Ezel / Tax Rulings / TX
TX 9010L1062B04 Sales and/or Use Tax (State,Local,MTA) 1990-10-24

Were amine and the products used to clean recycled amine exempt in a Texas natural-gas processing plant?

Short answer: Amine was exempt because it directly purified gas held for sale, but filter elements, carbon, and defoamers used only to clean the amine were taxable.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A natural-gas processing plant used amine in a vertical column to remove acid-gas impurities and make unmarketable gas marketable. It then used filter elements, carbon, and defoamers to clean the amine for reuse.

The amine qualified for exemption because it directly processed tangible personal property held for sale.

The filter elements, carbon, and defoamers were taxable. They cleaned and recycled the amine but did not directly affect the natural gas being processed.

The letter said recent court cases and legislative manufacturing changes had not altered the treatment of items not used directly in manufacturing.

What this means for you

The ruling drew a direct-use line. A chemical contacting and purifying the product qualified, while property maintaining that chemical one step removed did not.

Common questions

Was the amine taxable? No.

Why was amine exempt? It directly removed impurities from natural gas held for sale.

Were amine filters and carbon exempt? No.

Were defoamers used to recycle amine exempt? No.

Citations and references

The letter did not cite a specific statute or administrative rule.

Source

Original ruling text

October 24, 1990

Dear *****:

Thank you for your letter questioning the taxability of defoamer, filter
elements, and carbon used to clean amine in a natural gas processing plant.

Unmarketable natural gas enters a gas processing plant to remove impurities
and thus make the gas more marketable. One of the steps in this process is
to remove acid gas components. This is done by running the natural gas through
a vertical column containing amine which acts as a purifying agent. The amine
qualifies for exemption because it is used directly in processing the natural
gas (tangible personal property) held for sale.

The amine is then sent through a filtering process containing filter elements,
carbon, and defoamers so that the amine may be used over and over again in the
treating of natural gas. You asked whether the filter elements, carbon, and
defoamers purchased for use in cleaning the amine solution qualifies for
exemption. They do not; these items do not have a direct effect upon the natural
gas being processed for sale.

The recent court cases and legislative changes affecting manufacturing exemptions
did not alter the application of tax to these items that are not used directly in
the manufacturing process.

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

You may also write to Tax Correspon-dence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence

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.