Ezel / Tax Rulings / TX
TX 9202L1163F07 Sales and/or Use Tax (State,Local,MTA) 1992-02-07

When were the oilfield services in this Texas letter nontaxable completion work rather than taxable tubing-fishing repair?

Short answer: The letter's Item 1 services were nontaxable because they accompanied completion work bringing a well to productive status. Item 2 was taxable because fishing for tubing repaired or maintained tangible personal property.

Apply this to your situation

This page answers the general question as of 1992. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1992
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 Comptroller classified two oilfield-service items differently under Rule 3.324.

The services labeled Item 1 were nontaxable because they were performed with completion services that brought a well to productive status under Rule 3.324(b)(2)(I).

The services labeled Item 2 were taxable because they repaired, restored, remodeled, or maintained tangible personal property. Rule 3.324(d)(C) specifically listed fishing for tubing as taxable because tubing was tangible personal property.

The letter does not reproduce the requester's detailed descriptions of Item 1 and Item 2, so this page does not infer facts beyond the classifications stated in the response.

What this means for you

Oilfield service businesses

Timing and purpose mattered: work integrated with initial completion received different treatment from fishing for tubing as repair or maintenance.

Accountants and tax professionals

Because the underlying item descriptions are absent, do not treat this short letter as a complete classification guide for every fishing operation.

Common questions

Was Item 1 taxable? No. It accompanied completion work bringing the well to productive status.

Was Item 2 taxable? Yes.

Why was tubing fishing taxable? The rule treated tubing as tangible personal property and the service as repair, restoration, remodeling, or maintenance.

Citations and references

  • 34 Tex. Admin. Code Rule 3.324(a)(2), (b)(2)(I), and (d)(C) (well completion and taxable tubing-fishing services)

Source

Original ruling text

February 7, 1992

Dear **:

Thank you for your letter concerning oilfield services performed
by your client.

The services described in Item 1 are not subject to the sales tax
because they are being performed in conjunction with completion
services performed to bring a well to productive status. Details
are set out in Rule 3.324 Sec. (b)(2)(I).

The services described in Item 2 are subject to the sales tax
because they are charges to repair, restore, remodel, or maintain
tangible personal property. Refer to Sec. (a)(2) of Rule 3.324.
Fishing for tubing is listed as a taxable service in Sec. (d)(C) of
Rule 3.324 because tubing is considered to be tangible personal
property.

This opinion is based on the facts as presented. Different or
additional facts may cause the opinion to change.

If you have additional questions or need more information, please
call our toll-free number 1-800-531-5441. My regular number is
(512) 463-4434, or you may write me at the Tax Administration
Division.

Sincerely,

John Bolin
Tax Administration Division

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