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Ezel / Tax Rulings / TX
TX 8508L0652B11 Sales and/or Use Tax (State,Local,MTA) 1985-08-07

Was removing paraffin from the producing string of an oil well subject to Texas sales tax?

Short answer: Yes. The service was taxable, and the provider was told to collect and remit tax going forward while retaining the letter for any examination of earlier periods.

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This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1985 Texas Comptroller taxpayer-response letter limited to removing paraffin from the producing string of an oil well. It acknowledges that the provider might previously have received different advice, directs proper collection and remittance going forward, and tells the provider to retain the letter for examination of past periods. It refers to enclosed Rule 3.324, which is not reproduced. Current oilfield-service, paraffin-removal, prior-guidance, audit, sales-tax, and effective-date rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Removing paraffin from the producing string of an oil well was subject to sales tax. Although the provider might previously have been advised otherwise, the Comptroller expected it to collect and remit tax properly from then on.

The provider was told to keep the letter in case a Comptroller representative examined earlier periods.

Common questions

Was the paraffin-removal service taxable? Yes.

What did the letter say about earlier contrary advice? It acknowledged that possibility, required proper collection going forward, and told the provider to retain the letter for past-period examinations.

Was the referenced oilfield-services rule reproduced? No. Rule 3.324 was said to be enclosed.

Citations and references

  • 34 Tex. Admin. Code Rule 3.324 — referenced as covering many oilfield services; the enclosure is not reproduced.

Source

Original ruling text

August 7, 1985

Dear ***:

Thanks for contacting us concerning the taxability of removing paraffin
from the producing string of an oil well.

This service is subject to the sales tax. It is entirely possible that
you may have been advised otherwise earlier. We will therefore expect
you to collect and remit the tax properly from now on. You should retain
this letter in case one of our representatives examines past periods.

We am enclosing a copy of Rule 3.324 which covers many oil field services.
If you need assistance on a job that is not covered, please give us a call.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Very truly yours,

Tax Policy Section
Tax Administration Division

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