Crude Oil and Natural Gas Taxes
Frequently Asked Questions
Account Set Ups
Submit a completed Crude Oil and Natural Gas Texas Tax Questionnaire (Form AP-134) to the Comptroller’s office.
Send a letter to Comptroller’s office stating you ceased conducting business that is subject to all severance tax and reporting laws. In your letter, include the tax identification number, name of your company and the reason the account needs to be closed. You can email your letter at CONGTAX@cpa.state.tx.us or contact Account Maintenance Division for additional information.
Filing Tax Reports for Natural Gas and Crude Oil
All natural gas producers that have an average monthly tax liability of:
- $200 or more must file a producer's monthly tax report, as required by Texas Tax Code 201.203.
- less than $200 must file a producer's annual tax report. Upon request by a taxpayer and approval by an account examiner, a natural gas producer is allowed the option to change their filing status from yearly to monthly if the average monthly tax liability is less than $200. This change in filing status is allowed provided the report period begins in January of the following year. A producer is not allowed to change their filing status from yearly to monthly or monthly to yearly mid-way throughout the year.
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 at 1-800-531-5441, ext. 3-4434 for further information.
Visit our Electronic Data Interchange (EDI) Web page for more Information on filing tax reports electronically.
- Natural gas production from all leases is taxed at the standard 7.5 percent. If a lease was approved for a legislative exemption, then the tax rate is less than 7.5 percent.
- Crude oil production from all leases is taxed at the standard 4.6 percent. If a lease was approved for a legislative exemption, then the tax rate is less than 4.6 percent.
To determine if a natural gas or crude oil lease was approved for a legislative exemption, go to the CONG Web Inquiry system. Under the heading titled, “Lease Search,” click on the link titled, “By Lease Number” and enter the lease, well and county numbers and the lease type.
Natural Gas: Whenever a taxpayer reports as being liable for the tax for a lease, the oil field clean-up 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. The oil field clean-up regulatory fee is $0.000667 for each M.C.F. (1000 cubic feet) of gas produced. The oil field clean-up regulatory rate for gas produced before September 1, 2001 was $0.000333.
Crude Oil: Whenever a taxpayer reports as being liable for the tax on a lease, 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 per barrel. This amount consists of 5/8 of a cent ($0.00625) per barrel.
- For report periods September 2001 through August 2015, the taxable barrels are subject to the Regulatory Tax and Oil Field Clean-Up Fee amounts of .008125. This amount consists of 3/16 of a cent ($.001875) per barrel plus 5/8 of a cent ($0.00625) per barrel, which equals to .008125.
What is the factor that determines 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?
Contact 1-800-531-5441, ext. 3.4455 to discuss the bill with an account examiner. Please provide the account examiner the tax type, taxpayer number and report period.
Detailed information on reporting the low producing well exemption, the latest average gas prices and exemption status for natural gas tax, and the latest average prices for crude oil tax is available online.
Contact Account Maintenance Division to speak to an account examiner. Please follow the pre-recorded prompts to ensure the most efficient customer service.
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 ten 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 Limitation: Credit-amended reports must be filed within four years from the due date of a production period.
- Ten Percent Penalty: Form AP-180 must be filed at the later of the 180th day after the date of first production or the 45th day after the date of approval by the commission. If Form AP-180 is not filed by the applicable deadline, the tax exemption or 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 which have production periods that are prior to the Comptroller’s signature date must be filed by the first anniversary from the Comptroller’s signature date.
- Two-Year Window Requirement: If the application for certification is submitted to the Texas Railroad Commission after Jan. 1, 2004, the total allowable credit for taxes paid for reporting periods before the date the application is filed may not exceed the total tax paid on the gas that otherwise qualified for the exemption or 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.
Contact Account Maintenance Division to speak to an account examiner to find out the status of a refund request.
Web Inquiry System
Tax report data, payments, refunds, account balances, report errors, and data changes can be viewed by logging on to the CONG Web Inquiry system. First time users can contact Comptroller’s office for registration assistance at 1-800-531-5441, ext. 3-4455. You may be asked to submit information via email for identification verification prior to registration.
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 at CONGTAX@cpa.state.tx.us
Open Records Request
The Comptroller’s office has no legal authority involving issues relating to royalty interest owners and their royalty interest payments. To assist royalty interest owners, the Comptroller’s office can provide a computer drop listing the volumes and values reported by producers and purchasers indicating which party paid the tax on a lease for specific production periods. This computer drop can be ordered by submitting an open records request and will inform royalty interest owners when taxes were reported and paid by a producer and/or purchaser. Royalty interest owners can then determine when they should have been paid based on the volumes and values reported to the Comptroller’s office. The Texas Railroad Commission lease and county numbers and the production periods must be provided to the account examiner in the Open Records Division. Contact the Open Records Division at 512-936-6057 or email firstname.lastname@example.org