Sulphur Production Manual
Chapter 2 - General Information
The tax on sulphur production originated in 1923. The monies raised from this tax are appropriated in the following manner:
- 25% to the Foundation School Fund, and
- 75% to the General Revenue Fund
Currently, there are twenty-seven active taxpayers filing sulphur production reports, most being located in the Houston and Dallas-Fort Worth areas. Some taxpayers are headquartered outside Texas, primarily in Oklahoma.
This tax is imposed on each individual, partnership, corporation or other organization who owns, controls, manages leases or operates a sulphur mine, well or shaft or who produces sulphur by any other method system or manner.
The tax is due on sulphur that is produced in the state of Texas. The tax is not due on the sale of sulphur - but on the production of sulphur. The tax rate is $1.03 per long ton or partial long ton (as partial tons are rounded up to the next whole ton).
Sulphur production tax is tax code 20. Reports are due on the last day of the month following the end of a quarter. This due date has been in effect since September 13, 1983, when it was changed by administrative rule. Please note: the due date referenced in the Statute has not been updated.
(There is a due date chart provided in this manual – See Chapter 5.)
The taxpayer must file a report whether or not there is tax due on a report.
On the tax report total long tons of sulphur produced is reported. Long tons = 2,240 lbs. A normal ton = 2000.
Note: The conversion factor to use for converting normal to long is .892857 (2000/2240). All fractions of tons should be rounded up to the next whole ton on the report.
The actual report form can be found on the Comptroller’s website:
Additional 50% Penalty
Effective for audits started on or after September 1, 1989, an additional penalty of 50 % of the amount due may be assessed. Section 111.061 of the State Taxation – Collection Procedures allows for this additional 50% penalty if:
- The failure to pay the tax or file a report when due was a result of fraud or an intent to evade the tax; or
- The taxpayer alters, destroys, or conceals any record, document, or thing, or presents to the comptroller any altered or fraudulent record, document, or thing, or otherwise engages in fraudulent conduct, for the apparent purpose of affecting the course or outcome of an audit, investigation, redetermination, or other proceeding before the comptroller.
This penalty is in addition to any penalty previously mentioned (Sec. 203.101).
Although the statute for sulphur production tax, which is really an occupation tax, does not specifically detail any exemptions, deductions are allowed for exempt royalties. The deductions would consist of royalty interests of:
- The State of Texas
- Cities, towns or, villages of Texas
- Counties of Texas
- Independent school districts in Texas
- State-supported colleges and universities
The basis for these deductions comes from Texas Attorney General Opinion Number 0-476, dated May 18, 1939. Briefly, this opinion stated that the state cannot impose an occupation tax upon itself. The opinion further stated that the entities listed above are considered to be part of the State of Texas, thus exempt.
NOTE: There is not any exemption for royalty interests of churches or charitable institutions.