CHAPTER 201. GAS PRODUCTION TAX
TAX CODE
TITLE 2. STATE TAXATION
SUBTITLE I. SEVERANCE TAXES
CHAPTER 201. GAS PRODUCTION TAX
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 201.001. DEFINITIONS. In this chapter:
(1) "Casinghead gas" means gas or vapor indigenous to an oil
stratum and produced from the stratum with oil.
(2) "Condensate" means liquid hydrocarbon that is or can be
recovered from gas by a separator, but does not include liquid
hydrocarbon recovered from gas by refrigeration or absorption and
separated by a fractionating process.
(3) "First purchaser" means a person who purchases gas from a
producer.
(4) "Gas" means natural gas, casinghead gas, or other gas taken
from the earth or water, whether produced from a gas well or a
well also producing oil, distillate or condensate or both, or
other products.
(5) "Producer" means a person who takes gas from the earth or
water, a person who owns, controls, manages, or leases a gas
well, or a person who owns an interest, including a royalty
interest, in gas or its value, whether the gas is produced by the
person owning the interest or by another on his behalf by lease,
contract, or other arrangement.
(6) "Production" or "gas produced" means the gross amount of gas
taken from the earth or water as determined by meter readings
that show 100 percent of the gas taken expressed in cubic feet.
(7) "Royalty interest" means an interest in mineral rights in a
producing leasehold in the state, but does not include the
interest of the person having the management and operation of a
well.
(8) "Sour gas" means gas with more than 1-1/2 grains of hydrogen
sulfide per 100 cubic feet or more than 30 grains of sulphur per
100 cubic feet.
(9) "Subsequent purchaser" means a person who purchases gas from
a person other than the producer of the gas.
(10) "Sweet gas" means gas other than sour gas or casinghead
gas.
Acts 1981, 67th Leg., p. 1728, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.002. MEASUREMENT OF VOLUME OF GAS. The provisions of
Section 91.052 of the Standard Gas Measurement Law, Subchapter C,
Chapter 91, Natural Resources Code, apply to this code.
Acts 1982, 67th Leg., p. 1729, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER B. TAX IMPOSED
Sec. 201.051. TAX IMPOSED. There is imposed a tax on each
producer of gas.
Acts 1981, 67th Leg., p. 1729, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.052. RATE OF TAX. (a) The tax imposed by this chapter
is at the rate of 7.5 percent of the market value of gas produced
and saved in this state by the producer.
(b) Repealed by Acts 2001, 77th Leg., ch. 1263, Sec. 84(3), eff.
October 1, 2001.
Acts 1981, 67th Leg., p. 1729, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 2001, 77th Leg., ch. 1263, Sec. 84(3), eff.
Oct. 1, 2001.
Sec. 201.053. GAS NOT TAXED. The tax imposed by this chapter
does not apply to gas:
(1) injected into the earth in this state, unless sold for that
purpose;
(2) produced from oil wells with oil and lawfully vented or
flared;
(3) used for lifting oil, unless sold for that purpose; or
(4) produced in this state from a well that qualifies under
Section 202.056 or 202.060.
Acts 1981, 67th Leg., p. 1729, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1993, 73rd Leg., ch. 1015, Sec. 2, eff.
Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
267, Sec. 7, eff. January 1, 2006.
Sec. 201.054. TAX ON LIQUID HYDROCARBONS. (a) There is imposed
on each producer a tax on the market value of liquid
hydrocarbons, other than condensate, recovered from gas produced
in the state by a producer.
(b) The rate of the tax imposed by this section is the same as
the rate of the tax imposed by Section 201.052 of this code.
Acts 1981, 67th Leg., p. 1729, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.055. TAX ON CONDENSATE. (a) There is imposed on each
producer a tax measured by the amount of condensate recovered
from gas produced in this state by a producer.
(b) The tax imposed by this section is at the same rate as the
rate of the tax imposed on oil by Section 202.052 of this code.
Acts 1981, 67th Leg., p. 1729, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.057. TEMPORARY EXEMPTION OR TAX REDUCTION FOR CERTAIN
HIGH-COST GAS. (a) In this section:
(1) "Commission" means the Railroad Commission of Texas.
(2) "High-cost gas" means:
(A) high-cost natural gas as described by Section 107, Natural
Gas Policy Act of 1978 (15 U.S.C. Section 3317), as that section
exists on January 1, 1989, without regard to whether that section
is in effect or whether a determination has been made that the
gas is high-cost natural gas for purposes of that Act; or
(B) all gas produced from oil wells or gas wells within a
commission approved co-production project.
