Midland-based Southwest Royalties Inc. is currently in the middle of a Texas-sized tax fight. The oil and gas company is battling the Texas Comptroller of Public Accounts and the Texas attorney general over the issue of whether oil and gas drilling equipment is included under a statute that includes sales and use tax exemptions for “manufacturing, processing and fabrication.”
In the recent oral arguments before the Texas Supreme Court, Southwest contended that it has the right to a tax exemption for the equipment it uses to remove oil and gas from underground. As part of its argument in the appeal, Southwest is asserting that because it processes the extracted hydrocarbons, it is therefore eligible for the tax exemption provided by state law.
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