Texas Administrative Code
Title 34 - PUBLIC FINANCE
Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3 - TAX ADMINISTRATION
Subchapter C - CRUDE OIL PRODUCTION TAX
Section 3.40 - Tax Credit for Enhanced Efficiency Equipment

Universal Citation: 34 TX Admin Code § 3.40

Current through Reg. 50, No. 13; March 28, 2025

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commission--The Railroad Commission of Texas.

(2) Operator--The person responsible under law or commission rules for the physical operation of a lease.

(3) Institute of Higher Education--A comptroller approved institution of higher education located in this state that has an accredited petroleum engineering program.

(4) Marginal Well--A comptroller approved oil well that produces 10 barrels of crude oil or less per day during the month prior to installation of new efficiency equipment.

(b) For each marginal well qualifying under this section, the comptroller will require the following information from the operator of the lease.

(1) A copy of the monthly production report made to the commission for the lease for the qualifying month.

(2) A copy of the evaluation from an institution of higher education certifying the name of the enhanced efficiency equipment and that the equipment produces the required energy reduction.

(3) A list of the producing wells on the lease and supporting documentation to show the number of days each well was producing during the month prior to installation of the new efficiency equipment.

(4) A completed comptroller exemption application for the marginal well.

(5) A statement as to whether tax has been paid on the crude oil for periods after the effective date of the exemption, and the name of the party paying the tax.

(6) A billing statement showing the cost of the equipment, the cost of installation and proof that the equipment was not purchased or installed earlier than September 1, 2005, or later than September 1, 2013.

(c) The credit will be in effect until the accumulated credit equals 10% of the cost of the equipment or $1,000 per marginal well, whichever occurs first.

(d) If the tax is paid at the full rate provided by Tax Code, Chapter 202, on hydrocarbons produced on or after the effective date of the tax exemption but before the date the comptroller approves an application for the tax exemption, the operator is entitled to a credit on taxes due under Tax Code, Chapter 202, in an amount equal to the tax paid during that period within the statute of limitations. To receive a credit, the operator or the party remitting the tax must apply to the comptroller by filing amended reports. If a party other than the operator has remitted the tax, the operator must provide the party remitting the tax a copy of the approved comptroller application form that qualifies the marginal well for the tax exemption.

(e) The comptroller is limited to approving, each fiscal year, only the number of applications that will not exceed a number equal to one percent of the producing marginal wells in this state on September 1 of that state fiscal year.

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