net effect is the same. 
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-16

FIGURE 3-4. Producing PIF 

PAYOR INFORMATION FORM

SOLID MINERALS

U.S.DEPARTMENT OF THE INTERIORMinerals Management ServiceRoyalty Management Program

PART 2: LEASE DATAPART 3: PRODUCING LEASE DETAIL

FORM MMS-4030 (Rev. 9/94)

CHEC

FEDERAL INDIAN

Comments:

MMS Lease Number or BLM/BIA Number

Lease producing - Y/N Date of First Production

MSHA Mine NumberY/N Start Date End Date

Rent Payor?Minimum Royalty Payor?Advance Royalty Payor?

PART 1: COMPANY DATA

Company NameAddressPerson to Contact

Payor CodeCity, State, ZipPhone Number/Ex

MA

Action 

Code Effective 

Date

Mining 

Type 

Code

Royalty 

Rate, Range 

or Schedule

MMS 

Use 

Only Product

Arm's Length 

or 

Non-Arm's Length 

Sales?

Percent 

of 

Sales

Authorized Signature Date

Public reporting burden for this form is estimated to average 20 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining data, ancomments regarding the burden estimate or any other aspect of this form including suggestions for reducing this burden to the Information Collection Clearance Officer, Mail Stop 2053, Minerals Mana22070; and the Office of Information and Regulatory Affairs, Office of management and Budget, Paperwork Reduction Project (1010-0064), Washington, DC 20503.The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to set up an automated accounting data base for Federal and Indian souse the information in monitoring and collecting rents and royalties due the government and Indians.WARNING: This is to inform you that failure to report accurately and timely in accordance with the statutes, regulations, or terms of the lease, permit, or contract may result in late payment charges, cassessed without further notification. Intentional false or inaccurate reporting is subject to criminal prosecution in accordance with applicable Federal law(s).

M39-003421-0

Y 02/96 02900123

X

XYZ Chemicals 111P.O. Box 45 Dry Hole, NM G. Allen Olsen (555) 555-555

A 2/24/96 2 2 to 5% Muriate of Potash-Std. Arm’s-length 80 A 2/24/96 2 2 to 5% Muriate of Potash-Gran. Arm’s-length 80 A 2/24/96 2 2 to 5% Muriate of Potash-Std. Non-arm’s-length 20 

A 2/24/96 2 2 to 5% Muriate of Potash-Gran. Non-arm’s-length 20 A 2/24/96 2 5% Potassium Sulfate-Std. Arm’s-length 100 A 2/24/96 2 5% Salt Arm’s-length 100 

G. Allen Olsen 3/1/96

FOR ILLUSTRATION

ONLY
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-17

FIGURE 3-5. PCR for producing PIF 

REPORT ID: RP114OR1

RUN DATE: 3/15/96

RUN TIME: 17:49:42

UNITED STATES DEPARTMENT OF THE INTERIOR

MINERALS MANAGEMENT SERVICE

ROYALTY MANAGEMENT PROGRAM

PAYOR CONFIRMATION REPORT

PAYOR IDENTIFICATION INFORMATION

COMPANY NUMBER: MA111 XYZ CHEMICALS

P.O. BOX 45

DRY HOLE, NM 77777

LEASE NUMBER: M39-003421-0

PAYOR RESPONSIBLE FOR:

AS OF:

ENDING:

MMS USE ONLY

 DOCUMENT ID:

 ACCEPTANCE DATE:

REVENUE SOURCE INFORMATION

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

REV SOURCE TYPE: MINE

INTERNAL ID:

START DATE: 02/1996

END DATE:

MMS USE ONLY

 DOCUMENT ID: PIF272760518

 ACCEPTANCE DATE: 3/15/96

AGREEMENT DATA INFORMATION

AGENCY ASSIGNED NUMBER:

UNIT COMM NAME:

PART AREA OR FORMATION:

UNIT/COMM NUMBER: 

TRACT NUMBER:

TRACT PORTION: 0.000000
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-18

FIGURE 3-5. PCR for producing PIF (continued)

SELLING ARRANGEMENT INFORMATION

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

MMS USE ONLY

 DOCUMENT ID: PIF272760518

 ACCEPTANCE DATE: 3/15/96

|

|

*

*

O

PRODUCT: JL MURIATE OF POTASH - GRANULAR

S/A NUM 100

START 

DATE: 02/1996

SPOT SALE: NO

END DATE:

T PURCHASE INFORMATION

H

E

R

*

BUYER/SELLER: XYZ CHEMICALS

TYPE: SELLER

CONTRACT NO:

* ALLOWANCE DATA

|

|

NAME: ARMS LENGTH:

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

 |

 |

*

PRODUCT: JL MURIATE OF POTASH - GRANULAR

S/A NUM 200

START 

DATE: 02/1996

SPOT SALE: NO

END DATE:

O

T

H

E

R

PURCHASE INFORMATION

BUYER/SELLER: XYZ CHEMICALS

TYPE: SELLER

CONTRACT NO:

* ALLOWANCE DATA

 |

 |
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-19

FIGURE 3-5. PCR for producing PIF (continued)

SELLING ARRANGEMENT INFORMATION

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

MMS USE ONLY

 DOCUMENT ID: PIF272760518

 ACCEPTANCE DATE: 3/15/96

|

|

*

*

O

PRODUCT: JD MURIATE OF POTASH - STANDARD

S/A NUM 100

START DATE: 02/1996

SPOT SALE: NO

END DATE:

T PURCHASE INFORMATION

H

E

R

*

BUYER/SELLER: XYZ CHEMICALS

TYPE: SELLER

CONTRACT NO: 

* ALLOWANCE DATA

| NAME: ARMS LENGTH:

|

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

|

|

*

*

PRODUCT: JD MURIATE OF POTASH - STANDARD

S/A NUM 200

START DATE: 02/1996

SPOT SALE: NO

END DATE:

O

T

H

E

R

PURCHASE INFORMATION

BUYER/SELLER: XYZ CHEMICALS

TYPE: SELLER

CONTRACT NO: 

* ALLOWANCE DATA

 |

 |

NAME: ARMS LENGTH:
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-20

FIGURE 3-5. PCR for producing PIF (continued)

SELLING ARRANGEMENT INFORMATION

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

MMS USE ONLY

 DOCUMENT ID: PIF272760518

 ACCEPTANCE DATE: 3/15/96

 |

 |

*

*

O

PRODUCT: PN POTASSIUM - STANDARD

S/A NUM 100

START DATE: 02/1996

SPOT SALE: NO

END DATE:

T PURCHASE INFORMATION

H

E

R

*

BUYER/SELLER: XYZ CHEMICALS

TYPE: SELLER

CONTRACT NO: 

* ALLOWANCE DATA

 | NAME: ARMS LENGTH:

|

PAYOR NUMBER: MA111

LEASE NUMBER: M39-003421-0 REVENUE SOURCE NUM: 201

 |

 |

*

PRODUCT: SA SALT

S/A NUM 100

START DATE: 02/1996

SPOT SALE: NO

END DATE:

O

T

H

E

R

*

PURCHASE INFORMATION

BUYER/SELLER: XYZ CHEMICALS

TYPE: SELLER

CONTRACT NO: 

* ALLOWANCE DATA

 |

 |

NAME: ARMS LENGTH:
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-21

Producing PIF revision example

Figure 3-6 on page 3-22 shows the necessary PIF changes by ABC Coal, 

Inc. when a coal lease is readjusted. 

• ABC Coal, Inc. reports and pays 100 percent of the royalties 

accruing from the producing lease.

• The mine began producing in 1989.

• The lease was readjusted effective September 1, 1995; the royalty 

rate changed from 20 cents/ton (selling arrangement 300) to 

12.5 percent of the value of the raw bituminous coal produced and 

sold from this surface mine (mining type code 1, revenue 

source 101).

• ABC Coal, Inc. continues to sell the coal through arm’s-length 

arrangements (selling arrangement 100).

A single-line “change” entry results in turning off the old royalty rate 

and starting the new rate.

Figure 3-7 on page 3-23 shows the PCR returned by MMS.

NOTE

We leave the “Purchase Information” on the PCR 

blank, or we identify your company as the seller. 

The net effect is the same. 
Solid Minerals Payor Handbook

MMS/RMP Release 1.0◆ 02/20/97

3-22

FIGURE 3-6. Producing PIF revision 

PAYOR INFORMATION FORM

SOLID MINERALS

U.S.DEPARTMENT OF THE INTERIORMinerals Management ServiceRoyalty Management Program

PART 2: LEASE DATAPART 3: PRODUCING LEASE DETAIL

FORM MMS-4030 (Rev. 9/94)

CHECK 

FEDERAL INDIAN

Comments:

MMS Lease Number or BLM/BIA Number

Lease producing - Y/N Date of First Production

MSHA Mine NumberY/N Start Date End Date

Rent Payor?Minimum Royalty Payor?Advance Royalty Payor?

PART 1: COMPANY DATA

Company NameAddressPerson to Contact

Payor CodeCity, State, ZipPhone Number/Exte

MA

R

S

Action 

Code Effective 

Date

Mining 

Type 

Code

Royalty 

Rate, Range 

or Schedule

MMS 

Use 

Only Product

Arm's Length 

or 

Non-Arm's Length 

Sales?

Percent 

of 

Sales

Authorized Signature Date

Public reporting burden for this form is estimated to average 20 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining data, and comments regarding the burden estimate or any other aspect of this form including suggestions for reducing this burden to the Information Collection Clearance Officer, Mail Stop 2053, Minerals Manage22070; and the Office of Information and Regulatory Affairs, Office of management and Budget, Paperwork Reduction Project (1010-0064), Washington, DC 20503.The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to set up an automated accounting data base for Federal and Indian solid use the information in monitoring and collecting rents and royalties due the government and Indians.WARNING: This is to inform you that failure to report accurately and timely in accordance with the statutes, regulations, or terms of the lease, permit, or contract may result in late payment charges, civiassessed without further notification. Intentional false or inaccurate reporting is subject to criminal prosecution in accordance with applicable Federal law(s).

M75-00004682-0

X

ABC Coal, Inc. 001P.O. Box 61 Thickseam, WY O. H. Love (307) 424-2424

C 9/95 1 .125 Coal-bituminous-raw Arm’s-length 100 

O. H. Love 9/2/95

Lease readjusted effective 9/1/95. Royalty rate now 12.5% (p

FOR ILLUSTRATION ONLY
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-23

FIGURE 3-7. PCR for producing PIF revision 

G

REPORT ID: RPI14OR1

RUN DATE: 9/15/96

RUN TIME: 17:49:42

UNITED STATES DEPARTMENT OF THE INTERIOR

MINERALS MANAGEMENT SERVICE

ROYALTY MANAGEMENT PROGRAM

PAYOR CONFIRMATION REPORT

PAYOR IDENTIFICATION INFORMATION

COMPANY NUMBER: MA001 ABC COAL, INC.

P.O. BOX 61

THICKSEAM, WY 87222

LEASE NUMBER: M75-004682-0

PAYOR RESPONSIBLE FOR:

AS OF:

ENDING:

MMS USE ONLY

 DOCUMENT ID:

 ACCEPTANCE DATE:

REVENUE SOURCE INFORMATION

PAYOR NUMBER: MA001

LEASE NUMBER: M75-004682-0 REVENUE SOURCE NUM: 101

REV SOURCE TYPE: MINE

INTERNAL ID:

START DATE: 01/01/1989

END DATE:

MMS USE ONLY

 DOCUMENT ID: PIF272760518

 ACCEPTANCE DATE: 09/15/95

AGREEMENT DATA INFORMATION

AGENCY ASSIGNED NUMBER:

UNIT COMM NAME:

PART AREA OR FORMATION:

UNIT/COMM NUMBER: 

TRACT NUMBER:

TRACT PORTION: 0.000000
3. How to Complete the PIF

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

3-24

FIGURE 3-7. PCR for producing PIF revision (continued)

SELLING ARRANGEMENT INFORMATION

PAYOR NUMBER: MA001

LEASE NUMBER: M75-004682-0 REVENUE SOURCE NUM: 101

MMS USE ONLY

 DOCUMENT ID: PIF272760518

 ACCEPTANCE DATE: 09/15/95

 |

 |

*

*

O

PRODUCT: ED COAL - BIT - RAW

S/A NUM 300

START DATE: 01/01/1989

SPOT SALE: NO

END DATE: 08/1995

T PURCHASE INFORMATION

H

E

R

*

BUYER/SELLER: ABC COAL, INC.

TYPE: SELLER

CONTRACT NO: 

* ALLOWANCE DATA

 | NAME: ARMS LENGTH:

 |

PAYOR NUMBER: MA001

LEASE NUMBER: M75-004682-0 REVENUE SOURCE NUM: 101

 |

 |

*

PRODUCT: ED COAL - BIT - RAW

S/A NUM 100

START DATE: 09/1995

SPOT SALE: NO

END DATE:

O

T

H

E

R

PURCHASE INFORMATION

BUYER/SELLER: ABC COAL, INC.

TYPE: SELLER

CONTRACT NO:

* ALLOWANCE DATA

 |

 |

NAME: ARMS LENGTH:
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-1

4. How to Complete the

Form MMS-2014

This chapter shows you how to complete the Report of Sales and Royalty 

Remittance, Form MMS-2014, using field-by-field explanations.

4.1 Reporting Tips

To ensure that the royalty information you report on Form MMS-2014 

is accurate and complete, it is important to:

• Report all sales and royalty information in the gross amount.

• Report any adjustments or allowances (transportation or 

processing) as separate line items.

• Reverse all adjustments as originally accepted by MMS and enter 

the correct information as a separate line.

• Use a minus (–) sign to denote a credit entry. Do not use brackets.

• Show rental, advance royalties, and minimum royalties as separate 

line items.

• Report your working interest percentage of production if you are 

paying only your share of the royalty.

• Submit separate forms for Federal and Indian royalty information.

The combination of a payor code, accounting identification (AID) 

number, product code, selling arrangement, sales month, and 

NOTE Net adjustments are not allowed and will NOT

be accepted.
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-2

transaction code makes each report line unique. These “data elements” 

are defined below.

4.1.1 Payor code

The payor code is a unique, five-character, MMS-assigned number that 

identifies the payor (company). We require a payor code on each page of 

your Form MMS-2014. Payor codes for solid minerals leases begin with 

MA. If you report production to us (on solid minerals operations and 

facilities reports), use the same MA payor code on both your royalty and 

production reports. Companies that also have oil and gas leases must 

use their oil and gas payor codes on oil and gas reports (including oil and 

gas reporting on Form MMS-2014). 

4.1.2 AID number

An accounting identification (AID) number has 13 digits and consists of 

the MMS-converted lease number plus a 3-digit revenue source number 

(see “Lease number” and “Revenue source” on page 3-3). A typical AID 

number appears as follows:

NOTE Include your payor code on all correspondence.

M32 – 048392 – 0 – 201

Mining

indicator

Lease

prefix

BLM/BIA

lease

number

Suffix

(usually 0)

Revenue source

(assigned by MMS)

(indicates

location)
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-3

4.1.3 Product code

The product code is a two-character code assigned to a specific product 

description (see app. B) as reported to us on your Payor Information 

Form (PIF).

4.1.4 Selling arrangement

We convert the product disposition information that you supply on the 

PIF (returned to you on the Payor Confirmation Report [PCR]) to a 

three-digit selling arrangement code based on the following:

• 100 for all arm’s-length sales on ad valorem leases.

• 200 for all non-arm’s-length sales or internal consumption (a 

no-contract transfer) on ad valorem leases.

• 300 when royalty is based on a fixed rate per ton (cents per unit) or 

for western Federal phosphate leases.

Arm’s-length sales include all competitive sales to buyers who are not 

tied to the lessee/operator by common ownership and have opposing 

economic interests. A non-arm’s-length selling arrangement would be, 

for example, coal sales by an operator to a powerplant wholly or 

partially owned by the same company, or potash sales by a lessee to its 

own fertilizer plant. Also, selling arrangements based on consideration 

other than the value of the product are considered non-arm’s-length.

4.1.5 Transaction codes

Transaction codes are two-digit codes that describe each payment and 

recoupment activity. We require separate report lines when more than 

one transaction type applies to a single AID number/product 

code/selling arrangement combination. These transaction code 

activities include, but are not limited to:

• Royalty due from sales,

• Minimum royalty,
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-4

• Advance rental,

• Adjustments to previously reported lines,

• Allowances applied against royalties due,

• Advance rental credit applied against royalties due, and

• Recoupment of credit balances to reduce payment on Indian leases.

See appendix C for a complete list of transaction codes.

4.2 Filling Out the Form MMS-2014

If you have questions about filling out the Form MMS-2014, please 

contact the Solid Minerals Reporting Section (see “How to Contact 

MMS” on p. 2-6). 

Form MMS-2014 is divided into header (top), royalty (center), and 

trailer (bottom) sections.

4.2.1 Header information

The following instructions explain the header information you must 

complete on every Form MMS-2014. Each explanation is sequentially 

numbered and keyed to figure 4-1 on page 4-6.

Field

No. Field title Instructions

(Top 

left)

Report 

Month/Year

Enter the current month and year 

(MMYY) in which you are submitting 

this form; for example, 0196.

1 Payor’s Name Enter your payor name on every page (of 

a multipage report).
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-5

2 Payor Code Enter your MMS-assigned solid 

minerals payor code on every page (of a 

multipage report).

3 Federal or Indian 

Indicator

Check the appropriate box to indicate 

the type of leases listed on this form. You 

must file separate Forms MMS-2014 for 

Federal and Indian leases.

