Mesa County and several other western Colorado local governments owe more than $1 million to Oxy USA Inc. in tax overpayments, the Colorado Supreme Court ruled Monday.
State law "gives taxpayers the right to seek abatement and refund for erroneously or illegally levied taxes resulting from an overvaluation caused solely by taxpayer mistake," the high court ruled in the case, which stretches back to the 2011 tax year.
The more than $1 million owed by local governments in Mesa County doesn't include interest payments totaling $14,000 a month. For Mesa County itself, about $400,000 was at issue and interest payments would be about $4,000 a month. Under Colorado law, Oxy could be paid 1 percent in simple interest per month of the total tax at issue.
"No good news goes unpunished," Mesa County Commissioner Scott McInnis said, referring to last week's victory in which voters approved a public-safety sales tax followed by the county's loss in the ruling.
"That's why you have a reserve account," McInnis said. "The fight was one we had to engage in."
County officials previously have noted that the county had no choice but to rely on Oxy's original claims.
The Supreme Court ordered the case remanded to the Colorado Court of Appeals for "further proceedings consistent with this opinion," meaning that the county and Plateau Valley School District 50, the Plateau Valley Fire Department and the Plateau Valley Hospital District have some time to prepare to repay money that has been at issue since 2013.
The school district stands to lose more than $500,000, while the hospital district would owe $149,275 and the fire department $106,512.
Mesa County Attorney Patrick Coleman said he was studying the ruling and a spokeswoman for Oxy said the company had "nothing to offer" in comment.
Officials with the Plateau Valley Hospital District also didn't respond immediately. Mike Page, the new superintendent of District 50, said he was familiarizing himself with the issue.
County officials were optimistic about their chances because the taxes were based on information that Oxy supplied for the 2011 and 212 tax years.
After filing an operator statement, which is used by local officials to set tax rates, "Oxy discovered that it had failed to deduct certain allowable costs when preparing its statements for tax years 2011 and 2012," the high court's opinion said. "Without those deductions, Oxy over-reported the selling point of its gas at the wellhead for those years. This led Oxy to overvalue its leasehold and thereby overpay its taxes. This is undisputed."
When Oxy sought relief, the Mesa County Commission denied the petition, but the county was reversed by the Board of Assessment Appeals and the Court of Appeals reversed that decision, setting the issue up for the high court.
The county had contended that none of the grounds for abatement and refund applied because Oxy alone made the error and it relied on two previous Supreme Court rulings for that position.
The plain language of the statute suggests that abatement is allowed for any overvaluation, "even when it is caused by taxpayer error," the court said.
The county's 2017 budget anticipated a nearly $11 million fund balance.