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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

Crude Oil and Natural Gas Taxes Frequently Asked Questions


Tax Accounts

How do I open a crude oil and/or natural gas account with the Comptroller's office?

Complete and submit Form AP-134, Crude Oil and Natural Gas Texas Tax Questionnaire (PDF), to the Comptroller's office via mail or email.

How do I close my crude oil or natural gas tax account?

Send a letter to Comptroller's asking for your account to be closed. In your letter, include

  • the taxpayer identification number
  • name of your company
  • tax type(s)
  • reason the account needs to be closed
  • date the account should be closed

Email your letter to congtax@cpa.texas.gov or contact the Account Maintenance Division for additional information. Paper filers should blacken the final report box if using any of these forms:

Filing Tax Reports

Can I print my own tax report or exemption application forms online?

Yes, all Texas natural gas and crude oil tax forms are available online.

Do I need to file a producer natural gas tax report on a yearly or monthly basis?
  • File monthly if you are a natural gas producer with an average monthly tax liability that is over $200 per month or $2,400 per year.
  • File annually if you are a natural gas producer with an average monthly tax liability of $200 or less. By taxpayer request and with account examiner approval, natural gas producers can change their filing status from monthly to yearly if the average monthly tax liability is $200 or less. This change in filing status is allowed provided the report period begins in January of the following year. Producers can only change their filing status from yearly to monthly or monthly to yearly on Jan. 1.
How can I be set up to file a monthly producer crude oil tax report?

A crude oil producer or operator must send a letter to the Tax Policy Division requesting approval to file monthly tax reports. Contact the Tax Policy Division toll-free at 1-800-531-5441, ext. 3-7393 for further information.

How can I be set up to file and pay natural gas and crude oil tax reports electronically?

Visit our Electronic Data Interchange (EDI) web page for more information on filing tax reports electronically.

How do I determine the tax rate for my natural gas or crude oil lease?
  • Natural gas production from all leases is taxed at the standard 7.5 percent of net taxable value, unless a statutory exemption that lowers the rate applies.
  • Crude oil production from all leases is taxed at the standard 4.6 percent of net taxable value, unless a statutory exemption that lowers the rate applies. To determine if a natural gas or crude oil lease was approved for a statutory exemption, go to the CONG Web Inquiry system. Under the "Lease Search" heading, click on the "By Lease Number" link and enter the lease number and county code.
What is a regulatory fee? How is it calculated?

Natural Gas: Whenever a taxpayer reports as being liable for the tax for a lease, the oil field cleanup regulatory fee applies only to the reported volumes of raw gas (RG-1), lease use gas (LU-3), products (PR-6) and residue gas (RS-5). If both products and residue are reported on the same lease, the residue volume is not used to calculate the fee (residue reported without products is subject to the fee). The oil field cleanup regulatory fee is $0.000667 for each MCF (1,000 cubic feet) of gas produced.

Crude Oil: Whenever a taxpayer reports as being liable for the tax on a lease,

  • For report periods prior to September 2015, the regulatory tax and fee applies on crude oil produced and saved.
  • For report periods September 2015 and later, the taxable barrels are subject to the Oil Field Clean-Up Fee of $0.00625 (5/8 of a cent) per barrel.
  • For report periods September 2001 through August 2015, the taxable barrels are subject to the Regulatory Tax and Oil Field Clean-Up Fee amounts of .008125 (3/16 of a cent ($.001875) per barrel plus 5/8 of a cent ($0.00625) per barrel, equaling .008125).
Which party is liable for the tax on each lease? What happens if a purchaser withholds tax from the producer, but the purchaser does not pay the tax to the Comptroller's office?
What are the numeric commodity codes for natural gas?

The numeric codes are:

  • 1 - Raw Gas
  • 3 - Lease Use
  • 4 - Condensate
  • 5 - Residue
  • 6 - Products

Account Reconciliation

I received a jeopardy determination for a report period. Why did I receive this, and who do I contact to discuss it?

Contact 1-800-531-5441, ext. 3.4455 to discuss the bill with an account examiner. Please have the tax type, taxpayer number and report period ready when you call.

Exemption Applications

How can I receive a tax credit from a low-producing gas well or low-producing oil lease (exempt type 11)?

Visit our website for detailed information on claiming a tax credit from a low-producing gas well, low-producing oil lease, and the latest average gas and oil prices.

Who do I contact regarding a question about my natural gas or crude oil tax accounts or my exemption applications?

Visit the Account Maintenance Division webpage for contact information.

The Comptroller approval letter for a specific lease states that the reduced rate for high cost gas will not apply since the one-year and two-year window requirements were not met. What does this mean? Also, what is a 10 percent penalty?

