Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS › Chapter 3 - TAX ADMINISTRATION › Subchapter C - CRUDE OIL PRODUCTION TAX › Section 3.37 - Enhanced Oil Recovery Projects

Current through Reg. 49, No. 28; July 12, 2024
(a)
				  Enhanced oil recovery projects.
(1) Producers
				  producing crude oil from an enhanced oil recovery project approved and
				  certified by the Texas Railroad Commission may file with the comptroller an
				  application for a reduced tax rate.
(2) An application for taxation at the
				  reduced tax rate must be filed.
(A) The
				  operator shall make application on forms prescribed by the comptroller for the
				  reduced tax rate on qualified oil produced and sold by the operator. The
				  operator shall be responsible for advising the comptroller whenever the status
				  of the enhanced oil recovery project changes in a manner that would affect the
				  imposition of the tax due on the oil produced from the project area.
(B) A nonoperator taking production in-kind
				  from a project area for which the operator has filed an application for tax
				  relief shall also file an application for tax relief on forms prescribed by the
				  comptroller for the qualified oil produced and sold by the
				  nonoperator.
(3) The
				  application for tax relief filed by the operator shall include an approved copy
				  of Texas Railroad Commission Form H-12, Enhanced Oil Recovery Project and Area
				  Designation Approval Application, and a copy of the Certificate of Positive
				  Production Response issued by the Texas Railroad Commission.
(4) The application for tax relief filed by a
				  nonoperator must contain the project name as designated by the operator, and
				  the project number as designated by the Texas Railroad Commission. The
				  application for tax relief filed by a nonoperator will not be granted until the
				  operator has complied with paragraph (3) of this subsection.
(5) When an application for tax relief has
				  been approved by the comptroller, a producer may file amended reports to
				  recover the additional tax paid by the producer on qualified oil for periods
				  after the effective date of the reduced tax rate and prior to the actual date
				  of approval. In order to obtain a refund, the amended reports must be filed
				  within one year after the date the Texas Railroad Commission certifies that a
				  positive production response has occurred.
(6) Producers obtaining an approval for
				  relief from the comptroller shall furnish to any first purchaser required to
				  report a purchase of the enhanced recovery oil a copy of the comptroller's
				  approval. Any first purchaser paying tax on qualified oil for periods after the
				  effective date of the reduced rate and prior to the actual date of approval
				  shall file amended reports to recover the additional tax paid. In order to
				  obtain a refund, the amended reports must be filed within one year after the
				  date the Texas Railroad Commission certifies that a positive production
				  response has occurred.
(7)
				  Producers and purchasers reporting enhanced recovery oil shall designate the
				  oil as being qualified secondary recovery oil, or oil recovered by any other
				  approved enhanced recovery method, according to instructions contained on the
				  crude oil tax reports.
(8) The
				  reduced tax rate does not apply until an amount of oil equal to the oil
				  produced and stored on the lease prior to the effective date of the tax relief
				  is removed from the lease.
(9) Any
				  crude oil produced and stored on the lease during a period in which the reduced
				  tax rate applies, but removed from the lease after the reduced tax rate period
				  has expired, qualifies for the reduced tax rate. The reduced tax rate will
				  apply until the volume of oil removed equals the volume of qualified oil
				  stored.
(10) Producers delivering
				  to a first purchaser oil which contains a volume of qualified secondary
				  recovery oil, and/or a volume of qualified oil produced by any other approved
				  recovery method, and a volume of oil not eligible for the reduced tax, or any
				  combination of these, shall furnish to the first purchaser the volume
				  information necessary to enable the purchaser to file proper reports.