2023 Oklahoma Statutes › Title 68. Revenue and Taxation › §68-2369. Reports by persons making payments to taxpayers - Withholding production payments for failure to file state income tax return.

A. Except as otherwise provided for in this section, all persons, banks or corporations, in whatever capacity acting, and whether or not otherwise exempted from taxation under this act, including lessees, mortgagors of real or personal property, fiduciaries, employers and all officers or employees of the state or of any political subdivision thereof, having the control, receipt, custody, disposal or payment of interest, income from real property and tangible personal property including rents, oil or gas production payments, and mining production payments, salaries, wages, premiums, annuities, compensation, remunerations, emoluments or other fixed or determinable annual or other periodical gains, profits or income, amounting to Seven Hundred Fifty Dollars ($750.00) or over, paid or payable during any year, to any taxpayer, shall make complete reports thereof, under oath, to the Tax Commission, under such rules and regulations, in such form and manner and to such extent, as may be prescribed by it.
B. Such reports may be required, regardless of amounts, (1) in case of payments of interest upon bonds, mortgages, deeds of trust, or other similar obligations of corporations, and (2) in the case of dividend payments by corporations subject to the tax levied by this act and (3) in the case of any broker transacting any business, as such, for any individual subject to the provisions of this act. The Tax Commission may require such corporations to state the name and address of each shareholder, the number of shares owned by him and, in the case of a broker, it may require submission of the names of the customer for whom such broker transacted any business, with such details as to profits, losses or other information as the Tax Commission may require as to each such customer. Any reports required under this subsection shall likewise be rendered under oath, and in accordance with rules and regulations prescribed and adopted by the Tax Commission.
C. Complete reports shall be required, regardless of amounts and not limited to payments exceeding Seven Hundred Fifty Dollars ($750.00), for all oil, gas, or mining production payments, paid or payable during any year, to any person, as defined in Section 202 of of this title. The Tax Commission may require any person or corporation making such production payments to report the total production payments made to any person during any calendar year, in addition to any other information necessary to calculate Oklahoma income tax upon such production payments. The Tax Commission may require such reports from any person or corporation making production payments for any time period prior to the effective date of this act based on payment records that such person or corporation is required to maintain by state or federal law. For purposes of this section, the term "production payment" means payments of proceeds generated from mineral interests in this state, including but not limited to, a lease bonus, delay rental, royalty and working interest payment, and overriding royalty interest payment.
D. 1. The Tax Commission, or its duly authorized agent, is authorized and empowered to issue orders to withhold all production payments to any person upon a determination that the person has failed to file a state income tax return as required by law reporting production payment income or has failed to pay state income tax. The order to withhold production payments shall be directed to the person or corporation making production payments and shall apply to all production payments that the person named within such order is entitled to until the return is filed and the income tax, penalty and interest are paid. Release of the order to withhold shall be mailed by the Tax Commission to the person or corporation withholding production payments upon the filing of the return and payment of the tax, penalty and interest by the person named within such order or upon payment of the tax, penalty and interest by the person or corporation withholding the production payment.
2. Upon receipt of the Tax Commission order to withhold production payments, the person or corporation making production payments, within thirty (30) days of receiving such order, shall:
a.
withhold payments for all production of the person named within such order until such order is released by the Tax Commission,
b.
hold in suspense all production payments subject to such order to withhold, and
c.
in the case of established delinquent income tax, upon receiving such order from the Tax Commission of such established delinquency, pay the tax, penalty and interest out of the withheld production payments and receipt such tax payment to the taxpayer in lieu of cash in settlement for such production.
The order to withhold shall apply to production payments in any case where a successor person or corporation is required to make production payments and to production payments of subsequent production of minerals in this state. Any person or corporation that withholds production payments or pays same to the Tax Commission pursuant to such order is hereby relieved of all liability for such acts.
3. The Tax Commission shall mail notice to each delinquent taxpayer at the last-known address reported by the person or corporation making production payments at least twenty (20) days prior to issuance of an order to withhold production payments. The notice shall contain a statement that the taxpayer has failed to file an income tax return as required by law or has failed to pay delinquent income tax. An order to withhold production payments may be issued by the Tax Commission, or its duly authorized agent, for collection of any delinquent income tax, penalty and interest owed by the taxpayer entitled to production payments.
4. Any person or corporation making production payments who refuses or fails tofile the reports required by this section, in the manner and at the time prescribed by the Tax Commission, shall be subject to a penalty in the amount of One Hundred Dollars ($100.00) for each day such report is delinquent. Any person or corporation making production payments who refuses to withhold payments shall be subject to a penalty in the amount of One Hundred Dollars ($100.00) for each payment made which was ordered to be withheld. All penaltiesassessed pursuant to this subsection shall be collected and apportioned in the same manner as the state income tax.
Amended by Laws 1986, c. 218, § 22, emerg. eff. June 9, 1986.