(3) "Commission approved co-production project" means a
reservoir development project in which the commission has
recognized that water withdrawals from an oil or gas reservoir in
excess of specified minimum volumes will result in recovery of
additional oil and/or gas from the reservoir that would not be
produced by conventional production methods and where operators
of wells completed in the reservoir have begun to implement
commission requirements to withdraw such volumes of water and
dispose of such water outside the subject reservoir. Reservoirs
potentially eligible for this designation shall be limited to
those reservoirs in which oil and/or gas has been bypassed by
water encroachment caused by production from the reservoir and
such bypassed oil and/or gas may be produced as a result of
reservoir-wide high-volume water withdrawals of natural formation
water.
(4) "High-volume water withdrawals" means the withdrawal of
water from a reservoir in an amount sufficient to dewater
portions of the reservoir containing oil and/or gas previously
bypassed by water encroachment.
(5) "Co-production" means the permanent removal of water from an
oil and/or gas reservoir in an effort to lower the gas-water
contact or oil-water contact in the reservoir or to reduce
reservoir pressure to recover entrained hydrocarbons from the
reservoir that would not be produced by conventional primary or
secondary production methods.
(6) "Operator" means the person responsible for the actual
physical operation of an oil or gas well.
(7) "Consecutive months" means months in consecutive order,
regardless of whether or not a well produces oil or gas during
any or all such months.
(b) High-cost gas as defined in Subsection (a)(2)(A) of this
section produced from a well that is spudded or completed between
May 24, 1989, and September 1, 1996, is exempt from the tax
imposed by this chapter during the period beginning September 1,
1991, and ending August 31, 2001. High-cost gas as defined in
Subsection (a)(2)(B) of this section produced from any well
regardless of spud date or completion date is eligible for
refunds of tax paid and exemption from the tax imposed by this
chapter for production occurring during the period beginning the
first day of the month after commission approval of a
co-production project and ending August 31, 2001; provided,
however, in the event co-production ceases, the exemption shall
also cease on the first day of the first calendar month that
begins on or after the 91st day following the date of termination
or co-production operations. Tax must be paid when due at the
rate provided in Section 201.052 of this code for all high-cost
gas, as defined in Subsection (a)(2)(B) of this section, produced
on or before July 31, 1995. On or after September 1, 1995, the
operator may apply to the comptroller for a refund and shall be
entitled to receive a refund of all taxes paid on such high-cost
gas produced on or after the first day of the calendar month
after commission approval of the co-production project from which
such gas was produced and that is otherwise eligible for the tax
exemption.
(c) High-cost gas as defined in Subsection (a)(2)(A) produced
from a well that is spudded or completed after August 31, 1996,
is entitled to a reduction of the tax imposed by this chapter for
the first 120 consecutive calendar months beginning on the first
day of production, or until the cumulative value of the tax
reduction equals 50 percent of the drilling and completion costs
incurred for the well, whichever occurs first. The amount of tax
reduction shall be computed by subtracting from the tax rate
imposed by Section 201.052 the product of that tax rate times the
ratio of drilling and completion costs incurred for the well to
twice the median drilling and completion costs for high-cost
wells as defined in Subsection (a)(2)(A) spudded or completed
during the previous state fiscal year, except that the effective
rate of tax may not be reduced below zero.
(d) Taxes must be paid when due at the rate provided in Section
201.052 of this code on all high-cost gas, as defined in
Subsection (a)(2)(A) of this section, for wells spudded or
completed between September 1, 1996, and August 31, 1997. On or
after September 1, 1997, the operator of a well that was spudded
or completed and that produced high-cost gas between September 1,
1996, and August 31, 1997, may apply to the comptroller for a
refund and shall be entitled to receive a refund of taxes paid in
excess of the taxes that would have been due if calculated under
Subsection (c). Wells spudded or completed between September 1,
1996, and August 31, 1997, shall also be eligible for the reduced
tax under this section for a 120-consecutive-calendar-month
period as provided for other wells qualifying under this section.
The time period for which an operator is entitled to a refund
under this section shall be included for purposes of the
calculation of this 120-month period. The period of entitlement
for reduced taxation and refund for any qualifying well shall not
exceed 120 consecutive calendar months.
