34 Tex. Admin. Code § 3.332 - Drilling Equipment

(a) Drilling equipment built for exclusive use outside Texas. The Texas Tax Code, § 151.324(b) exempts the receipts from a sale, lease, or rental of, or the storage, use, or other consumption in this state of drilling equipment used in the exploration for or production of oil, gas, sulphur, or other minerals when such equipment is built for exclusive use outside the boundaries of the State of Texas and is removed forthwith from the state upon completion.

(b) Offshore exploration or production. The Texas Tax Code, § 151.324(a)(1) exempts the receipts from a sale, lease, or rental in this state of casing, drill pipe, tubing, and other pipe to be used in exploration for or production of oil, gas, sulphur, and other minerals offshore outside the territorial limits of the state from the tax. The Texas Tax Code, § 151.324(a)(2), (c), and (d) extends the above exemption to all tangible personal property which is to be used exclusively in the exploration for or production of oil, gas, sulphur, or other minerals offshore and outside the territorial limits of the state. Such tangible personal property may be delivered to the purchaser or lessee in this state for removal by his own facilities or by any other means beyond the territorial limits of the state, or may be shipped to any place in the state for further assembly or fabrication, and the receipts from a sale, lease, or rental of such property made upon completion of the assembly or fabrication are exempt if the property is forthwith removed beyond the territorial limits of the state.

(c) Boundaries. Boundaries of the state includes all territory within the exterior limits of the State of Texas. The gulfward boundary of Texas is confirmed at three marine leagues from the coast. Removal from state "forthwith' means removal from the state within a reasonable period of time from the transfer of possession of the property providing that there is no use or consumption of the property within the state. If at the time of sale, delivery, assembly, or fabrication, it is not known whether the property will be used outside the state, then the taxes must be paid to the vendor or lessor.

(d) Proof of exemption. Where such property as may be exempted under this section is delivered in Texas to the purchaser or his designated agent, such property shall be presumed to be taxable unless the retailer obtains an exemption certificate from the purchaser stating the property is for exclusive use outside the boundaries of the state or offshore outside the territorial limits of state.

Notes

34 Tex. Admin. Code § 3.332

The provisions of this §3.332 adopted to be effective January 1, 1976.