3a Payor-Assigned 

Document 

Number (PADN)

You create this number and include it on 

your accompanying royalty check or 

electronic funds transfer (EFT) 

transmittal message. The PADN may be 

any combination of up to six numbers 

that you select each month. This number 

must be unique and used one time

only for any royalty report/payment 

combination; for example, use 109601 if 

this is the first report you are filing for 

the October 1996 report month. 

(Top 

right)

Page _____ of _____ Enter the page number and total 

number of pages in your report.

Field

No. Field title Instructions
Solid Minerals Payor Handbook

MMS/RMP Release 1.0◆ 02/20/97

4-6

FIGURE 4-1. Form MMS-2014 header information

4 5 6 7 8

PRODUCT CODE

9 10 11 12 13 14 15 16 17

RESERVED FOR 

PREPARER'S 

USE

ACCOUNTING 

IDENTIFICATION 

(AID) NUMBER

REG PRICE CODE

SELLING ARR CODE

SALES MONTH/ YEAR

TRANS CODE

ADJ REAS CODE

SALES QUANTITY QUALITY MEASUREMENT CALC METH SALES VALUE ROYAL

REPORT CONTROL BLOCK

22 Checks to MMS

Payment (Method Code)

(01)

Amount

23 Payments to Others (02)24 EFT to MMS (03)25 Royalty-In-Kind (04)26 Checks to MMS for BIA (05)27 EFT to BIA (06)28 Payments to Lockboxes (07)29 TOTAL OF ITEMS 22-28

The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to document details of royalty payments on sales of minerals from leases on Federal and Indian lands. MMS will use this information to maintain and audit lease accounts.

3031

I have read and examined the statements in this report and agree they are accurate and completName (typed or printed) and authorized signatureName of preparer

123456789

10111213

For detailed instructions and examples on how to complete and submit this form, please refer to the appropriate Minerals Management Service handbook. See the Oil and Gas Payor Handbook–Volume II for oil and gas and geothermal leases. See the AFS Payor Handbook–Solid Minerals for solid mineral leases.

U.S. DEPARTMENT OF THE INTERIOR

Minerals Management Service - Royalty Management Program

REPORT OF SALES AND ROYALTY REMITTANCE

Form MMS-2014

3

FEDERAL 

OR 

INDIAN

OMB 1010-0022 (Exp. April 30, 1998)

REPORT MO./YR. :

1

2

PAYOR'S NAME: PAYOR CODE:

3a PAYOR-ASSIGNED DOCUMENT NUMBER

Form MMS-2014 (5/95)

OMB 1010-0022 (Exp. April 30, 19XX) 19X

FOR ILLUSTRATION ONLY

➂ 3 

➂ 1

➂ 2 ➂3a
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-7

4.2.2 Royalty line information

This section provides detailed instructions for entering the information 

needed to report and pay your royalties. Each explanation is 

sequentially numbered and keyed to figure 4-2 on page 4-10.

NOTE Fill out each report line completely. Do not use 

ditto marks, arrows, or “squiggles” from one line 

to another.

Field

No. Field title Instructions

5 Reserved for 

Preparer’s Use 

Enter any identifying information 

(such as mine name) in this field that 

will help us cross-reference the report 

line if we need to contact you.

6 AID Number Enter the MMS-assigned AID number 

(lease number and revenue source) (see 

“AID number” on p. 4-2).

7 Product Code Enter the appropriate product code (see 

“Product code” on p. 4-3 and app. B).

8 Regulated Price 

Code

Leave blank (for oil and gas use only).

9 Selling 

Arrangement 

Code

Enter the appropriate selling 

arrangement code, as established on 

your PIF and PCR (see “Selling 

arrangement” on p. 3-3 and on p. 4-3).

10 Sales Month/

Year 

Enter the month and year (MMYY) you 

sold the product. For leases that 

explicitly permit other than monthly 

payments (for example, quarterly), 

enter the last month and year of the 

period for which you are reporting. For 

example, if you are reporting first 

quarter 1996 sales, enter 0396.
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-8

11 Transaction 

Code 

Enter the appropriate transaction code 

(see “Transaction codes” on p. 4-3 and 

app. C).

After you establish your reporting information 

on the PIF, you will receive a monthly 

Model 2014 with fields 6, 7, 9, 10, and 11 

preprinted with your royalty lines (see 

“Model 2014” on p. 4-14 for more information).

12 Adjustment 

Reason Code 

If applicable, enter the appropriate 

adjustment reason code (see “Reporting 

an Adjustment” on p. 6-2 and app. D).

13 Sales Quantity Enter the sales quantity that represents 

your share of total sales for the lease 

(for example, tons, cubic yards, or 

pounds). Do not fill in total mine 

quantities. Do not round off the sales 

quantity; carry it to two numbers after 

the decimal point.

14 Quality 

Measurement

Leave blank (for oil and gas use only).

15 Calculation 

Method

Leave blank (for oil and gas use only).

16 Sales Value Enter the total value of sales (Sales 

Quantity [field 13] multiplied by the 

unit value). Do not deduct allowances 

from this value, except for sodium and 

potassium leases (see “Claiming an 

allowance” on p. 5-17). Do not round off 

the sales value; carry it to two numbers 

after the decimal point. You do not have 

to fill in this field if you are reporting on 

a cents-per-ton (non-ad valorem) lease.

17 Royalty Quantity Leave blank (for oil and gas use only).

Field

No. Field title Instructions

NOTE
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-9

18 Royalty Value Enter the royalty value (Sales Value 

[field 16] multiplied by the royalty rate). 

Do not deduct allowances from this 

value, except for sodium and potassium 

leases (see “Claiming an allowance” on 

p. 5-17). Do not round off the royalty 

value; carry it to two numbers after the 

decimal point.

19 Payment Method 

Code

Enter the appropriate payment method 

code, as defined in the Report Control 

Block (see p. 4-11) and appendix E. 

Remember to complete this field for 

each reported line.

Field

No. Field title Instructions
Solid Minerals Payor Handbook

MMS/RMP Release 1.0◆ 02/20/97

4-10

FIGURE 4-2. Form MMS-2014 royalty line information

4 5 6 7 8

PRODUCT CODE

9 10 11 12 13 14 15 16 17

RESERVED FOR 

PREPARER'S 

USE

ACCOUNTING 

IDENTIFICATION 

(AID) NUMBER

REG PRICE CODE

SELLING ARR CODE

SALES MONTH/ YEAR

TRANS CODE

ADJ REAS CODE

SALES QUANTITY QUALITY MEASUREMENT CALC METH SALES VALUE ROYALTY Q

REPORT CONTROL BLOCK

22 Checks to MMS

Payment (Method Code)

(01)

Amount

23 Payments to Others (02)24 EFT to MMS (03)25 Royalty-In-Kind (04)26 Checks to MMS for BIA (05)27 EFT to BIA (06)28 Payments to Lockboxes (07)29 TOTAL OF ITEMS 22-28

20 

2

The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to document details of royalty payments on sales of minerals from leases on Federal and Indian lands. MMS will use this information to maintain and audit lease accounts.

30

31

I have read and examined the statements in this report and agree they are accurate and complete.Name (typed or printed) and authorized signatureName of preparer

123456789

10111213

For detailed instructions and examples on how to complete and submit this form, please refer to the appropriate Minerals Management Service handbook. See the Oil and Gas Payor Handbook–Volume II for oil and gas and geothermal leases. See the AFS Payor Handbook–Solid Minerals for solid mineral leases.

U.S. DEPARTMENT OF THE INTERIOR

Minerals Management Service - Royalty Management Program

REPORT OF SALES AND ROYALTY REMITTANCE

Form MMS-2014

3

FEDERAL 

OR 

INDIAN

OMB 1010-0022 (Exp. April 30, 1998)

REPORT MO./YR. :

1

2

PAYOR'S NAME: PAYOR CODE:

3a PAYOR-ASSIGNED DOCUMENT NUMBER

Form MMS-2014 (5/95)

OMB 1010-0022 (Exp. April 30, 19XX) 19X

FOR ILLUSTRATION ONLY

➂ 5 ➂ 6 ➂ 7 ➂ 8 ➂ 9 ➂10 ➂11 ➂12 ➂13 ➂14 ➂15 ➂16 ➂1
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-11

4.2.3 Trailer information

The following instructions explain the trailer information you must 

complete on every Form MMS-2014. Each explanation is sequentially 

numbered and keyed to figure 4-3 on page 4-13.

Field

No. Field title Instructions

20 Page Total Total the Royalty Value (field 18). All 

credit (negative) entries in the field will 

reduce the total.

21 Report Total For a multipage report, add the Page 

Total (field 20) from each page in the 

report. Enter the Report Total on the 

first page only. For a single-page 

report, the Report Total will equal the 

Page Total.

22-28 Report Control 

Block

Sum the Royalty Values (field 18) in the 

entire report by Payment Method Code 

(field 19) and enter these totals on the 

appropriate line(s) of the Report Control 

Block. For a multipage report, enter 

these totals on the first page only. Use 

payment method codes 01 (Checks to 

MMS), 02 (Payments to Others—

including Indian Tribes and agencies), 

and 03 (EFT to MMS). Do not use

method codes 04, 05, 06, and 07 because 

they apply to oil and gas payments only.

29 Total of Items 

22-28

Total the Report Control Block amounts. 

This grand total must equal the grand 

total in the Report Total (field 21).

30 Name/Authorized 

Signature/Date

Print or type the name of the person 

verifying the accuracy of this report and 

have the verifier sign and date it. For a 

multipage report, enter this information 

on the first page only.
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-12

31 Name of 

Preparer/

Telephone

Fill in the name and telephone number, 

including area code, of the person who 

completed the form. For a multipage 

report, enter this information on the 

first page only. The authorizor’s name 

(field 30) can be the same as the 

preparer’s.

Field

No. Field title Instructions
MMS/RMP Release 1.0

Solid Minerals Payor Handbook ◆ 02/20/97

4-13

FIGURE 4-3. Form MMS-2014 trailer information

4 5 6 7 8

PRODUCT CODE

9 10 11 12 13 14 15 16 17

RESERVED FOR 

PREPARER'S 

USE

ACCOUNTING 

IDENTIFICATION 

(AID) NUMBER

REG PRICE CODE

SELLING ARR CODE

SALES MONTH/ YEAR

TRANS CODE

ADJ REAS CODE

SALES QUANTITY QUALITY MEASUREMENT CALC METH SALES VALUE ROYALT

REPORT CONTROL BLOCK

22 Checks to MMS

Payment (Method Code)

(01)

Amount

23 Payments to Others (02)24 EFT to MMS (03)25 Royalty-In-Kind (04)26 Checks to MMS for BIA (05)27 EFT to BIA (06)28 Payments to Lockboxes (07)29 TOTAL OF ITEMS 22-28

The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to document details of royalty payments on sales of minerals from leases on Federal and Indian lands. MMS will use this information to maintain and audit lease accounts.

30

31

I have read and examined the statements in this report and agree they are accurate and compName (typed or printed) and authorized signatureName of preparer

123456789

10111213

For detailed instructions and examples on how to complete and submit this form, please refer to the appropriate Minerals Management Service handbook. See the Oil and Gas Payor Handbook–Volume II for oil and gas and geothermal leases. See the AFS Payor Handbook–Solid Minerals for solid mineral leases.

U.S. DEPARTMENT OF THE INTERIOR

Minerals Management Service - Royalty Management Program

REPORT OF SALES AND ROYALTY REMITTANCE

Form MMS-2014

3

FEDERAL 

OR 

INDIAN

OMB 1010-0022 (Exp. April 30, 1998)

REPORT MO./YR. :

1

2

PAYOR'S NAME: PAYOR CODE:

3a PAYOR-ASSIGNED DOCUMENT NUMBER

Form MMS-2014 (5/95)

OMB 1010-0022 (Exp. April 30, 19XX) 19X

FOR ILLUSTRATION ONLY

➂30

➂29

➂22

➂28 ➂31
4. How to Complete the Form MMS-2014

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

4-14

4.3 Model 2014

Figure 4-4 on page 4-15 illustrates a Model 2014. After you complete 

and return PIFs to MMS detailing your reporting requirements, we 

generate and mail monthly Model 2014s preprinted with your specific 

reporting information, including:

• The current report month/year,

• Your company name,

• Your payor code,

• AID numbers (field 6),

• Product codes (field 7),

• Selling arrangements (field 8),

• The current sales month (field 10), and

• Transaction codes (field 11).

Reporting is faster and easier when you use the Model 2014 because you 

need to complete only the remaining fields that detail your monthly 

sales amounts. If you need to make adjusting entries, you can add them 

to any blank lines on the Model 2014.

If you end date a report line (by sending us a revised PIF), that line will 

be removed from your Model 2014. If you end date every report line, we 

will no longer mail you a monthly Model 2014. If you report 

electronically or by computer-generated facsimile, we will no longer 

mail you any Model 2014s. 

NOTE Lease-level activities (rentals, minimum/

advance royalties, and recoupable balances) do 

not preprint on the Model 2014. You must type 

or handwrite these lines yourself.
MMS/RMP Release 1.0

Solid Minerals Payor Handbook ◆ 02/20/97

4-15

FIGURE 4-4. Model 2014

4 5 6 7 8

PRODUCT CODE

9 10 11 12 13 14 15 16 17

RESERVED FOR 

PREPARER'S 

USE

ACCOUNTING 

IDENTIFICATION 

(AID) NUMBER

REG PRICE CODE

SELLING ARR CODE

SALES MONTH/ YEAR

TRANS CODE

ADJ REAS CODE

SALES QUANTITY QUALITY MEASUREMENT CALC METH SALES VALUE ROYALTY QU

REPORT CONTROL BLOCK

22 Checks to MMS

Payment (Method Code)

(01)

Amount

23 Payments to Others (02)24 EFT to MMS (03)25 Royalty-In-Kind (04)26 Checks to MMS for BIA (05)27 EFT to BIA (06)28 Payments to Lockboxes (07)29 TOTAL OF ITEMS 22-28

20 

21 

The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) requires us to inform you that this information is being collected to document details of royalty payments on sales of minerals from leases on Federal and Indian lands. MMS will use this information to maintain and audit lease accounts.

30

31

I have read and examined the statements in this report and agree they are accurate and complete.Name (typed or printed) and authorized signatureName of preparer

123456789

10111213

For detailed instructions and examples on how to complete and submit this form, please refer to the appropriate Minerals Management Service handbook. See the Oil and Gas Payor Handbook–Volume II for oil and gas and geothermal leases. See the AFS Payor Handbook–Solid Minerals for solid mineral leases.

U.S. DEPARTMENT OF THE INTERIOR

Minerals Management Service - Royalty Management Program

REPORT OF SALES AND ROYALTY REMITTANCE

Form MMS-2014

3

FEDERAL 

OR 

INDIAN

OMB 1010-0022 (Exp. April 30, 1998)

REPORT MO./YR. :

1

2

PAYOR'S NAME: PAYOR CODE:

3a PAYOR-ASSIGNED DOCUMENT NUMBER

0 5 9 6

MINING EFX COMPANY

M A 9 9 9

X

80199999 M72 123123 0 101 EC 00 100 04 96 01

80199999 M72 123123 0 101 ED 00 100 04 96 01801015 M72 000888 0 101 EG 00 300 04 96 01801015 M72 000888 0 101 ED 00 300 04 96 01

OMB 1010-0022 (Exp. April 30, 19XX) 19X

FOR ILLUSTRATION ONLY
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-1

5. Explanations of Different 

Reporting Situations

The explanations and examples in this chapter show typical reporting 

situations you may encounter when filling out the Form MMS-2014. 

This chapter covers lease-level transactions (rent, advance royalty, and 

minimum royalty) and illustrates more complex production royalty 

situations.

5.1 How to Report and Pay Lease-Level Transactions

Rent, advance royalty, and minimum royalty are lease-level 

transactions that are described by the lease terms. These transactions 

are normally due and payable on an annual basis. Because lease-level 

lines do not preprint on your monthly Model 2014, you must write or 

type them on any blank line on your Form MMS-2014 or Model 2014.

5.1.1 Reporting and paying rent—TCs 04 and 05

You must report and pay rent (transaction code [TC] 04) or recoupable 

rent (TC 05) before the first day of each lease year. Fill in the Sales 

Month/Year (field 10) as the first month of the lease year. For example, 

for a lease with a lease year beginning January 1, 1996, you must report 

and pay rent during December 1995 (or before) using a January 1996 

sales month. If your lease terms allow you to recoup your rent against 

production royalties, refer to “Rent recoupment reporting example” on 

page 5-6.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-2

Follow these instructions to report a rent line on Form MMS-2014:

Field

No. Field title Instructions

6 Accounting 

Identification 

(AID) Number 

Enter the 10-digit MMS-assigned lease 

number followed by 000 as the last 

three digits.

7 Product Code Leave blank.

8 Regulated 

Price Code

Leave blank.

9 Selling 

Arrangement 

Code

Leave blank.

10 Sales Month/

Year

Enter the first month of the lease year, 

using an MMYY format. For example, 

enter January 1996 as 0196.

11 Transaction 

Code

Enter 04 or 05, as appropriate.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Enter the rental amount on which you 

are reporting and paying.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-3

Rent reporting example

Following is an example of how to report rent on Form MMS-2014 using 

the data given below:

• The current report month is September 1996.

• The MMS-converted lease number is M72-007170-0.

• The lease anniversary date is October 1.

• The lease specifies an annual nonrecoupable rental payment of 

$3/acre for 600 acres.

• The company paid by check.

