Gilbert Zamora, CPA Retired
Director of Tax Policy
Former Texas Comptroller Auditor & Tax Policy Expert, 31 Years

Change in Requirement for LOA
(a)  A claim for refund with the comptroller within the limitation period specified by Subchapter D, Chapter 111.
(b)  The comptroller by rule may provide additional procedures for claiming a refund under this section.

If your company falls into the category of a non-permitted Oil and Gas operator and you want to determine if you have overpaid sales taxes on purchases of equipment or services, feel free to contact Texas Tax Group to perform, at no cost to you, a credit/refund review. We work on a contingency basis for refunds/credits, meaning There is no cost unless we are able to generate refunds and/or credits making our Sales and use tax credit/refund study pay for itself. ARE YOU A NON-PERMITTED (FOR SALES TAX) O&G OPERATOR?

As a result of a 2021 legislative change an O&G operator is no longer required to obtain a Letter of Assignment (LOA) from a vendor for sales taxes paid in error to that vendor. The purchaser may seek a refund directly from the comptroller’s office.

Many times, a vendor is no longer in business and the O&G purchaser would be out of luck in obtaining a refund of any taxes paid in error to that vendor.  With this change in statute, an O&G operator, that is permitted to report severance taxes based on the oil and gas produced at the operator’s well site, can request a refund of the taxes paid in error directly from the Comptroller’s office.

A few caveats:

• Refunds would be allowed for transactions that occurred on or after the effective date of the bill, September 1, 2021.
• The O&G operator must be a person that files a report under Sections 201.203, 201.2035, 202.201, or 202.202

Text of the relevant Statute:

Sec. 151.4305.  TAX REFUNDS FOR OIL OR GAS SEVERANCE TAXPAYERS.

(a)  Notwithstanding Section 111.104(b), a person who files a report under Section 201.203, 201.2035, 202.201, or 202.202 and who does not hold a permit under this chapter may obtain a refund for taxes paid under this chapter in error to a person who holds a permit under this chapter by filing a claim for refund with the comptroller within the limitation period specified by Subchapter D, Chapter 111.
(b)  The comptroller by rule may provide additional procedures for claiming a refund under this section.

If your company falls into the category of a non-permitted Oil and Gas operator and you want to determine if you have overpaid sales taxes on purchases of equipment or services, feel free to contact Texas Tax Group to perform, at no cost to you, a credit/refund review. We work on a contingency basis for refunds/credits, meaning There is no cost unless we are able to generate refunds and/or credits making our Sales and use tax credit/refund study pay for itself.

See Comptroller Rules:
§3.324–Oil and Gas Well Services
§3.300 – Manufacturing; Custom Manufacturing; Fabricating; Processing
Tax Policy letters: 9609L1435A12, 9111T1141A07, 9002L0983B08
Southwest Royalties, Inc. v. Combs, et al