(e) The operator of a proposed or existing gas well, including a
gas well that has not been completed, or the operator of any
proposed or existing oil or gas well within a commission approved
co-production project, may apply to the commission for
certification that the well produces or will produce high-cost
gas. Such application, if seeking certification as high-cost gas
according to Subsection (a)(2)(A), may be made at any time after
the first day of production. The application may be made but is
not required to be made concurrently with a request for a
determination that gas produced from the well is high-cost
natural gas for purposes of the Natural Gas Policy Act of 1978
(15 U.S.C. Section 3301 et seq.) or with a request for commission
approval of a co-production project. The commission may require
an applicant to provide the commission with any relevant
information required to administer this section. For purposes of
this section, a determination that gas is high-cost natural gas
according to Subsection (a)(2)(A) or a determination that gas is
produced from within a commission approved co-production project
is a certification that the gas is high-cost gas for purposes of
this section, and in that event additional certification is not
required to qualify for the exemption or tax reduction provided
by this section.
(f) To qualify for the exemption or tax reduction provided by
this section, the person responsible for paying the tax must
apply to the comptroller. The application must contain the
certification of the commission that the well produces high-cost
gas and, if the application is for a well spudded or completed
after September 1, 1995, must contain a report of drilling and
completion costs incurred for each well on a form and in the
detail as determined by the comptroller. Drilling and completion
costs for a recompletion shall only include current and
contemporaneous costs associated with the recompletion.
Notwithstanding any other provision of this section, to obtain
the maximum tax exemption or tax deduction, an application to the
comptroller for certification according to Subsection (a)(2)(A)
must be filed with the comptroller at the later of the 180th day
after the date of first production or the 45th day after the date
of approval by the commission. If the application is not filed by
the applicable deadline, the tax exemption or tax deduction is
reduced by 10 percent for the period beginning on the 180th day
after the first day of production and ending on the date on which
the application is filed with the comptroller. An application to
the comptroller for certification according to Subsection
(a)(2)(B) may not be filed before January 1, 1990, or after
December 31, 1998. The comptroller shall approve the application
of a person who demonstrates that the gas is eligible for the
exemption or tax reduction. The comptroller may require a person
applying for the exemption or tax reduction to provide any
relevant information in the person's monthly report that the
comptroller considers necessary to administer this section. The
commission shall notify the comptroller in writing immediately if
it determines that an oil or gas well previously certified as
producing high-cost gas does not produce high-cost gas or if it
takes any action or discovers any information that affects the
eligibility of gas for an exemption or tax reduction under this
section.
(g) As soon as practicable after March 1 of each year, the
comptroller shall determine from reports containing drilling and
completion cost data as required on applications to the
comptroller under Subsection (f), the median drilling and
completion cost for all high-cost wells as defined in Subsection
(a)(2)(A) for which application for exemption or reduced tax was
made during the previous state fiscal year. Those median drilling
and completion costs shall be used to compute the reduced tax
under Subsection (c).
(h) Information regarding drilling and completion costs included
on an application under Subsection (f) is confidential and may
not be disclosed, except to the extent aggregated with other
similar information to produce industry averages. Unauthorized
disclosure is an offense subject to the same penalty as provided
by Section 111.007 for unauthorized disclosure of federal tax
return information.
(i) If, before the commission certifies that a well produces
high-cost gas or before the comptroller approves an application
for an exemption or tax reduction under this section, the tax
imposed by this chapter is paid on high- cost gas that otherwise
qualifies for the exemption or tax reduction provided by this
section, the producer or producers of the gas are entitled to a
credit against other taxes imposed by this chapter in an amount
equal to the amount of the tax paid on the gas that otherwise
qualified for the exemption or tax reduction on or after the
first day of the next month after the month in which the
application for certification under this section was filed with
the commission. If the application for certification is submitted
to the commission after January 1, 2004, the total allowable
credit for taxes paid for reporting periods before the date the
application is filed may not exceed the total tax paid on the gas
that otherwise qualified for the exemption or tax reduction and
that was produced during the 24 consecutive calendar months
immediately preceding the month in which the application for
certification under this section was filed with the commission.
The credit is allocated to each producer according to the
producer's proportionate share in the gas. To receive a credit,
one or more of the producers must apply to the comptroller for
the credit not later than the first anniversary after the date
the comptroller approves the application for an exemption or tax
reduction under this section. If a producer demonstrates that the
producer does not have sufficient tax liability under this
chapter to claim the credit within five years from the date the
application for the credit is made, the producer is entitled to a
refund in the amount of any credit the comptroller determines may
not be claimed within that five years. Nothing in this subsection
shall relieve the obligation imposed by Subsection (b) to pay tax
when due on high-cost gas produced from co-production projects on
or before July 31, 1995.