NOTE You may also pay your nonrecoupable rent (for 

Federal leases only) using the Rental Courtesy 

Notice that we send to you. Use either the 

Form MMS-2014 or the Rental Courtesy Notice 

to report and pay the rental; do not report on 

both forms for the same payment. Mail either 

form to the appropriate address listed in “How to 

Contact MMS” on page 2-6. 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007170 0 000 1096 04 1,800 00 01

2

3

13

1,800 00

1,800 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-4

5.1.2 Reporting and taking a rent recoupment—TC 25

Most Indian and some Federal lease terms require a rental payment 

that can then be recouped against net revenues reported and paid for 

the same lease year. You can offset 100 percent of the current month’s 

net revenues against the previously reported rent payment, but you 

cannot recoup more than 100 percent of the rent.

If you fail to recoup the rent in the same lease year on an Indian lease, 

we consider these rents as an overpayment. You must recoup these 

overpayments using TCs 50 and 51 (see “Indian Recoupments” on 

p. 6-13).

If you make your rent payment before the actual due date, remember 

that you cannot recoup it until there are royalties in the lease year to 

which the rent applies.

If, at the end of the lease year, you paid less in royalties than the initial 

rental payment amount, you cannot recoup the balance left over against 

any future lease year’s royalties.

Follow these instructions to report a rent recoupment line on 

Form MMS-2014:

Field

No. Field title Instructions

6 AID Number Enter the 10-digit MMS-assigned lease 

number followed by 000 as the last 

three digits.

7 Product Code Leave blank.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement

Code

Leave blank.

10 Sales Month/

Year

Enter the sales month/year that you are 

recouping against, using an MMYY 

format. For example, enter January 

1996 as 0196.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-5

11 Transaction 

Code

Enter 25.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty Quantity Leave blank.

18 Royalty Value Enter the rent recoupment amount you 

are taking. Be sure to use a minus sign.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.

Field

No. Field title Instructions
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-6

Rent recoupment reporting example

Following is an example of how to report—and then recoup—recoupable 

rent on Form MMS-2014 using the data given below:

• The current report month is February 1996.

• The MMS-converted lease number is M72-007171-0.

• The lease anniversary date is March 1.

• The lease specifies an annual recoupable rent payment of $3/acre 

for 120 acres.

• The company paid by check.

In the May 1996 report month, the company reported and paid $5,000 

in royalties for the April 1996 sales month. (See “How to Report and Pay 

Royalties—TC 01” on page 5-14 for instructions on paying royalties.) 

The company then recouped the rent against the royalties.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007171 0 000 0396 05 360 00 01

2

3

13

360 00

360 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-7

5.1.3 Reporting and paying advance royalty—TC 32

For the purposes of reporting to MMS, we consider “minimum royalty 

due in advance” and “advance royalty” as the same reporting and 

payment procedure. However, the production status of your non-coal 

lease (43 CFR 3500) will determine when and how you report advance 

royalty:

• If your lease will not be in production at the beginning of the lease 

year, you must report and pay advance royalty (TC 32) before the 

first day of the lease year. Fill in the Sales Month/Year (field 10) as 

the first month of the lease year. For example, for a lease with a 

lease year beginning January 1, 1996, you must report and pay 

advance royalty during December 1995 (or before) using a January 

1996 sales month. If production begins during the lease year, you 

can recoup the advance royalty against royalties using TC 33 (see 

“Advance royalty recoupment reporting example” on p. 5-12).

• If your lease is in production at the beginning of the lease year, we 

consider the advance royalty payable at the end of the year as a 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007171 0 201 ED 100 0496 01 3,125 00 62,500 00 5,000 00 01

2 M72 007171 0 000 0496 25 – 360 00 01

3

13

4,640 00

4,640 00

NOTE Even if you are recouping rent (against 

production or advance royalties) in the same 

month that you pay the rent, do not net this 

amount. The rent payment and the recoupment 

must be separate line items. See chapter 6 for 

more information on recoupments.

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-8

minimum royalty. If there is a deficiency at year-end between the 

total production royalties for the year and the advance royalty 

amount, you will pay the difference using TC 02, minimum royalty 

(see “Advance royalty recoupment reporting example” on p. 5-12).

For coal advance royalty (in lieu of production) requirements, see 

“Advance Royalties” on page 8-4.

Follow these instructions to report an advance royalty line on 

Form MMS-2014:

Field

No. Field title Instructions

6 AID Number Enter the 10-digit MMS-assigned lease 

number followed by 000 as the last 

three digits.

7 Product Code Leave blank.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement

Code

Leave blank.

10 Sales Month/

Year

Enter the first month of the lease year, 

using an MMYY format. For example, 

enter January 1996 as 0196.

11 Transaction 

Code

Enter 32.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-9

Advance royalty reporting example

Following is an example of how to report advance royalties on 

Form MMS-2014 using the data given below:

• The current report month is December 1995.

• The MMS-converted lease number is M72-007172-0.

• The lease anniversary date is January 1.

• The lease specifies an annual advance royalty payment of $3/acre 

for 600 acres.

• The company paid by electronic funds transfer (EFT).

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Enter the advance royalty amount on 

which you are reporting and paying.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007172 0 000 0196 32 1,800 00 03

2

3

13

1,800 00

1,800 00

Field

No. Field title Instructions

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
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5.1.4 Reporting and taking an advance royalty 

recoupment—TC 33

Most Indian and some Federal lease terms require an advance royalty 

payment that can then be recouped against net royalties reported and 

paid for the same lease year. You can offset 100 percent of the current 

month’s net royalties against the previously reported advance royalty 

payment, but you cannot recoup more than 100 percent of the advance 

royalty.

If you fail to recoup advance royalties in the same lease year on an 

Indian lease, we consider these advance royalties as an overpayment. 

You must recoup these overpayments using TCs 50 and 51 (see “Indian 

Recoupments” on p. 6-13).

If you make your advance royalty payment before the actual due date, 

you cannot recoup it until there are royalties in the lease year to which 

the advance royalty applies.

If, at the end of the lease year, you paid less royalties than the initial 

advance royalty payment amount, you cannot recoup the balance left 

over against any future lease year royalties.

Follow these instructions to report an advance royalty recoupment line 

on the Form MMS-2014:

Field

No. Field title Instructions

6 AID Number Enter the 10-digit MMS-assigned lease 

number followed by 000 as the last 

three digits.

7 Product Code Leave blank.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement

Code

Leave blank.
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5-11

10 Sales Month/

Year

Enter the sales month/year that you are 

recouping against, using an MMYY 

format. For example, enter January 

1996 as 0196.

11 Transaction 

Code

Enter 33.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Enter the advance royalty recoupment 

amount you are taking. Be sure to use a 

minus sign.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.

Field

No. Field title Instructions
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

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5-12

Advance royalty recoupment reporting example

Following is an example of how to recoup advance royalties on 

Form MMS-2014 using the data given below:

• The current report month is February 1996.

• The MMS-converted lease number is M72-007172-0.

• The company made an $1,800 advance royalty payment on this 

lease in the December 1995 report month.

• The company is now reporting and paying $2,500 in royalties 

against which they will recoup their advance royalties. (See “How 

to Report and Pay Royalties—TC 01” on page 5-14 for instructions 

on paying royalties.)

• The company paid by EFT.

5.1.5 Reporting and paying minimum royalty—TC 02

Some lease terms require a minimum royalty payable at the end of the 

lease year if you have not paid the minimum amount through royalties 

during the course of the lease year. In this case, you must report and pay 

minimum royalty on or before the last day of the lease year, even if you 

have not reported all royalties for the lease year. For example, your 

December royalties are not due until January, but the total minimum 

royalty must be paid by December 31. Fill in the Sales Month/Year 

(field 10) as the last month of the lease year. For example, for a lease 

with a lease year beginning January 1, 1996, you must report and pay 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007172 0 101 ED 100 0196 01 3,000 00 20,000 00 2,500 00 03

2 M72 007172 0 000 0196 33 – 1,800 00 03

3

13

700 00

700 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
5. Explanations of Different Reporting Situations

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5-13

minimum royalty during December 1996 (or before) using a December 

1996 sales month. 

Follow these instructions to report a minimum royalty line on 

Form MMS-2014:

Field

No. Field title Instructions

6 AID Number Enter the 10-digit MMS-assigned lease 

number followed by 000 as the last 

three digits.

7 Product Code Leave blank.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement

Code

Leave blank.

10 Sales Month/

Year

Enter the last month of the lease year, 

using an MMYY format. For example, 

enter January 1996 as 0196.

11 Transaction 

Code

Enter 02.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty Quantity Leave blank.

18 Royalty Value Enter the minimum royalty amount on 

which you are reporting and paying.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-14

Minimum royalty reporting example

Following is an example of how to report minimum royalty on 

Form MMS-2014 using the data given below:

• The current report month is December 1996.

• The MMS-converted lease number is M72-007173-0.

• The lease anniversary date is January 1.

• The lease specifies an annual minimum royalty payment of $3/acre 

for 600 acres in lieu of production.

• The company paid by check.

5.2 How to Report and Pay Royalties—TC 01

Use TC 01 to report monthly royalties due on Federal and Indian leases. 

You must generally report and pay royalties within 1 month following 

the month of sales. 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007173 0 000 1296 02 1,800 00 01

2

3

13

1,800 00

1,800 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
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5-15

Follow these instructions to report a royalty line on the 

Form MMS-2014:

Field

No. Field title Instructions

6 AID Number Enter your 10-digit MMS-assigned lease 

number and 3-digit revenue source 

assigned on your Payor Confirmation 

Report (PCR).

7 Product Code Enter your two-character product code 

assigned on your PCR.

8 Regulated 

Price Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter your three-digit selling 

arrangement code assigned on your 

PCR.

10 Sales Month/

Year

Enter the month/year in which the 

product was sold, using an MMYY 

format. For example, enter January 

1996 as 0196.

11 Transaction 

Code

Enter 01.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Enter the quantity of product for which 

you are responsible for reporting and 

paying royalties (for example, tons, cubic 

yards, or pounds).

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Enter the corresponding dollar value of 

the sales quantity.

17 Royalty 

Quantity

Leave blank.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-16

Royalty reporting example

Following is an example of how to report royalty on your 

Form MMS-2014 using the data given below:

• The current report month is September 1996.

• The MMS-converted lease number is M72-007174-0.

• The revenue source is 101 (indicating a surface mining operation).

• The product is raw bituminous coal, product code ED.

• Because the product is disposed of through an arm’s-length 

contract, the MMS-assigned selling arrangement code is 100.

• The coal was removed and sold in August 1996.

• The company sold 2,000 tons of coal at $20/ton.

• The lease terms specify a 12.5-percent royalty rate.

• The company paid by check.

18 Royalty 

Value

Enter the sales value multiplied by the 

lease royalty rate.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007174 0 101 ED 100 0896 01 2,000 00 40,000 00 5,000 00 01

2

3

13

5,000 00

5,000 00

Field

No. Field title Instructions

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
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5-17

5.3 How to Report and Take Allowances

We allow two types of deductions from gross proceeds, when 

appropriate: transportation allowances and processing (washing) 

allowances. Generally, you take an allowance as reimbursement for 

your costs incurred in enhancing the value of your royalty percentage of 

production beyond a standard of marketable condition. Allowances 

apply only to leases for which royalties are computed on the value of 

products sold (ad valorem or royalty percentage leases).

5.3.1 Claiming an allowance

You can deduct reasonable, actual costs incurred for transporting a 

product to a point of sale that is distant from the mine, plant, or other 

customary point of shipment to market. You cannot deduct the cost of 

haulage in and around the mine, including mine support facilities. 

Normally, your reasonable, actual costs will be the basis for an 

allowance; however, we may compare free on board (f.o.b.) mine sales 

value with f.o.b. destination sales value minus the transportation costs 

to determine the reasonableness of an allowance.

You can deduct the actual, reasonable costs incurred in washing coal. 

You can also claim allowances on lead/zinc/copper leases for smelting, 

refining, and associated handling costs when royalties are reported on 

the basis of refined metal. You cannot claim processing allowances for 

mining and concentrating costs necessary to produce the ore 

concentrate.

For sodium and potassium products, we may allow deductions for 

transportation, packaging, and procesing. However, do not claim 

transportation, packaging, or reagent allowances as separate line items 

on Form MMS-2014. Instead, make appropriate adjustments for these 

items to the Sales Value of the sodium or potassium product. See 

page 7-1 for special instructions and examples on computing and 

reporting royalties for sodium and potassium leases.

For example, do not base your sodium and potassium royalties on:

• The delivered price of a bulk product sold at a site remote from the 

lease,
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

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5-18

• The packaged price of a product sold in packages, or

• The total weight of a product containing a lessee-owned reagent 

that is chemically part of the product.

In these instances, base your royalties on:

• The sales price of the delivered bulk product, net of actual 

transportation costs. However, the net price may be no lower than 

the weighted average sales price of the same product sold in the 

area of origin (the mine, processing plant, or regional distribution 

center).

• The weighted average royalty value of the same product sold in 

bulk form, whether sold at the area of origin or a remote sales 

point.

• The weight of the product containing the reagent, less the weight of 

that reagent in the product sold. However, you can claim the 

reagent deduction only if the unit value used to compute the royalty 

is the sales value (or sales value less transportation costs) of the 

product that contains the reagent.

Currently, there are no processing allowances for phosphate. Please 

check your lease terms for other leasable minerals, such as gilsonite or 

uranium, to determine if you can take a processing allowance.

Indian coal lessees must follow the reporting requirements for 

transportation and washing allowances found at 30 CFR 206.461 and 

206.458, respectively.

Please direct any questions concerning allowances to the address and 

phone number in “How to Contact MMS” on page 2-6.

NOTE You must type or handwrite all solid minerals 

allowance lines on Form MMS-2014 because they 

do not preprint on your Model 2014.
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5-19

5.3.2 Reporting a transportation allowance—TC 11

Use TC 11 to report your transportation expenses as a credit against 

royalties due. Always report your transportation allowance as a 

separate line from your royalty (TC 01) line. Do not net your allowance 

with your royalty due (except for sodium and potassium products; see 

“Claiming an allowance” on p. 5-17).

Follow these instructions to report a transportation allowance line on 

Form MMS-2014:

Field

No. Field title Instructions

6 AID Number Enter the same AID number as the 

royalty line from which you are taking 

an allowance.

7 Product Code Enter the same product code as the 

royalty line from which you are taking 

an allowance.

8 Regulated

Price Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter the same selling arrangement as 

the royalty line from which you are 

taking an allowance.

10 Sales Month/

Year

Enter the same sales month/year as the 

royalty line from which you are taking 

an allowance. Enter the month/year in 

MMYY format; for example, enter 

January 1996 as 0196.

11 Transaction 

Code

Enter 11.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

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5-20

Transportation allowance reporting example

Following is an example of how to report and take a transportation 

allowance on Form MMS-2014 using the data given below:

• The current report month is February 1996.

• The MMS-converted lease number is M72-007175-0.

• The company sold 5,000 tons of raw bituminous coal at a sales point 

remote from the mine.

• The royalty rate is 8 percent.

• The company reports and pays $8,000 in royalties. (See “How to 

Report and Pay Royalties—TC 01” on page 5-14 for instructions on 

paying royalties.)

• They incurred a $0.75/ton out-of-pocket transportation expense to 

ship coal to the customer’s plant.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty 

Quantity

Leave blank.

18 Royalty 

Value

The allowance royalty value equals the 

sales quantity for which you are 

claiming a transportation allowance 

multiplied by the royalty rate multiplied 

by the transportation allowance per unit 

of measure. Enter this amount as a 

credit, using a minus sign.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.

Field

No. Field title Instructions
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

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5-21

• The company calculated the transportation allowance royalty value 

by multiplying the sales quantity by the royalty rate by the unit 

allowance:

5,000 × 0.08 × $0.75 = $300

• The company paid by EFT.

5.3.3 Reporting a processing (washing) allowance—TC 15

Use TC 15 to report your processing expenses as a credit against 

royalties due. Always report your processing allowance as a separate 

line from your royalty (TC 01) line. Do not net your allowance with your 

royalty due.

Follow these instructions to report a processing allowance line on 

Form MMS-2014:

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007175 0 201 ED 100 0196 01 5,000 00 100,000 00 8,000 00 03

2 M72 007175 0 201 ED 100 0196 11 – 300 00 03

3

13

7,700 00

7,700 00

Field

No. Field title Instructions

6 AID Number Enter the same AID number as the 

royalty line from which you are taking 

an allowance.

7 Product Code Enter the same product code as the 

royalty line from which you are taking 

an allowance.

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
5. Explanations of Different Reporting Situations

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5-22

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter the same selling arrangement as 

the royalty line from which you are 

taking an allowance.

10 Sales Month/

Year

Enter the same sales month/year as the 

royalty line from which you are taking 

an allowance. Enter the month/year in 

MMYY format; for example, enter 

January 1996 as 0196.

11 Transaction

Code

Enter 15.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty

Quantity

Leave blank.

18 Royalty Value The allowance royalty value equals the 

sales quantity approved for a processing 

allowance multiplied by the processing 

allowance per unit of measure 

multiplied by the royalty rate. Enter this 

amount as a credit, using a minus sign.

19 Payment 

Method Code

Enter 01, 02, or 03, as defined in the 

Report Control Block.

Field

No. Field title Instructions
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-23

Processing allowance reporting example

Following is an example of how to report and take a processing 

(washing) allowance on Form MMS-2014 using the data given below:

• The current report month is April 1996.

• The MMS-converted lease number is M72-007176-0.

• The company sold 7,000 clean coal tons at $15/ton and a 

12.5-percent royalty rate.

• The company reports and pays $13,125 in royalties. (See “How to 

Report and Pay Royalties—TC 01” on page 5-14 for instructions on 

paying royalties.)

