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Ezel / Tax Rulings / TX
TX 9710826L Sales and/or Use Tax (State,Local,MTA) 1997-10-03

Does natural gas used to maintain a pilot light on a chemical plant's flare stack qualify for the Texas manufacturing exemption, and is a predominant-use study needed?

Short answer: Yes, the gas qualifies for the manufacturing exemption from sales tax. Because the gas runs through its own meter and is used only to maintain the flare stack's pilot light, no predominant-use study is required.

Apply this to your situation

This page answers the general question as of 1997. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1997
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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

A tax professional asked, on behalf of a chemical-industry client, whether natural gas purchased to maintain the pilot light on the client's flare stack qualifies for the manufacturing exemption from sales tax, and whether a utility (predominant-use) study would be needed given the gas is used only for the flare stack.

The Comptroller confirmed the gas qualifies for the exemption. Because the gas runs through its own dedicated meter and is used solely to maintain the pilot light, a predominant-use study — normally required when a single meter serves both exempt and non-exempt uses — is not necessary here.

What this means for you

Chemical plants and manufacturers with flare stacks

If the natural gas feeding your flare stack's pilot light is metered separately from other plant gas usage, you can claim the manufacturing exemption on that gas without needing a predominant-use study — the dedicated metering itself establishes the exempt use.

Accountants and tax professionals

Dedicated single-purpose metering is the key fact that avoids a predominant-use study; if a client's flare-stack gas shares a meter with other equipment, expect the Comptroller to require a study apportioning exempt vs. taxable use.

Common questions

Q: Is natural gas for a flare stack pilot light exempt from sales tax?
A: Yes, when it qualifies for the manufacturing exemption, as it did here.

Q: When is a predominant-use study required?
A: When a single meter serves both exempt and taxable uses; it isn't required when the gas is run through its own dedicated meter for the flare stack alone.

Q: Can another chemical plant rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts with a tax professional.

Source

Original ruling text

October 3, 1997

Subject: Gas usage

Dear*****:

This is in response to your request for a ruling on behalf of a client who is
in the chemical industry. This client purchases gas from COMPANY which is used
to maintain a pilot light on their flare stack. You would like to know if the
usage of this gas qualifies for the manufacturing exemption? If so, would a
utility study be necessary since the gas is only used for the flare stack?

Response: The gas qualifies for exemption from sales tax. If the gas is run
through one meter and is used only to maintain the pilot light, then a
predominant use study is not required.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please
call me toll-free at 1-800-531-5441, extension 3-4502. The direct line is
512/463-4502. You may also write to Tax Policy Division, Comptroller of Public
Accounts. You may also e-mail our tax help section at:
[email protected]

Sincerely,

Gilbert Zamora
Tax Policy Division

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