(j) An applicant for commission approval of a co-production
project shall submit a written application for approval to the
commission. Such application must be filed before January 1,
1994. The applicant shall provide the commission with any
relevant information required to administer this section,
including evidence demonstrating that the reservoir is eligible
for the designation and demonstrating the minimum volumes of
high-volume water withdrawal required to recover oil and/or gas
from the reservoir that would not be produced by conventional
production methods. A commission representative may
administratively approve the application. If the commission
representative denies administrative approval, the applicant
shall have the right to a hearing upon the request.
Added by Acts 1989, 71st Leg., ch. 1197, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1993, 73rd Leg., ch. 958, Sec. 1, eff.
Sept. 1, 1993; Acts 1995, 74th Leg., ch. 895, Sec. 1, eff. Sept.
1, 1995; Acts 1997, 75th Leg., ch. 1040, Sec. 52, 53, eff. Sept.
1, 1997; Acts 1999, 76th Leg., ch. 365, Sec. 1, eff. Aug. 30,
1999; Acts 2003, 78th Leg., ch. 209, Sec. 52, eff. Oct. 1, 2003;
Acts 2003, 78th Leg., ch. 1310, Sec. 110, eff. Sept. 1, 2003.
Sec. 201.058. TAX EXEMPTIONS. (a) The exemptions described by
Sections 202.056, 202.057, and 202.060 apply to the taxes imposed
by this chapter as authorized by and subject to the
certifications and approvals required by those sections.
(b) Operators increasing production by marketing gas from an oil
well or lease that has been released into the air for 12 months
or more pursuant to the rules of the commission shall be entitled
to an exemption from the tax imposed by this chapter on the
production resulting from the marketing of such gas for the life
of the well or lease.
Added by Acts 1995, 74th Leg., ch. 989, Sec. 3, eff. Jan. 1,
1996. Amended by Acts 1997, 75th Leg., ch. 1060, Sec. 1, eff.
Sept. 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch.
267, Sec. 8, eff. January 1, 2006.
Acts 2009, 81st Leg., R.S., Ch.
10, Sec. 1, eff. September 1, 2009.
Subsec. (g) of this section provided for the expiration of the
section on Sept. 1, 2007. Subsec. (g) was repealed by Acts 2007,
80th Leg., R.S., Ch.
911, Sec. 4, which was effective January 1, 2008, after the
section had expired.
Sec. 201.059. CREDITS FOR QUALIFYING LOW-PRODUCING WELLS. (a)
In this section:
(1) "Commission" means the Railroad Commission of Texas.
(2) "Mcf" means 1,000 cubic feet of gas as measured in
accordance with Section 91.052, Natural Resources Code.
(3) "Qualifying low-producing well" means a gas well whose
production during a three-month period is no more than 90 mcf per
day, excluding gas flared pursuant to the rules of the
commission. For purposes of qualifying a gas well, production
per well per day is determined by computing the average daily
production from the well using the monthly well production report
made to the commission.
(b) Each month, the comptroller shall certify the average
taxable price of gas, adjusted to 2005 dollars, during the
previous three months based on various price indices available to
producers, including prices reported by Henry Hub, Houston Ship
Channel, Mississippi Barge Transport, New York Mercantile
Exchange, or other spot prices, as applicable. The comptroller
shall publish certifications under this subsection in the Texas
Register.
(c) An operator of a qualifying low-producing well is entitled
to a 25 percent credit on the tax otherwise due on gas produced
and saved from that well during a month if the average taxable
price of gas certified by the comptroller under Subsection (b)
for the previous three-month period is more than $3 per mcf but
not more than $3.50 per mcf.
(d) An operator of a qualifying low-producing well is entitled
to a 50 percent credit on the tax otherwise due on gas produced
and saved from that well during a month if the average taxable
price of gas certified by the comptroller under Subsection (b)
for the previous three-month period is more than $2.50 per mcf
but not more than $3 per mcf.
(e) An operator of a qualifying low-producing well is entitled
to a 100 percent credit on the tax otherwise due on gas produced
and saved from that well during a month if the average taxable
price of gas certified by the comptroller under Subsection (b)
for the previous three-month period is not more than $2.50 per
mcf.
(f) If the tax is paid on gas at the full rate provided by
Section 201.052, the person paying the tax is entitled to a
credit against taxes imposed by this chapter or Chapter 202 on
the amount overpaid. To receive the credit, the person must
apply to the comptroller for the credit not later than the
expiration of the applicable period for filing a tax refund under
Section 111.104.
Subsec. (g) was repealed by Acts 2007, 80th Leg., R.S., Ch.
911, Sec. 4. The effective date of the repeal was January 1,
2008, which was after the expiration of the section.
