Sales And Use Tax Refund Opportunities For Energy Companies

Due to the drop in demand for oil and gas attributable to the COVID-19 pandemic and the decline in oil prices, cash flow generation is crucial to energy companies.  To enhance cash flow, energy companies should review their sales and use tax procedures to determine if sales and use taxes for certain purchases of services or assets were paid in error.  If sales or use taxes were paid in error, there may be an opportunity to obtain a cash refund of such taxes.

States have granted certain sales tax exemptions that are applicable to oil and gas exploration and production companies for certain purchases of assets, equipment or services (i.e., production equipment, chemicals and utilities).  Such exemptions can be complicated, vary from state to state and are subject to change over time.  Further, record keeping for oil and gas companies with numerous vendors can be challenging.

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