TAX CODE
CHAPTER 204. TAX CREDIT FOR NEW FIELD DISCOVERIES
§ 204.001. DEFINITIONS. In this chapter:
(1) "Commission" means the Railroad Commission of
Texas.
(2) "Field" means an accumulation of oil or gas or both
that is not in natural pressure communication or otherwise
connected to any other accumulation of oil or gas or both.
(3) "New field" means a field that has been certified
by the commission as a previously unrecognized and unidentified
field.
(4) "Discovery well" means an oil or gas well by which
a new field discovery is made.
(5) "Spud" means the initial penetration of the earth
by the drill bit for an oil or gas well under proper permit from the
commission.
(6) "Completed" means the well has been equipped to
produce hydrocarbons and the commission has been notified as
required by commission rules.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.002. TAX CREDIT FOR NEW FIELD
DISCOVERIES. (a) Persons who obtain a certification of a new
field discovery from the commission as the result of a discovery
well spudded during the period of January 1, 1994, through December
31, 1994, are eligible for a tax credit applicable against the taxes
imposed by Chapters 201 and 202 upon the commission notifying the
comptroller that 521 new fields have been discovered as the result
of wells spudded during 1994.
(b) The amount of the tax credit shall be as follows:
(1) $10,000 for each discovery well spudded during
1994 if the number of discovery wells spudded that year is 521 or
more, but less than 721;
(2) $25,000 for each discovery well spudded during
1994 if the number of discovery wells spudded that year is 721 or
more.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.003. CERTIFICATION OF NEW FIELD
DISCOVERY. (a) The commission shall have the authority to
establish the method of determining whether a new field has been
discovered. The commission may require an applicant for a new field
discovery to provide the commission with any relevant information
required to administer this chapter. Upon determining that a well
spudded during 1994 resulted in the discovery of a new field, the
commission shall furnish a certificate of new field discovery to
the applicant.
(b) For purposes of obtaining a tax credit under this
chapter, applications for new field discoveries must be made to the
commission within 90 days of the date the discovery well is
completed in the proposed new field. In no event will an
application for new field discovery be accepted by the commission,
for purposes of obtaining a tax credit, after 180 days from the
cessation of drilling operations.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.004. TAX CREDIT FOR ADDITIONAL WELLS IN A NEW
FIELD. Upon the commission notifying the comptroller that 842
discovery wells have been spudded in 1994, persons obtaining a new
field discovery during that year shall be eligible for an
additional $25,000 tax credit for each additional well spudded and
producing from that field, within 10 years from the spud date of the
discovery well. The tax credit is available to persons who obtain a
new field discovery regardless of who drills the additional well.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.005. APPLICATION. To qualify for the tax credit,
a person who receives a new field discovery certificate from the
commission must apply to the comptroller. The comptroller shall
approve the application of a person who demonstrates eligibility
for a tax credit. The comptroller shall have the power to establish
procedures in order to comply with this chapter and may require a
person applying for the tax credit to provide any relevant
information. The commission shall immediately notify the
comptroller in writing if it determines that the new field
designation obtained by the applicant has been revoked or if it
discovers any information that affects the tax credit.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.006. APPLICABILITY OF TAX CREDIT. (a) Tax
credits earned under this chapter may only be applied against the
severance taxes imposed by Chapters 201 and 202 of this code. The
tax credit may not be used until September 1, 1995, and may not be
used after August 31, 2000. The tax credit may be applied to either
oil or gas severance taxes regardless of the field from which the
production originates.
(b) Tax credits provided under this chapter shall only be
available if at the time the application for a tax credit is made,
the discovery well that is the basis for the tax credit is producing
oil or gas from the discovery field.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.007. TRANSFERABILITY OF TAX CREDIT. The tax
credit earned under this chapter is fully transferable.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.008. REVOCATION OF NEW FIELD
DESIGNATION. (a) If the commission determines that a designated
new field is connected with another recognized field, the tax
credit provided by this chapter is canceled.
(b) Persons responsible for paying the severance tax will
not be liable for any taxes offset by tax credits available under
this chapter prior to the date of cancellation unless the tax
credits were obtained in violation of this chapter or any rules or
orders of the commission.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.009. PENALTIES. (a) Any person who makes or
subscribes any application, report, or other document and submits
it to the commission to form the basis for an application for a tax
credit under this chapter knowing that the application, report, or
other document is false or untrue in a material fact may be subject
to the penalties imposed by Chapters 85 and 91, Natural Resources
Code.
(b) Upon notice from the commission that the certification
for a new field discovery has been revoked, the tax credit may not
be applied to oil or gas production sold after the date of
notification. Any person who violates this subsection is liable to
the state for a civil penalty if the person applies or attempts to
apply the tax credit allowed by this chapter after the
certification for new field discovery is revoked. The amount of the
penalty may not exceed the sum of:
(1) $10,000; and
(2) the difference between the amount of taxes paid or
attempted to be paid and the amount of taxes due.
(c) The attorney general may recover a penalty under
Subsection (b) in a suit brought on behalf of the state. Venue for
the suit is in Travis County.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
§ 204.010. RULES AND ORDERS. The commission has broad
discretion in administering this chapter and may adopt and enforce
any appropriate rules or orders that the commission finds necessary
to administer this chapter.
Added by Acts 1993, 73rd Leg., ch. 1014, § 1, eff. Sept. 1, 1993.