(g) This section expires September 1, 2007.
(g) Repealed by Acts 2007, 80th Leg., R.S., Ch. 911, Sec. 4,
eff. January 1, 2008.
Added by Acts 2005, 79th Leg., Ch.
267, Sec. 9, eff. September 1, 2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
911, Sec. 4, eff. January 1, 2008.
Sec. 201.060. EXEMPTION OF GAS INCIDENTALLY PRODUCED IN
ASSOCIATION WITH THE PRODUCTION OF GEOTHERMAL ENERGY. Gas
incidentally produced in association with the production of
geothermal energy is not subject to the tax imposed by this
chapter.
Added by Acts 2009, 81st Leg., R.S., Ch.
1036, Sec. 1, eff. September 1, 2009.
SUBCHAPTER C. DETERMINING VALUE
Sec. 201.101. MARKET VALUE. (a) The market value of gas is its
value at the mouth of the well from which it is produced. The
value of gas at the mouth of the well is determined by
ascertaining the producer's actual marketing costs and
subtracting those costs from the producer's gross cash receipts
from the sale of the gas.
(b) Marketing costs are the costs incurred by the producer to
get the gas from the mouth of the well to the market, including:
(1) costs for compressing the gas sold;
(2) costs for dehydrating the gas sold;
(3) costs for sweetening the gas sold; and
(4) costs for delivering the gas to the purchaser.
(c) Marketing costs do not include:
(1) costs incurred in producing the gas;
(2) costs incurred in normal lease separation of the oil or
condensate; or
(3) insurance premiums on the marketing facility.
(d) Marketing costs are determined by adding:
(1) a reasonable charge for depreciation of the marketing
facility being used, provided that, if the facility is rented,
the actual rental fee is added;
(2) a return on the producer-owned investment equal to six
percent per year on the average depreciable balance;
(3) costs of direct or allocated labor associated with the
marketing facility;
(4) costs of materials, supplies, maintenance, repairs, and fuel
associated with the marketing facility; and
(5) ad valorem taxes paid on the marketing facility.
(e) If the facility is used for a purpose other than marketing
the gas being sold, the cost shall be allocated accordingly.
(f) If the facility is handling gas for outside parties, the
average cost for handling all of the gas shall be applied against
the facility owner's gas.
(g) The actual cost being charged a producer by an outside party
for marketing functions may be used for tax purposes if no other
benefit or value accrues to the producer.
(h) A producer receiving a cost reimbursement from the gas
purchaser shall include the reimbursement in the gross cash
receipts and is entitled to deduct the actual marketing costs
incurred.
Acts 1981, 67th Leg., p. 1730, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 111, eff.
Sept. 1, 2003.
Sec. 201.102. CASH SALES. If gas is sold for cash only, the tax
shall be computed on the producer's gross cash receipts.
Payments from a purchaser of gas to a producer for the purpose of
reimbursing the producer for taxes due under this chapter are not
part of the gross cash receipts.
Acts 1981, 67th Leg., p. 1730, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 112, eff.
Sept. 1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
267, Sec. 10, eff. September 1, 2005.
Sec. 201.103. VALUE IF CONSIDERATION INCLUDES EXTRACTS. If the
consideration for the sale of gas includes products extracted
from the gas, a portion of the residue gas, or both, the tax
shall be computed on the gross value of all things of value
received by the producer, including a bonus or premium.
Acts 1981, 67th Leg., p. 1730, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.104. RETURNED CYCLE GAS. (a) If gas is processed for
its liquid hydrocarbon content and the residue gas is returned to
a gas-producing formation by cycling methods, as distinguished
from repressuring or pressure maintenance methods, the taxable
value of the gas is three-fifths the value of all liquid
hydrocarbons extracted, separated, and saved from the gas.
(b) The value of the liquid hydrocarbons for the purpose of this
section is the highest posted price of crude oil in the field
where the gas is produced. If no oil is produced in that field,
the value is the highest posted price for crude oil in the
nearest oil field.
(c) The value of the liquid hydrocarbons is determined when they
are extracted and separated from gas and before they are
absorbed, refined, or processed. The quantity of the liquid
hydrocarbons is the yield from the gas at the processing plant.
(d) The valuation method prescribed by this section controls
over the valuation methods described in Sections 201.102 and
201.103 of this code only in circumstances in which Subsection
(a) of this section applies.
