The Department of Revenue

Important Links

DOR Website: http://revenue.wyo.gov/

DOR Rules: https://revenue.wyo.gov/about-us/rules-and-regulations

Wyoming Statutes & Constitution: http://www.wyoleg.gov/StateStatutes/StatutesConstitution?tab=0

W.S. 39-14-208 (d)(iv) All taxes, fees, penalties and interest imposed under this article are an automatic and continuing lien in favor of the state of Wyoming. The lien is on all property in the state of Wyoming, real, tangible and intangible, including all after acquired property rights, future production and rights to property, of any person severing minerals in this state and who is liable under Wyoming law for the collection, payment or remittance of the severance tax and corresponding penalty or interest as of the date such taxes, fees, penalties or interest is due, and remains a lien until paid;

“Can liens be placed on purchased wells, mines etc. for unpaid taxes of a previous operator?” Yes

W.S. 39-14-208 (d)(v) A lien under this subsection is also a lien on all interests in the mineral estate from which the production was severed, and on all future production of the same mineral from the same leasehold, regardless of any change of ownership or change in the person extracting the mineral;

“What are the Mineral Tax Division’s procedures before placing a lien?”

* Three consecutive invoices are mailed or e-mail to the operator’s MTSIII registered contact person.

* There has to be a continuous unpaid balance of the prior three months.

* Approximately, a week after the third invoice is sent, an “Unpaid Balance with the Mineral Tax Division”, letter is sent to the contact person indicating what portion of the operator’s account ledger is unpaid.

* The operator has thirty (30) days to pay the balances, from the date on the letter.

* If the unpaid balance is not paid within the thirty (30) days, a lien is filed with the Wyoming Secretary of State’s Office.

Severance Penalties: Authority

“What gives the Mineral Tax Division the authority to impose a severance penalty?”

W.S. 39-14-208 (d)(ii) If any person fails to file the ad valorem report required by W.S. 39 14 207(a)(i) by the due date or any extension thereof, the department may impose a penalty equal to a total of one percent (1%) of the taxable value of the production from the well or property but not to exceed five thousand dollars ($5,000.00) for each calendar month or portion thereof that the report or information is late. If any person fails to file reports and other information required by rule of the department of revenue other than those required by W.S. 39 14 207(a)(v) or 39 14 207(a)(i) the department may impose a penalty of up to one thousand dollars ($1,000.00). The department may waive penalties under this subsection for good cause. Penalties imposed under this subsection may be appealed to the state board of equalization;

“What is the maximum amount of severance penalty imposed?”

W.S. 39-14-208 (d)(iii) If any person fails to make or file a severance tax return and remit the tax as required by W.S. 39 14 207(a)(v) and (b)(iii), the department shall impose a penalty of five percent (5%) of the taxes due for each thirty (30) day period, or fraction thereof, elapsing between the due date of the return and the date filed, unless the person for good cause obtains from the department an extension of time for filing prior to the due date for filing. In no event shall the total penalty imposed by this subsection exceed twenty five percent (25%) of the tax due.;

Severance Penalties: Authority

“Can a severance penalty be waived or abated?” Yes:

YES ----W.S. 39-14-208 (d)(iii) The department, for good cause, may waive a penalty imposed for failure to file a return for any one (1) month in a calendar year, provided that:

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(A) The return was filed within five (5) business days following the due date, including an approved extension period; and

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(B) The taxpayer requests the waiver in writing within fifteen (15) days after the return was filed, setting forth the reasons for the late filing.

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****Important Information****

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The Department policy is to grant one severance penalty waiver per operator. The Mineral Tax Administrator has the final decision on whether a severance penalty is waived or abated.

“What gives the Mineral Tax Division the authority to impose a gross product penalty?”

W.S. 39-13-108 (c) (II) (C) - If any person fails to file the reports for ad valorem purposes required by chapter 14 of this title by the due date or any extension thereof, the department may impose a penalty equal to a total of one percent (1%) of the taxable value of the production from the well, mine or mining claim but not to exceed five thousand dollars ($5,000.00) for each calendar month or portion thereof that the report or information is late. If any person fails to file reports and other information required by rule of the department other than those required by chapter 14 of this title, the department may impose a penalty of up to one thousand dollars ($1,000.00).

* IMPORTANT * The Department policy is to grant one gross product penalty waiver per operator. The Mineral Tax Administrator has the final decision on whether a gross product penalty is waived or abated.

“Can a gross product penalty be waived or abated?” Yes

W.S. 39-13-108 (c)(ll) The department may waive penalties under this subparagraph for good cause. Penalties imposed under this subparagraph may be appealed to the board.

Gross Product Penalties: Authority

Interest

“When does interest begin?”

