Montana Severance Tax and Tribal Calculations

Montana is unique in how it processes severance taxes. Different incentives allow owners to be charged a reduced severance tax rate for Working Interest owners in certain wells. Tribal tax calculations and exemptions also add to the complexity of taxes in Montana. SherWare can handle these complex calculations. Below is an explanation of how to set up these Severance taxes.

1) You can set up a tax table to automatically calculate the tribal severance taxes for this well. Keep in mind that if the "Use these rates instead of tax table" option is marked on the Taxes tab of the Well Information screen, Tax calculation 1 will be replaced with the calculation entered with that option. Therefore, if using that option, do not use Tax calculation 1 because it will not be used. Tax calculation 2, 3, and 4 will still be calculated for the well. Using one of these enter the tax calculation that should be withheld for wells on tribal lands.

2) The Severance taxes for Royalty and Working Interest Owners for Montana wells can be set up in the Taxes tab of the Well Information screen. Mark the option to "Use these rates instead of tax table" then enter in the different Royalty and Working Interest rates. If the well is on tribal land and you also need to charge the tribal taxes, you can associate the well with the tax table created in step 1 on the Well Info tab.

3) To prevent tribal owners with an interest in the well on tribal land from being charged theses severance taxes, you can mark them as exempt from severance taxes on the Options tab of the Owner Information screen.

1) Well Products Tax Table: view
a. Create a tax table specifically for wells that are on tribal lands.