Acts 1981, 67th Leg., p. 1730, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.105. VALUE OF LIQUID HYDROCARBONS OTHER THAN
CONDENSATE. The taxable value of liquid hydrocarbons other than
condensate is the producer's total gross receipts for all liquid
hydrocarbons, including condensate, recovered from gas produced
by him less the taxable value of the condensate recovered from
that gas.
Acts 1981, 67th Leg., p. 1730, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.106. VALUE OF CONDENSATE. The value of condensate for
the purpose of computing the tax due on it is the prevailing
price for condensate in the general area where it is recovered.
Acts 1981, 67th Leg., p. 1730, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER D. RECORDS
Sec. 201.151. PRODUCER'S RECORDS. A producer shall keep
accurate records of all gas the producer produces. The records
shall be kept in the state.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.152. PURCHASER'S RECORDS. A purchaser shall keep
accurate records of all gas the purchaser purchases. The records
shall be kept in the state.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER E. REPORTS AND PAYMENTS
Sec. 201.201. TAX DUE. The tax imposed by this chapter for gas
produced and saved is due at the office of the comptroller in
Austin on the 20th day of the second month following the month of
production.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1995, 74th Leg., ch. 1000, Sec. 63, eff.
Oct. 1, 1995.
Sec. 201.202. PAYMENT OF TAX. The tax imposed by this chapter
must be paid by legal tender or cashier's check payable to the
comptroller.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.120,
eff. Sept. 1, 1997.
Sec. 201.203. PRODUCER'S REPORT. (a) On or before the 20th day
of the second month following the month in which gas was
produced, the producer shall file a report with the comptroller
on forms prescribed by the comptroller. The report must contain
the following information concerning gas produced during the
month being reported:
(1) the gross amount of gas produced that is subject to the tax
imposed by this chapter;
(2) the leases from which the gas was produced;
(3) the names and addresses of the first purchasers of the gas;
and
(4) other information the comptroller may reasonably require.
(b) If the report the producer is required to file shows
additional tax due, the producer must pay the additional tax when
he files the report.
(c) If the producer is required to report and pay the tax under
Section 201.2041 of this code, the producer's report shall
include for that gas any additional information required to be
reported by a first purchaser under Section 201.2035 of this code
for gas for which the first purchaser is required to pay the tax.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1983, 68th Leg., p. 1378, ch. 284, Sec. 8,
eff. Sept. 1, 1983; Acts 1987, 70th Leg., 2nd C.S., ch. 6, art.
4, Sec. 1, eff. July 21, 1987; Acts 1999, 76th Leg., ch. 1183,
Sec. 2, eff. Sept. 1, 2001.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
10, Sec. 2, eff. September 1, 2009.
Sec. 201.2035. FIRST PURCHASER'S REPORT. (a) On or before the
20th day of the second month following the month in which gas was
purchased from a producer, the first purchaser must file a report
with the comptroller on forms prescribed by the comptroller. The
report must contain the following information concerning gas
purchased from a producer during the month being reported:
(1) the gross amount of gas purchased from each producer;
(2) the price paid for the gas;
(3) the leases from which the gas was produced; and
(4) other information the comptroller may reasonably require.
(b) If the report the first purchaser is required to file shows
any additional tax due, the first purchaser must pay the tax when
he files the report.
Added by Acts 1983, 68th Leg., p. 1378, ch. 284, Sec. 9, eff.
Sept. 1, 1983. Amended by Acts 1999, 76th Leg., ch. 1183, Sec. 3,
eff. Sept. 1, 2001.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
10, Sec. 3, eff. September 1, 2009.
Sec. 201.2037. DISCLOSURE OF CERTAIN INFORMATION.
Notwithstanding any provision of this chapter or Chapter 202,
neither the comptroller nor the Railroad Commission of Texas may
require disclosure of information relating to receipt points,
delivery points, volumes, rates, or other natural gas
transportation contractual information under this chapter or
Chapter 202 unless the disclosure is reasonably necessary for the
comptroller or commission to implement or administer this chapter
or Chapter 202. This section expires September 1, 1999.
Added by Acts 1997, 75th Leg., ch. 1040, Sec. 54, eff. Sept. 1,
1997.
Sec. 201.204. FIRST PURCHASER TO PAY TAX. (a) Except as
provided by Section 201.2041, a [A] first purchaser shall pay the
tax imposed by this chapter on gas that the first purchaser
purchases from a producer and takes delivery on the premises
where the gas is produced.
(b) A first purchaser shall withhold from payments to the
producer the amount of the tax that the first purchaser is
required to pay. This subsection does not affect a lease or
contract between the state or a political subdivision of the
state and a producer.
