By: Armbrister S.B. No. 1198
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the taxation of oil well servicing under Chapters 151
1-2 and 191 of the Tax code; providing definitions of oil well
1-3 servicing and gross receipts; requiring permits for service
1-4 providers.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
1-7 by adding a new Section 151.352, to read as follows:
1-8 Sec. 151.352. OIL WELL SERVICING-CONSUMABLE SUPPLIES OR
1-9 MATERIALS. (a) There are exempted from the taxes imposed by this
1-10 chapter the sale or purchase of consumable supplies or materials
1-11 used and consumed by a person permitted to perform an oil well
1-12 service subject to the tax imposed under Subchapter E of Chapter
1-13 191 of this code.
1-14 (b) As used in this section, "consumable supplies or
1-15 materials used and consumed" means tangible personal property used
1-16 directly in providing the service that is used once and is
1-17 completely consumed or destroyed as a result of that use.
1-18 SECTION 2. Section 191.081, Tax Code, is amended to read as
1-19 follows:
1-20 Sec. 191.081. DEFINITIONS <DEFINITION>. In this subchapter:
1-21 (1) "oil well service" means all activities performed
1-22 for consideration in oil, gas, disposal, injection, or geothermal
1-23 wells in this state by the use of instruments, equipment or other
2-1 tangible personal property, at least a portion of which is used to
2-2 create the well bore or is located in the well bore when the
2-3 service is performed. This service includes, but is not limited
2-4 to, all activities performed to create, enlarge, abandon, plug,
2-5 spud, or extend the well bore, to install downhole or remove from
2-6 downhole casing, tubing, packers, pumps, or other devices or
2-7 equipment, to survey or test the sands, formations, or their
2-8 contents, to perforate, acidize, or fracture the tubing, casing,
2-9 sands, or formations surrounding the well bore, or to start,
2-10 stimulate, restore, maintain, increase, or stop production. The
2-11 term does not include activities performed before spudding, and
2-12 activities on or near the surface of the earth in preparation for
2-13 or support of drilling a well, such as constructing, repairing, or
2-14 maintaining roads and pads, digging pits, or setting up drilling
2-15 equipment; and does not include activities performed after plugging
2-16 and abandoning of a well; or services performed on a well the
2-17 purpose of which is to produce water;
2-18 (2) "gross receipts" means the total value charged or
2-19 received by, or promised as consideration to, the person who
2-20 performs a well service without a deduction for the materials or
2-21 equipment used, labor or service employed, interest, losses, or
2-22 other expenses incurred by the service provider; or, transportation
2-23 incidental to the performance of the well service. "Gross
2-24 receipts" does not include the amount of tax imposed under this
2-25 subchapter if separately stated to the purchaser for reimbursement
3-1 purposes <cementing the casing seat of an oil or gas well,
3-2 shooting, fracturing, or acidizing the sands or other formation of
3-3 the earth in an oil or gas well, or surveying or testing the sands
3-4 or other formations or their contents in an oil or gas well by
3-5 using instruments or equipment at least a part of which are located
3-6 in the well bore when the survey or test is made>.
3-7 SECTION 3. Section 191.082 is amended to read as follows:
3-8 (a) A tax is imposed on each person who engages in the
3-9 business of providing any oil well service for another for
3-10 consideration.
3-11 (b) The tax is the obligation of the service provider and
3-12 shall be paid by the service provider to the comptroller.
3-13 (c) The amount of tax may be separately stated to the
3-14 purchaser and shall, if separately stated, be a debt of the
3-15 purchaser to the service provider until paid <and who:>
3-16 <(1) owns, controls, or furnishes the tools,
3-17 instruments, and equipment used in providing the oil well service
3-18 for another for consideration and who:>
3-19 <(2) uses any chemical, electrical, or mechanical
3-20 process in providing the service at any oil or gas well during and
3-21 in connection with the drilling and completion, or reworking or
3-22 reconditioning, of the well.>
3-23 <(b) The tax imposed by this subchapter does not apply to the
3-24 business of drilling or reworking an oil or gas well or to a
3-25 service incidental to that business performed by persons engaged in
4-1 the business or drilling or reworking>.
4-2 SECTION 4. Section 191.083, Tax Code, is amended to read as
4-3 follows:
4-4 The rate of the tax imposed by this subchapter is 3.1 <2.42>
4-5 percent of the service provider's gross receipts <amount received
4-6 for service after deduction for the reasonable value at the well of
4-7 material used, consumed, or expended in or incorporated into the
4-8 well>.
4-9 SECTION 5. Section 191.085(b), Tax Code, is amended to read
4-10 as follows:
4-11 (b) The person shall keep the record open for four <two>
4-12 years for inspection by the comptroller or the attorney general.
4-13 SECTION 6. Section 191.089, Tax Code, is amended to read as
4-14 follows:
4-15 Sec. 191.089. PERMIT REQUIRED. (a) A person subject to the
4-16 tax imposed by this subchapter shall register with the comptroller
4-17 and file an application for a permit.
4-18 (b) The registration and permit application form must
4-19 contain the following information:
4-20 (1) the name under which the applicant transacts or
4-21 intends to transact business;
4-22 (2) the principal office, residence, or place of
4-23 business in Texas of the applicant;
4-24 (3) if the applicant is not an individual, the names
4-25 of the principal officers of an applicant corporation, or the names
5-1 of the members of an applicant partnership, and the office, street,
5-2 or post office addresses of each; and
5-3 (4) other information required by the comptroller.
5-4 (c) The comptroller may deny or may revoke a permit if false
5-5 information is submitted on the application or on a required tax
5-6 report <acquire the permit required by Section 182.086 of this
5-7 code. Application, issuance, and suspension of the permit are
5-8 subject to Sections 182.087 and 182.088 of this code>.
5-9 SECTION 7. Section 191.101, Tax Code, is amended by adding a
5-10 new subsection (c) to read as follows:
5-11 (c) This subchapter does not apply to subchapter E of this
5-12 chapter.
5-13 SECTION 8. This act takes effect on January 1, 1994.
5-14 SECTION 9. This article applies to services performed on or
5-15 after the effective date of this article. Taxes on services
5-16 performed before the effective date of this article are governed by
5-17 the law in effect when the services were performed, and that law is
5-18 continued in effect for the collection of taxes due and for civil
5-19 and criminal enforcement of the liability for those taxes.
5-20 SECTION 10. The importance of this legislation and the
5-21 crowded condition of the calendars in both houses create an
5-22 emergency and an imperative public necessity that the
5-23 constitutional rule requiring bills to be read on three several
5-24 days in each house be suspended, and this rule is hereby suspended.