With OGwin’s Bank Reconciliation program, you get two options for recording bank service charges. You may enter the service charge manually through a journal entry, marking the Reconcile Type as “SVC,” or you may have OGwin generate it during the Bank Reconciliation.

With either option, you must enter the service charge amount in the Bank Reconciliation screen. If you make a manual journal entry to record the charge but fail to input the amount in Bank Reconciliation, OGwin will back out the amount.

New OGSYS Corporate Address

In August, we moved our corporate offices to a different complex in Fort Worth. Our new address is:
Oil & Gas Information Systems, Inc.
6500 West Freeway, Suite 925
Fort Worth, TX 76116

Phone numbers, fax number, and email addresses did not change.

Download the Latest OGwin Service Packs

It’s a good idea to periodically download and apply our newest service pack to your OGwin database. To find the latest service packs, simply visit http://www.ogsys.com and go to “Support.”

Make sure to select the appropriate download for the version of OGwin you are currently running. To verify your version of OGwin, go to “About OGwin” on the Help menu in the database. You will find the version number and the date of the last service pack (update).

State Income Tax Withholding Requirements for OK and NM

Two states have now implemented income tax withholding requirements for non-residents who receive oil and gas revenues - Oklahoma and New Mexico. State income tax is handled similar to other tax deductions with a couple of twists.

Disclaimer: This document is not an interpretation of the New Mexico Senate Bill 621 or any other tax law. Its only purpose is to describe the procedures for setting up a withholding tax in OGwin. Please consult your tax authority to verify the method of calculation, tax rates, effective dates and application to individual owners’ revenue.

STEP 1: Identify the owners subject to the withholding:

1. To identify non-resident owners, print a full list from Revenue Deck Maintenance-Run Report, selecting on a user-defined well selection of State NM or OK.

2. Determine from the addresses of the owners on this list which owners are subject to withholding.

3. Some companies then send confirmation letters to these owners to give them the opportunity to declare if they are exempt from the state withholding.

STEP 2: Set up the tax for new revenue

1. Set up the tax in Revenue Tax Rate Maintenance (Master Maintenance, Revenue Maintenance) at the appropriate rate. Since it is a State withholding, be sure to set the tax type in revenue tax rate maintenance to ‘Income W/H’. For this example, the level will be State. The State will be NM. Tax column 4 is being used. (NOTE: If all tax columns are already used it will be necessary to combine taxes to make room.) Set the effective date as the earliest month for which production will be paid after the effective date of the tax law. The following is an example using a 6.75% withholding tax rate on gross value. Consult your taxing authority for the appropriate tax rate for the actual input.
A. Set up the tax at the appropriate rate in Revenue Tax Rate Maintenance (Master Maintenance, Revenue Maintenance). Since this is a state withholding, be sure to set the tax type in revenue tax rate maintenance to “I” for Income Tax.

For example, the level will be “State” and State will be “NM.” Since the withholding is on net income, use tax column 4. (However, if all tax columns are already used, combine taxes to make room.) Set the “Effective Date” as the earliest month for which production will be paid after the October 1 implementation.

In the sample below, we used a 5 percent withholding tax rate; however, you will use the appropriate tax rate for your entries.

Tax columns relate to the different types of tax deducted. Tax-rate lines “A” through “E” relate to the product for which the tax is being calculated. See Product Maintenance for the proper tax-rate line to use.

Inputting “123” in the Gross-Values column tells the system to deduct all other taxes prior to calculating the income tax.

B. Set up the fixed accounts (by product) necessary for this tax column in Product Fixed Accounts Maintenance (Master Maintenance, G/L and Report Maintenance, Fixed Account Maintenance). It may be necessary to designate a new account in Chart of Accounts Maintenance for the Tax Payable account. Make sure this account gets a Location of E-entity, so that the amount of tax withheld will be sub-totaled by owner in the general ledger.

C. Check the “Generate” box next to the tax description to set up the state income tax as a “Generated Tax” in the Purchaser Check Control Maintenance (Master Maintenance, Revenue Maintenance).

D. Any revenue deck that includes an owner subject to the tax also should reflect the appropriate decimal interest for that specific owner. Enter the appropriate decimal interest for those subject to the tax, and enter “0.00” for exempted owners.

E. When the purchaser check entry is done, the system will calculate the amount of income tax that should be withheld and deduct it from the amount of revenue payable to the owner. OGwin will post an offsetting credit to the Tax Payable fixed account established in Step B and report the total amounts withheld as a state income tax withheld for the state on the year-end 1099s.