W.S. 39-14-2018 (c)(ii) Taxes are delinquent pursuant to paragraphs (iii) and (iv) of this subsection when a taxpayer or his agent knew or reasonably should have known that the total tax liability was not paid when due;

“How is interest calculated”

W.S. 39-14-208 (c)(iii) The balance of any ad valorem tax not paid as provided by W.S. 39 14 207(b)(ii) is delinquent after the day on which it is payable and shall bear interest at twelve percent (12%) per annum until paid or collected;

(iv) Effective January 1, 1994, interest at an annual rate equal to the average prime interest rate as determined by the state treasurer during the preceding fiscal year plus four percent (4%) shall be added to all delinquent severance taxes on any mineral produced on or after January 1, 1994. To determine the average prime interest rate, the state treasurer shall average the prime interest rate for at least seventy-five percent (75%) of the thirty (30) largest banks in the United States. The interest rate on delinquent taxes shall be adjusted on January 1 of each year following the year in which the taxes first became delinquent. In no instance shall the delinquent tax rate be less than twelve percent (12%) nor greater than eighteen percent (18%) from any mineral produced on or after January 1, 1994. The interest rate on any delinquent crude oil, lease condensate or natural gas severance tax from any crude oil, lease condensate or natural gas produced before January 1, 1994, shall be eighteen percent (18%) per annum.

Interest cont.

How is interest calculated (cont.)

The interest is calculated every thirty days (30), on any outstanding balance. This balance could be the result of;

a. Previous unpaid invoice balances.

b. Original severance filings since the previous invoice

c. Any increased severance filings since the previous invoice

d. Any unpaid or newly imposed severance or gross product penalties.

“Can interest be waived?”

Only through a decision made by a Wyoming court or the State Board of Equalization (SBOE

Payment Allocation Hierarchy

Severance payments follow an allocation hierarchy called TIPS

a. T – taxpayer (Tax Liabilities)

b. I - interest

c. P - severance or gross product penalties

d. S – gross product / severance assessment

Within each of the four areas of payment above, there is an additional hierarchy.

a. Newest production year to oldest production year

b. Newest production month to oldest production month (within each production year)

c. Smallest amount due to largest amount due (per production month and production year)

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EXAMPLE: July 2018 taxes will be paid from the smallest amount owing to the largest amount

June 2018 taxes will be paid from the smallest amount owing to the largest amount.

Ad Valorem Invoices

The Department of Revenue (DOR) will generate an estimated ad valorem tax invoice near the 8th of every month, payable to the DOR and not the associated county or counties, within 30 days of the date of the notice. Late payments are subject to penalty and interest.

This accelerated ad valorem payment necessitates an additional step in collecting the proper amount. The invoice issued by the DOR is based upon the prior year’s mill levy (tax rate). Once the County Commissioners have established their actual mill levy for the given production year in August of the year following the year of production, the County Treasurers will then compute the actual taxes owed based upon the value reported on the annual gross products return. This will result in either a refund if the mill levy decreased, or an additional tax bill if the mill levy increased. You will be notified of this true-up process result by the appropriate County Treasurer(s) in September of the year the Annual Gross Products return is due.

The DOR may need to have two new points of contact (via DOR Form 1) from each producer, along with their contact information (email address and phone number). They are the individual to receive invoices and the individual(s) with the authorization to initiate the payment .

Payment Allocation cont.

You can determine how a payment is allocated only if the payment is for the exact amount of the newest invoice.

A payment can match a filing only if you separate original severance filings with a respective payment and then wait ten (10) days to file any Prior Production Amendments (PPA) with payments. It allows us time to process both the filing and the payment.

Ad Valorem Interest

Per 39-13-108 (b)(ii)

The balance of any tax not paid as provided by W.S. 39-13-113 or paragraph (i) of this subsection is delinquent after the day on which it is payable and shall bear interest at eighteen percent (18%) per annum until paid or collected;

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Ad Valorem Penalty

39-13-108(c)(D)(ii)(C)

If any person fails to file the reports for ad valorem purposes required by W.S. 39-13-113 or chapter 14 of this title by the due date or any extension thereof, the department may impose a penalty equal to a total of one percent (1%) of the taxable value of the production from the well, mine or mining claim but not to exceed five thousand dollars($5,000.00) for each calendar month or portion thereof that the report or information is late. If any person fails to file reports and other information required by rule of the department other than those required by chapter 14 of this title, the department may impose a penalty of up to one thousand dollars ($1,000.00). The department may waive penalties under this subparagraph for good cause. Penalties imposed under this subparagraph may be appealed to the board.

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Senior Tax Examination Analyst

(Accounting / billing supervisor)

Jack Rehm

Ph: (307) 777-7984

e-mail: jack.rehm@wyo.gov

Senior Tax Examiner

(Accounting - billing)

Karen Mefford

Ph: (307) 777-7717

Karen.mefford1@wyo.gov