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A BILL TO BE ENTITLED
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AN ACT
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relating to the designation of a well as a two-year inactive well or |
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three-year inactive well for purposes of the oil and gas severance |
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tax exemption. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 202.056, Tax Code, is amended to read as |
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follows: |
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(a) In this section: |
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(1) "Commission" means the Railroad Commission of |
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Texas. |
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(2) "Hydrocarbons" means any oil or gas produced from |
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a well, including hydrocarbon production. |
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(3) "Three-year inactive well" means any well that has
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not produced in more than one month in the three years prior to the
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date of application for severance tax exemption under this section.
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(4) "Two-year inactive well" means a well that has not |
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produced oil or gas in more than one month in the two years |
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preceding the date of application for severance tax exemption under |
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this section. |
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(b) Hydrocarbons produced from a well qualify for a 10-year |
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severance tax exemption if the commission designates the well as a |
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three-year inactive well or a two-year inactive well. The |
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commission may require an applicant to provide the commission with |
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any relevant information required to administer this section. The |
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commission may require additional well tests to determine well |
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capability as it deems necessary. The commission shall notify the |
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comptroller in writing immediately if it determines that the |
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operation of the three-year inactive well or two-year inactive well |
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has been terminated or if it discovers any information that affects |
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the taxation of the production from the designated well. |
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(c) If the commission designates a three-year inactive well
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under this section, it shall issue a certificate designating the
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well as a three-year inactive well as defined by Subsection (a)(3)
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of this section. The commission may not designate a three-year
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inactive well under this section after February 29, 1996. If the |
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commission designates a two-year inactive well under this section, |
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it shall issue a certificate designating the well as a two-year |
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inactive well as defined by Subsection (a)(4)(3) of this section. |
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The commission may not designate a two-year inactive well under
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this section after February 28, 2010.
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(d) An application for three-year inactive well
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certification shall be made during the period of September 1, 1993,
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through August 31, 1995, to qualify for the tax exemption under this
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section. An application for two-year inactive well certification |
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shall be made during the period September 1, 1997, through August
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31, 2009, to qualify for the tax exemption under this section. |
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Hydrocarbons sold after the date of certification are eligible for |
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the tax exemption. |
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(e) The commission may revoke a certificate if information |
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indicates that a certified well was not a three-year inactive well
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or a two-year inactive well, as appropriate, or if other lease |
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production is credited to the certified well. Upon notice to the |
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operator from the commission that the certificate for tax exemption |
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under this section has been revoked, the tax exemption may not be |
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applied to hydrocarbons sold from that well from the date of |
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revocation. |
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(f) The commission shall adopt all necessary rules to |
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administer this section. |
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(g) To qualify for the tax exemption provided by this |
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section, the person responsible for paying the tax must apply to the |
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comptroller. The comptroller shall approve the application of a |
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person who demonstrates that the hydrocarbon production is eligible |
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for a tax exemption. The comptroller may require a person applying |
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for the tax exemption to provide any relevant information necessary |
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to administer this section. The comptroller shall have the power to |
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establish procedures in order to comply with this section. |
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(h) If the tax is paid at the full rate provided by Section |
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201.052(a), 201.052(b), 202.052(a), or 202.052(b) before the |
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comptroller approves an application for an exemption provided for |
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in this chapter, the operator is entitled to a credit against taxes |
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imposed by this chapter in an amount equal to the tax paid. To |
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receive a credit, the operator must apply to the comptroller for the |
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credit before the expiration of the applicable period for filing a |
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tax refund claim under Section 111.104. |
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(i) Penalties |
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(1) Any person who makes or subscribes any |
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application, report, or other document and submits it to the |
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commission to form the basis for an application for a tax exemption |
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under this section, knowing that the application, report, or other |
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document is false or untrue in a material fact, may be subject to |
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the penalties imposed by Chapters 85 and 91, Natural Resources |
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Code. |
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(2) Upon notice from the commission that the |
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certification for a three-year inactive well or a two-year inactive |
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well has been revoked, the tax exemption shall not apply to oil or |
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gas production sold after the date of notification. Any person who |
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violates this subsection is liable to the state for a civil penalty |
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if the person applies or attempts to apply the tax exemption allowed |
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by this chapter after the certification for a three-year inactive
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well or a two-year |
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inactive well is revoked. The amount of the |
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penalty may not exceed the sum of: |
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(A) $10,000; and |
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(B) the difference between the amount of taxes |
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paid or attempted to be paid and the amount of taxes due. |
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(3) The attorney general may recover a penalty under |
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Subdivision (2) of this subsection in a suit brought on behalf of |
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the state. Venue for the suit is in Travis County. |
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SECTION 2. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect on the 91st day after the last day of the |
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legislative session. |