Encino Energy tax forms create questions for royalty owners

A flier from Encino Energy explains how people can decipher their Form 1099s they received for oil and gas royalties. Click to enlarge the image.

SALEM, Ohio — Tax documents aren’t usually much to get excited about, but Form 1099s sent to Encino Energy royalty owners caused a hubbub this week.

The Encino Energy office, in Louisville, Ohio, was flooded with calls and people took to social media to crowdsource answers after landowners noticed a discrepancy in their 1099-Misc forms, which are used to report income from oil and gas royalties.

People noticed a difference between the amount of money they received in their royalty checks throughout last year and the amount Encino reported on the 2019 Form 1099. The royalties reported were much higher than the money they actually received. Some people noted this was different than what their 1099s from Chesapeake, Encino’s predecessor, looked like.

That’s because people are being shown more information than they were before, said Jackie Stewart, director of external affairs with Encino Energy. The company didn’t realize this was different than what landowners saw in the past.

“Given our commitment to operational transparency, we have enhanced the level of information included in the annual federal tax documents that our landowners recently received,” Stewart said in a statement. “We understand that this enhanced level of information has, in some cases, created questions.”

The royalties amount in box 2 of the form is the gross royalty amount, something that is required by the IRS to be included on the form, Stewart said.

Encino also included the taxes and other deductions taken from the royalty payments in a smaller box on the bottom left section of the form.

If the taxes and deductions are subtracted from the gross royalties amount in box 2, it should come out to the amount people received in their royalty checks.

As a result of the strong reaction from landowners, Stewart said a letter from Encino Chief Financial Officer Michael Magilton explaining the change is being sent to them all, as well as a flier further illustrating how to decipher the Encino 1099.

The flier is also available on the company’s website at www.encinoenergy.com/landowner-relations/ and by clicking the following link: Landowner Tax Information.

Anyone with further questions should contact Encino Landowner Relations at 1-866-858-9001 or email ownerrelations@encincoenergy.com.

(Reporter Rachel Wagoner can be contacted at 800-837-3419 or rachel@farmanddairy.com.)


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Rachel is a reporter with Farm and Dairy and a graduate of Clarion University of Pennsylvania. She married a fourth-generation beef and sheep farmer and settled down in her hometown in Beaver County. Before coming to Farm and Dairy, she worked at several daily and weekly newspapers throughout Western Pennsylvania covering everything from education and community news to police and courts.



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