TR: Senator Frand Area Code 502 5-7-30 lite produce approximately f In reply to your nice letter of, havells of oil per dope #37.31 per barrell. The tax pd. is och harrell. the the are getting about 34.2% of the gross. I would to fever the tapreciate legislation to 100% people who for pende produce less than 20 barrels Thanks for all you are doing Verytruly yours, Glen Melton INSURANCE REAL ESTATE FARMS In response to your letter of May 14, I enclose a card and a copy of a check stub from Koch Oil Company. The second sentence of the card reads: "Koch Oil Company, as first purchaser, is required by law to withhold this tax from your payments and remit it to the Federal Government, unless you are an integrated oil company or are exempt from the tax." The law should read: "The first purchaser of oil and gas that can pass the tax on to a wholeseller or retailer shall be charged the windfall profit tax. As you can see, there is no way we, as a royalty owner, can pass anything on to anybody. We also pay income tax on what is left. As you can see, they are holding out about one-third of the total amount due us. I have also written Sun Oil Company for a complete breakdown on the other check stub I sent you and as soon as I have a reply from them, I will pass it on to you. Jack joins me in sending best wishes and kindest regards you know an excise tax, known as the Windfall Profits Tax, has been passed Into law by Congress effective after February 29, 1980. Koch 011 Company, as first purchaser, is required by law to withhold this tax from your payments and remit it to the Federal Government, unless you are Integrated oll company or are exempt from the tax. The rates and catagories for the tax that may affect you are as follows: Major Producer 705 601 30% Independent Producer** 50% 308 301 Major rate Includes royalty and overriding royalty owners. Independent rate is for qualifying working Interest owners that have certified their status to KOCH. The tax is computed in this manner: Removal (Current Purchase Price) - Adjusted Base Price - Severance Tax Adjustment Windfall Profif Windfall Profit Tax Windfall Profit times the applicable tax rate. 1980 JUN -2 AM 8:02 Honorable Wendell H. Ford United States Senate 633 Portland Drive Dear Senator Ford: I appreciate your letter of May 8, 1980, informing me of your position regarding the effects of the windfall profits tax on the small producers and royalty owners. a sheet In answer to your request for detailed information on the financial effects of this tax on my personal situation, I am attaching giving a breakdown of my mother's interests in four Kentucky stripper leases for the month of March. As you can see from the "Totals for Month" line, the windfall profits tax took $162.61 out of a net income of $469.90 - or 34.61% of what she would have received had there been no windfall profits tax. We feel that this is an exorbitant tax on such a small income. Senator, I just can't believe that it was the informed intent of Congress when they passed the W.P.Tax bill to tax the small royalty owners at the same high rate they applied to the giant oil companies. My mother, who is an 82 year old widdow, depends on her oil royalties for a significant part of her income, and $162 less a month really hurts. I have recently been in contact with Senator Bob Dole, and he informs me that his Bill No. 52521 is designed to help the small royalty owners by exempting 10 barrels of royalty interest per day from the W.P.Tax. His speech introducing this bill on April 2, 1980 is recorded on Page S3438 of the "Congressional Record-Senate". I am attaching a Xerox copy of this speech so you will not have to look it up. As you can see from the last column of the attached data sheet, my mother's total "Average Barrels per Page No. 2 Hon. Wendell H. Ford Day" for the month of March was only .419 barrels, which would put it well within Senator Dole's proposed exemption of 10 barrels of royalty interest per day. Mr. Ford, I believe Senator Dole's bill is well deserving of your support as a workable plan for relieving the small royalty owner of this burdensome tax, and I certainly hope you will aid him in pushing the bill through the Senate. I am sure all the small royalty owners in Kentucky will be most grateful for your efforts on behalf of their welfare. |