To recoup credits for previously paid tax on approved reduced tax rates for high cost gas leases, the information filed on credit-amended reports must meet all of the following criteria:

  • Four-Year Statute of Limitations: Credit-amended reports must be filed within four years from the due date of a production period.
  • Ten Percent Penalty: Form AP-180, Request for Approval of Reduced Tax Rate for High Cost Gas (PDF), must be filed the 180th day after the date of first production or the 45th day after the date of approval by the commission, whichever is later. If Form AP-180 is not filed by the applicable deadline, the tax deduction is reduced by 10 percent for the period beginning on the 180th day after the first day of production and ending on the date on which Form AP-180 is filed with the Comptroller.
  • One-Year Window Requirement: Credit-amended reports containing approved exempt high cost gas wells that have production periods prior to the Comptroller's signature date must be filed by the first anniversary from the Comptroller's approval date.
  • Two-Year Window Requirement: The total allowable credit for taxes paid for reporting periods before the date the application is filed cannot exceed the total tax paid on the gas that otherwise qualified for the tax reduction and that was produced during the 24 consecutive calendar months immediately preceding the month in which the application for certification was filed with the Texas Railroad Commission.

Refunds

How do I request a refund for natural gas or crude oil tax?

Information on filing a refund request for natural gas tax and for crude oil tax is available online.

Who can I call to determine the status of my pending refund request?

Visit the Account Maintenance Division webpage for contact information.

Web Inquiry System

How can I view the Comptroller's office data on my natural gas or crude oil tax account?

You can view tax report data, payments, refunds, account balances, report errors and data changes using the CONG Web Inquiry system. First time users can contact Comptroller's office for registration assistance at 1-800-531-5441, ext. 3-4455. We may ask you to submit information via email for identification verification prior to registration.

Why does the Web Inquiry system indicate a report period is in error status? I don't see any critical errors for the report period when I run the report error list.

In the report period flagged as being in error status, there is a variance between the reported totals and the calculated totals for one or more of the tax reports processed. For assistance, call the Comptroller's office at 1-800-531-5441, ext. 3-4455 or email congtax@cpa.texas.gov.

On the CONG inquiry system, what’s the difference between data changes and errors?
  • A data change occurs when a taxpayer files a report with information that is inconsistent with the comptroller’s database information. The system will automatically adjust the information. In some cases, data changes can incur a liability. It is recommended to review your account on the CONG inquiry system within a week after filing your report to verify whether data changes are present and make any necessary amendments for correction.
  • An error occurs when the taxpayer makes an error on the filed report. In some cases, errors can create a liability. Common errors include:
    • incorrect county codes;
    • incorrect purchaser/producer number;
    • math errors on the values/net taxable value.
    These can be checked on the CONG inquiry system. It is recommended to review your account on the CONG inquiry system be within a week after filing your report to verify whether errors are present and make any necessary amendments for correction.
What are data changes?
  • Data changes happen when the report doesn’t match internal information.
    • Example: if a lease has switched from oil to gas, the system will automatically change the data to correct the lease type. This type of data change does not typically need to be corrected.
  • In some cases, data changes can impact your tax due and an amended report will need to be filed to correct the data changes.
    • Example: Taxpayer has filed a report with a low-producing exemption. But the Railroad Commission (RRC) has not received the taxpayer’s production report on time for that filing period—the low-producing exemption will be data changed to remove the exemption from the report.
      • This typically will result in a liability/penalty. The Railroad Commission (RRC) production reports are due earlier than the comptroller’s tax reports. Please check with the RRC to ensure that you are filing your production reports on time to avoid these types of data changes, as they often require corrections in the form of an amended report.
      • In some cases, data changes are accurate. In the case of low-producing exemptions, if the monthly average is more than 90 mcfs, the data change is accurate, and a liability will be assessed.
      • In some cases, the exemption will be data changed because the taxpayer filed with the incorrect percentage. You can find the monthly percentages and gas prices on our website. This page should be checked every filing period to ensure that percentages are accurate in the report. In this case, a liability will be assessed.
Where do I find data changes?

Navigate to the CONG inquiry system, on the lower left side of the page, under "Secure Information." You must be signed in to see your data changes.

How do I correct data changes?
  • Some data changes do not require correction. Such as the previous example of lease type changes.
  • Things that do require correction: anything that affects tax liability. The most common data changes that typically need to be corrected are the type in the previous example of the low-producing exemption.

Royalty Interest

I am a royalty interest owner of several natural gas leases, and I have not received payments for my royalties. How can I find out why I am not being paid my portion?

The Comptroller's office has no legal authority involving issues relating to royalty interest owners and their royalty interest payments. However, the Comptroller's office can assist in generating a list of the volumes and values that producers and purchasers report. The list shows which party paid the tax on a lease for specific production periods; royalty interest owners can use the list to determine when they should have been paid based on the volumes and values reported to the Comptroller's office. Order the list by submitting an open records request at open.records@cpa.texas.gov. Include the Texas Railroad Commission (RRC) lease and county numbers and the production periods.

Additionally, you may use the RRC lease ID number or drilling permit number to look up this data on our CONG Web Inquiry system. Click either the "Lease Drop–Crude Oil" or "Lease Drop–Natural Gas" links, and complete the appropriate fields. No login is required for this feature.