Texas Administrative Code, Title 34, Part 1, Chapter 34, Subchapter B, Rule 3.14 and Subchapter C, rule 3:34

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SUBCHAPTER BNATURAL GASRULE §3.14Exemption of Certain Interest Owners from Gas Occupation Taxes<br />(a) Mineral and/or royalty interests owned by the federal government and its subdivisions and the State of Texas and its subdivisions are not subject to the gas occupation tax. (1) Subdivisions of the federal government include, but are not limited to, the following: (A) the Federal Land Bank; (B) the Department of the Interior; (C) the Bureau of Land Management; and (D) the Army Corps of Engineers. (2) Subdivisions of the State of Texas include, but are not limited to, the following: (A) Texas cities, towns, and villages; (B) Texas counties; (C) Texas independent and common school districts; and (D) Texas public colleges and universities.(b) The tax on production from properties with an ownership interest exempt from tax, such as state royalty, shall be due from the nonexempt interest owners in the same proportion that the nonexempt owners share the net proceeds (wellhead value) from the sale of the production.(c) For example, 10,000 MMBTU (million British thermal units) are sold for $2.00 per MMBTU or $20,000 gross proceeds. There is a state royalty interest (exempt from tax) paid on gross proceeds and the working interest (not exempt from tax) has incurred $5,000 transportation and processing fee.<br /><<Prev RuleTexas Administrative CodeNext Rule>><br />TITLE 34PUBLIC FINANCEPART 1COMPTROLLER OF PUBLIC ACCOUNTSCHAPTER 3TAX ADMINISTRATIONSUBCHAPTER CCRUDE OIL PRODUCTION TAXRULE §3.34Exemption of Certain Royalty Interests from Oil Occupation Taxes and Regulation Pipeline Taxes<br />Royalty interests owned by the following governmental entities are not subject to the oil occupation tax: (1) cities, towns, and villages; (2) counties; (3) independent school districts and common school districts; (4) public colleges and universities; (5) political subdivisions of the federal government.Source Note: The provisions of this §3.34 adopted to be effective January 1, 1976.<br />