• They incurred a $5/ton clean coal washing expense.

• The company calculated the processing (washing) allowance royalty 

value by multiplying the sales quantity by the royalty rate by the 

unit allowance:

7,000 × 0.125 × $5 = $4,375

• The company paid by EFT.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M72 007176 0 101 EC 100 0396 01 7,000 00 105,000 00 13,125 00 03

2 M72 007176 0 101 EC 100 0396 15 – 4,375 00 03

3

13

8,750 00

8,750 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

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5-24

5.4 Reporting Tax Credits on Indian Leases—TC 12

Indian leases, with very few exceptions, are exempt from State and local 

taxes. If taxes are imposed on an Indian lease, they are typically 

severance taxes collected on gross sales and remitted by the payor to the 

taxing authority on the lessor’s behalf. Although tax credits on Indian 

leases do not require prior approval from MMS, we presume all Indian 

leases to be exempt from taxes. If you feel that your Indian lease is not 

exempt, you must prove that it was issued under Federal statutory 

authority expressly subjecting the Indians to State taxes for the lease 

revenues. Unless you can present such proof, we will treat your 

tax withholdings as a royalty underpayment. Contact the local 

Bureau of Indian Affairs (BIA) office that has responsibility for your 

lease if you have any questions.

We do not allow tax credits on Federal leases.

Show transactions that include appropriate tax credits on Indian leases 

as two-line entries on Form MMS-2014. The first line reports the sale at 

the stated product price (TC 01). The second line reports the tax credit 

and is entered as a credit amount using a minus sign (–).

Below is a description of how to report the second line:

Field

No. Field title Instructions

6 AID Number Enter the 10-digit MMS-assigned lease 

number and 3-digit revenue source 

reported on the first line.

7 Product Code Enter the two-character product code 

reported on the first line.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter the three-digit selling 

arrangement code reported on the first 

line.

10 Sales Month/

Year

Enter the month/year reported on the 

first line in the MMYY format; for 

example, enter January 1996 as 0196.
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5-25

11 Transaction Code Enter 12.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Enter the tax credit using a minus sign. 

If the tax credit is based on the product’s 

value (that is, 20-percent tax rate), then 

the tax credit equals the tax rate times 

the royalty value from the first line.

19 Payment 

Method Code

Enter the same payment method code 

reported on the first line.

Field

No. Field title Instructions
5. Explanations of Different Reporting Situations

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

5-26

Tax credit reporting example

Following is an example of how to report an Indian tax credit on your 

Form MMS-2014 using the data below:

• The current report month is March 1996.

• The AID number is M34-200000-0-101.

• The product is bituminous processed coal, product code EC.

• Because the coal is disposed of through an arm’s-length contract, 

the MMS-assigned selling arrangement code is 100.

• The coal was removed and sold in February 1996.

• The company sold 2,000 tons at $20/ton.

• The lease terms specify a 12.5-percent royalty rate.

• The company has an allowable tax credit of $0.07/ton.

• The company paid the Indians directly.

5.5 Reporting No Sales

If you had no sales for an entire month, you may leave that line blank. 

If all of the report lines on your document are blank, you don’t need to 

return the form.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 200000 0 101 EC 100 0296 01 2,000 00 40,000 00 5,000 00 02

2 M34 200000 0 101 EC 100 0296 12 – 140 00 02

3

13

4,860 00

4,860 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
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6-1

6. Adjustments, 

Recoupments, and 

Refunds

If you submitted incorrect data on your Form MMS-2014, you must 

make an adjustment to correct the information. An adjustment is any 

correction made on Form MMS-2014 to a previously accepted line. You 

may make an adjustment in order to:

• Pay additional monies, 

• Recoup overpaid amounts, or

• Change information that does not affect your payment. 

Your lease type (Federal, Indian, or offshore) and the original date of the 

information being adjusted may affect the way you report your 

adjustment. 

The adjustment reason code you choose (field 12 on Form MMS-2014) 

will depend on your reason for the adjustment and whether it was a 

payor-initiated or other adjustment. (See appendix D for a list of all 

adjustment reason codes.) A recoupment occurs when you report an 

adjustment that results in a net negative for the transaction (that is, 

you are adjusting a previously overpaid amount) and you recoup this 

amount from the remaining positive lines on Form MMS-2014.

NOTE Make sure that the adjustments you make on 

your royalty reports are also reflected on your 

production reports.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

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6-2

A refund occurs when you receive direct payment for an overpayment. 

All refunds require our review and approval. We issue refunds on 

Federal leases only when:

• You are no longer an active payor in our system, or

• You have no producing Federal leases in our system, or

• Your recoupment would take an unreasonable amount of time 

(more than 1 year) to be recouped.

6.1 Reporting an Adjustment

Report adjustments as two-line entries. You must first credit out the 

original report line and then re-report the adjusted report line. 

Follow these instructions to report the original (credited) royalty line 

and the adjusted royalty line on Form MMS-2014.

Line One—Original (Credited) Royalty Line

NOTE Because of the potential complexity of 

adjustments, recoupments, and refunds, we 

encourage you to contact the Solid Minerals 

Reporting Section Accountant if you have any 

questions (see “How to Contact MMS” on 

page 2-6).

Field

No. Field title Instructions

6 Accounting 

Identification 

(AID) Number 

Enter the 10-digit MMS-assigned lease 

number and 3-digit revenue source as 

the line accepted in our automated 

system.

7 Product Code Enter the two-character product code as 

the line accepted.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-3

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter the three-digit selling 

arrangement code as the line accepted.

10 Sales Month/

Year

Enter the sales month/year as the line 

accepted. 

11 Transaction

Code

Enter the transaction code as the line 

accepted.

12 Adjustment 

Reason Code

Enter the appropriate adjustment 

reason code. (Use an adjustment reason 

code on both the negative and the 

positive lines.) See appendix D for more 

explanation.

13 Sales Quantity Enter the negative of the sales quantity 

as the line originally accepted. Use a 

minus sign.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Enter the negative of the sales value as 

the line originally accepted. Use a minus 

sign.

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Enter the negative of the royalty value 

as the line originally accepted. Use a 

minus sign.

19 Payment 

Method Code

Enter the same payment method code as 

you originally reported it.

Field

No. Field title Instructions
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-4

Line Two—Adjusted Line

Field

No. Field title Instructions

6 AID Number Enter the 10-digit MMS-assigned lease 

number and 3-digit revenue source as 

you originally reported it or as you need 

to modify it.

7 Product Code Enter the two-character product code as 

you originally reported it or as you need 

to modify it.

8 Regulated 

Price Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter the three-digit selling 

arrangement code as you originally 

reported it or as you need to modify it.

10 Sales Month/

Year

Enter the sales month/year as you 

originally reported it or as you need to 

modify it. Enter the month/year in the 

MMYY format; for example, enter 

January 1996 as 0196.

11 Transaction 

Code

Enter the transaction code as you 

originally reported it or as you need to 

modify it.

12 Adjustment 

Reason Code

Enter the appropriate adjustment 

reason code (this must be the same code 

that you used on your first line).

13 Sales Quantity Enter the sales quantity as you 

originally reported it or as you need to 

modify it.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Enter the sales value as you originally 

reported it or as you need to modify it.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-5

6.2 Payor-Initiated Adjustments

Payor-initiated adjustments are corrections you make to a previously 

submitted royalty line because of pricing, volume, royalty rate, or 

allowance changes, whether the adjustment results in an increase or a 

decrease to royalties. Use the adjustment reason codes listed below:

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Enter the royalty value as you originally 

reported it or as you need to modify it.

19 Payment 

Method Code

Enter the payment method code as you 

originally reported it or as you need to 

modify it.

Code Description

01 Incorrect pricing. To adjust a line item you previously 

reported with an incorrect price.

02 Incorrect volume. To adjust a line item you previously 

reported with an incorrect volume or a zero quantity.

03 Incorrect royalty rate. To adjust a line item you 

previously reported with an incorrect royalty rate.

04 Allowance adjustment. To adjust an allowance you 

incorrectly reported.

10 Other adjustments. To adjust a line item you 

previously reported incorrectly (because of a coding or 

typographical error) when adjustment codes 01 

through 04 would not be applicable.

Field

No. Field title Instructions
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-6

Payor-initiated adjustment example

In this example, a company determined in October 1996 that the royalty 

value reported for lease number M49-001234-0 for the January 1995 

sales month was incorrect. They used an incorrect price for calculating 

the sales value, causing the royalty value to be understated. 

• They initially reported 100 tons of coal at $25/ton. The correct price 

was $30/ton.

• The lease has a 12.5-percent royalty rate.

• The company makes the following two-line adjustment on its 

October 1996 report. They use adjustment reason code 01 in 

field 12 because they reported the initial line at an incorrect price.

The company pays the $62.50 increase in royalties due when they send 

in their report. 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M49 001234 0 101 EC 100 0195 01 01 – 100 00 – 2,500 00 – 312 50 01

2 M49 001234 0 101 EC 100 0195 01 01 100 00 3,000 00 375 00 01

3

13

62 50

62 50

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-7

6.3 Other Adjustments

Some adjustments are corrections you make to a previously submitted 

royalty line because of lease term, regulatory, or MMS pricing or policy 

changes, whether the adjustment results in an increase or a decrease to 

royalties. Listed below are the adjustment reason codes you will use:

Code Description

31 Retroactive mandatory price adjustments. To adjust 

the price of a previously reported product for which a 

law, regulation, or lease terms require a pricing 

change.

36 Duplicate reporting. To reverse a line entry on which 

you reported more than once. (This is the only 

adjustment reason code that does not require two lines 

to correct the report royalties.)
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-8

Duplicate reporting adjustment example

A company initially reported the following line on its August 1995 

report.

MMS notified them in January 1996 that the above-referenced line is a 

duplicate of a previously reported line. The company submitted the 

following entry on their January 1996 report. They used adjustment 

reason code 36 in field 12 to identify the duplicate line.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 005011 0 101 EC 100 0795 01 4,000 00 36,000 00 4,500 00 01

2

3

13

4,500 00

4,500 00

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 005011 0 101 EC 100 0795 01 36 – 4,000 00 – 36,000 00 – 4,500 00 01

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-9

6.4 Audit Adjustments

You must report royalties paid as a result of an audit on a special green

Form MMS-2014 using the following adjustment reason codes:

The bill for collection will identify whether the audit was conducted by 

MMS alone or as a joint audit. If you have any questions about filling 

out the green Form MMS-2014, contact the Solid Minerals Reporting 

Section (see p. 2-6) or the auditor who initiated the audit.

Code Description

40 Joint audit royalty report. To report post-1983 entries 

resulting from an audit conducted jointly by MMS and 

a State, Indian Tribe, or Bureau of Indian Affairs (BIA) 

agency.

41 Audit exception royalty report. To report post-1983 

entries resulting from an audit conducted solely by 

MMS.

42 Joint audit royalty report prior to 1983. To report 

pre-1983 entries resulting from an audit conducted 

jointly by MMS and a State, Indian Tribe, or BIA 

agency.

43 Audit exception royalty report prior to 1983. To report 

pre-1983 entries resulting from an audit conducted 

solely by MMS.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-10

Audit adjustment example

Following is an example of how to report an audit adjustment on a green 

Form MMS-2014:

• Crawford Mining Company files an adjustment and pays additional 

royalties as a result of an MMS audit.

• The audit disclosed that a transposition error caused the royalty for 

lease M49-001100-0 to be understated by $18,000. The royalty 

value should have been $31,250 rather than the $13,250 initially 

reported for May 1993 sales.

Crawford Mining will pay the $18,000 increase in royalties due when 

they send in their report.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M49 001100 0 201 ED 100 0593 01 41 – 19,530 00 – 390,625 00 – 13,250 00 03

2 M49 001100 0 201 ED 100 0593 01 41 19,530 00 390,625 00 31,250 00 03

3

13

18,000 00

18,000 00

REPORT MO./YR.: _ _ _ _ 

PAYOR CODE: _ _ _ _ _ 2

1 PAYOR’S NAME: ________________________________________ 

OMB 1010-0022 (Exp. April 30, 19XX)

The Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.)requires us 

to inform you that this information is being collected to document details of 

royalty payments on sales of minerals from leases on Federal and Indian 

lands. MMS will use this information to maintain and audit lease accounts.

U.S. DEPARTMENT OF THE INTERIOR

Minerals Management Service - Royalty Management Program

REPORT OF SALES AND ROYALTY REMITTANCE

Form MMS-2014

For 

MMS 

Use 

Only

FEDERAL

OR

INDIAN

X 3 PAYOR-ASSIGNED

DOCUMENT NUMBER _ _ _ _ _ _ 3a

Page _____ of _____

M A 0 0 1

Crawford Mining Company

0 5 9 6

0 5 9 3 0 4

1 1

Green Form MMS-2014

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-11

6.5 Adjustments Involving More Than One Reason

You may need to submit an adjustment for more than one reason. For 

example, you might need to correct a line due to a retroactive 

mandatory pricing adjustment (adjustment reason code 31) and a 

transposition error (adjustment reason code 10).

In these situations you must determine the following:

• Does the revision require more than a standard two-line 

adjustment entry?

• Which adjustment reason code should I use for each entry?

Following are four different situations and responses:

Situation 1. You are correcting a line with more than one 

payor-initiated adjustment but no other adjustments.

Response. Decide which of the adjustment reasons is 

predominant and use that adjustment reason code in a standard 

two-line adjustment entry on Form MMS-2014.

Situation 2. You are correcting a line with more than one adjustment 

but no payor-initiated adjustments.

Response. If MMS did not specify which adjustment reason code 

to use, you should decide which adjustment reason is predominant 

and use that adjustment reason code in a standard two-line 

adjustment entry on Form MMS-2014.

Situation 3. You are correcting a line with a payor-initiated and 

another adjustment. The payor-initiated adjustment results in a 

decrease or no change in the previously reported royalty value.

Response. Use the appropriate non-payor-initiated adjustment 

reason code in a two-line entry on Form MMS-2014.

Situation 4. You are correcting a line with a payor-initiated and 

another adjustment. The payor-initiated adjustment results in an 

increase to the previously reported royalty value.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-12

Response. Use a four-line entry on Form MMS-2014. The first 

two lines record the payor-initiated adjustment. The second two 

lines record the other adjustment.

Multiple reason adjustment example

Following is an example of how to correct a line with both a 

payor-initiated and another adjustment:

• The company reported incorrect quantity and value amounts for 

lease M40-111222-0 for the March 1996 sales month.

• They also became aware of a retroactive mandatory pricing 

adjustment that increased the unit value of the coal by $0.60.

• Because correcting the quantity and value amounts due to payor 

error results in an increase of royalties due, the company must use 

a four-line adjustment entry. Lines 1 and 2 reflect the 

payor-initiated adjustment, and lines 3 and 4 reflect the pricing 

adjustment.

NOTE If you have difficulty determining which 

adjustment reason is predominant in a given 

situation, call the Solid Minerals Reporting 

Section Accountant (see p. 2-8).

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M40 111222 0 101 EI 100 0396 01 02 – 900 00 – 27,000 00 – 3,375 00 01

2 M40 111222 0 101 EI 100 0396 01 02 1,000 00 30,000 00 3,750 00 01

3 M40 111222 0 101 EI 100 0396 01 31 – 1,000 00 – 30,000 00 – 3,750 00 01

4 M40 111222 0 101 EI 100 0396 01 31 1,000 00 32,000 00 4,000 00 01

13

625 00

625 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-13

6.6 Indian Recoupments

You may recoup overpayments on Indian leases (with certain 

restrictions) depending on the type of lease you have:

• Tribal lease. You can recoup prior overpayments as a credit 

against the current month’s rent or royalties due on the same

lease. If you receive Tribal approval, you can recoup against other 

leases owned by the same Tribe. You must send a copy of written 

Tribal approval to us with your Form MMS-2014. You may recoup 

up to 100 percent of only the current net royalties. You cannot 

create a “negative” lease payment on your Form MMS-2014.

• Allotted lease. You can recoup prior overpayments as a credit 

against current month’s rent or royalties due on the same lease. 

Your recoupment cannot reduce the allottee’s current net royalties 

by more than 50 percent.

If the overpayment you are recovering exceeds the limit for a single 

report month, you must establish a recoupable balance to carry forward 

to future months. Listed below are the transaction codes you will use 

(these are transaction codes, not adjustment reason codes):

You must set up your recoupable balance as a three-line entry. You 

must first credit out the original report line, re-report the adjusted 

report line (see “Reporting an Adjustment” on p. 6-2), and set up the 

recoupable balance (TC 50) on the third line. This three-line entry 

must sum to zero. Below are examples of how to report the recoupable 

balance, as well as the actual recoupment (TC 51), on Form MMS-2014.

Code Description

50 Recoupable balance. To establish a balance against 

which you can recoup.

51 Recoupment taken. To recoup your Indian 

overpayment.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-14

Tribal recoupment example

Following is an example of how to report recoupments for Tribal lease 

overpayments: 

• An Indian Tribe owns lease M34-000995-0.

• The current report month is October 1996.

• The company sold 1,000 tons of coal during the July 1996 sales 

month.

• They originally reported sales at $18/ton but now need to correct 

the price to $13.50/ton.

• The lease has a 20-percent royalty rate.

• The net overpayment is $900.

The first illustration shows their line as originally reported for the July 

1996 sales month.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000995 0 101 EC 100 0796 01 1,000 00 18,000 00 3,600 00 02

2

3

13

3,600 00

3,600 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-15

The next illustration shows the company reversing their original entry 

and reporting it correctly on line 2. They set up a recoupable balance on 

line 3. Note that the three lines sum to zero.

