Ezel / Tax Rulings / TX
TX 9001L0972D11 Sales and/or Use Tax (State,Local,MTA) 1990-01-15

Was an oilfield company's sale and delivery of fresh water taxable, and what if chemicals or a taxable service were included?

Short answer: Fresh water sold and delivered by itself was not taxable. A combined water-and-chemical charge was fully taxable, and water used in performing a taxable job became part of that job's taxable total charge.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 sale and delivery of fresh water by itself was not taxable.

If the oilfield service company also sold chemicals mixed with the water at the site, the entire combined charge was taxable. If the company used the water while performing another taxable job, the water became part of that job's total taxable charge.

Common questions

Was fresh water taxable by itself? No.

What if chemicals were mixed into it? The entire charge was taxable.

What if the water was consumed in a taxable service? It was included in the taxable service charge.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 15, 1990

Dear ***:

Thank you for your recent letter regarding the taxability of fresh
water.

You stated that you are an oilfield service company and sell a
considerable amount of fresh water to be used in various oilfield
operations. It has been the experience of this office, that when
an oilfield service company sells fresh water, it also sells
chemicals that are mixed with the water at the site. If this is
occurring, the entire charge is taxable.

The sale and delivery (transportation) of fresh water only, is not
taxable. However, if CORP A uses the water in performing a taxable
job, then the water would be taxable as part of the total charge for
that taxable job.

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 additional information, you may
call me toll-free at 1-800-252-5555, extension 5-0330, or write
me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Bettie U. Peterson
Tax Correspondence Division

Get today's answer for your situation

You just read a 1990 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.