What Taxes Do We Owe on Oil and Gas Produced?

General Mineral Rights Discussion
#1

My niece inherited a non-participating deed to the mineral rights (does not say land) in Reeves County, Texas. There are 4 heirs who received an undivided 20/640th of 1/8th of the oil and gas produced and mined from the following land:

all of Section 11, Block C-1, Public School Land Survey, Reeves Co., Texas.

What taxes is she supposed to pay besides Federal income taxes? She just received a notice from a lawyer representing Reeves County that there are back taxes due for 2015-2017. Shouldn't the landowner be responsible instead? However, the deed was written in 1952 and we don't know the landowner.

Also, if my niece pays 1/4 of the taxes Reeves Co. says are due, what happens if the other 3 heirs don't pay their share?

#2

The land owner may not have any interest in the oil and gas minerals. You should phone the Reeves County Tax Assessor Reeves County Tax Office Mailing Address:

P.O. BOX 700 PECOS, TEXAS 79772

Physical Address:

424 S. CYPRESS STREET PECOS, TEXAS 79772

Phone: 432-445-5473

Fax: 432-445-5096

#3

depletion tax should be accounted for too right? Anyone mind explaining this?

#4

Resolute is operating wells in this section and presumably your niece is receiving royalty checks. Reeves County and Pecos-Barstow-Toyah ISD assess property taxes on producing wells. These taxes are paid by each mineral owner on his or her interest in the well. Your niece needs to make sure the title and tax assessments are in her individual name so that she is not affected by the failure of other heirs to pay their taxes. If the taxes are owed by the decedent, then that may have to be paid in full before the heirs get their interests separated. She needs to talk with the tax office to get all this straightened out. Also, your niece is the property owner and the property is her producing NPRI. The surface owner is assessed separately.

#5

Perfectly stated, Tennis

#6

Texas has county tax on producing wells. If it isn’t pay after so many years you will lose the minerals. It doesn’t have anything to do with land tax. If you have minerals in TX and they are non-producing, then you don’t owe taxes on it.

#7

Thank you for your responses. This is something new for us, as we have been in Georgia for the past many years and were unaware of any mineral deed until my niece was contacted in 2017 by a landman wanting to purchase her mineral rights. Now we're having to learn about oil and gas production.