Ezel / Tax Rulings / TX
TX 8606L0744C05 Sales and/or Use Tax (State,Local,MTA) 1986-06-24

Did communication and storage buildings qualify for the exemption for tangible property used in offshore mineral exploration or production?

Short answer: No. Property had to be used directly and exclusively in the exploration or production activity itself, and communication and storage buildings did not meet that test.

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This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The requester asked about tangible personal property used in offshore exploration or production of oil, gas, sulphur, or other minerals beyond Texas's territorial limits.

The Comptroller said qualifying property had to be used directly and exclusively in the exploration or production activity itself. Communication buildings and storage buildings did not qualify.

Common questions

Did a communication building qualify? No.

Did a storage building qualify? No.

What test did the letter state? Direct and exclusive use in the exploration or production activity itself.

Source

Original ruling text

June 24, 1986

Dear ***:

I have received your letter of June 10, 1986, concerning the definition
of tangible personal property used exclusively in the exploration for, or
production of oil, gas, sulphur, or other minerals offshore outside the
territorial limits of Texas.

To qualify for the exemption, the tangible personal property must be
used directly and exclusively in the exploration or production activity
itself.

Communication buildings and storage buildings do not qualify for the
exemption.

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

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