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Natural Gas Tax Reports

Monthly Producer Tax Report

GENERAL INFORMATION

  • This report must be accompanied by all Lease Detail Supplement pages (Form #10-163). It is recommended to complete the supplement pages first, before completing the Report Totals and Tax Computation page.
  • This report form is available on the Comptroller's Web site: http://www.window.state.tx.us/taxinfo/taxforms/11-forms.html
  • Do not report corrections from a previous report period on this report. The "Amended Natural Gas Tax - Producer Report (Form #10-169 and #10-173) must be filed to correct previously reported data or to report data omitted from your original report form.
  • This page must include a signature and printed name.
  • Do not write in shaded areas.
  • For assistance in completing this form, call the Crude Oil and Natural Gas Tax Section at (800) 531-5441, ext. 3-4455 or e-mail the section at: congtax@cpa.state.tx.us

WHO MUST FILE?

  • Every producer whose natural gas tax account is established and is authorized by the Comptroller must file this report either monthly or annually, depending on the amount of taxes paid in a calendar year.
  • As long as a producer is in business, this report must be filed even if the producer sold no gas in any production period. Producers who have nothing to report for a specific report period must mark the box in item "j" of this page. Returning the Lease Detail Supplement Form (#10-163) page is not required when a producer has nothing to report.
  • Producers required to file this report must report all taxable disposition of natural gas even if the purchaser is paying the tax.

WHEN TO FILE?

  • If the due date falls on a Saturday, Sunday or legal holiday, the next business day will be the due date for the following types of filers:
    1. Monthly Filers: This report must be filed or postmarked on or before the 20th of the second month following the month of production.
    2. Annual Filers: This report must be filed on or before February 20th of the following year.

Producer Report of Natural Gas Tax

SPECIFIC INFORMATION

Item c: Taxpayer Number

Enter your 11-digit taxpayer number assigned by the Comptroller's office.

Item e: Filing Period

  • Monthly Filers: Enter the month and year for the report period. Example: March 2007
  • Annual Filers: Enter the year only for the report period: Example 2007

Item 1: Total Net Taxable Value of Condensate

Enter the total amount of all net taxable values of condensate from Line 22 of the Lease Detail Supplement page(s). Enter dollars and cents.

Item 2: Tax Due on Condensate:

Enter the tax due amount on condensate by multiplying the net taxable value on condensate reported in Item 1 on this page by 0.046 (or 4.6%). Enter dollars and cents.

Item 3: Total Net Taxable Value of Gas

Enter the total net taxable values of gas for all commodities in Line 22 of the Lease Detail Supplement page(s). Do not include values that correspond with high cost gas exemption "Type 05" leases and condensate values. Enter dollars and cents.

Item 4: Tax Due on Gas

Enter the tax due amount on gas by multiplying the net taxable values of gas in Item 3 of this page by 0.075 (or 7.5%). Enter dollars and cents.

Item 5: Taxable Regulatory Fee Volume

  • Leases are subject to the regulatory fee whenever approved legislative exemptions include "Yes" as being liable for tax for raw gas, lease use and product commodities. The exception is leases that are approved for the reactivated orphan well exemption are not subject to the regulatory fee. Enter whole numbers.
  • Enter the sum of your volume of all leases reported in Line 16 of the Lease Detail Supplement page(s) that includes the commodities of raw gas (RG), Lease use (LU), and products (PR) less the total of all the governmental royalty volumes reported in Line 19.
  • Include volumes for residue (RS) unless the residue volume is included as part of the plant products or raw gas volume. Only include leases marked "Yes" as liable for tax due in Line 18.

Item 6: Regulatory Fee Due

Enter the regulatory fee due amount by multiplying the volume in Item 5 of this page by 0.000667. Enter dollars and cents.

Item 7: Tax Due on Exemption Type 5

Enter the sum of all the reduced tax due amounts reported with high cost gas exemption "Type 05" leases in Line 24 of the Lease Detail Supplement page(s). Enter dollars and cents.

Item 8: Total Tax and Fee Due

Enter the total tax and fee due amount by adding the amounts indicated in Items 2, 4, 6 and 7 of this page. Enter dollars and cents.

Item 9: Credits

Enter a credit amount only if using a credit from another report period to offset the liability in this report period. In order to process the transfer of credit, the "Credit Transfer Form for Natural Gas Tax" (Form #10-147), must be signed and submitted.

