Travis County District Judge John Dietz Rules “Below-Ground” Equipment Used in Processing of Oil and Gas Qualifies for Texas Manufacturing Exemption
DALLAS, April 20, 2012 /PRNewswire/ — Ryan, a leading global tax services firm with the largest indirect tax practice in North America, today announced that a dispute between Southwest Royalties, Inc. (“Southwest Royalties”) and the State of Texas regarding the taxability of oil and gas production equipment used “below-ground” has been decided by Travis County District Court Judge John Dietz. In Southwest Royalties, Inc. v. Combs, Judge Dietz ruled from the bench that “below-ground” equipment used in or during the actual processing of oil and gas qualifies for the manufacturing exemption under Texas Tax Code Sec. 151.318. It is expected that Judge Dietz will issue a signed judgment within a week. Ryan serves as tax advisor to Southwest Royalties and its law firm, Scott, Douglass & McConnico, LLP, in connection with this matter and played a key role in developing the arguments that Judge Dietz found persuasive.
The Texas Attorney General’s office has filed a post-trial plea to the jurisdiction that Southwest Royalties did not raise the use of a sample and projection method in its motion for rehearing. Given the fact that Southwest Royalties actually used the state’s own sample and projection methodology to determine the refund, this action is unlikely to have any material impact on the main issue in the suit–with the worst case scenario being a possible reduction in the refund amount.
The State of Texas has 30 days after the judgment is signed to file a notice of appeal, unless the State requests findings of fact and conclusions of law, in which case, the State has 90 days to file a notice of appeal. It is expected that the State will file a request for findings of fact and conclusions of law.
“It has long been the Firm’s contention that below-ground equipment used in the processing of oil and gas qualifies for the Texas manufacturing exemption,” said G. Brint Ryan, Chairman and CEO of Ryan. “We will continue to work diligently to ensure that the manufacturing exemption is applied as written by the Texas Legislature.”
Ryan is an award-winning global tax services firm, with the largest indirect tax practice in North America and the seventh largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a two-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan’s multi-disciplinary team of more than 925 professionals and associates serves over 6,500 clients in 40 countries, including many of the world’s most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.