The Texas Supreme Court unanimously rejected Southwest Royalties’ claim that oil and gas equipment should be exempt from sales taxes. Comptroller Glenn Hegar stated during a House Appropriations hearing that a ruling in favor of Southwest could have impacted the budget with a potential liability of $500 million a year in lost tax revenue and refunds to Southwest and similar companies costing over $4 billion.
Texas Attorney General Ken Paxton issued the following statement in response to the decision: “I am pleased that the Texas Supreme Court unanimously agreed that the law is clear and that Southwest Royalties does not qualify for a tax exemption. The Comptroller is faithfully executing the law and treating taxpayers fairly, in accordance with the wishes of the Texas Legislature. Bottom line: we saved the State, and taxpayers across the State, over $4 billion.”