Hon. Robert S. Calvert
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 122-A,Taxation-General, Vernon's Civil
Statutes.
     This question has previously been answered by Attorney
General's Opinion O-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.
                                               SF
          precaution is taken to the end that al
          oil other than sediment is taxed." (Emphasis
          added)
     Therefore, in keeping with Attorney General!s Opinion O-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.
                            SUMMARY
          Tank bottom oil that is chargeable back to
          the lease as part of the producer's allowable
                              -l-
Mr. Robert S.Calvert, Page 2 (M-l)


          is taxable under the crude oil reduction
          tax as provided for by Chapter .f, Title
          122A, Taxation-General, Vernon's Civil
          Statutes.
                                     truly yours,


                                         tcms
                                         '2.MARTIN
                                     ney General of Texas

Prepared by Linward Shivers
A ;istant Attorney General
 E
APPROVED:
OPINION COMMITTEE
Hawthorne Phillips, Chairman
W. V. Geppert, Co-Chairman
Bill Allen
Marvin F. Sentell
John Pettit

STAFF LEGAL ASSISTANT:
A. J. Carubbi, Jr.




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