Item 10: Net Amount Due

Enter the net amount due by subtracting Item 8 from Item 9 of this page. Enter dollar and cents.

Item 11: Penalty and Interest

  • If a payment is 1-30 days late, a 5 percent penalty is assessed on the tax balance due.
  • If a balance is remaining after 30 days, an additional 5% penalty is assessed on the tax balance due.
  • Interest begins to accrue on the 61 day after the due date of a report period.
  • The interest rate varies annually. For current interest rate information, call the Comptroller toll-free at (877) 447-02837 or visit our Web site at: www.window.state.tx.us/taxinfo/int_rate.html

Item 12: Total Amount Due and Payable

Add the amounts in Item 10 and Item 11. Make the amount in Item 12 payable to "State Comptroller".

Producer Lease Detail Supplement

  1. Lease Name (as recorded with the Railroad Commission) Enter the lease name as recorded with the Texas Railroad Commission.
  2. County of production

    Enter the county as recorded with the Texas Railroad Commission. If the lease overlaps a county line, the county where the purchase meter is located should be shown.

  3. Commodity

    Enter the two-digit alpha code for the type of commodity reported on the lease identified in lines 1 and 7.

    RG - Raw Gas - Report sale or purchase of raw gas, unprocessed gas from an oil well, or gas well gas.

    LU - Lease Use - Report all gas produced and used to run equipment on the lease regardless of whether it is for oil well, gas well gas or residue gas. The lease use commodity must also include miscellaneous sales of gas to persons not normally engaged in purchasing gas for resale.

    When a producer reports the lease use (LU) commodity, the producer must always be shown as the purchaser in lines 12 and 13 and must mark "Yes" in Line 18 as being liable for the tax. The lease use commodity should never be reported on a purchaser report.

    CN - Condensate - Report the taxable disposition and purchase of all condensate from a gas well, actual or theoretical. Condensate is the liquid hydrocarbon, or high gravity oil that is, or can be, removed from gas by a separator. It does not include absorption and separated by a fractionating process.

    • Report CN-4 only when reporting a gas lease (Type "2"). It should be reported in barrels, rounded to the nearest whole barrel.
    • CN-4 cannot be reported as an off-lease sale.
    • CN-4 is the only commodity that cannot be reported as an oil well, type "1", or any approved exempt code types "3, 4, 5, 6, 7, 8" or "9".
    • Oil production from a well classified as type "1" must be reported on the Texas Monthly Report of Taxable Crude Oil.

    RS - Residue Gas - Gas that has been processed and the liquids removed by a processing plant. Residue gas should only be reported when the purchaser of the products is different. If a processing plant takes title to both commodities for products and residue, report as RG-1 indicating the plant operator as the purchaser.

    PR - Products - Liquid hydrocarbons extracted from a gas stream at a plant. Use the products commodity only when the purchasers of the products and residue are different. Do not use gallons extracted or shrinkage volume. Enter the total inlet volume to the processing plant as the volume (i.e., the raw gas volume delivered to the extraction plant).

  4. Commodity code

    Enter the 2-digit alpha code for the type of commodity reported on the lease identified in lines 1 and 7.

    Numeric
    Commodity Code
    Alpha
    Commodity Code
    1 RG
    3 LU
    4 CN
    5 RS
    6 PR
  5. Lease type

    Enter the number for the designated lease type:

    1. - oil lease
    2. - gas lease
      Note: Do not enter an exempt lease type for this item. Item 9 is now used to identify exemptions.
  6. County code

    Enter the Comptroller's office 3-digit code for the county shown in Line 2. A list of county codes is available on Comptroller's Web site at: http://www.window.state.tx.us/taxinfo/taxforms/10-codes.html.

  7. Lease number

    Enter the identification number assigned by the Texas Railroad Commission for the lease shown in Line 1.

    The Texas Railroad Commission assigns separate completion numbers to gas reservoirs. Therefore, the number assigned to the property becomes the lease identification number used to report volumes and values to the Comptroller's office. The lease identification number is reported on the natural gas tax report consists of one of the following:

    • five-digit lease identification number assigned to an oil lease, plus a preceding zero;
    • six-digit gas well completion number;
    • two-digit "R3" code and four-digit identification number assigned to a plant or drip station by the Texas Railroad Commission.

    Report each well separately when reporting multiple wells within one lease where only one or more wells qualify for an exemption.