STEP 3: Set up withholding on existing revenue payable at the implementation date

According to the new statues, you will withhold income tax based on when the income is paid (Not when it is accrued). Therefore, you must calculate amounts to be withheld on all revenue payable at the effective date of the senate bill (currently October 1, 2003 for NM). Some companies have avoided this calculation by releasing (paying) all suspended revenue prior to the effective date of the bill.

To withhold state taxes from revenue already posted at the effective date of the bill, use the procedure below:

A. When checks are being issued for revenue amounts payable to owners prior to the establishment of the generated tax as described above, the taxes must be calculated to be withheld on non-New Mexico residents receiving non-working interest payments. Consider calculating these amounts manually based on the amounts in the Full Check Prelist prior to the effective date of the senate bill.

B. Based on the calculations, use Unpaid History Entry to record the tax amount to be withheld by owner, by well, by production month at the time that it is necessary to issue the revenue check. Put the tax amount on the Net line in the appropriate Tax Column that has been designated as the New Mexico withholding tax. Make no entry in Amount Paid.

C. Make a corresponding Manual JE to debit Royalties Payable and credit New Mexico State Tax Withheld for the amount entered in Step B above.

D. The check prelist (and subsequent checks) will include an additional item corresponding to the input in Step B to deduct the New Mexico tax. The Revenue Summary Statements will also show the New Mexico withholding.

STEP 4: Remit withheld amounts to the state

A. When the tax is generated, an offsetting credit will go to the Taxes Payable account that was designated in the Product Fixed Accounts. To pay the state, make an entry through Accounts Payable Invoice Entry for the amount to be remitted. The account distribution will be to the same Taxes Payable account as defined in the Product Fixed Accounts.

B. Run the 1099 Proof report (the 499-02 report – one amount per owner per well) for owners using the User-specified Selection, selecting state and filtering on all states except New Mexico, and wells using the User-Specified Selection, selecting State and filtering on the state of New Mexico. Enable the field for “Print Non-Flagged Owners” to include any owner that is not flagged to receive a 1099 but has withheld amounts. This will produce a year-to-date report of all revenue from wells in the state of New Mexico and amounts withheld from non-New Mexico resident owners. Use these amounts to calculate the quarterly taxes to be remitted to New Mexico on amounts actually paid to owners in that quarter.

C. Use Company Maintenance to list the State Legal ID for the state so that it will print in Box 17 of the 1099.

Handling Year-end 1099s

A. At year-end, it will be necessary to send the withholding information to the state. To print 1099s for an individual state, use the “One Amount per Owner Per Well” selections for the 1099s.

B. Use the Property Selection Method to specify a “User-Specified Well Selection”, selecting on the “State” field, with a filter of “NM,” for example. This will produce 1099 information relating to wells in the state of New Mexico.

C. Complete the minimum amount fields as normal. Owners that have any income tax withheld, regardless of whether their amounts exceed the minimums will be reported.

A New Look for JIB Redistribution

Notice the changes in the JIB Redistribution screen. In response to requests for greater flexibility for memo companies, we have added three new features related to the redistribution of JIB items:

1. If the original entry specified a memo company for the owner being redistributed, the memo company entries are reversed.

2. You may now specify a memo company for the target entities.

3. You may now specify a deck to use to determine the target entities for the redistribution.

Contact OGSYS Support for additional help in using JIB Redistribution.

Answers to Key Questions

Q. I need to run a general ledger on just a few accounts. The accounts are consecutive, so I can’t use the range feature, and I don’t want to run a separate GL for each account. How do I handle this?

A. Create an account batch with the accounts you need to see. Go to Master Maintenance/Batchname Maintenance/Account Batchname Maintenance. Create a new batch name, select the accounts, and save. Then when you run the GL, go to batchname on the account selection line and enter the batch you created.

Q. My advance did not apply to the JIB items. I used the same well on the items as I used for my advance entry.

A. If you entered the advance using an AFE code, the charges must have the same AFE code on them in order to apply. If you do not have the AFE code, the advance will not apply. Also, if the advance was entered without an AFE code, it will not apply to charges with AFE codes on them. If no AFE was used, the charges and advance must match casing point.

Q. Is it OK to run the GL Close Month on the same company, multiple months at the same time?

A. No. Never run more than one close per company at a time. It is possible that an error will occur, and this would result in your having to restore the database.