(c) Money withheld by a first purchaser under this section is
held in trust for the use and benefit of the state and may not be
commingled with other funds of the first purchaser.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 6, art. 4,
Sec. 2, eff. July 21, 1987.
Sec. 201.2041. PRODUCER TO PAY TAX ON CERTAIN GAS. If the first
purchaser takes delivery of gas off the premises on which the gas
is produced, the producer shall report and pay the tax imposed by
this chapter on the volume of gas produced from the premises. In
that event, the first purchaser is not required to report the
purchase of the gas on the report required by Section 201.2035 of
this code or pay the tax on that gas.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 6, art. 4, Sec. 3,
eff. July 21, 1987.
Sec. 201.205. TAX BORNE RATABLY. The tax shall be borne ratably
by all interested parties, including royalty interests. Producers
or purchasers of gas, or both, are authorized and required to
withhold from any payment due interested parties the
proportionate tax due and remit it to the comptroller.
Acts 1981, 67th Leg., p. 1731, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.206. TRANSFER OF OWNERSHIP. (a) If a gas-producing
lease is transferred or is to be transferred, the producer
transferring the lease shall note the name and address of the
producer acquiring the lease and the date of the transfer on the
last report that covers the lease and that he is required by
Section 201.203 of this code to file.
(b) If a gas-producing lease is transferred, the producer
acquiring the lease shall note the date of the transfer and the
name and address of the person from whom the lease was acquired
on the first report that covers the lease and that he is required
by Section 201.203 of this code to file.
Acts 1981, 67th Leg., p. 1732, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER F. LIABILITY FOR TAX
Sec. 201.251. LIABILITY OF PRODUCER AND PURCHASER. (a) The tax
imposed by this chapter is the primary liability of the producer
and, except as provided by Subsection (b) of this section, is a
liability of the first purchaser and each subsequent purchaser.
Failure of the first purchaser to pay the tax does not relieve
the producer or a subsequent purchaser from liability for the
tax. A purchaser of gas produced in the state shall satisfy
himself that the tax on that gas has been or will be paid by the
person liable for the tax.
(b) The first purchaser is not liable for the tax imposed by
this chapter on gas for which the producer is required to pay the
tax as provided by Section 201.2041 of this code, unless the
first purchaser purchases the gas for resale or resells the gas.
Acts 1981, 67th Leg., p. 1732, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 6, art. 4,
Sec. 4, eff. July 21, 1987.
Sec. 201.252. PRODUCER'S REMEDY. If a purchaser withholds the
amount of the tax imposed by this chapter from payments to a
producer for the sale of gas and fails to pay the tax as provided
by this chapter, the producer may sue the purchaser to recover
the amount of the tax withheld, penalties and interest that have
accrued from failure to pay the tax, court costs, and reasonable
attorney's fees.
Acts 1981, 67th Leg., p. 1732, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER G. ENFORCEMENT
Sec. 201.301. INVESTIGATIONS. The comptroller may enter the
premises of a taxpayer liable for a tax imposed by this chapter
or any other premises necessary to determine tax liability in
order to examine books or records of a person subject to a tax
imposed by this chapter or to secure any information related to
the enforcement of this chapter.
Acts 1981, 67th Leg., p. 1732, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.302. AUDITS. (a) The comptroller shall employ
auditors and other technical assistants to verify reports and
investigate the affairs of producers and purchasers to determine
whether the tax is properly reported and paid.
(b) A producer who has failed to pay the proper amount of tax, a
penalty, or interest due is liable for the reasonable expenses
incurred by representatives of the comptroller in the
investigation or the reasonable value of their services. The
amount for which the producer is liable under this subsection is
an additional penalty.
Acts 1981, 67th Leg., p. 1732, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.303. TAX LIEN. (a) If a tax imposed by this chapter
is delinquent or if interest or a penalty on a delinquent tax has
not been paid, the state has a prior lien for the tax, penalty,
and interest on all property and equipment used by the producer
to produce gas.
(b) The lien may be enforced by a suit filed by the attorney
general. Venue of the suit is in Travis County.
Acts 1981, 67th Leg., p. 1733, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.304. SUIT FOR TAXES; SWORN DENIAL. Rule 185, Texas
Rules of Civil Procedure, applies to a suit by the attorney
general for taxes imposed by this chapter if:
(1) the attorney general files as an exhibit a report or audit
of the taxpayer; and
(2) the exhibit is supported by the comptroller's affidavit that
the taxes shown to be due are past due and unpaid and that all
payments and credits have been allowed.