The last illustration shows how the company will begin reporting and 

taking their recoupment in subsequent months. Because they are 

recouping against a Tribal lease, they can recoup 100 percent of the 

revenues for that lease for that month.

The company’s recoupable balance is now $800, to be recouped against 

future royalty payments.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000995 0 101 EC 100 0796 01 01 – 1,000 00 – 18,000 00 – 3,600 00 02

2 M34 000995 0 101 EC 100 0796 01 01 1,000 00 13,500 00 2,700 00 02

3 M34 000995 0 000 000 0796 50 900 00 02

13

0 00

0 00

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000995 0 101 EC 100 1096 01 37 00 500 00 100 00 02

2 M34 000995 0 000 000 1096 51 – 100 00 02

3

13

0 00

0 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-16

Tribal recoupment example with allowances taken

Following is an example of how to report recoupments for Tribal lease 

overpayments while also taking allowances against the lease: 

• An Indian Tribe owns lease M34-000996-0.

• The current report month is October 1996.

• The company originally reported 1,000 tons of coal during the July 

1996 sales month but now needs to correct it to 900 tons.

• They reported sales at $18/ton.

• The lease has a 20-percent royalty rate.

• The company has an approved transportation allowance (TC 11) at 

$0.50/ton and a coal washing allowance (TC 15) at $8/ton.

• The net overpayment is $190.

The first illustration shows their royalty and allowances as originally 

reported for the July 1996 sales month.

The next illustration shows the company reversing their original entries 

(including allowances) and reporting them correctly on lines 4, 5, and 6. 

They set up a recoupable balance on line 7. Note that all the lines sum 

to zero.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000996 0 101 EC 100 0796 01 1,000 00 18,000 00 3,600 00 02

2 M34 000996 0 101 EC 100 0796 11 – 100 00 02

3 M34 000996 0 101 EC 100 0796 15 – 1,600 00 02

13

1,900 00

1,900 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-17

The last illustration shows how the company reports and takes 

recoupment in subsequent months. Because they are recouping against 

a Tribal lease, they can recoup 100 percent of the revenues from that 

lease for that month.

The company recouped only $131 of the available $190 because they 

could take only from the net amount of royalties less all allowances. 

Their recoupable balance is now $59, to be recouped against future 

revenues. 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000996 0 101 EC 100 0796 01 02 – 1,000 00 – 18,000 – 3,600 00 02

2 M34 000996 0 101 EC 100 0796 11 02 100 00 02

3 M34 000996 0 101 EC 100 0796 15 02 1,600 00 02

4 M34 000996 0 101 EC 100 0796 01 02 900 00 16,200 00 3,240 00 02

5 M34 000996 0 101 EC 100 0796 11 02 – 90 00 02

6 M34 000996 0 101 EC 100 0796 15 02 – 1,440 00 02

7 M34 000996 0 000 000 0796 50 190 00 02

13

0 00

0 00

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000996 0 101 EC 100 1096 01 70 00 1,250 00 250 00 02

2 M34 000996 0 101 EC 100 1096 11 – 7 00 02

3 M34 000996 0 101 EC 100 1096 15 – 112 00 02

4 M34 000996 0 000 000 1096 51 – 131 00 02

13

0 00

0 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-18

Allotted recoupment example

Following is an example of how to report recoupments for allotted lease 

overpayments: 

• An allottee owns lease M34-000997-0.

• The current report month is October 1996.

• The company sold 1,000 tons of coal during the July 1996 sales 

month.

• They originally reported sales at $18/ton but now need to correct 

the price to $13.50/ton.

• The lease has a 20-percent royalty rate.

• The net overpayment is $900.

The first illustration shows their line as originally reported for the July 

1996 sales month.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000997 0 101 EC 100 0796 01 1,000 00 18,000 00 3,600 00 02

2

3

13

3,600 00

3,600 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-19

The next illustration shows the company reversing their original entry 

and reporting it correctly on line 2. They set up a recoupable balance on 

line 3. Note that the three lines sum to zero.

The last illustration shows how the company will report and take a 

recoupment in subsequent months. Because they are recouping against 

an allotted lease, they can recoup only 50 percent of the net revenues 

paid for that lease for that month.

The company’s recoupable balance is now $225, to be recouped against 

future revenues.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000997 0 101 EC 100 0796 01 01 – 1,000 00 – 18,000 00 – 3,600 00 02

2 M34 000997 0 101 EC 100 0796 01 01 1,000 00 13,500 00 2,700 00 02

3 M34 000997 0 000 000 0796 50 900 00 02

13

0 00

0 00

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000997 0 101 EC 100 1096 01 500 00 6,750 00 1,350 00 02

2 M34 000997 0 000 000 1096 51 – 675 00 02

3

13

675 00

675 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

6-20

Allotted recoupment example with allowances taken

Following is an example of how to report recoupments for allotted lease 

overpayments while also taking allowances against the lease: 

• An allottee owns lease M34-000998-0.

• The current report month is October 1996.

• The company originally reported 1,000 tons of coal during the July 

1996 sales month but now needs to correct it to 900 tons.

• They reported sales at $18/ton.

• The lease has a 20-percent royalty rate.

• The company has an approved transportation allowance (TC 11) at 

$0.50/ton and a coal washing allowance (TC 15) at $8/ton.

• The net overpayment is $190.

• The company also recoups rental against royalties according to 

their lease terms.

The first illustration shows royalty and allowances as originally 

reported for the July 1996 sales month.

The next illustration shows the company reversing their original entries 

(including allowances) and reporting them correctly on lines 4, 5, and 6. 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000998 0 101 EC 0796 01 1,000 00 18,000 00 3,600 00 02

2 M34 000998 0 101 EC 0796 11 – 100 00

3 M34 000998 0 101 EC 0796 15 – 1,600 00

13

1,900 00

1,900 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

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6-21

They set up a recoupable balance on line 7. Note that all the lines sum 

to zero.

The last illustration shows how the company will report and take a 

recoupment in subsequent months. Because they are recouping against 

an allotted lease, they can recoup up to 50 percent of the net royalty 

revenues paid for that lease for that month. However, they may recoup 

100 percent of any recoupable rentals paid on the lease.

The company recouped 100 percent of the rent but only 50 percent of the 

net current royalties (gross royalties minus allowances and the 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000998 0 101 EC 100 0796 01 02 – 1,000 00 – 18,000 00 – 3,600 00 02

2 M34 000998 0 101 EC 100 0796 11 02 100 00 02

3 M34 000998 0 101 EC 100 0796 15 02 1,600 00 02

4 M34 000998 0 101 EC 100 0796 01 02 900 00 16,200 00 3,240 00 02

5 M34 000998 0 101 EC 100 0796 11 02 – 90 00 02

6 M34 000998 0 101 EC 100 0796 15 02 – 1,440 00 02

7 M34 000998 0 000 000 0796 50 190 00 02

13

0 00

0 00

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M34 000998 0 101 EC 100 1096 01 70 00 1,250 00 250 00 02

2 M34 000998 0 101 EC 100 1096 11 – 7 00 02

3 M34 000998 0 101 EC 100 1096 15 – 112 00 02

4 M34 000998 0 000 000 1096 25 – 100 00 02

5 M34 000998 0 000 000 1096 51 – 15 00 02

13

16 00

16 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

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6-22

applicable rent recoupment). Their recoupable balance is now $175, to 

be recouped against future revenues. 

6.7 Federal Recoupments

There are no limitations on the amount of overpayment you can recoup 

in a single month on a Federal onshore lease. Also, you may apply 

overpayments on one Federal lease to royalties due on any Federal lease 

during the same report month.

Federal onshore recoupment example

Following is an example of how to report correcting adjustments on a 

Federal lease.

• The lease number is M40-046810-0.

• A payor produces coarse muriate of potash (product code JA) by 

surface mining. 

• The applicable royalty rate is 5 percent.

• The payor incorrectly reported the sales quantity for November 

1995 and discovered the error during January 1996.

• The payor reversed the original royalty line and correctly reported 

it during the January 1996 sales month.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

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6-23

Note that the payor recouped part of the revenue from a second lease, 

M40-052311-0, because lease M40-046810-0 did not have enough 

royalty revenue this month.

6.8 Indian Refunds

If you are unable to recoup an Indian overpayment and want to request 

a refund, you must contact the appropriate BIA agency, area office, or 

Tribe directly. After receiving refund approval, immediately contact 

MMS because we may require you to submit a correcting Form 

MMS-2014.

6.9 Federal Refunds

MMS issues refunds when:

• You are no longer an active payor in our automated system, or

• You have no producing Federal leases in our system, or

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M40 046810 0 101 JA 100 0196 01 300 00 9,000 00 450 00 03

2 M40 052311 0 101 JA 100 0196 01 900 00 27,000 00 1, 350 00 03

3 M40 046810 0 101 JA 100 1195 01 02 – 2,200 00 – 66,000 00 – 3,300 00 03

4 M40 046810 0 101 JA 100 1195 01 02 1,200 00 36,000 00 1,800 00 03

13

300 00

300 00

NOTE Because companies pay the royalty recipients 

directly, we do not receive any Indian royalties. 

Thus, we cannot issue Indian refunds.

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

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6-24

• Your recoupment would take an unreasonable amount of time 

(more than 1 year) to be recouped.

You must send us a written request with appropriate justification for 

the refund (see the correspondence address on p. 2-9). Include the 

following in your request:

• A signed statement certifying the following:

– You have not previously submitted a request for refund.

– You have not already recouped the overpayment.

– A refund for the amount shown is due and payable.

• A request for a specific amount.

• An explanation of why and how the overpayment occurred.

• A schedule, by lease, providing the following data for each sales 

month:

– Royalty paid to MMS

– Corrected royalty amount due

– Royalty overpayment

• Sufficient documentation to support the validity of the 

overpayment; that is, copies of canceled checks, copies of previously 

filed royalty reports (including the adjusted reports), and copies of 

worksheets used to calculate the revised royalty amount due and 

resulting overpayment. The type and amount of data necessary to 

support each refund request will vary depending on the reasons for 

the overpayment.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

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6-25

• If you request a refund instead of a recoupment, you must justify 

why a refund is warranted.

6.10 Bidding Rights

The Government may award bidding rights credits that you can use for 

payment of royalties, rentals, bonuses, etc., on Federal leases. The 

award document may permit you to assign the credits, in whole or in 

part, and may restrict the percentage amount you can use for any 

particular reporting transaction. Treat all credits for bidding rights as 

single-line, lease-level adjustments on Form MMS-2014 using 

M44-444444-0 (a false lease number reserved for this purpose), 

transaction code 02, and adjustment reason code 50.

NOTE Congress repealed section 10 of the Outer 

Continental Shelf (OCS) Lands Act of 1953 as 

part of the Royalty Simplification and Fairness 

Act (1996). An offshore refund no longer requires 

congressional review or a 2-year statute of 

limitations.
6. Adjustments, Recoupments, and Refunds

Solid Minerals Payor Handbook

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6-26

Bidding rights example 

A company was awarded $100,000 in bidding rights credits. The terms 

of the award restrict the amount of money they may credit on Form 

MMS-2014 to 50 percent of the total monies due on any one lease. 

However, the terms also allow them to use these credits on any type of 

lease payments. They are paying both royalties for the August 1996 

sales month and rental due September 1, 1996.

The company was able to use only $83,000 of their bidding rights credits 

(50 percent of the net monies paid). They can use the remaining $17,000 

the next sales month, assuming they have at least $34,000 in net 

revenues.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M33 123456 0 201 EC 100 0896 01 105,000 00 2,000,000 00 160,000 00 03

2 M33 123456 0 000 000 0996 04 6,000 00 03

3 M44 444444 0 000 0896 02 50 – 83,000 00 03

13

83,000 00

83,000 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Solid Minerals Payor Handbook

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7-1

7. Special Instructions for 

Major Minerals Other 

Than Coal

This chapter covers special reporting circumstances for 

sodium/potassium, lead/zinc/copper, phosphate, and uranium leases. 

Although these examples include rent, allowance, and royalty 

transactions, you should also refer to the general reporting instructions 

and examples in chapters 4, 5, and 6 to ensure proper reporting.

7.1 Sodium/Potassium Leases

Terms for sodium/potassium leases from Federal and Indian lands can 

vary considerably. You must make lease-level payments on a 

calendar-year basis. Currently, most royalty rates for sodium and 

potassium leases are generally 2 to 5 percent of the gross value of the 

product sold at the point of shipment to market. Effective February 

1996, all new sodium leases in the Green River Basin in Wyoming will 

be issued with an 8-percent royalty rate, and existing leases will be 

renewed at 6 percent. The point of royalty determination for sodium and 

potassium is the point of shipment, generally the processing plant or 

regional distribution point, whether on or off the lease. The method of 

valuing and reporting sodium and potassium lease production is 

significantly different from other solid minerals (see “Claiming an 

allowance” on p. 5-17). The following sodium and potassium reporting 

examples encompass the major differences.

NOTE Because of the complexities of valuing and 

calculating your sodium and potassium 

royalties, please call our Royalty Valuation 

Division with your valuation questions and the 

Solid Minerals Reporting Section with your 

reporting questions. (See “How to Contact 

MMS” on page 2-6 for addresses and phone 

numbers.) 
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-2

Sodium reporting example

The following example pertains to a Wyoming trona operation but 

applies to all soda ash producers.

• A company operates on Federal trona lease M75-654321-0.

• The applicable royalty rate is 5 percent.

• The company sold 5,000 tons of light soda ash (product code SK) at 

its processing plant for $92/ton.

• They sold 6,000 tons of light soda ash at $100/ton, delivered to a 

sales point in Utah.

• The company sold 10,000 tons of dense soda ash (product code SL) 

at its processing plant for $82/ton.

• They sold 12,000 tons of dense soda ash at $86/ton, delivered to a 

sales point in Utah.

• All sales are through arm’s-length contracts.

• The report month is December 1995.

• Recoupable rent (transaction code [TC] 05) of $3/acre for 

2,500 acres is due in January 1996. (Rent from the expiring year 

was fully recouped in earlier reports.)

• The company’s cost to transport both the light and dense soda ash 

from Green River, Wyoming, to the sales point was $5/ton.

• The company computed the sales value (field 16) of the light soda 

ash as follows:

– The value for royalty purposes of the 5,000 tons of light soda ash 

sold at the processing plant is its sales value. The sales price 

equals $92/ton. This is also the unit value for royalty purposes. 

The sales value is:

5,000 tons × $92/ton = $460,000
7. Special Instructions for Major Minerals Other Than Coal

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7-3

– The net sales price of the 6,000 tons of light soda ash transported 

to a remote point of sale equals $100/ton minus $5/ton, or 

$95/ton. This is also the unit value for royalty purposes, because 

it is greater than $92/ton—the unit sales value of the light soda 

ash sold at the processing plant. The sales value is:

6,000 tons × $95/ton = $570,000

– The sales value of the 11,000 tons of light soda ash is:

(5,000 tons × $92/ton) + (6,000 tons × $95/ton) = $1,030,000

• The company computed the sales value (field 16) of the dense soda 

ash as follows:

– The value for royalty purposes of the 10,000 tons of dense soda 

ash sold at the processing plant is its sales value. The unit sales 

value is $82/ton. The sales value is:

10,000 tons × $82/ton = $820,000

– The unit value for royalty purposes of the 12,000 tons of dense 

soda ash sold at a remote delivery point is generally the net sales 

price, which equals $86/ton minus $5/ton, or $81/ton. However, 

the unit sales value equals $82/ton, because the unit sales value 

of transported soda ash can be no lower than the weighted

average price of the same product sold at the processing plant.

– The sales value of the 22,000 tons of dense soda ash is:

(10,000 + 12,000 tons) × $82/ton = $1,804,000

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M75 654321 0 201 SK 100 1195 01 11,000 00 1,030,000 00 51,500 00 03

2 M75 654321 0 201 SL 100 1195 01 22,000 00 1,804,000 00 90,200 00 03

3 M75 654321 0 000 000 0196 05 7,500 00 03

13

149,200 00

149,200 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

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7-4

Potash reporting example

This example applies to an underground New Mexico potash operation 

on Federal lease M40-123321-0.

• A company sells only one potash product, free on board (f.o.b.) 

Carlsbad, New Mexico, in bulk and in bags:

– Standard muriate of potash (product code JD) in bulk; 100 tons 

at $70/ton and 75 tons at $75/ton. The sales contract is 

arm’s-length (selling arrangement 100).

– Standard muriate of potash (JD) in bags; 100 tons at $90/ton. 

The sales contract is arm’s-length (selling arrangement 100).

– Standard muriate of potash (JD) in bulk; 80 tons at $50/ton. The 

sales contract is non-arm’s-length (selling arrangement 200).

– Standard muriate of potash (JD) in bulk; 50 tons at $80/ton. The 

sales contract is non-arm’s-length (selling arrangement 200).

– Standard muriate of potash (JD) in bags; 40 tons at $90/ton. The 

sales contract is non-arm’s-length (selling arrangement 200).

• The royalty rate is 2 percent.

• The report month is December 1995.

• The recoupable rent (TC 05) of $2/acre for 5,000 acres is due on 

January 1, 1996. (Rent from the expiring year was fully recouped in 

earlier reports.)

• The company computed the sales value of the bulk potash sold 

under arm’s-length contracts as follows:

(100 tons × $70/ton) + (75 tons × $75/ton) = $12,625

The company computed the unit sales value as follows:

This is the bulk potash weighted average unit sales value. If some 

bulk product were sold at a remote delivery point, the bulk potash 

( ) 100 tons $70/ton) × + (75 tons $75/ton ×

100 tons 75 tons + ---------------------------------------------------------------------------------------------------------------- = $72.14/ton
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

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7-5

weighted average unit sales value would be computed by the same 

method, but using the sales value of the delivered product in the 

computation.

