Garfield will await high court ruling on gas tax refunds
Garfield County commissioners have denied requests from two natural gas producers that would result in more than $7 million in tax refunds.
Commissioners opted instead to see whether the state Supreme Court upholds a lower-court ruling holding that Occidental Petroleum shouldn’t be reimbursed by local governments in Mesa County for more than $1.8 million in tax overpayments.
In both the Oxy case and the Garfield County ones involving Encana and Caerus Oil and Gas, the overpayments resulted from errors made by the companies in reporting oil and gas production for assessment purposes.
In the Garfield County cases, clerical errors by Encana and Caerus resulted in incorrect tax value assessments under which the companies say they respectively paid about $6 million and $1.2 million more than they owed, counting interest that has accrued since the overpayments.
Encana’s error was for the 2014 tax year, and the Caerus error happened the following year.
In December, the Colorado Court of Appeals ruled against Oxy’s bid to recoup taxes paid based on erroneous information it had provided to the Mesa County Assessor’s Office.
It has appealed that ruling.
Oral arguments have occurred before the state’s high court and a ruling is pending.
“This appeal to the Supreme Court has statewide concern regarding the ability of oil and gas taxpayers to request abatements,” Garfield County Assessor Jim Yellico told Garfield commissioners when they recently considered the abatement requests by Encana and Caerus.
Yellico said the main reason commissioners denied the abatement is that the Mesa County case “is being decided pretty much as we speak.”
Neither Encana nor Caerus appeared at the hearing before county commissioners.
“They’ve decided not to appear but want to go on the record that this is a big issue to them,” Sean McCourt, an assessor’s office employee who specializes in oil and gas appraisals, told commissioners.
“This is quite an abatement request,” Commissioner John Martin said.
Yellico said his office doesn’t dispute that the companies made mistakes in their initial reporting, but it’s just a question of whether they can seek abatements based on their own mistakes.
He said his office saw a discrepancy in Encana’s case when the company initially reported its production.
“We noticed something wasn’t right and mentioned something and they were sure it was right,” he said.
Encana now says the error resulted in nearly a $150 million difference in assessed value.
The county’s oil and gas auditors have been reviewing the Encana and Caerus abatement claims for accuracy in terms of the valuation amounts at issue, in case the high court rules in favor of the industry and tax refunds are required.
In that case, affected tax entities are allowed to temporarily adjust mill levies to collect the extra money needed for the refunds, Yellico said.
Should that happen, it would be the oil and gas industry that would shoulder much of the cost of the refunds because that industry accounts for so much of the local tax base, although other taxpayers would be affected too, he said.
Yellico said the clerical errors for the two companies weren’t ongoing but occurred for one tax year apiece.