    Enter the check digit. The check digit is a mathematically calculated check digit used by the Comptroller's office.

    NOTE: The check-digit in Line 7 of the producer and purchaser report is no longer part of the lease identification number and it mostly is used for key entry purposes. No edits are in place for the check-digit field. If a different or incorrect digit is reported, no report error will be generated.

    Drilling Permit Number: When reporting volumes and values on a lease not yet assigned by the Railroad Commission, use the drilling completion number assigned to the lease until the Railroad Commission assigns a lease number. To use the drilling permit number, complete item 8.

  8. Is item 7 a drilling permit number?
    • If a lease number has not been assigned yet and Item 7 is a Railroad Commission assigned drilling permit number, check "Yes."
    • If Item 7 is a Railroad Commissioned lease number, check "No."

      This feature was added to reduce the number of reporting errors.

  9. Exemption type

    Enter the number for the designated exemption type, if applicable:

    • 03 - approved two-year inactive lease (beginning Sept. 1, 1997 or 9709)

    • 04 - approved flared/released gas lease (beginning Sept. 1, 1997 or 9709)

    • 05 - approved high-cost lease with reduced rate (beginning Sept. 1, 1996 or 9609)

    • 06 - approved high-cost gas lease (beginning Sept. 1, 1991 or 9109. This exemption ended Aug. 31, 2001.)

    • 07 - approved three-year inactive well (beginning Sept. 1, 1991 or 9109. This exemption ended Feb. 28, 2006.)

    • 08 - approved co-production (beginning Sept. 1, 1993 or 9309. This exemption ended Aug. 31, 2001.)

    • 09 - approved incremental production gas lease (beginning Sept. 1, 1997 or 9709. This exemption was suspended 0012, but was reinstated 0106, then suspended again effective 0303).

    • 11 - qualifying low-producing gas well (beginning Sept. 1, 2005 or 0509.

    • 12 - reactivated orphaned well (beginning Jan. 1, 2006 or 0601)

  10. API number

    Enter the last 8-digits of the American Petroleum Institute (API) number assigned by the Texas Railroad Commission to each well that qualifies for a well-level exemption. The API number is only required for the following well-level exemptions:

    • two-year inactive well exemption (Type "03"),
    • three-year inactive well exemption (Type "07"), and
    • reactivated orphan well exemption (Type "12").

    If the API number is required, the correct API number must be entered or the exemption will be disallowed and the lease entry will be changed to a taxable entry.

    If there are multiple exempt wells for a lease, the production must be allocated to each individual exempt API number on the lease. To do this, a lease entry must be reported for each individual exempt well.

  11. Is this an off-lease sale?
    • On sales where delivery is made off the lease, check "Yes" and leave line 12 or 13 blank.
    • If the sale is an on-lease sale, check "No" and complete lines 12 and 13.
  12. Purchaser's name

    Enter the name of the first purchaser, if delivery is made on the lease. When reporting a sale to yourself or Lease USE (LU-3) commodity code, enter your producer name.


    For an off-lease sale, leave this line blank and check "Yes" in Line 11.
  13. Purchaser taxpayer number

    For delivery made on the lease, enter the taxpayer number of the purchaser/processor whose name is shown in Line 12.

    For an off-lease sale, leave this line blank and check "Yes" in Line 11. A taxpayer number search engine is located on the Comptroller's Web site: http://www.window.state.tx.us/taxinfo/nat_gas/index.html

  14. Total Lease Volume

    Line 10 should be completed by the physical operator (i.e., operator of record listed with the Railroad Commission) and reflect 100 percent of the commodity being reported.

    • Report total volume of gas produced (M.C.F.) when reporting raw gas as commodity code: RG 1.
    • Report total volume used (M.C.F.), when reporting lease use as commodity code: LU 3.
    • Round the total volume up to the nearest whole barrel, when reporting condensate as commodity code CN 4.
    • Report the inlet volume (M.C.F.) to the plant, when reporting products as commodity code PR 6.
    • Report the volume of gas (M.C.F) actually sold under the contact, when reporting residue as commodity code RS 5.
      NOTE: If a processing plant takes title to both products and residue commodities, DO NOT report products and residue as separate transactions. Report the raw gas as the commodity.
  15. Is tax reimbursement included in calculating the value on this lease?
    • If the value reported in Line 17 is adjusted for tax reimbursement, check "Yes."
    • If the value reported in Line 17 is not adjusted for tax reimbursement, check "No."
  16. Your Volume

    Producers who report as operators, should report the production being sold under their own contract.

