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TITLE 34 PUBLIC FINANCE

PART 1 COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 3 TAX ADMINISTRATION

SUBCHAPTER B NATURAL GAS

RULE §3.14 Exemption of Certain Interest Owners from Gas Occupation Taxes

(a) Mineral and/or royalty interests owned by the federal government and its subdivisions and the State of Texas and its subdivisions are not subject to the gas occupation tax.

(1) Subdivisions of the federal government include, but are not limited to, the following:

(A) the Federal Land Bank;

(B) the Department of the Interior;

(C) the Bureau of Land Management; and

(D) the Army Corps of Engineers.

(2) Subdivisions of the State of Texas include, but are not limited to, the following:

(A) Texas cities, towns, and villages;

(B) Texas counties;

(C) Texas independent and common school districts; and

(D) Texas public colleges and universities.

(b) The tax on production from properties with an ownership interest exempt from tax, such as state royalty, shall be due from the nonexempt interest owners in the same proportion that the nonexempt owners share the net proceeds (wellhead value) from the sale of the production.

(c) For example, 10,000 MMBTU (million British thermal units) are sold for $2.00 per MMBTU or $20,000 gross proceeds. There is a state royalty interest (exempt from tax) paid on gross proceeds and the working interest (not exempt from tax) has incurred $5,000 transportation and processing fee.

Attached Graphic

Source Note: The provisions of this §3.14 adopted to be effective April 18, 1983, 8 TexReg 1072.

Page 1 of 2: Texas Administrative Code

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