Administrative Rules of Montana › Department 42 - REVENUE › Chapter 42.17 - WITHHOLDING AND ESTIMATED TAX PAYMENTS › Subchapter 42.17.6 - Mineral Royalty Withholding › Rule 42.17.603 - APPLICABLE THRESHOLDS - CHANGE OF OWNERSHIP - PUBLICLY TRADED PARTNERSHIPS - NONPROFIT ORGANIZATIONS - EXEMPT ROYALTY OWNERS

Current through Register Vol. 13, July 5, 2024
(1) There is not a requirement to withhold
				from payments to royalty interest owners if the producing entity's production
				does not exceed 100,000 barrels of oil and 500 million cubic feet of gas, based
				on the previous three calendar years' average production reported to the
				Montana Board of Oil and Gas Conservation. For example, the department will
				calculate whether payments for an entity's production are subject to
				withholding from their royalty interest owners for 2015 by averaging the
				production numbers for calendar years 2011, 2012, and 2013 and comparing this
				average to the production exemption limits.
(2) If an entity does not have three years of
				recent mineral production records, the remitter may provide the department with
				information supporting the exemption from the withholding requirements of
				15-30-2536, MCA. The
				department shall review this information to determine if an exemption is
				warranted and notify the remitter of the determination.
(3) On or before September 15 of each year,
				the department shall notify all oil and gas producers of their requirements as
				it relates to the provisions of
				15-30-2538
				and
				15-30-2539,
				MCA. The department will notify all other mineral producers by September 15
				only if they are required to withhold.
(4) If a person who is required to withhold
				on behalf of their royalty interest owners sold their mineral interests during
				the year and ceases to be the remitter, the person who acquired the mineral
				interests becomes the remitter and must continue to withhold 6 percent of the
				net royalty payments from the royalty interest owners subject to the
				withholding requirements of
				15-30-2538,
				MCA.
(5) If a remitter produces
				both oil and gas, and only one resource meets the requirements for withholding
				as provided in
				15-30-2539,
				MCA, the withholding provisions apply to both oil and gas regardless of the
				production volumes of the other resource that does not meet the requirements of
				15-30-2539,
				MCA.
(6) If a person not
				previously extracting resources in the state begins extracting from new or
				existing sources of natural resources in Montana (i.e., newly drilled oil or
				gas wells or a new mine), that person is required to withhold 6 percent of the
				net royalty payments from the royalty interest owners subject to the
				withholding requirements of
				15-30-2538,
				MCA.
(7) All persons that extract
				minerals other than oil and gas must withhold 6 percent of the net royalty
				payments of all royalty interest owners subject to the withholding requirements
				of
				15-30-2538,
				MCA.
(8) The person described in
				(7) may not be required to withhold net royalty payments from their royalty
				interest owners if the person can provide information that satisfies the
				department that the net royalty payments are immaterial.
(a) The department has defined an entity that
				has immaterial net royalty payments as an entity that has production amounts
				for minerals, other than oil and gas, with a value less than $5 million. The
				only filing requirement for this type of entity is the filing of the Form RW-3
				by January 31 of the following year along with a listing of all royalty
				recipients. The $5 million value will be based on a three-year average of
				production value reported to the department's Business Tax and Valuation
				Bureau. For example, the department will calculate whether an entity is
				required to withhold from its royalty interest owners for 2017 by averaging the
				valuation reported for 2013, 2014, and 2015.