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A BILL TO BE ENTITLED
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AN ACT
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relating to the tax credit for enhanced efficiency equipment |
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installed on certain wells. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 202.061, Tax Code, is amended by |
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amending Subsection (a) and adding Subsection (a-1) to read as |
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follows: |
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(a) In this section "enhanced [:
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[(1)"Enhanced] efficiency equipment" means equipment |
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used in the production of oil that reduces the energy used to |
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produce a barrel of fluid by 10 percent or more when compared to |
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commonly available alternative equipment. The term does not |
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include a motor or downhole pump. Equipment does not qualify as |
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enhanced efficiency equipment unless an institution of higher |
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education approved by the comptroller that is located in this state |
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and that has an accredited petroleum engineering program evaluated |
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the equipment and determined that the equipment does produce the |
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required energy reduction. |
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(a-1) This section applies only to [(2) "Marginal well"
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means] an oil well that produces 25 [10] barrels of oil or less per |
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day on average during a month. |
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SECTION 2. Section 202.061(b), Tax Code, is amended to read |
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as follows: |
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(b) The taxpayer responsible for the payment of severance |
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taxes on the production from a [marginal] well in this state on |
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which enhanced efficiency equipment is installed and used is |
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entitled to a credit in an amount equal to 20 [10] percent of the |
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cost of the equipment, provided that: |
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(1) the cumulative total of all severance tax credits |
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authorized by this section may not exceed $5,000 [$1,000] for any |
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[marginal] well; |
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(2) the enhanced efficiency equipment installed in a |
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qualifying [marginal] well must have been purchased and installed |
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not earlier than September 1, 2005, or later than September 1, 2013 |
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[2009]; |
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(3) the taxpayer must file an application with the |
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comptroller for the credit and must demonstrate to the comptroller |
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that the enhanced efficiency equipment has been purchased and |
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installed in the [marginal] well within the period prescribed by |
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Subdivision (2); |
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(4) the number of applications the comptroller may |
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approve each state fiscal year may not exceed a number equal to one |
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percent of the producing [marginal] wells in this state to which |
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this section applies on September 1 of that state fiscal year, as |
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determined by the comptroller; and |
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(5) the manufacturer of the enhanced efficiency |
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equipment must obtain an evaluation of the product under Subsection |
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(a). |
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SECTION 3. This Act takes effect September 1, 2007. |