35 Miss. Admin. Code Pt. IV, Subpt. 10, Ch. 04 — Oil Field Services

Levy
100 Every person engaging in the business of performing services in con nection with
geophysical surveying, exploring, developing, drilling, producing, distributing or testing
of oil, gas, water and other mineral resources is liable for the regular retail rate of tax on
gross income received except as otherwise provided. This includes persons acting as
operators or performing management services for a fee in connec tion with developing,
producing or distributing mineral resources. Con sultants, supervisors and engineers
whose presence is required at the well site or inside the oil field on a permanent or
continuing basis are considered to be engaged in an oil field service and are liable for
sales tax. Where the operator owns an interest in a well under his manage ment, he is
liable for tax on compensation received from the other owners.
101 (Reserved)
Gross Income
200 Any business which performs taxable services incurs business ex penses which of
necessity must be recovered through charges for its services. Such expenses include
meals and lodging for employees, mileage, equipment rental and supplies such as
chemicals, swab cups and ex plosives which are used or consumed in the performance of
services. The term "gross income" includes charges made for recovery of these expenses
and are taxable irrespective of the fact that they may be itemized or that the goods or
services have borne a retail tax at the time of purchase.
201 Charges for transportation, outside an oil or gas field, in connection with rigging up or
rigging down are not includable in taxable receipts. Companies which rig up or down a
derrick in connection with hauling said derrick are deemed to be in the transportation
business and are subject to tax only on the portion of the service performed in the oil or
gas field. Transportation from one location in a field to another location in the same field
is considered an oil field service taxable at the regular retail rate of sales tax.
202 Services such as salt water disposal, but not limited thereto, are con sidered oil field
services taxable at the regular retail rate of sales tax on the gross income received from
such service. Any transportation charges in connection with such services are considered
an expense of performing the service and are not excludable from gross income.
203 "Gross income" from gathering and interpreting data within and without this State may
be apportioned between the states if adequate records are maintained. "Gross income"
does not include receipts which constitute reimbursement by clients for cost of easements
to cross or enter land of property owners for property damage payments. In addi tion to
services ordinarily rendered, the operator of a management com pany may also act as
agent for well owners in arranging for other ser vices. In such cases, the operator is not
liable for tax on receipts which represent rebilling to the owners of payments made to
vendors by the operator for property purchased and services performed for owners on
which the regular retail rate of tax has been paid to the vendors.
204 The gross income from oil field services performed in Mississippi is taxable at the regular
retail rate of sales tax with the following exceptions:

# 1.

Compensation received from a contract in excess of $10,000 to drill, redrill or work
over an oil well or a gas well is taxable at the 31/2% contractor's rate of tax.

# 2.

No sales tax is due when service is performed for another licensed dealer in the same
service.
205 Adequate records must be maintained to substantiate exempt sales.
206 (Reserved)
Equipment
300 Equipment purchases or rentals and purchases of supplies are tax able at the regular retail
rate of sales or use tax.
301 Manufactured or produced products withdrawn for use or consump tion are taxable at the
regular retail rate of tax, measured by the cost or value when converted to use. In no
instance shall value be less than the selling price of similar products.
302 (Reserved)
Sub Part 11 Transportation