West Virginia Code of State Rules
Agency 110 - Tax
Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT
Series 110-13AA - Information to be Utilized for Calculating the Distribution of Oil and Gas Severance Taxes
Section 110-13AA-6 - Presumptions

Universal Citation: 110 WV Code of State Rules 110-13AA-6

Current through Register Vol. XLI, No. 38, September 20, 2024

6.1. For those tax returns or other reports wherein the operator fails to report separate amounts as gross proceeds for oil and separate amounts as gross proceeds for natural gas that was severed during the reporting period, the Tax Division will attempt to obtain the correct information from those operators. If the Tax Division is unable to obtain the necessary information after a reasonable effort to do so, the Tax Division will apply the presumption that gross proceeds from oil and gross proceeds from gas, respectively, from each well is consistent with the statewide average proportional production of oil and gas from all reporting wells, and that gross receipts from the production of wells for which the operator fails to report separate amounts as gross proceeds for oil and separate amounts as gross proceeds for natural gas is consistent with the statewide average for proportional gross receipts for oil and gas respectively.

6.2. Example:

(1) A Taxpayer files an annual report with the Tax Division stating that the Taxpayer has $1 million gross receipts from the severance of natural gas and the severance of oil. However, the Taxpayer does not state how much of the gross receipts come from each.

(2) The Tax Division contacts the Taxpayer to seek the missing information. The Taxpayer fails to report the information.

(3) The Tax Division determines that the statewide average production of oil and gas based on gross receipts, is proportionally 88% gas and 12% oil for the production year.

(4) The Tax Division will presume that the Taxpayer's gross receipts from gas and oil production are consistent with the statewide average, and will apportion the gross receipts of the Taxpayer accordingly.

$1,000,000 X 88% = $880,000 gross receipts from severance of natural gas

$1,000,000 X 12% = $120,000 gross receipts from severance of oil

The Tax Division will apportion the tax derived from the Taxpayer's remittance of severance tax accordingly.

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