    Non-operators taking their production in-kind should report their share of the production being sold under their own contract.

    • Report total volume of gas produced (M.C.F.) when reporting raw gas as commodity code: RG 1.
    • Report total volume used (M.C.F.), when reporting lease use as commodity code: LU 3.
    • Round the total volume to the nearest whole barrel, when reporting condensate as commodity code CN 4.
    • Report the inlet volume (M.C.F.) to the plant, when reporting products as commodity code PR 6.
    • Report the volume of gas (M.C.F) actually sold under the contact, when reporting residue as commodity code RS 5.
  17. Value of your volume

    Enter the entire value associated with the volume indicated in Line 16. This is usually referred to as the "contract price." Cost reimbursement from the gas purchaser should be included.

    Tax Reimbursement from the gas purchaser should not be included.

  18. Are you liable for the tax?

    Check this box to show if you are responsible for paying tax on this lease.

    • If "Yes", complete lines 19 through 24.

      Producers must always mark "Yes" in Line 18 when one of the following conditions occurs:

      • report the lease use commodity in lines 3 and 4,
      • mark "Yes" to an off-lease sale in Line 11,
      • report themselves as purchaser in lines 12 and 13.
    • If "No," do not complete lines 19 through 24.
  19. Governmental royalty volume

    Enter the volume of gas not subject to tax because of a governmental exempt status, such as a city, town or village government in Texas, a county government in Texas, an independent school district or common school district in Texas, public (state owned) colleges and universities in Texas, or political subdivisions of the Federal government. (See Rule §3.14.)

    DO NOT enter volumes associated with exemption types approved for a legislative tax exemption.

  20. Governmental royalty value

    Enter the value of gas reported in Line 19. (See Rule §3.14.)

    DO NOT enter value associated with lease types approved for a legislative tax exemption.

  21. Marketing cost

    Enter actual marketing costs incurred. Ascertaining the producer's actual marketing costs and subtracting these costs from the producer's gross cash receipts from the sale of the gas shall determine the "market value at the mouth of the well".

    Marketing costs are allowable expenses incurred by the producer in getting the gas from the wellhead to market. They include the following:

    • cost for compressing the gas sold;
    • cost for dehydrating the gas sold;
    • cost for sweetening the gas sold; and
    • cost for delivering the gas sold.

    See allowable marketing costs for more detailed information on Comptroller's Web site: http://www.window.state.tx.us/taxinfo/nat_gas/ap116.htm

  22. Net taxable value

    Enter the sum of Line 17 less lines 20 and 21 in Line 22. Net taxable values on the original report form may never be less than zero.

    Enter zero for the following legislative exemptions:

    • 2-year inactive (Type "03")
    • flared and released (Type "04")
    • 3-year inactive (Type "07"), and
    • reactivated orphaned well (Type "12").

    For high cost gas exemption (Type "05"), enter the sum of Line 17 less lines 20 and 21 and proceed to lines 23 and 24.

    For incremental production (Type "09"), enter 50 percent of the sum of Line 17, less lines 20 and 21.

    NOTE: Leases reported with a Type "09" must also have a baseline volume and value reported under a Type "1."

    For qualifying low producing gas leases (Type "11"), enter the taxable value based on the price of gas for the applicable credit.

  23. Price Conditions

    Gas from qualified wells becomes eligible for different levels of exemption from natural gas severance tax based upon the Comptroller-certified average price for the reporting month.

    Average Taxable
    Gas Price
    Exemption
    More than $3.50 No Exemption
    Over $3 to $3.50 25 Percent Credit
    Over $2.50 to $3 50 Percent Credit
    $2.50 or Less 100 Percent Credit

    The Comptroller-certified average price of gas to be used in these calculations will be posted in the Texas Register on the Comptroller's Web site. When the average price falls within one of the categories listed above, gas will be allowed the corresponding level of exemption for that reporting month.

  24. Reduced tax rate for Type 05

    Enter the 3-digit reduced tax rate for the approved high cost gas exemption Type "05" lease indicated in Line 7.

  25. Tax due on Type 05

    For high cost gas exemption Type "05", enter the TAX DUE amount. This amount is the net taxable value amount reported in Item 22 times the tax rate reported in Item 23.

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