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Natural Gas Reporting Errors


When natural gas tax reports are processed, every lease transaction is reviewed for reporting errors. A lease that has report errors may contain one or more error messages.

The Comptroller's office classified two types of errors identified as non-critical errors and critical errors. The critical errors affect the tax or credit amount due for each lease transaction in a report period. The non-critical errors do not affect the tax or credit amount due for each lease transaction in a report period. A list of non-critical and critical errors are identified below.

Non-Critical Errors

Although non-critical errors do not affect the tax or credit amount due for each lease transaction, these errors could potentially become critical errors when subsequent amendments are processed.

If a report period has outstanding non-critical errors and no critical errors, refunds are issued and credit transfers from one period to another are processed. Credit interest will be paid on refunds issued and/or credit transfers processed only if a report period has non-critical errors and meet the criteria for credit interest accrual.

However, non-critical errors are incorrect information provided to the Comptroller's office. This definitely impacts the type of lease data provided to the general public, Texas Legislature and other state agencies. All data from lease transactions is used to make important decisions for the state of Texas, including the estimation of Texas revenues for budgeting purposes and valuations for Texas property tax appraisals.

Critical Errors

Critical errors do affect the tax or credit amount due for each lease transaction. If a report period contains at least one critical error, a refund will not be issued and credit transfers from one period to another will not be processed. The critical error must be corrected in order for a refund to be issued or credit transfer to process.

Error Letters

Letters from the Comptroller's office are mailed weekly after an original and/or amended report has processed informing the taxpayer errors were identified for a specific report period.

1. Letters to electronic filers inform the taxpayer to view their report errors on the web.

2. Letters to paper filers include an error list identifying the report errors. With an assigned web identification number, taxpayers who report on paper also have the option to view their report errors on the web.

Whether the error message list is viewed on paper or on the web, the format of the error message list is the same.

Error messages can occur on either the lease detail and/or the computation of the report totals.

Report Errors can be viewed under the Secured Information Section of the Crude Oil and Natural Gas Inquiry System. Users must be registered and logged in to view these error messages.

Error Messages on Reported Totals Are Critical Errors

The "reported totals" are the totals a taxpayer reported on their report and "calculated totals" are the totals computed by the Comptroller's office after the report has processed.

Based on each lease transaction listed on a report, error messages on "reported totals" are a result of a computation error on the tax reported by a taxpayer. Whenever the "reported totals" and the "calculated totals" do not match, an error message is generated indicating the report to be "out of balance." This is why errors on report totals were categorized as critical errors. Below are the most common error messages for report totals.

  1. Cannot have condensate totals out of balance
  2. Reported and calculated totals do not match
  3. Reported and calculated fee volumes did not match
  4. Computation error in total for Type 05 tax due.

Critical Error Messages on Lease Detail

  1. Commondity code cannot be blank
  2. Commodity code invalid for lease type
  3. Lease type is invalid-Critical error for report periods prior to November 2007.
  4. County is missing
  5. Invalid county code. County must be 001-254
  6. Cannot report exemption type with condensate commodity code
  7. Lease number is missing
  8. Lease number not on file
  9. Lease number not active in county
  10. Lease number not active
  11. Drilling permit number not on file
  12. No well exemptions exist for this lease for API number
  13. Purchaser number not on file-Critical error if "Are You Liable For Tax?" field is "NO"
  14. Purchaser number not active for period-Critical error if "Are You Liable For Tax?" field is "NO"
  15. Purchaser number missing-Critical error if "Are You Liable For Tax?" field is "NO"
  16. Purchaser number not set up for sub-type-Critical error if "Are You Liable For Tax?" field is "NO"
  17. Purchaser number not set up for tax-Critical error if "Are You Liable For Tax?" field is "NO"
  18. Producer number not on file-Critical error if "Are You Liable For Tax?" field is "NO"
  19. Producer number not active for period-Critical error if "Are You Liable For Tax?" field is "NO"
  20. Your volume cannot be negative
  21. Your volume cannot be zero with a reported value
  22. Value of your volume cannot be negative
  23. Liable for tax is invalid with a net taxable value
  24. Liable for tax is not a valid value
  25. "Are you liable for tax?" must be yes with lease use
  26. Governmental volume cannot be negative
  27. Gov royalty volume ratio of your volume to gov royalty volume is unreasonable
  28. Gov royalty value ratio of your value to gov royalty value is unreasonable
  29. Gov royalty value cannot be negative
  30. Gov royalty value cannot equal to your value
  31. Marketing costs cannot be negative
  32. Marketing cost exceeds your value, net taxable value must be zero
  33. Net taxable value cannot be negative
  34. Net taxable value is out of balance
  35. Net taxable value is unreasonable
  36. Incorrect computation for net taxable value
  37. Net taxable value is unreasonable with reported exemption type
  38. Net taxable value is noncomputable
  39. Net taxable value cannot be zero with reported value
  40. Net taxable value complete 10% penalty not met
  41. Tax due on type 05 incorrect computation
  42. Tax due on type 05 cannot be negative
  43. Tax due is unreasonable for exempt type
  44. Incorrect exemption rate reported for exemption type
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