HB 3231 West Virginia House of Delegates · 2025 Regular Session

Relating to withholding tax on income of nonresidents from natural resources royalty payments

HB 3231 requires lessees (like oil, gas, or mining companies) in West Virginia to withhold state income tax from royalty payments made to nonresident lessors (owners living outside West Virginia) who earn income from mineral rights within the state. The bill mandates that lessees deduct tax from these payments, remit it to the state Tax Commissioner, and provide annual statements to nonresident owners, who can claim credit against their own tax liability or receive refunds for overpayments. It directly affects nonresident owners of mineral rights (including coal, oil, gas, and other natural resources) and lessees who pay them, creating a new tax collection system to address revenue loss from previous gaps. The law applies to all natural resources royalty payments exceeding $1,000 annually per lessor, with definitions covering minerals, timber, and related payments.

Issues: ✓ Budget & Taxes

Bill status in committee 1 of 4 stages cleared

Introduction

Mar 2025

Committee Review

Floor Vote

Governor

Introduced Mar 7, 2025 Last action Mar 17, 2025

Maddy AI version diff · 1 comparison

What changed between versions

Introduced Version → Committee Substitute · 6 edits

MODERATE

The bill text was replaced with a Committee Substitute version that adds significant administrative details, including specific filing deadlines, electronic filing requirements for large lessees, and expanded rulemaking authority for the Tax Commissioner. The substantive tax withholding rules remain largely the same, but the Committee version provides clearer implementation guidance and compliance mechanisms.

Scope change

The scope of applicability remains the same (withholding tax on nonresident royalty payments), but the scope of administrative requirements expanded to include electronic filing thresholds and more detailed reconciliation procedures.

REQUIREMENT

Added specific requirement for lessees filing for 25 or more lessors to use electronic filing, with a $25 per lessor penalty for non-compliance.

Expanded annual reconciliation requirements to include submission of 1099 copies and added flexibility for Tax Commissioner to set different due dates based on industry practices.

ENFORCEMENT

Added new subsections requiring lessees to deposit withheld taxes in trust accounts and specifying civil and criminal penalties for non-compliance.

TIMELINE

Added specific effective date provision stating the bill applies to taxable years beginning after December 31, 2025.

TECHNICAL

Added a formal bill purpose note and expanded rulemaking authority for the Tax Commissioner to implement the withholding provisions.

Removed navigation elements and formatting artifacts from the Introduced Version, replacing them with the clean Committee Substitute text.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Mar 17, 2025

Committee

To House Finance

lower

Mar 17, 2025

Lower · Passed

By substitute, do pass, but first to Finance

lower

Mar 7, 2025

Committee

To House Energy and Public Works

lower

Mar 7, 2025

Introduced

Introduced in House

lower

1 primary · 1 co-sponsor