Williams paying $4.5M following GarCo tax audit

Williams Production RMT is paying about $4.5 million to resolve a Garfield County audit of its oil and gas production over four years.

The payment helps county Assessor John Gorman make good on a campaign promise to go after energy companies for underpayment of taxes. Gorman, a Democrat, unseated Republican incumbent Shannon Hurst in 2006.

The audit found Williams underpaid taxes by about $2.76 million between 2002 and 2005. Williams also is paying interest on the underpaid amount.

Gorman said the underpayment resulted from inaccurate valuations of production and of deductions for production-related expenses.

Under Gorman, the county hired an outside consultant that focused first on some of the county’s biggest gas producers going back as many years as allowed by the statute of limitations.

Audits of EnCana Oil & Gas (USA) and Petroleum Development Corp. are ongoing.

Gorman said Williams also will be audited for more recent years, and his office has notified “a laundry list” of other companies that they will be audited.

“My intention is to continue to audit at least until the audit doesn’t pay for itself. I mean, why wouldn’t I?” he said.

The county deducted audit expenses of about $69,000 and county treasurer’s fees of about $50,000 before distributing the remainder of the Williams revenues to local tax jurisdictions.

The Re-2 School District in Rifle is receiving more than $900,000 as a result of the audit. District finance director Christy Hamrick said some of that will result in a bond mill levy being reduced for taxpayers, while the rest can help shore up the district’s budget.

“It is one-time money, so we’re treating it as that, but it really can help when we’re looking at the situation with the state currently and how we’re going to handle our budget in the future,” she said.

Williams spokeswoman Susan Alvillar said the company wants to pay its fair share of taxes and worked hard to cooperate with the audit.

“We realize that we may have had some deficiencies, and we really worked to correct those,” she said.

Williams hired two employees to work with the county on the audit, expanded its use of an outside consultant involved in the process and increased staffing in its gas production measurement department, which implemented new software programs and upgraded equipment in the field to improve accuracy, Alvillar said.

Gorman said some of the underpayments resulted from mistakes such as putting a well into production but failing to start reporting production until a few months later.

He said the audit also found some errors that worked in Williams’ favor.

“There are hundreds of ways to make a mistake here,” he said.

Alvillar said valuation of gas production isn’t simple, and there can be different legal interpretations about what deductions are allowed. She also blamed some underpayments on things such as typographical errors, spreadsheet mistakes and duplications.


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