Senate is likely to pass bill that will mean smaller royalty payments for people who have leased their land for oil and natural gas drilling.
A tax bill introduced by Senate Republican Pat Browne last month requires energy companies to automatically withhold the 3.07 percent of royalty payments that landowners would owe in state taxes.
The Corbett Administration came up with the proposal, and House and Senate leaders are expected to pass it alongside the state budget, which needs to be signed into law within the next two weeks.
The withholdings are comparable to employer tax withholdings and will allow the department to more quickly and accurately collect tax due to royalty payments from non-residents—people who live out-of-state, but own Pennsylvania land where drilling is taking place
This would not be a tax increase. Landowners are already required to pay taxes on their royalty payments, but are required to handle their own payments.
While taxes won’t increase, the Department of Revenue says improved documentation of royalty payments would lead to a $5.3 million increase in tax collections next year, and about $2 million more a year going forward.
Pennsylvania acquired $46 million from taxes on drilling royalties in 2010.