Avalara Taxrates > Blog > Sales Tax News > Wyoming: How to Tax Tools Lost Down Holes - Avalara

Wyoming: How to Tax Tools Lost Down Holes


 How many tools are lost down that Wyoming gas well?

When a tool is lost down a hole in Wyoming, should it be subject to sales tax? Anyone suffering sleepless nights over this question will be happy to learn that the Wyoming Department of Revenue has just issued “Important Clarification Concerning the Taxability of Tools Lost Down Hole.” The holes in question aren’t just any holes; they’re oil and gas wells.

It turns out that “Wyoming has historically viewed tools lost down hole or tools damaged beyond repair” to be subject to sales tax, regardless of when the damage or lost-down-hole-event occurred. That is no longer the case.

Effective immediately (the notice was published on April 15, 2014), the Wyoming Department of Revenue is changing its “interpretation of the taxability of tools lost down hole or damaged beyond repair to be consistent with the phase of the well at the time the tool is lost or damaged.”

Under the new policy, taxability hinges on when the tool was lost: during the pre-production casing phase or during the production casing phase:

  • If a customer is required to pay for a tool that “is lost down hole or damaged beyond repair during the pre-production casing phase of the well,” the tool will be exempt from sales tax.
  • If a customer is required to pay for a tool that is “lost or damaged beyond repair during the production casing phase of the well,” the tool is subject to sales tax.

This policy change “in no way affects the taxability of any services performed within an oil or gas well site.”

Does dealing with sales tax and sales tax exemptions make you want to throw your tools down a hole? Switch to an automated sales tax solution instead.

photo credit: SkyTruth via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.