Texas – Taxability of Services at Oil and Gas Well Sites

SALT Report 1542 – The Texas Comptroller’s monthly newsletter discusses the taxability of waste removal and pest control services at oil and gas well sites.
Waste Removal
Collecting and removing garbage, rubbish, or other solid waste is usually a taxable real property service. However, an exclusion is provided for the removal or collection of waste material that result from work associated with the exploration, development, or production of oil, gas, geothermal resources, or any other substance or material regulated by the Railroad Commission of Texas under Section 91.101, Natural Resources Code, such as depleted drilling mud and broken pipe.
However, collecting and removing any waste that does not directly result from the exploration, development, or production of an oil or gas well is taxable. Therefore, collecting and removing staff personal items, such as food and beverage containers, is taxable.
Landscaping and Pest Control
Landscaping activities, which include cutting or mowing grass and weeds, are usually taxable real property services.  However, these activities when performed at an oil or gas well site are not taxable.
Pest control services to kill insects or remove weeds at an oil field location through the use of pesticides, or herbicides are taxable as structural services under Section 1951.003 Occupation Code.
Pest control services provided at a location where there are only items of tangible personal property are not considered taxable pest control services.  Machinery, equipment, and tanks with a capacity of 500 barrels or less are considered tangible personal property and not a structure or improvement to realty.  Therefore, the charge for pest control service at a well site should be separately stated for the services related to structural or real property otherwise, sales tax would apply to the total combined charge.
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