Exxon shorts county $10 million

by Cat Urbigkit

ExxonMobil continues its battle over tax assessments related to its Shute Creek Plant production in Sublette County, lobbing a new hardball in late December when it issued a check to cover taxes.

The ad valorem tax bill at issue is for the 2006 tax year, which is based on the 2005 production year. According to the county’s special attorney who handles ExxonMobil issues, John McKinley of the Davis and Cannon law firm, the Wyoming Department of Revenue certified the valuation to the county for ExxonMobil, with a tax bill due to the county of $13.8 million. McKinley spoke with commissioners via telephone conference call on Tuesday.

But when ExxonMobil cut the check for the taxes, the company only submitted $3.4 million - $10 million short. The check was accompanied by a letter from C. Terry Olson, assistant manager in ExxonMobil’s Tax Reporting and Analysis Center, noting the company disagrees with the valuation because of the method used by DOR.

Olson’s letter noted: “The Department’s assessed valuation is void ‘ab initio’ because it includes assessments on federal helium purchased by ExxonMobil from the federal government and in the direct cost ratio of the proportionate profits formula in direct violation of two final judicial decrees holding to the contrary.”

So “in the absence of a lawful assessment,” according to Olson, the company did its own tax calculated and submitted what it felt was due.

McKinley said Olson’s citation of the court degrees is simply incorrect. He predicted that ExxonMobil will follow its usual path, first by appealing the assessment to the Wyoming Board of Equalization, and if then unhappy with an adverse decision there, will follow the judicial path to the Wyoming Supreme Court.

The state’s highest court is a frequent hearer of disputes involving taxation on ExxonMobil’s production in Sublette County, with a current dispute over taxation on helium production, due for oral arguments in mid-February.

Should ExxonMobil be wrong, it will have to pay the county the $10 million in tax owed, as well as interest.

Sublette County Commission Chairman Bill Cramer said, “If they’re wrong, we get 18 percent.”