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

Well Service Providers

Well Service ProvidersAre you a well service provider that is unclear of your tax responsibilities relating to services that you provide at the well site?

Due to recent changes/clarifications in policy by the Comptroller’s office you may find that you collected tax in error on the services that you provide at the well site. These could include services such as flow back testing, water transfer services, adding chemicals downhole or to prevent deterioration of exempt equipment.

Worse yet, you may have collected tax and find that you are not permitted to remit the tax to the Comptroller’s office. In audit situation this referred to as Tax Collected Not Remitted (TCNR).

Penalties for TCNR can include a 50% fraud penalty in addition to the regular 10% late filing

Penalty.
If you are not permitted to collect and report sales taxes, the Comptroller may go beyond the normal four year statute period for audits to recover taxes owed. In some instances, where the TCNR is material, the Comptroller may seek to refer the case for criminal prosecution.

What can you do?

If you find that you are in this situation, you should hire Texas Tax Group to do a review of your records and determine the extent of your liability. There may be options available to you that we can address that can help you avoid the penalties and interest. We may also be able to limit the review to a four year period.