The Comptroller of Public Accounts proposes new §9.4031, concerning a manual for discounting oil and gas income.

The new §9.4031 updates and revises the Manual for Discounting Oil and Gas Income that was adopted in April 2015. The new manual explains the concept of discounting, the discounted cash flow (DCF) equation, DCF appraisal, and three acceptable techniques for estimating a discount rate in the DCF method. The updates and revisions to the manual generally reflect statutory changes, changes in the federal statutory income tax rate, updates to names and sources of information and updates to appendices to reflect current values. The proposed updated version is available for review at https://comptroller.texas.gov/taxes/property-tax/docs/96-1703-proposed.pdf.

Tom Currah, Chief Revenue Estimator, has determined that during the first five years that the proposed new rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Mr. Currah also has determined that the proposed new rule would have no significant fiscal impact on the state government, units of local government, or individuals.

The proposed new rule would benefit the public by improving the administration of local property valuation and taxation. There would be no anticipated significant economic cost to the public. The proposed new rule would have no significant fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Korry Castillo, Director, Property Tax Assistance Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: ptad.rulecomments@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The new section is proposed under Tax Code, §5.05 (Appraisal Manuals and Other Materials) and §23.175 (Oil or Gas Interests), which provide the comptroller with the authority to develop and distribute to each appraisal office appraisal manuals that specify the methods and procedures to discount future income from the sale of oil or gas from the interest to present value.

The new section implements Tax Code, §23.175 (Oil or Gas Interests).