81R10991 CBH-D
By: Merritt H.B. No. 3332
A BILL TO BE ENTITLED
AN ACT
relating to an exemption from the oil severance tax for oil produced
from certain low-producing wells.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 202, Tax Code, is amended
by adding Section 202.0585 to read as follows:
Sec. 202.0585. EXEMPTION FOR OIL FROM LOW-PRODUCING WELL.
(a) In this section:
(1) "Commission" means the Railroad Commission of
Texas.
(2) "Low-producing well" means a well classified as an
oil well whose production during a calendar year is less than 15
barrels of oil per day of production.
(b) Oil produced from a low-producing well is exempted from
the tax imposed by this chapter as provided by this section.
(c) An operator of a well may submit an application to the
commission for certification of a well as a low-producing well. The
commission may require the applicant to provide the commission with
any relevant information required to certify the well. The
commission shall issue a certificate to each operator of the well.
The certificate must:
(1) identify the well; and
(2) state the date the tax exemption takes effect,
subject to the comptroller's approval of the exemption under
Subsection (g).
(d) The commission shall provide to the comptroller a copy
of a certificate of exemption for each well qualifying under this
section.
(e) The commission may revoke a certificate relating to a
well if the commission receives information indicating that the
well was not eligible for certification at the time the commission
issued the certificate or if the well no longer qualifies as a
low-producing well. The commission shall notify the operator and
the comptroller that a certificate has been revoked. A tax
exemption granted under this section is automatically revoked on
the date the certificate is revoked, and oil produced from the well
after the date of revocation is not eligible for the tax exemption.
(f) The commission may adopt and enforce any rules or orders
that the commission finds necessary to administer this section.
(g) To qualify for the tax exemption, the person responsible
for paying the tax must apply to the comptroller for the exemption
and include with the application the certificate issued by the
commission under Subsection (c). The comptroller shall approve the
application if the person submits the certificate and the
comptroller determines that the oil produced from the well is
otherwise eligible for the exemption. The comptroller may require
a person applying for the tax exemption to provide any relevant
information necessary to administer this section. The comptroller
may establish procedures to comply with this subsection and
Subsection (h).
(h) If the tax is paid at the full rate provided by this
chapter on oil produced on or after the date the commission
certifies the well for a tax exemption but before the date the
comptroller approves the application for the tax exemption, the
operator is entitled to a credit on taxes due under this chapter in
the amount equal to the tax paid during that period. To receive a
credit, the operator must apply to the comptroller for the credit
not later than the first anniversary of the date the commission
certifies the well for a tax exemption.
(i) A person is subject to the penalties that may be imposed
under Chapters 85 and 91, Natural Resources Code, if the person
makes and submits to the commission or comptroller an application,
report, or other document used or intended to be used for a
certificate, tax exemption, or tax credit under this section and
the person knows that the application, report, or other document
contains a false or untrue material fact.
(j) A person is liable to this state for a civil penalty if
the person, after receiving notice from the commission that the
person's tax exemption certificate for a well has been revoked,
applies or attempts to receive the tax exemption for oil produced
from the well under the revoked certificate. The amount of the
penalty may not exceed the sum of:
(1) $10,000; and
(2) the difference between the amount of taxes paid or
attempted to be paid and the amount of taxes due.
(k) The attorney general may recover a penalty under
Subsection (j) in a suit brought on behalf of this state. Venue for
the suit is in Travis County.
SECTION 2. The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
SECTION 3. This Act takes effect January 1, 2010.