1967 Book 1 Texas Attorney General Reports and Opinions 1 (1967)

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January 11, 1967
Hon. Robert S. Calvert        Opinion No. M-1
Comptroller of Public Accounts
Austin, Texas                 Re: Applicability of Oil
Production Tax on Tank
Dear Mr. Calvert:                  Bottoms
You have asked this office for an opinion on whether tank
bottoms are taxable under the crude oil production tax provided
for by Chapter 4, Title 122A, Taxation-General, Vernon's Civil
This question has previously been answered by Attorney
General'sOpinion 0-1320 (1939) a copy of which I am enclosing.
Also, in State v. Stack, 199 S.W.2d 701 (Tex.Civ.App. 1947),
the Court has reaffirmed the position that tank bottom oil charged
back to the producer as part of his allowable is taxable under
the statute. The Court in that opinion stated:
The manner in which the Railroad Commis-
sion fixes this allowance is certainly shown
to be reasonable. Permits are required to
clean tanks; the bottoms tested in the
presence of Railroad Commission employees,
and all merchantable or pipe line oil is
charged back to the producer and only the
remainder is moved and then only by per-
mission of the Railroad Commission. Every
precaution is taken to the end that all
oil other than sediment is taxed. (Emphasis
Therefore, in keeping with Attorney General's Opinion 0-1320
and State v. Stack, supra, it is the opinion of this office that
oil which is removed from tank bottoms and is chargeable back to
the producer as part of his allowable, as provided by Rules and
Regulations of the Railroad Commission, is taxable under Chapter 4,
Title 122A, Taxation-General, Vernon's Civil Statutes.
Tank bottom oil that is chargeable back to
the lease as part of the producer's allowable
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