Checks were created, printed and mailed in January using old tax withholding rates of 5.3% and should have been 4.9%. The new rate for 2008 is 4.9% How do we go back and correct?

There's not a way to enter a state tax adjustment amount since it is calculated automatically by the software. What you'll need to do is enter a credit for the amount that needs returned to the owners, using the Well Revenue by Well (8/8ths) screen for each well. This can be entered using the Other Product tax (PTAX)type.

To start, you'll need to copy everyone's revenue interest to the Other Product Tax class that you want to use. You can do this easily with our Copy Division of Interest utility. Be sure to copy within the same well from the revenue interest class (such as Oil or Gas) to the Other Product Tax class (such as Other Product Tax 1). Once you have the interests copied for the affected wells, close out of the utility.

Then, go to the Well Revenue by Well (8/8ths) screen, and enter a positive tax amount that should be credited back to the owners on that well using the Other Product Tax class that you previously copied interests to. The system will credit the amount to the owners based on their interest in that class. These credits will be picked up on the next revenue run closing.

When the revenue run is closed, it will automatically create an owner history record for those owners, for those wells, including the Other Product Tax credit. Since this is actually a state tax credit, you'll need to change their owner history records so that the tax is shown in the Tax W/H field on the Owner History record, instead of the Other Tax field. You can make this change using the Owner History screen under the Maintain menu. Use the List button on the toolbar to locate the records for the owners that need to be changed. Then, click on the Taxes tab when you have the record on the screen. Move the amount of the state tax credit from the Other Tax field to the Tax W/H field, and click Save on the toolbar. Do this for each owner affected by the credit.

Also, let me mention that our recent updates include a utility that will allow you to automatically change the State Tax withholding percentage for all owners within a given state. This can be found under the Utilities menu > Switch Tax Withholding Rate.

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Last month I started using the State Tax Withholding in the SherWare software that connects to QuickBooks, and I accidentally told the software to withhold some Oklahoma tax when I wasn't supposed to. Is there any way to just give that back to the owner on the next month royalty statement?

Yes, it's possible to credit back state tax, but it requires a few steps listed below.

1. Enter the tax credit for that well in the Well Revenue by Well (8/8ths) screen. I recommend using a tax type which is not normally used such as PTAX4. Enter the amount of the credit as a positive number, and then enter this owner's ID in the Allocate All To field. This will credit the amount to this owner on the next run closing's distribution.

2. To process this tax credit after the run is closed, go to the Maintain menu > Owner History screen. Click on the List button on the toolbar to locate the record created for this owner when the run was closed for that well. Once you have located that record, click OK to bring it to the screen. Click on the Taxes tab. In the Other Tax 4 field (if you used PTAX4 as suggested above) will be the amount of the state tax credit. Remove the amount from the PTAX4 field, and move it to the Tax Withholding field. After you have moved it, click Save on the toolbar.

3. The entry made in step 1 will show as a debit to your cash account, and a credit to your revenue clearing account. You will need to edit that journal entry created in QuickBooks to make the debit account be the account used for State Tax withholding, so that it corrects the balance of that account, and does not affect your balance in your cash account.

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