Which welding, repair, loading, and hauling charges on nine oilfield invoices were taxable?

Plain-English summary

The Comptroller reviewed nine oilfield-service invoices. Work by a welder on pump-truck iron racks, breaking out piping connected to surplus production equipment, breaking out and repairing salt-water lines, and repairing a salt-water line from a treater to a tank were taxable.

Roustabout labor to load and haul pipe, and hauling pipe from a location to a pipeyard, were nontaxable.

Three invoices lacked enough detail to establish nontaxability—road-entrance work involving boards and rock, work on a pump-truck cross-member brace, and general welder work on a pump truck—so the Comptroller presumed them taxable. The service provider was instructed to describe specifically whether the labor was repair, fabrication, or another kind of work.

Common questions

Were pipe loading and hauling taxable? No, for the two charges described in the letter.

Was welding automatically nontaxable? No. The identified welding and repair work was taxable.

What happened when an invoice was unclear? The Comptroller presumed it taxable because the description did not establish nontaxability.

Citations and references

• 34 Tex. Admin. Code Rule 3.324(d) — oil, gas, and related well service.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8603L0706E03

Original ruling text

March 17, 1986

Dear ***:

This is to confirm our recent telephone conversation concerning the
invoices you sent to us requesting a ruling on the taxability of certain
oilfield services.

The following is a breakdown of the things listed on nine invoices and
their taxability.

Invoice to *** (2-28-86) - 1 welder with equipment; work on
pump truck iron racks. - Taxable

Invoice #*** - Breaking out piping that was connected to surplus
production equipment. - Taxable

Invoice #*** Roustabouts to load and haul pipe. - Not Taxable

Invoice #*** Haul pipe from location to pipeyard. - Not Taxable

Invoice #*** Move rock from end of boards on county road. Cut off
boards to culvert and spread rock back on entrance. - Not enough information
to clearly indicate that the service is not taxable, therefore it is presumed
taxable.

Invoice #*** - Work on pump truck cross member brace. - Not enough
information to clearly indicate that the work is not taxable, therefore
it is presumed to be taxable.

Invoice #*** - I welder with equipment; work on pump truck. Not
enough information to clearly indicate that the work is not taxable,
therefore it is presumed taxable.

Invoice #*** Break out lines. Repair salt water lines. - Taxable

Invoice #*** Repaired salt water line from treater to salt water
tank. - Taxable

You should indicate specifically what type of labor (repair, fabrication,
etc.) was done. Please refer to section (d) of the enclosed Rule 3.324; Oil,
Gas and Related Well Service.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

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.

Sincerely,

Tax Policy Section
Tax Administration Division