1. (a) Imposition of tax, penalty, and interest.

   1. (1) Penalty and interest will not apply to additional value resulting from retroactive price increases or retroactive adjustments to value provided the additional tax is remitted on or before the 20 day of the second month following the month in which such price or value was determined. The taxpayer has the burden of notifying the comptroller of any tax not subject to penalty and interest. If notification is not provided, the prepayment procedure, if applicable, will be followed.
   2. (2) The gas purchaser will be held responsible for any tax, penalty, and interest accruing on gas taken by the purchaser whenever the proceeds are not disbursed to the interest owners, unless the producer is solely liable for the tax.

2. (b) Prepayment procedure.

   1. (1) Any natural gas taxpayer may voluntarily prepay the amount of tax that may become due as the result of filing amended reports after the due date.
   2. (2) If the prepayment is sufficient to cover the additional tax and the postmark for the prepayment is on or before the due date for the period being amended, no penalty and interest will be assessed.
   3. (3) If the prepayment is insufficient to cover the additional tax, or if the prepayment postmark date is not timely, the prepayment will be applied in such a manner that the maximum amount of penalty and interest will be eliminated based upon the account balances at that time.
   4. (4) A prepayment will be applied only when a payment is received along with the amended report and only if the application would eliminate or reduce penalty and interest. A prepayment will not be automatically applied against penalty and interest. Any prepayment used will be replaced with the payment received with the amended reports. The replacement will then be available for use as a prepayment under the actual postmark date that it was sent to the comptroller.
   5. (5) Any taxpayer electing to use the prepayment procedure may not designate the application of payments. The application will be made by the comptroller and will be made in such a manner that the maximum amount of penalty and interest will be eliminated based upon the balances at the time of receipt of the amended reports and payments.
   6. (6) A prepayment will not automatically be applied against a liability reflected on an original report or against a liability established by audit of the taxpayer's records.
   7. (7) The comptroller may apply a prepayment to any unpaid natural gas tax, penalty, and interest existing in the taxpayer's account, unless the deficiency is included in a redetermination hearing.
   8. (8) A taxpayer may increase the amount of the prepayment at any time.
   9. (9) A taxpayer may request a refund of the unused prepayment, or any part of it, at any time. The granting of the unused prepayment, or any part of it, at any time. The granting of the refund is subject to existing law and rules of the comptroller.

Source Note:The provisions of this §3.11 adopted to be effective January 1, 1976; amended to be effective February 2, 1981, 6 TexReg 200; amended to be effective December 3, 1987, 12 TexReg 4366.