BUCKHANNON — Recouping $50,000 in back tax dollars is better than potentially losing some of those dollars, the Upshur County Commission decided Thursday.
At its regular meeting, the commission voted to approve a $50,000 settlement offer proffered by an Oklahoma-based oil and gas company it alleges owed the county approximately $118,000 in back taxes due to an erroneous assessment that occurred over the span of three years.
As prescribed by state code 11-3-27, the county filed a Petition for Relief from Erroneous Assessments, asking that the sheriff’s office be paid the $118,975.41 it says Appalachian Midstream Services owes in back taxes as a result of what county assessor Dustin Zickefoose and Upshur County prosecuting attorney David Godwin have labeled as an “inadvertent clerical error.” The commission presided over a July 20 public hearing on the matter during which Appalachian Midstream Services’ attorney Chris Hunter of the Charleston-based law firm Jackson Kelly argued that the company should not have to pay the back taxes, while Godwin made the case that the county was entitled to recover the money owed.
Based on testimony at the July 20 hearing, the commission ruled in favor of the assessor’s office and against Appalachian Midstream Services — which has since merged with the energy company the Williams Group — at its July 27 meeting.
On Thursday, the commission unanimously approved an offer from the company in which it would pay the county $50,000 in exchange for the Appalachian Midstream Services not appealing the case at the Upshur County Circuit Court level.
Godwin said the company initially offered to pay back taxes on one of the three years, but after conferring with the commission, he responded that the county would rather Appalachian Midstream Services pay two of the three years.
“They countered (with an offer) of paying $50,000 to resolve past taxes,” Godwin told the commission Thursday. “That’s around 42 percent. I think this is unfortunate that this occurred, but considering the expense of litigation … I think $50,000 is a fair and appropriate offer.”
Godwin pointed out the commission could potentially lose the case if the company appealed it in Upshur County Circuit Court.
“You would have the risk of loss if the fact finder found it was a matter of negligence, and then there would be no way to get back years’ (taxes),” Godwin said. “There’s even more risk in finding that it (the mistake) could have reasonably been found before December 2016.”
State code 11-3-27 states relief may be granted — in this case to the county assessor’s office — if the error is a result of an inadvertent clerical error and not negligence. In addition, a party can be granted relief if the petition or claim is filed within one of two time periods — either within a year of when the tax books are delivered to the sheriff’s office or within “one year from the time such clerical error or mistake is discovered or could be reasonably discovered.”
Commissioner Sam Nolte said he thought there was risk in the county rejecting the settlement offer.
“There’s some risk going forward with it,” Nolte said, “just with the fact that it could have been discovered if the paperwork would have been analyzed a little more carefully. It’s a significant amount of money. When you’re dealing with money in taxes, you really need to take your time to make sure it’s really accurate. I feel we run a risk going forward. Honestly, I feel like we should have caught it.”
County administrator Carrie Wallace advised Nolte, “I would not make those statements if you are going to reject the settlement offer because it could be made part of the record (going forward) in court.”
Nolte made a motion to accept the $50,000 offer, which was seconded by commissioner Troy “Buddy” Brady and passed unanimously.
Commission president Terry Cutright said that although he felt the company owed the full $118,000, it would be better to recover some of the money than none of it.
“Personally, I feel if you owe the taxes, you do owe the taxes, but if you bring in Circuit Court and up to the Supreme Court, my mother always said, ‘A bird in the hand is worth two in the bush,’” Cutright said.
The error, which was discovered in December 2016, occurred when the assessor’s office submitted an incorrect assessed value to the sheriff’s office for tax years 2014, 2015 and 2016 on a piece of property located in the Banks District owned by Appalachian Midstream Services, which has since merged with the Williams Group. According to a previous Record Delta article, when Appalachian Midstream Services submitted their property assessment for tax years 2014-2016 on a spreadsheet, the company included both the fair market value of the property as well as the assessed value, which is 60 percent of the fair market value.
The assessor’s office mistakenly entered the assessed value instead of the fair market value in its computer program, which then automatically reduced it again, resulting in Appalachian Midstream Services paying $118,975.41 less than it should have over a three-year time period.
Hunter, the legal representative for Appalachian Midstream Services, was not present at Thursday’s meeting.