• The company computed the sales value of the bagged potash sold 

under arm’s-length contracts as follows:

100 tons × $72.14/ton = $7,214

The unit sales value of the bagged potash is the bulk potash 

weighted average unit sales value.

• The company computed the sales value of the bulk potash sold at 

$50/ton under non-arm’s-length contracts as follows:

80 tons × $72.14/ton = $5,771.20

The unit sales value is the bulk potash arm’s-length weighted 

average unit sales value.

• The company computed the sales value of the bulk potash sold at 

$80/ton under non-arm’s-length contracts as follows:

50 tons × $80/ton = $4,000

While the unit sales value of a non-arm’s-length sale is generally 

the bulk potash arm’s-length weighted average unit sales value (see 

above), the unit sales value of a non-arm’s-length sale can be no 

lower than the actual sales price.

• The company computed the sales value of the bagged potash sold 

under non-arm’s-length contracts as follows:

40 tons × $72.14/ton = $2,885.60
7. Special Instructions for Major Minerals Other Than Coal

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7-6

The sales value of bagged product sold under non-arm’s-length 

contracts is equal to the bulk potash arm’s-length weighted average 

unit sales value.

7.2 Lead/Zinc/Copper Leases

Royalty provisions for most lead/zinc/copper leases on Federal acquired 

lands stipulate that royalties are calculated as a percentage of the gross 

value of minerals mined and milled at the point of shipment to market. 

Further, this point of shipment to market is commonly defined as being 

located at the mill, and the products of the mill are mineral 

concentrates.

You generally determine the gross value of the mineral concentrates by 

using either of the following two methods (although other valuation 

procedures may be appropriate):

• The price paid for any sale of your concentrate under an 

arm’s-length (free-market) contract less any transportation 

allowances, or

• The net smelter return method of determining concentrate value 

for royalty purposes where the concentrate is processed and metal 

is later sold.

Concentrate method. Because most lease terms stipulate that 

royalties are based on the gross value of concentrates produced, you will 

report the sales quantity (field 13 on Form MMS-2014) in tons of 

concentrate. The applicable product codes are PC (lead concentrate), 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASURE

-MENT

CALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M40 123321 0 201 JD 100 1195 01 275 00 19,839 00 396 78 01

2 M40 123321 0 201 JD 200 1195 01 170 00 12,656 80 253 14 01

3 M40 123321 0 000 000 0196 05 10,000 00 01

13

10,649 92

10,649 92

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

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7-7

ZA (zinc concentrate), and CH (copper concentrate). Report the total 

value sold (for example, the summation of the value of zinc, cadmium, 

and silver in the zinc concentrate) as the sales value (field 16 on 

Form MMS-2014).

If you sell the concentrate (before it is processed into a metal), report 

your gross sales and royalty due as a separate line item on 

Form MMS-2014, followed by a second line for any transportation 

allowances (TC 11). (See “Reporting a transportation 

allowance—TC 11” on page 5-19 for instructions to report a 

transportation allowance.) 

If you sell concentrate to a smelter and receive provisional payments for 

the sales, you must report and pay royalties when these sales are made. 

You will not deduct processing or transportation allowances until final 

settlement.

When you receive the final payment, you must adjust the previously 

reported provisional figures. Do not net this adjustment in the current 

month’s royalty payment. Instead, reverse the original royalty line with 

the provisional figures. On a separate line, enter the corrected figures 

with the total payment (provisional plus final). Use the appropriate 

adjustment reason code (normally 31) for both the reversed and 

corrected lines. Report the applicable transportation allowance on a 

third line.

Net smelter return method. This method computes the equivalent 

sales value of the concentrate (field 16 on Form MMS-2014) by 

subtracting various treatment, refining, tolling, and freight charges 

from the gross proceeds received for sale of your metal in arm’s-length 

contracts. You must attach a worksheet to Form MMS-2014 

line-itemizing these deductions. The worksheet must show the gross 

value of the metal, the types and amounts of charges deducted, 

concentrate grade, impurities, etc.

If you use the net smelter return method to compute your royalties, the 

processing and transportation charges are already deducted from the 

sales price of the metal. You will report only one line on 

Form MMS-2014 (net of charges).
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-8

Lead/zinc/copper reporting example

This example illustrates reporting on lead/zinc/copper lease 

M89-141414-0:

• A company sells lead concentrate under an arm’s-length contract.

• They ship the zinc and copper concentrate to a tolling facility that 

makes partial advance (provisional) payments subject to settlement 

several months later.

• The company has transportation allowances for the zinc and copper, 

to be deducted at the time of final settlement. They also have an 

allowance for the lead concentrate.

• The applicable royalty rate is 5 percent.

• Lease terms provide that production halts rental requirements.

• The report month is April 1996.

NOTE Because of the complexities of valuing and 

calculating your lead/zinc/copper royalties, 

please call our Royalty Valuation Division with 

your valuation questions and the Solid Minerals 

Reporting Section with your reporting 

questions. (See “How to Contact MMS” on 

page 2-6 for addresses and phone numbers.) 
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-9

Line 1 of the example shows that 1,900 tons of lead concentrate were 

sold at a point remote from the concentrate mill during the March 1996 

sales month. The total sales value of this concentrate (including the 

value of the contained lead, silver, and copper) was $570,000, resulting 

in a royalty payment of $28,500.

Line 2 shows a transportation allowance for the lead concentrate that 

resulted in a deduction of $3,800.

Lines 3 and 4 report the current provisional payments for the zinc and 

copper concentrates shipped to the tolling facility. The company does 

not report the transportation allowances related to these concentrates 

until final settlement.

Lines 5 and 6, and 8 and 9, respectively, show the final settlements for 

zinc and copper concentrates originally reported in the January 1995 

sales month. Lines 5 and 8 are shown exactly as reported in the original 

report except that negative numbers are used; this deletes the original 

line. The corrected figures are entered on lines 6 and 9.

Lines 7 and 10 report the transportation allowances for the zinc and 

copper concentrates deducted from the final January 1995 figures.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASURE-ME

NT

CALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M89 141414 0 201 PC 100 0396 01 1,900 00 570,000 00 28,500 00 03

2 M89 141414 0 201 PC 100 0396 11 – 3,800 00 03

3 M89 141414 0 201 ZA 100 0396 01 215 00 115,000 00 5,750 00 03

4 M89 141414 0 201 CH 100 0396 01 50 00 21,000 00 1,050 00 03

5 M89 141414 0 201 ZA 100 0195 01 01 – 200 00 – 100,000 00 – 5,000 00 03

6 M89 141414 0 201 ZA 100 0195 01 01 200 00 106,000 00 5,300 00 03

7 M89 141414 0 201 ZA 100 0195 11 – 110 00 03

8 M89 141414 0 201 CH 100 0195 01 01 – 70 00 – 28,000 00 – 1,400 00 03

9 M89 141414 0 201 CH 100 0195 01 01 70 00 26,600 00 1,330 00 03

10 M89 141414 0 201 CH 100 0195 11 – 125 00 03

13

31,495 00

31,495 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-10

Net smelter return method reporting example

The following example shows how a company determined their lead 

concentrate’s value using the net smelter return method:

• The accounting identification (AID) number is M89-098711-0-201.

• The company sold the lead metal under an arm’s-length contract.

• They received no provisional payments; the one-line transaction 

reflects total sales and royalty data.

• Lead concentrate smelting and refining charges amounted to 

$12,000.

• Freight charges totaled $10,000.

• The company processed 1,900 tons of lead concentrate and sold the 

processed lead metal for $570,000.

• The royalty rate is 5 percent.

The basic concentrate calculation is as follows:

Gross proceeds of lead metal sold $570,000

Treatment and refining charges – 12,000

Transportation charges – 10,000

Concentrate sales value

(field 16 on Form MMS-2014)

$548,000

5-percent royalty rate × 0.05

Royalty due

(field 18 on Form MMS-2014)

$27,400
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-11

Net profit share Indian copper leases. If you have a net profit 

share (NPS) Indian copper lease, you must use TC 39 on your 

Form MMS-2014 during unprofitable sales months and TC 40 during 

profitable sales months. Form MMS-2014 must include all production 

and revenue attributable to the NPS lease. 

Follow these instructions to report an NPS line on the Form MMS-2014:

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASURE

-MENT

CALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M89 098711 0 201 PC 100 0496 01 1,900 00 548,000 00 27,400 00 03

2

3

13

27,400 00

27,400 00

Field

No. Field title Instructions

6 AID Number Enter your 10-digit MMS-assigned lease 

number and 3-digit revenue source 

assigned on your Payor Confirmation 

Report (PCR).

7 Product Code Enter your two-character product code 

assigned on your PCR.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement 

Code

Enter your three-digit selling 

arrangement code assigned on your 

PCR.

10 Sales Month/

Year

Enter the month/year in which the 

product was sold in the MMYY format. 

For example, enter January 1996 as 

0196.

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-12

11 Transaction 

Code

Enter 39 if reporting an unprofitable

month and 40 if reporting a profitable

month.

12 Adjustment 

Reason Code

Leave blank.

13 Sales Quantity Enter the volume of product for the 

reported sales month.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value If reporting an unprofitable month, 

enter the corresponding dollar value of 

the Sales Quantity (field 13). If reporting 

a profitable month, enter the NPS base 

calculated at the end of the sales month.

17 Royalty 

Quantity

Leave blank.

18 Royalty Value Leave blank if reporting an 

unprofitable month. Enter the Sales 

Value (field 16) times the NPS rate 

specified in the lease if reporting a 

profitable month.

19 Payment 

Method Code

Enter 02.

Field

No. Field title Instructions
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-13

Unprofitable NPS Indian copper lease example

Following is an example of how to report on an unprofitable NPS Indian 

copper lease:

• The AID number is M09-100000-0-101.

• The current report month is August 1996.

• The company sold copper through an arm’s-length contract.

• The copper was removed and sold in July 1996.

• The company sold 1,000 pounds at $26.25/lb.

• The lease terms specify a 50-percent NPS rate.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M09 100000 0 101 CU 100 0796 39 1,000 00 26,250 00 02

2

3

13

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-14

Profitable NPS Indian copper lease example

Following is an example of how to report on a profitable NPS Indian 

copper lease:

• The AID number is M09-100001-0-101.

• The current report month is August 1996.

• The company sold copper through an arm’s-length contract.

• The copper was removed and sold in July 1996.

• The company sold 1,000 pounds at $26.25/lb.

• The lease terms specify a 50-percent NPS rate.

• There is a $10,000 NPS base at the end of July 1996.

• The company paid the Indians directly.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M09 100001 0 101 CU 100 0796 40 1,000 00 10,000 00 5,000 00 02

2

3

13

5,000 00

5,000 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

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7-15

7.3 Phosphate Leases

Phosphate valuation for royalty purposes depends on whether the ore is 

located in the eastern or western United States and whether ownership 

is Federal or Indian:

• Value eastern Federal phosphate lease production on gross 

proceeds of the phosphate concentrate (beneficiated phosphate 

rock).

• Value western Federal phosphate lease production by calculating 

an annual value using the indexed 1979 phosphorus pentoxide 

(P2O5) unit value and the Gross National Product-Implicit Price 

Deflator (GNP-IPD) index as published by the Department of 

Commerce, Bureau of Economic Analysis.

• Value Indian phosphate lease production by calculating an annual 

value using the indexed 1979 P2O5 unit value and the Consumer 

Price Index (CPI) published by the Department of Labor, Bureau of 

Labor Statistics.

Annually, the Solid Minerals Valuation and Reporting Branch, using 

the GNP-IPD index, calculates the P2O5 unit value to be used for the 

calendar year and issues that value to known Federal phosphate 

producers. If you need the phosphate unit value for current-year 

Federal or Indian production, please contact the Solid Minerals 

Valuation and Reporting Branch as indicated on page 2-8.
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

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7-16

Calculating royalties using the index method. Calculate 

royalties using the index method (GNP-IPD or CPI) in the following 

manner:

STEP 1. Establish the current value per P2O5 unit. A P2O5 unit is 

1 percent P2O5 content per dry ton of ore. To calculate the 

current value per P2O5 unit, divide the current annual index 

by the 1979 index, and then multiply the quotient by the 

1979 unit value ($0.337).

STEP 2. Compute the sales value. Multiply the current value per 

P2O5 unit by the average P2O5 units per ton and the dry tons 

produced or sold (depending on lease terms).

Enter this calculated sales value in field 16 of 

Form MMS-2014.

STEP 3. Compute the royalty value. Multiply the calculated sales 

value by the royalty rate.

Enter this calculated royalty value in field 18 of 

Form MMS-2014.

(1)

(2)

(3)

current index

1979 index

------------------------------------- 1979 value

P2O5

× ----------------------------- current value

P2O5

= ------------------------------------

current value

P2O5

------------------------------------ P2O5

ton × -------------- × sales quantity in tons

= sales value

sales value royalty rate × = royalty value
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

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7-17

Western phosphate lease example

The following example illustrates the calculations necessary for a 

Federal western phosphate lease:

• The current report month is August 1996.

• The AID number is M89-082313-0-101.

• The product is phosphate raw ore, product code PK.

• Lease terms specify the royalty rate is 5 percent, and the product 

value is based on the indexed 1979 phosphate value.

• Royalty determination occurs prior to sale at the point of shipment 

to market.

• The company sold 4,000 tons.

• The average P2O5 units per ton is 31.

• Using equation 1 on page 7-16, the company calculates the current 

value per P2O5 unit as follows:

– The 1979 index is 55.3.

– The current 1995 index is 107.5.

– The 1979 unit value is $0.337.

– The current value per P2O5 unit is:

• Using equation 2 on page 7-16, the company calculates the sales 

value (field 16) as follows:

107.5

55.3

-------------- × $0.337 = $0.655

$0.655 31 × × 4,000 = $81,220.00
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

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7-18

• Using equation 3 on page 7-16, the company calculates the royalty 

value (field 18) as follows:

• The selling arrangement code (field 9) must be 300, as this is a 

western phosphate lease (see “Selling arrangement” on p. 4-3).

7.4 Development Contracts

Leases included in a development contract and approved for reporting 

at the development contract level are reported on Form MMS-2014 at 

that level. You will report all of the leases’ rentals and royalties under 

one unique development AID number that we assign.

7.5 Uranium Leases

Royalty provisions for uranium production on Federal and Indian 

acquired lands vary according to specific lease terms. The most common 

royalty rates are expressed as a percentage of the value of produced 

uranium in dry tons. Determine this value either by using the gross 

proceeds of the unprocessed uranium ore sales or by using relatively 

complex schedules that ascertain the value per pound of uranium oxide 

(U3O8) contained in the ore.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M89 082313 0 101 PK 300 0796 01 4,000 00 81,220 00 4,061 00 01

2

3

13

4,061 00

4,061 00

$81,220 5 × % = $4,061

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
7. Special Instructions for Major Minerals Other Than Coal

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

7-19

Because uranium royalties are based on the value of products contained 

in the ore, the point of royalty determination occurs prior to any 

processing facility. However, royalties paid on associated vanadium 

(and other byproducts) produced with the uranium are based on sales of 

the processed product. If you have specific questions about valuing 

uranium, please contact our Solid Minerals Valuation and Reporting 

Branch (see p. 2-8).

Uranium reporters frequently make adjustments to previous royalty 

payments in response to average weighted sales price recalculations. 

Refer to chapter 6 for more information on adjustments.
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

8-1

8. Special Instructions for 

Coal Leases

The laws and regulations governing coal leases have changed 

significantly during the past several years, resulting in a variety of new 

rental and royalty terms. This chapter discusses reporting 

circumstances common to the coal industry. Although these examples 

include rent, allowance, and royalty transactions, you should also refer 

to the general reporting instructions and examples in chapters 4, 5, and 

6 to ensure proper reporting.

8.1 Leases with Pre-1976 Terms

Federal coal leases issued prior to August 4, 1976, that have not been 

readjusted since that date generally provide for:

• Cents-per-ton royalties,

• Rentals that may be recouped against either production or 

minimum royalties,

• Quarterly reporting, and

• Quarterly payments.

In many instances, rentals and minimum royalties run concurrently. 

For example, rent is required at the beginning of the lease year but is 

recoupable against the minimum royalty required at the end of the year. 

Also, although most pre-1976 lease terms state that royalties accrue on 

the tons produced, we require that you report and base your royalty 

payments on tonnage sold, unless we or the Bureau of Land 

Management (BLM) have issued an order to pay on tons produced.

You are not required to fill in a sales value (field 16) on Form MMS-2014 

for cents-per-ton leases. Also, your selling arrangement code (field 9) 

will always be 300 for these leases.
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

8-2

Pre-1976 lease example

Following is an example of a quarterly report for pre-1976 coal lease 

M32-482191-0. Note that quarterly transactions use the last month in 

the applicable quarter as the sales month/year (field 10).

• The lease terms require quarterly reporting and payment.

• The royalty rate is $0.15/ton sold. 

• The selling arrangement code is 300 (see “Selling arrangement” on 

p. 4-3).

• The company previously paid $1,600 in recoupable rent, due by the 

March 1 anniversary date, on the February 1996 Form MMS-2014.

• They are now reporting and paying royalties for the first quarter of 

1996 on their April 1996 Form MMS-2014.

• They are also recouping their rent against the first quarter 1996 

royalties. (See “How to Report and Pay Lease-Level Transactions” 

on page 5-1 for more information on recoupments.)

