Qualified deductions of marketing costs shall comply with the provisions of (1) through (5) of this Subsection. The marketing cost deduction may be disallowed by the Tax Commission for failure to submit supporting documentation sufficient to validate the deduction at the time of application.

1. (1) Marketing costs shall not include any costs incurred in the production of gas, oil or condensate or in the separation therefrom of any product subject to gross production tax.
2. (2) Taxes shall be computed on gross proceeds, including tax reimbursement, less the cost of gathering, compressing, and treating the gas sold.
3. (3) Documents required to be submitted with the application for refund shall include all of the following:
4. (A) A notarized affidavit stating the costs requested as deductions to the gross proceeds are for marketing expenses and not for production of the lease.
5. (B) An electronic spreadsheet of the operator's claimed marketing expenses allowed by Appendix A.
6. (C) Supporting documentation for the remitter's previously claimed marketing cost deductions, including:
7. (i) Check stubs; and
8. (ii) Settlement statements.
9. (D) Supporting documentation for operator's marketing cost deductions. If invoices are used as documentation, invoices for all costs claimed shall clearly indicate the facility incurring the cost and include a detailed description of the cost. If the invoice does not specify the cost was incurred on allowable marketing equipment, a job/work ticket must accompany the invoice describing the work that was done. Journal entries are not eligible as documentation of support for services provided by third parties.
10. (E) Electronic spreadsheet documenting the operator's pumper and compressor expenses allocated by production unit number.
11. (F) Electronic depreciation schedules:
12. (i) Any claimed depreciable equipment must be supported by documentation showing the original depreciable value. If the depreciable equipment was purchased, the original invoice is required. If the depreciable equipment was obtained through an acquisition of wells, documents from the acquisition indicating how the value of the depreciable equipment was determined must be provided.
13. (ii) Depreciation schedule allocating the equipment cost over the life of equipment by production unit number.
14. (iii) Allocation schedule of depreciation for equipment used for multiple production unit numbers.
15. (4) The Tax Commission may require additional information, including, but not limited to, copies of the operator's federal income tax return, joint interest billings, or other documentation regarding lease production or expenses.
16. (5) The burden of establishing the right to, and the validity of, a credit or refund is on the claimant.

Added at 25 Ok Reg 2039, eff 7-1-08

Amended at 38 Ok Reg 1525, eff 9-1-21

Amended at 42 Ok Reg, Number 20, effective 7-15-25