Acts 1981, 67th Leg., p. 1733, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER H. PENALTIES
Sec. 201.351. DELINQUENT TAX; PENALTY. (a) A person who fails
to pay the tax imposed by this chapter when due forfeits five
percent of the amount due as a penalty, and if the person fails
to pay the tax within 30 days after the day on which the tax is
due, the person forfeits an additional five percent.
(b) The minimum penalty provided by this section is $1.
Acts 1981, 67th Leg., p. 1733, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1983, 68th Leg., p. 453, ch. 93, Sec. 7,
eff. Sept. 1, 1983.
Sec. 201.352. UNLAWFUL REMOVAL OF GAS. On notice from the
comptroller, no person may produce or remove natural or
casinghead gas from a lease in this state if the owner or
operator of the lease has failed to file a report or pay a tax as
required by this chapter.
Acts 1981, 67th Leg., p. 1733, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 1, Sec. 11,
eff. July 21, 1987.
Sec. 201.353. INCOMPLETE RECORDS OR REPORTS; CONCEALING PROPERTY
UNDER LIEN; PENALTY. (a) A person commits an offense if the
person:
(1) with intent to defraud the state, knowingly fails to keep a
complete record that the person is required by this chapter to
keep;
(2) knowingly fails to file a complete report on or before the
day the person is required by this chapter to file the report; or
(3) with intent to defraud the state, conceals property or
equipment that is under a lien authorized by Section 201.303 of
this code.
(b) An offense under this section is a misdemeanor punishable
by:
(1) a fine of not less than $100 nor more than $1,000;
(2) confinement in county jail for not more than 12 months; or
(3) both a fine and confinement.
(c) In addition to the criminal penalty, a person is liable for
a civil penalty of $1,000 if the person:
(1) performs any act constituting an offense under Subsection
(a) of this section;
(2) with intent to defraud the state, makes a false entry in any
record the person is required by this chapter to keep;
(3) destroys, damages, or conceals a record the person is
required by this chapter to keep;
(4) falsifies a report the person is required by this chapter to
file; or
(5) violates any rule promulgated under this section.
Acts 1981, 67th Leg., p. 1733, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.354. COLLECTION OF CIVIL PENALTY. (a) The attorney
general shall bring a suit for the collection of a penalty
imposed by Section 201.353(c) of this code.
(b) Venue of a suit under this section is in the county where
the violation occurs.
(c) A suit under this section may be joined with any other civil
suit provided for by this chapter.
Acts 1981, 67th Leg., p. 1734, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.355. GENERAL PENALTY. (a) A person commits an offense
if the person violates or fails to comply with any provision of
this chapter.
(b) An offense under this section is a misdemeanor punishable by
a fine of not less than $100 nor more than $1,000. A separate
offense is committed each day that a violation of a provision of
this chapter continues.
Acts 1981, 67th Leg., p. 1734, ch. 389, Sec. 1, eff. Jan. 1,
1982.
SUBCHAPTER I. CLASSIFICATION OF TAX AND ALLOCATION OF REVENUE
Sec. 201.401. OCCUPATION TAX. The tax imposed by this chapter
is an occupation tax.
Acts 1981, 67th Leg., p. 1734, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.402. PENALTY COLLECTED FOR AUDITS OR INVESTIGATIONS. A
penalty collected for the expense or value of audits or
investigations authorized by Section 201.302 of this code shall
be deposited in the general revenue fund.
Acts 1981, 67th Leg., p. 1734, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.403. TAX SET ASIDE. One-half of one percent of the tax
collected under this chapter shall be set aside in the state
treasury for the use of the comptroller to administer and enforce
the provisions of this chapter, subject to appropriation by the
legislature. Money set aside by this section that is not spent at
the end of a fiscal year reverts proportionally to the other
funds to which the taxes imposed by this chapter are paid.
Acts 1981, 67th Leg., p. 1734, ch. 389, Sec. 1, eff. Jan. 1,
1982.
Sec. 201.404. ALLOCATION OF REVENUE. After deducting the amount
required to be deposited by Section 201.403 of this code, the
comptroller shall deposit one-fourth of the revenue collected
from the tax imposed by this chapter to the credit of the
foundation school fund and three-fourths to the general revenue
fund.
Acts 1981, 67th Leg., p. 1734, ch. 389, Sec. 1, eff. Jan. 1,
1982. Amended by Acts 1981, 67th Leg., p. 2778, ch. 752, Sec.
9(h), eff. Jan. 1, 1982; Acts 1984, 68th Leg., 2nd C.S., ch. 28,
art. II, part B, Sec. 7, eff. Sept. 1, 1984.