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M32 482191 0 101 ED 300 0396 01 40,000 00 6,000 00 01

2 M32 482191 0 000 000 0396 25 – 1,600 00 01

3

13

4,400 00

4,400 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Final Review Copy ◆ 02/20/97

8-3

8.2 Leases with Post-1976 Terms

Federal coal leases issued or readjusted since August 4, 1976, are 

subject to the Federal Coal Leasing Amendments Act of 1975 (FCLAA) 

and provide for:

• Nonrecoupable rentals,

• No minimum royalties,

• Ad valorem royalty rates,

• The opportunity to pay advance royalties in lieu of continued 

operations,

• Monthly reporting and payment requirements, and

• Allowable transportation and processing allowances.
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

8-4

Post-1976 lease example 

Following is an example of readjusted coal lease M74-021111-0:

• The lease terms require monthly reports and payments.

• The report month is July 1996.

• The applicable royalty rate is 8 percent.

• Nonrecoupable rent of $3/acre on 2,500 acres is due August 1. 

• The company sold 40,000 tons of coal at $26/ton during the 

June 1996 sales month.

• They took a transportation allowance at $4/ton; the allowance 

royalty value is $12,800 (40,000 tons at $4/ton at 8 percent).

• They also took a processing (washing) allowance at $4.16/ton; the 

allowance royalty value is $13,312 (40,000 tons at $4.16/ton at 

8 percent).

8.3 Advance Royalties

For Federal coal leases subject to FCLAA, you may request BLM to 

approve payment of advance royalties in lieu of continued operation 

production requirements. BLM will notify MMS of approvals and will 

supply us with the information we require to calculate total advance 

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M74 021111 0 201 ED 100 0696 01 40,000 00 1,040,000 00 83,200 00 03

2 M74 021111 0 201 ED 100 0696 11 – 12,800 00 03

3 M74 021111 0 201 ED 100 0696 15 – 13,312 00 03

4 M74 021111 0 000 000 0896 04 7,500 00 03

13

64,588 00

64,588 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Final Review Copy ◆ 02/20/97

8-5

royalty payments (in accordance with 43 CFR 3483.4). MMS will send 

notification of approval along with due dates, advance royalty payments 

due, and intent to assess BLM-mandated late-interest payments, if 

applicable.

Most coal leases with advance royalty provisions permit advance 

royalty recoupment with certain limitations, as specified by the lease 

terms or the regulations at 43 CFR 3483.4. After you report advance 

royalties on Form MMS-2014, show all recoupments as separate line 

items. 

As with rentals and minimum royalties (see “How to Report and Pay 

Lease-Level Transactions” on p. 5-1), you must show advance royalty 

transactions at the lease level on Form MMS-2014. Follow these 

instructions:

Field

No. Field title Instructions

6 Accounting 

Identification 

Number (AID)

Enter the 10-digit MMS-assigned lease 

number followed by 000 as the last 

three digits.

7 Product Code Leave blank.

8 Regulated Price 

Code

Leave blank.

9 Selling 

Arrangement

Leave blank.

10 Sales Month/

Year

Enter the first month of the lease or 

continued operations year, as applicable, 

using an MMYY format; for example, 

enter January 1996 as 0196. (When 

recouping your advance royalty, enter 

the same sales month in field 10 as the 

royalty line against which you are 

taking the recoupment.)

11 Transaction 

Code

Enter 32. (Use transaction code [TC] 33 

to recoup advance royalties.)

12 Adjustment 

Reason Code

Leave blank.
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

8-6

Advance royalties reporting example 

The following example illustrates an advance royalty payment:

• BLM authorized a company to pay $130,000 in advance royalties in 

lieu of continued operations on coal lease M31-003824-0.

• The continued operations year began August 1, 1996.

• The report month is July 1996.

• The company holds a second Federal lease (M31-431513-0) on which 

royalties of $37,440 were due; this transaction is unrelated to advance 

royalties.

13 Sales Quantity Leave blank.

14 Quality 

Measurement

Leave blank.

15 Calculation 

Method

Leave blank.

16 Sales Value Leave blank.

17 Royalty Quantity Leave blank.

18 Royalty Value Enter the advance royalty amount on 

which you are reporting and paying.

19 Payment 

Method Code 

Enter 01, 02, or 03, as defined in the 

Report Control Block.

Field

No. Field title Instructions
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Final Review Copy ◆ 02/20/97

8-7

The next illustration shows subsequent recoupment of advance royalties 

paid:

• The company owes $29,760 on lease M31-003824-0 for 

September 1996 royalties.

• They also owe royalties on their second lease.

The company can recoup only against the lease on which they made 

an advance royalty payment. They cannot recoup against the second 

lease’s royalty. They will recoup the balance of the advance royalty against 

future royalties.

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M31 003824 0 000 000 0896 32 130,000 00 03

2 M31 431513 0 201 ED 100 0696 01 23,400 00 468,000 00 37,440 00 03

3

13

167,440 00

167,440 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

ACCOUNTING

IDENTIFICATION

NUMBER

PROD 

CODE

REG

PRICE

CODE

SELL

ARR

CODE

SALES

MO/

YEAR

TRANS

CODE

ADJ

REAS

CODE

SALES QUANTITY

QUALITY

MEASUREMENTCALC

METH

SALES VALUE ROYALTY QUANTITY ROYALTY VALUE

PMT

METH

CODE

1 M31 003824 0 201 ED 100 0996 01 29,760 00 03

2 M31 003824 0 000 000 0996 33 – 29,760 00 03

3 M31 431513 0 201 ED 100 0996 01 39,062 00 781,250 00 62,500 00 03

13

62,500 00

62,500 00

4 6 7 8 9 10 11 12 13 14 15 16 17 18 19
8. Special Instructions for Coal Leases

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

8-8

8.4 Retroactive Price Adjustments

Coal contracts frequently contain provisions for retroactive price 

adjustments on the basis of certain indexes and actual production 

costs. These factors become known after you have sold the product and 

determined the royalty, which necessitates using adjustment transactions 

on Form MMS-2014.

Our policy requires that royalty payments on retroactive price 

adjustments are due no later than the end of the month following the 

month that you (1) invoiced the price adjustments as due and payable in 

accordance with contract terms, or (2) received payment—whichever 

comes first.

If you do not timely enforce the price escalators in your contracts, you

may be subject to late-payment assessments on the amount of the 

under-billing in the sales price from the time the additional cost was to 

become effective until the time you paid the royalty based on the additional 

cost. To avoid late-payment charges when questions of contract diligence 

come up, you must demonstrate that you timely invoiced for the additional 

price increments and, if necessary, timely pursued remedies set forth in the 

coal supply contract, or took other reasonable measures to enforce payment 

increases.

8.5 Logical Mining Units

A logical mining unit (LMU) is a BLM-approved area of land where an 

operator can develop the recoverable coal resources in an efficient, 

economical, and orderly manner as a unit. All rentals for coal leases within 

an LMU are due on or before the anniversary of the LMU effective date. We 

will send you a letter detailing your rental obligations when BLM approves 

or modifies the LMU.
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

A-1

A. Lease Prefix Conversion 

Tables

Use tables A-1 and A-2, respectively, to convert prefixes assigned by the 

Bureau of Land Management (BLM) or Bureau of Indian Affairs (BIA) 

on a Federal or Indian mining lease to the prefix used by MMS. When 

corresponding with or reporting to MMS, always use the MMS-assigned 

lease number.

TABLE A-1. Federal lease prefix conversions

States BLM-assigned prefixes

MMS 

mining

prefix

Alaska ANCHORAGE M01

Alaska FAIRBANKS M02

Arizona AR, A,A...(ARIZONA)a M11

Arkansas BLM-A M62

Arkansas ES or EASTERN STATES M63

Arkansas BLM M64

California S M03

California R M04

California LA M06

California CA M16

Colorado D or DENVER M49

Colorado C or COLORADO M50

Colorado P or PU or PUEBLO M51

Colorado BLM-A M54
A. Lease Prefix Conversion Tables

Solid Minerals Payor Handbook

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A-2

Eastern Statesb BLM-A M88

Eastern Statesb ES or EASTERN STATES M89

Idaho I or IDAHO M12

Idaho BLACKFOOTc M13

Minnesota M or MINNESOTA M86

Minnesota BLM-A M88

Minnesota ES or EASTERN STATES M89

Missouri BLM-A M62

Missouri ES or EASTERN STATES M63

Missouri BLM M64

Montana M or MONTANA M18

Montana MONTANA...(GF)a M20

Montana BILLINGS or 

MONTANA...(BIL) a

M21

Montana CASPER M22

Montana GREAT FALLS or GF M25

Montana BLM-A M31

Montana BLM M32

Nevada N M07

Nevada CC M08

Nevada BLACKFOOTc M13

New Mexico LC or LAS CRUCES M39

TABLE A-1. Federal lease prefix conversions (continued)

States BLM-assigned prefixes

MMS 

mining

prefix
A. Lease Prefix Conversion Tables

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

A-3

New Mexico NM or NEW MEXICO M40

New Mexico SF or SANTA FE M41

New Mexico BLM-A M43

North Dakota M...(ND) or MONTANA (ND) a M19

North Dakota BISMARCK or B M23

North Dakota NORTH DAKOTA or ND M24

North Dakota BLM-A M31

North Dakota BLM M32

North Dakota BLM...(ND)a M33

Oklahoma BLM-C M60

Oklahoma BLM-I M61

Oklahoma BLM M64

Oklahoma NM...(OK)a M65

Oklahoma TRANS NM...(OK) a M66

Oregon O or OREGON M05

Oregon BLACKFOOTc M13

South Dakota M...(SD) or SOUTH DAKOTA or 

SDa

M36

Texas T or TEXAS M42

Texas BLM-A M43

Utah SL or SALT LAKE M72

Utah U or UTAH M73

TABLE A-1. Federal lease prefix conversions (continued)

States BLM-assigned prefixes

MMS 

mining

prefix
A. Lease Prefix Conversion Tables

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

A-4

a. The three dots (ellipsis) indicate the lease number is between the letters 

shown.

b. Includes all States east of the Mississippi River.

c. Name of the issuing office, not the Tribe.

Utah BLM-A M77

Washington WASH M10

Washington OR...(WASH)a M10

Wyoming CASPER M22

Wyoming B or BUFFALO or 

WYOMING...(BUFF)a

M29

Wyoming BLM-A M31

Wyoming BLM M32

Wyoming C or CH or CHEYENNE or 

WYOMING...(CHEY) a

M52

Wyoming E or EVANSTON M74

Wyoming W or WYOMING M75

Offshore 

(Gulf of Mexico)

(Varies) M92

TABLE A-1. Federal lease prefix conversions (continued)

States BLM-assigned prefixes

MMS 

mining

prefix
A. Lease Prefix Conversion Tables

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

A-5

TABLE A-2. Indian lease prefix conversions

States

MMS 

mining

prefix

BIA-assigned prefixes 

Alaska M82 ALL INDIAN PREFIXES

Arizona, California, 

Idaho, Nevada, 

Oregon, and 

Washington

M14

M15

M09

14-20-0603

14-20-0450

ALL OTHER INDIAN 

PREFIXES IN THESE 

STATES

Colorado M55 ALL INDIAN PREFIXES

Montana, North 

Dakota, South 

Dakota, and 

Wyoming

M34

M35

14-20-0252

ALL OTHER INDIAN 

PREFIXES IN THESE 

STATES

Minnesota M90 ALL INDIAN PREFIXES

New Mexico and 

Texas

M45

M46

M44

14-20-603

NOO-C-1420

ALL OTHER INDIAN 

PREFIXES IN THESE 

STATES

Oklahoma, 

Arkansas, and 

Missouri

M67 ALL INDIAN PREFIXES

Utah M78 ALL INDIAN PREFIXES

Other States, 

including all 

States east of the 

Mississippi River

M90 ALL INDIAN PREFIXES
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-1

B. Product Codes

Use this appendix to convert the product name to the product code. 

“Tons” are in short tons (2,000 pounds) unless specified as long tons 

(2,200 pounds). 

Product name Product

code

Unit of

measure

Amethyst AA grams

Anhydrous Sodium Sulfate SN tons

Asbestos AB pounds

Asphalt AD tons

Barite BB tons

Basalt BC tons

Bentonite BD tons

Bitumen—processed BF tons

Bitumen—raw BA tons

Borate/Potash Brine NP tons

Borate/Sulfate Brine NQ tons

Borax—anhydrous BH tons

Borax—coarse BG tons

Borax—decahydrate BJ tons

Borax—pentahydrate BL tons

Borax Ore BW tons

Boric Acid BM tons

Boric Oxide BO tons

Boric Slag BN tons
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-2

Borrow Sand and Gravel BS tons

Brine ND barrels

Burkeite Brine BR tons

Burkeite Cake BP tons

Cadmium CD pounds

Calcium Chloride CA pounds

Calcium Silicate Slag CS tons

Carbon Dioxide CO tons

Carbonated Liquor MD tons

Chat CB tons

Cinders CC tons

Clay CG tons

Coal—Anthracite—processed EA tons

Coal—Anthracite—raw EB tons

Coal—Bituminous—processed EC tons

Coal—Bituminous—raw ED tons

Coal—Fines Circuit ES tons

Coal—Lignite—processed EF tons

Coal—Lignite—raw EG tons

Coal—Subbituminous—processed EH tons

Coal—Subbituminous—raw EI tons

Coal Resin ER tons

Coal Waste—sub-economic EW tons

Product name Product

code

Unit of

measure
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-3

Compactor Feed MF tons

Copper CU pounds

Copper Concentrate CH tons

Copper Concentrate—mill equivalent CI tons

Copper Ore CJ tons

Dawsonite DA tons

Feldspar Concentrate FA tons

Ferro Phosphorous Slag FB tons

Fluorspar—raw ore FR tons

Fluorspar Concentrate—chemical grade FD tons

Fluorspar Concentrate—industrial grade FC tons

Garnet—gem GA kilos

Garnet Concession Sale GC tickets

Garnet Sands GB tons

Gilsonite GF tons

Glaserite GL tons

Gold Metal AU ounces

Gold Ore AV tons

Gold Placer AP ounces

Granite GG tons

Gypsum GH tons

Hi-Carbonate Brine NS tons

Ilmenite—raw ore IA tons

Product name Product

code

Unit of

measure
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-4

Intermediate Brine IB tons

Iron Concentrate FF long tons

Iron Ore FE tons

Kyanite KA tons

Langbeinite—coarse LB tons

Langbeinite—granular LC tons

Langbeinite—raw ore LA tons

Langbeinite—special LS tons

Langbeinite—standard LD tons

Lead PB tons

Lead Concentrate PC tons

Lead Concentrate—mill equivalent PE tons

Lead Ore PF tons

Leonardite LT tons

Limestone PG tons

LLX/BAX Brine NL tons

Magnesium Chloride Brine MG tons

Manganese MN tons

Manure Salts MS tons

Mercury HG pounds

Mica MA tons

Mine Water TW tons

Mixed Potash—raw ore JE tons

Product name Product

code

Unit of

measure
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-5

Mixed Sulfate Cake MC tons

Molybdenum MO pounds

Molybdenum Concentrate MB tons

Muriate of Potash—chemical JC tons

Muriate of Potash—coarse JA tons

Muriate of Potash—fine JB tons

Muriate of Potash—granular JL tons

Muriate of Potash—industrial JI tons

Muriate of Potash—soluble JS tons

Muriate of Potash—standard JD tons

Nahcolite NC tons

Nickel NI pounds

Olivine Concentrate OB tons

Peat PI tons

Phosphate Concentrate PJ tons

Phosphate Pebble PH tons

Phosphate Raw Ore PK tons

Phosphate Rock PL tons

Phosphatic Clay PM tons

Potassium Sulfate—granular PT tons

Potassium Sulfate—special standard PS tons

Potassium Sulfate—standard PN tons

Precipitation Dust PQ tons

Product name Product

code

Unit of

measure
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-6

Purge Liquor PP tons

(equivalent)

Quartz QA pounds

Quartz—crystal QB tickets/

pounds

Rip Rap RP tons

Salt SA tons

Salt—waste SW tons

Salt Cake SD tons

Sand/Gravel SF tons

Sand/Gravel SG cubic yards

Scoria SC cubic yards

Silica Sand SE tons

Silver AG ounces

Slag—metal SH tons

Soda Ash SJ tons

Soda Ash—dense SL tons

Soda Ash—light SK tons

Soda Ash—standard SO tons

Sodium (metal) NA tons

Sodium Bicarbonate SB tons

Sodium Bicarbonate—animal feed SM tons

Sodium Bicarbonate—industrial SI tons

Sodium Brine NB tons

Product name Product

code

Unit of

measure
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-7

Sodium Cyanide—caustic SR tons

Sodium Decahydrate TD tons

Sodium Sesquicarbonate SP tons

Sodium Tripolyphosphate SQ tons

Spent Brine RA tons

Sulfide SU tons

Sulfur SS long tons

Sulfuric Acid SZ tons

Supo End Liquor ME tons

Sylvite—raw ore SY tons

Tar Sands TS tons

Tetrasodium Pyrophosphate ST tons

Titanium Oxide TF tons

Tripoli TG tons

Trona—raw (California) TR tons

Trona Ore (Wyoming) TJ tons

Tungsten WW tons

Uranium—raw ore UA tons

Uranium Concentrates—yellow cake UU pounds

Vanadium VV tons

Wavellite WA specimen

Yttrium YY tons

Yttrium Ore YO tons

Product name Product

code

Unit of

measure
B. Product Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

B-8

Zinc ZN tons

Zinc Concentrate ZA tons

Zinc Concentrate—mill equivalent ZB tons

Product name Product

code

Unit of

measure
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

C-1

C. Transaction Codes

Use this appendix to determine the proper transaction codes to use on 

your Forms MMS-2014. 

