Ezel / Tax Rulings / TX
TX 9205L1171B14 Sales and/or Use Tax (State,Local,MTA) 1992-05-20

Was an oilfield company's charge for pressure testing well rods and tubing taxable under Texas Letter Ruling 9205L1171B14?

Short answer: No. The company used a load-and-test truck to pressure the rods and tubing solely to find parted rods or holes, then notified the owner if repair was needed. Because the company performed testing and made no repairs, its testing charge was nontaxable on the stated facts.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 company's charge for testing oil-well rods and tubing was not taxable on the facts presented.

The company used a 50-barrel load-and-test truck at oilfield leases to apply pressure and determine whether rods were parted or tubing had a hole. If testing found a problem, the company contacted the well owner or representative, who arranged for a separate crew to make the repair. The testing company made no repairs itself.

What this means for you

The letter's answer was limited to diagnostic pressure testing by a company that did not perform the resulting repair work. Additional or different services could change the result.

Common questions

What was the company testing for? Parted rods and holes in tubing.

Did the company repair the well equipment? No. It notified the owner or representative, who arranged a repair crew.

Was the testing charge taxable? No under the facts presented.

Citations and references

The letter cited no specific statute or administrative rule.

Source

Original ruling text

May 20, 1992

Dear ***:

Thank you for your recent letter asking about the taxability of the work
performed by your company.

Your facts: You stated that your company owns a 50 barrel load and test truck.
The truck is used in the oil field on leases to pressure up on the rods and
tubing to discover if the rods are parted or if there is a hole in the tubing.
If a repair is needed, you contact the well owner or representative who, in
turn, arranges for a crew to perform the repair. Your company makes no repairs.

Response: Your company's charge for testing to discover if the rods are parted
or if the tubes have holes is not taxable.

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, you may call me toll free
at 1-800-252-5555, extension 3-4633. The regular number is 512/463-4633. You
may also write to the Tax Administration Division.

Sincerely,

Wanda Hutcheson
Tax Administration Division

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