SECTION 3.143. Oil, Gas, and Related Well Service

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Incomplete service--A service precluded or terminated without the benefit contracted for being produced (whether or not equipment is connected to the well).

(2) Primary taxable service--Includes:

(A) cementing the casing seat of any oil or gas well;

(B) shooting, fracturing, or acidizing the sands or other formations of the earth in any such well; and

(C) surveying or testing such formations or the contents thereof, in any such well through the use of instruments or equipment at least a portion of which instruments or equipment is located within the well bore when the survey or test is made.

(3) Waiting or standby time--That portion of the time billed at a reduced rate because the equipment for which such billing is made was not actually used in the performance of a taxable service during such period.

(b) Tax receipts. The following receipts shall be considered as taxable.

(1) Any tax imposed by the Texas Tax Code, §191.082, which is collected from the consumer by the person performing the taxable services shall be included in the taxpayer's gross receipts subject to the tax imposed by the Texas Tax Code, §191.082.

(2) Any receipts for service performed in direct connection with the primary taxable service when performed simultaneously with such taxable service, such as:

(A) services performed in direct connection with the addition of materials to enhance injection or recovery of fracturing fluids or formation dissolving acids; or

(B) casing pumps or other equipment utilized to keep packers in place during fracturing and acidizing operations; and

(3) any receipts for "mixing, blending, proportioning," or other similar activity, whenever such activity is performed by means of equipment connected to the well either directly or indirectly.

(c) Nontaxable receipts. The following receipts are not taxable provided they are invoiced separately or otherwise substantiated:

(1) any receipts for equipment taken to the well location but not connected in any way to the well or other equipment;

(2) receipts attributable to reasonable mileage charges for "waiting" or "standby" time, or incomplete service;

(3) receipts associated with services performed in converting an oil or gas well into an injection well;

(4) sales tax reimbursement;

(5) any receipts for service performed before or after a taxable service has been commenced or completed, such as:

(A) use of jet guns or other similar devices to perforate or to clean perforations preparatory to fracturing or acidizing; and

(B) surveying preparatory to fracturing or acidizing when not for location or determination of a producing formation;

(6) that portion of any receipts which represents the value at the well of any materials used, consumed, expended, or incorporated into the well; and

(7) receipts for frac tank services.

Source Note: The provisions of this §3.143 adopted to be effective January 1, 1976; amended to be effective May 14, 1979, 4 TexReg 1301; amended to be effective June 27, 1979, 4 TexReg 2142; amended to be effective June 3, 1985, 10 TexReg 1583.