Description Use Code

Royalty due To report the sales quantity and sales 

value for a reporting period and the 

resulting royalty value.

01

Minimum

royalty payment

To report the minimum royalty 

payment for a lease or to report a 

bidding rights credit with adjustment 

reason code 50.

02

Rental To report the rental payment for a 

lease if you cannot use it as a credit 

toward future royalties.

04

Recoupable 

rental

To report the rental payment for a 

lease if you can use it as a credit 

toward future royalties.

05

Transportation 

allowance claimed

To report a transportation allowance 

against royalty due on an accounting 

identification (AID) number.

11

Other allowances 

claimed

To report taxes paid on Indian leases, 

Federal black lung excise tax, 

abandoned mine lands reclamation 

fees, and severance tax allowances. 

Use this transaction code only with 

adjustment reason codes 80, 81, and 82 

(see app. D) on Federal leases only.

12

Processing 

allowance 

claimed

To report a processing or coal washing 

allowance against the royalty due on 

an AID number.

15
C. Transaction Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

C-2

Recouping 

advance rental 

credit

To credit up to the amount of the 

rental against royalties due, if you 

reported rental using transaction 

code 05.

25

Advance royalty 

payment

To report advance royalties due. 32

Recouping 

advance royalty 

payments

To credit up to the amount of the 

advance royalty against royalties due, 

if you reported advance royalty using 

transaction code 32.

33

Net profit share—

unprofitable 

month

To report an unprofitable month on a 

net profit share lease.

39

Net profit share—

profitable month

To report a profitable month on a net 

profit share lease.

40

Establishing 

recoupable 

balances

To set up a recoupable balance against 

a specific Indian lease.

50

Recouping credit 

balances

To recoup established recoupable 

credit balances on Indian leases.

51

Description Use Code
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

D-1

D. Adjustment Reason Codes

Use this appendix to determine the proper adjustment reason codes to 

use on your Forms MMS-2014. 

Description Use Code

Incorrect pricing To adjust a line item previously 

reported at an incorrect price.

01

Incorrect volume To adjust a line item previously 

reported as an incorrect quantity or 

a zero quantity.

02

Incorrect royalty 

rate

To adjust a line item previously 

reported at an incorrect royalty 

rate.

03

Adjustments for 

allowances

To report adjustments for incorrect 

allowances improperly deducted on 

a prior report when only the 

allowance was in error.

04

Other adjustments To adjust line entries previously 

reported with coding or 

typographical errors when the 

adjustment results in additional 

royalty payments.

10

Retroactive 

mandatory price 

adjustments

To adjust the price of a previously 

reported product for which a law, 

regulation, or lease term requires a 

pricing change.

31

Duplicate reporting To reverse a line entry reported 

more than once.

36
D. Adjustment Reason Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

D-2

The following four codes are for audit 

adjustments only. You must report royalties paid 

as a result of an audit on a special green Form 

MMS-2014 using these adjustment reason codes. 

Your Bill for Collection indicates whether MMS 

conducted the audit alone or jointly with a State, 

Indian Tribe, or Bureau of Indian Affairs (BIA) 

agency.

Joint audit royalty 

report

To report post-1983 entries 

resulting from an audit conducted 

jointly by MMS and a State, Indian 

Tribe, or BIA agency.

40

Audit exception 

royalty report 

To report post-1983 entries 

resulting from an audit conducted 

solely by MMS.

41

Joint audit royalty 

report prior to 1983

To report pre-1983 entries 

resulting from an audit conducted 

jointly by MMS and a State, Indian 

Tribe, or BIA agency.

42

Audit exception

royalty report prior 

to 1983

To report pre-1983 entries 

resulting from an audit conducted 

solely by MMS.

43

Bidding rights 

adjustments

To show, by single-line entry, the 

amount the authorized bidding 

rights reduce the current total 

payment.

50

Black lung excise 

tax exclusion1

To record the coal value exclusion 

for black lung excise tax. All lines 

reporting this exclusion, including 

the initial report and any 

subsequent adjustments, must 

contain this adjustment reason 

code.

80

Description Use Code

NOTE
D. Adjustment Reason Codes

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

D-3

xyz1

1 These exclusions are available to coal lessees only between March 1, 1989, and September 30, 1990, 

unless specified otherwise by lease terms.

Abandoned mine 

land reclamation 

fee exclusion1

To report the coal value exclusions 

for abandoned mine land 

reclamation fees. All lines reporting 

this exclusion, including the initial 

report and any subsequent 

adjustments, must contain this 

adjustment reason code.

81

Severance taxes 

exclusion1

To report the coal value exclusion 

for severance taxes. All lines 

reporting this exclusion, including 

the initial report and any 

subsequent adjustments, must 

contain this adjustment reason 

code.

82

Description Use Code
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

E-1

E. Payment Method Codes

Use this appendix to determine the proper payment method codes to use 

on your Forms MMS-2014. 

Description Use Code

Amount of 

checks to MMS

To report each line item that 

contains a royalty value paid to 

MMS as part of a check or other 

payment document.

01

Amount of 

payments 

to others

To report each line item that 

contains a royalty value paid to a 

party other than MMS (Indian 

Tribe, Indian allottee, Bureau of 

Indian Affairs).

02

Amount of 

electronic funds 

transfer (EFT) 

to MMS

To report each line item that 

contains a royalty value paid to 

MMS as part of an EFT message.

03
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

F-1

F. Forms

This appendix contains the following blank forms, which you may copy 

and use:

• Payor Information Form (PIF), Form MMS-4030

• Report of Sales and Royalty Remittance, Form MMS-2014
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

Index-1

Index

A

ad valorem . . . . . . . . . . . . . . . . 3-4, 4-3, 8-3

adjustment reason code . . . . . . 4-8, 6-3, D-1

adjustments . . . . . . . . . . . . . . . . . . 4-1, 6-1

audit . . . . . . . . . . . . . . . . . . . . 6-9–6-10

involving more than one reason 6-11–6-12

other . . . . . . . . . . . . 6-7–6-8, 6-11–6-12

payor-initiated. . . . . . . . . . 6-5–6-6, 6-11

reporting on Form MMS-2014 . . 6-2–6-5

retroactive pricing—coal . . . . . . 6-7, 8-8

advance royalty

coal . . . . . . . . . . . . . . . . . . . . . . 8-4–8-7

recoupment . . . . . . . . . . . . . . 5-10–5-12

reporting on Form MMS-2014 4-1,5-7–5-9

reporting on Model 2014 . . . . . . . . . 4-14

reporting on the PIF . . . . . . . . . . . . . 3-6

AID number . . . . . . . . . . . . . . . . . . 4-2, 4-7

allowances

Indian leases 5-18, 6-16–6-17, 6-20–6-22

lead/zinc/copper. . . . . . . . . . . . 5-17, 7-6

processing (washing) . . . . . . . 5-21–5-23

reporting on Form MMS-2014 5-17–5-23

sodium/potassium . . . . . . . . . 5-17–5-18

transportation . . . . . . . . . . . . 5-19–5-21

appeals . . . . . . . . . . . . . . . . . . . . . . . . . 2-10

arm’s-length sales

reporting on the PIF . . . . . . 3-4, 3-8, 4-3

Auditing and Financial System (AFS) 1-2–1-3

B

bidding rights . . . . . . . . . . . . . . . 6-25–6-26

bills for collection . . . . . . . . . . . . . 2-9–2-10

Bureau of Indian Affairs (BIA). . . . . 1-1–1-2

Bureau of Land Management (BLM) 1-1–1-2

C

coal leases . . . . . . . . . . . . . . . . . . . . . . . . 8-1

advance royalty . . . . . . . . . . . . . 8-4–8-7

claiming an allowance . . . . . . . . . . . 5-17

post-1976 terms. . . . . . . . . . . . . 8-3–8-4

pre-1976 terms . . . . . . . . . . . . . 8-1–8-2

retroactive price adjustments. . . 6-7, 8-8

valuation . . . . . . . . . . . . . . . . . . . . . . . . 1-1

computer-generated facsimile . . . . . . . . . 2-3

copper leases. . . . . . . . . . . . . 5-17, 7-6–7-14

net profit share . . . . . . . . . . . . 7-11–7-14

D

Department of the Interior . . . . . . . . . . . 1-1

development contracts . . . . . . . . . . . . . 7-18

E

electronic Form MMS-2014 . . . . . . . . . . . 2-3

electronic funds transfer (EFT) . . . . . . . . 2-3

F

Federal Coal Leasing Amendments Act 

(FCLAA) . . . . . . . . . . . . . . . . . . . . . . 8-3

Federal leases. . . . . . . . . . . . . . . . . . . . . 2-2

making payments . . . . . . . . . . . . . . . 2-3

Form MMS-2014. . . . . . . . . . . . . . . . 2-1, 3-1

Model 2014 . . . . . . . . . . . . . . . . 4-8, 4-14

reporting no sales . . . . . . . . . . . . . . 5-26

reporting tips . . . . . . . . . . . . . . . . . . 4-1

submittal . . . . . . . . . . . . . . . . . . 2-5, 2-7

forms . . . . . . . . . . . . . . . . . . . . . . . . 1-4–1-5

blank . . . . . . . . . . . . . . . . . . . . . . . . F-1

Freedom of Information Act . . . . . . . . . . 1-5

I

Indian leases . . . . . . . . . . . . . . 2-2, 3-1–3-2

allottees . . . . . . . . . . . . . . . . . . . . . 6-13

allowances . 5-18, 6-16–6-17, 6-20–6-22

net profit share . . . . . . . . . . . . 7-11–7-14

payments . . . . . . . . . . . . . . . . . . . . . 2-4

recoupments . . . . . . 5-4–5-7, 6-13–6-22

refunds . . . . . . . . . . . . . . . . . . . . . . 6-23

tax credits. . . . . . . . . . . . . . . . 5-24–5-26

Tribal . . . . . . . . . . . . . . . . . . . 6-13–6-17

L

late payments . . . . . . . . . . . . . . . . . . . . . 2-5

lead/zinc/copper leases . . . . . 5-17, 7-6–7-14

concentrate method. . . . . . . . . . . 7-6–7-7

net smelter return method . . . . . . . . 7-7

lease number . . . . . . . . . . . . . . 3-3, 3-5, 4-2
Index

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

Index-2

lease prefix . . . . . . . . . . . . . . . . . . . . . . . A-1

lease-level payments. See advance royalty, 

rental, minimum royalty

logical mining units. . . . . . . . . . . . . . . . . 8-8

M

Minerals Leasing Act of 1920. . . . . . . . . . 1-4

Minerals Management Service (MMS) 1-1–1-2

minimum royalty

reporting on Form MMS-2014 . . . . . . 4-3, 

5-12–5-14

reporting on Model 2014 . . . . . . . . . 4-14

reporting on the PIF . . . . . . . . . . . . . 3-6

mining type. . . . . . . . . . . . . . . . . . . . . . . 3-3

reporting on the PIF . . . . . . . . . . . . . 3-7

Model 2014. See Form MMS-2014

N

net smelter return method. . . 7-7, 7-10–7-11

no sales

reporting on Form MMS-2014 . . . . . 5-26

O

Office of Management and Budget (OMB) 1-4

Offshore Minerals Management (OMM). . 1-2

Outer Continental Shelf (OCS) Lands Act of 

1953 . . . . . . . . . . . . . . . . . . . . . . . . 6-25

Outer Continental Shelf (offshore) leases . 2-2

P

PAAS Solid Minerals Reporter Handbook 1-3

payment method codes . . . . . . 4-9, 4-11, E-1

payments. See royalty payments

payor codes . . . . . . . . . . . . . . . . 3-2, 4-2, 4-5

Payor Confirmation Reports (PCR) . . . . . 3-2

Payor Handbook

additional copies . . . . . . . . . . . . . . . . 1-5

Payor handbook

revisions . . . . . . . . . . . . . . . . . . . . . . 1-5

Payor Information Form (PIF) (Form 

MMS-4030) . . . . . . . . . . . . . 1-2, 2-1, 3-1

filling out the form . . . . . . . . . . . . . . 3-4

reporting on nonproducing leases. . . 3-11

reporting on producing leases . . . . . 3-15

revisions . . . . . . . . . . . . . . 3-2, 3-6, 3-21

submittal . . . . . . . . . . . . . . . . . . 2-2, 2-6

phosphate. . . . . . . . . . . . . . 5-18, 7-15, 7-17

calculating royalties using the index 

method . . . . . . . . . . . . . . . . 7-16

potash . . . . . . . . . . . . . . . . . . . . . . . 7-4–7-6

potassium. See sodium/potassium leases

product codes . . . . . . . 3-3, 3-9, 4-3, 4-7, B-1

Production Accounting and Auditing System 

(PAAS) . . . . . . . . . . . . . . . . . . . . . . . 1-3

R

recoupments . . . . . . . . . . . . . . . . . . . . . . 6-1

advance royalty . . . . . . . . . . . 5-10–5-12

Federal. . . . . . . . . . . . . . . . . . . . . . 6-22

Indian . . . . . . . . . . . . . . . . . . 6-13–6-22

rental . . . . . . . . . . . . . . . . . . . . . 5-4–5-7

refunds. . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

Federal. . . . . . . . . . . . . . . . . . 6-23–6-25

Indian . . . . . . . . . . . . . . . . . . . . . . 6-23

rental

courtesy notices . . . . . . . . . . . . . . . . 5-3

recoupment. . . . . . . . . . . . . . . . . 5-4–5-7

reporting on Form MMS-2014 4-1, 5-1, 5-3

reporting on Model 2014 . . . . . . . . . 4-14

reporting on the PIF . . . . . . . . . . . . . 3-6

report control block. . . . . . . . . . . . . 4-9, 4-11

Report of Sales and Royalty Remittance 

(Form MMS-2014). . . . . . . . . . . . 1-2, 2-1

Retroactive price adjustments . . . . . . 6-7, 8-8

revenue source . . . . . . . . . . . . . . . . . 3-3, 4-2

reporting on the PIF . . . . . . . . . . . . . 3-8

Royalty Management Program (RMP) 1-1–1-2

royalty payments

erroneous . . . . . . . . . . . . . . . . . . . . . 2-9

Federal. . . . . . . . . . . . . . . . . . . . . . . 2-3

Indian . . . . . . . . . . . . . . . . . . . . . . . 2-4

late. . . . . . . . . . . . . . . . . . . . . . . . . . 2-9

nonpayment . . . . . . . . . . . . . . . . . . . 2-9

reporting . . . . . . . . . . . . . . . . 5-14–5-16

when to submit. . . . . . . . . . . . . . . . . 2-5

royalty rate

reporting on the PIF . . . . . . . . . . . . . 3-8

royalty value . . . . . . . . . . . . . . . . . 4-9, 4-11

S

sales month . . . . . . . . . . . . . . . . . . 4-7, 4-14

sales quantity. . . . . . . . . . . . . . . . . . . . . 4-8

sales value . . . . . . . . . . . . . . . . . . . . 4-8–4-9
Index

Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

Index-3

selling arrangement . . . . 3-3, 4-3, 4-7, 4-14

reporting on the PIF . . . . . . . . . . . . . 3-9

sodium/potassium leases 5-17–5-18, 7-1–7-6

submittal

how to submit forms . . . . . . . . . . . . . 2-2

T

tax credits . . . . . . . . . . . . . . . . . . 5-24–5-26

transaction codes. . . . . . . 4-3, 4-8, 4-14, C-1

transportation allowance. See allowances

U

uranium leases . . . . . . . . . . . . . . 7-18–7-19

W

washing allowance. See allowances, processing

Z

zinc . . . . . . . . . . . . . . . . . . . . 5-17, 7-6–7-10
Solid Minerals Payor Handbook

MMS/RMP Release 1.0 ◆ 02/20/97

Release History-5

Release History

a. American Management Systems/Operations Corporation, Inc.

Release 

number

Release 

date Revised chapters/sections RMP originator Preparer

1.0 02/20/97

Royalty 

Valuation 

Division

AMS/OCa
As the Nation's principal conservation agency, the Department of the Interior has responsibility for 

most of our nationally owned public lands and natural resources. This includes fostering sound 

use of our land and water resources; protecting our fish, wildlife, and biological diversity; preserving 

the environmental and cultural values of our national parks and historical places; and providing for 

the enjoyment of life through outdoor recreation. The Department assesses our energy and mineral 

resources and works to ensure that their development is in the best interests of all our people by 

encouraging stewardship and citizen participation in their care. The Department also has a major 

responsibility for American Indian reservation communities and for people who live in island 

territories under U.S. administration.

As a bureau of the Department of the Interior, the Minerals Management Service's (MMS) primary 

responsibilities are to manage the mineral resources located on the Nation's Outer Continental 

Shelf (OCS), collect revenue from the Federal OCS and onshore Federal and Indian lands, and 

distribute those revenues.

Moreover, in working to meet its responsibilities, the Offshore Minerals Management Program

administers the OCS competitive leasing program and oversees the safe and environmentally 

sound exploration and production of our Nation's offshore natural gas, oil, and other mineral 

resources. The MMS Royalty Management Program meets its responsibilities by ensuring the 

efficient, timely, and accurate collection and disbursement of revenue from mineral leasing and 

production due to Indian tribes and allottees, States, and the U.S. Treasury.

The MMS strives to fulfill its responsibilities through the general guiding principles of (1) being 

responsive to the public's concerns and interests by maintaining a dialogue with all potentially 

affected parties and (2) carrying out its programs with an emphasis on working to enhance the 

quality of life for all Americans by lending MMS assistance and expertise to economic development 

and environmental protection.