Carbon dioxide producer Kinder Morgan is not ready to throw in the towel on an ongoing tax dispute with Montezuma County.
The company plans to appeal a higher asset valuation and tax bill by county assessors that was upheld in October by the Colorado Board of Assessment Appeals (CBAA).
“Now it will go to the Colorado Court of Appeals, where three judges will review the case,” said Montezuma County assessor Mark Vanderpool. “I am confident we are in a strong position.”
No new evidence is presented at the new appeal, and a scheduled court hearing is not expected soon. Either party can appeal the decision to the Colorado Supreme Court.
An investigation and audit into Kinder Morgan’s self-reported assets led to Vanderpool bumping their 2008 tax bill up by $2 million. The bill was paid, and the company’s appeal was denied by the CBAA five years later.
Montezuma County has reported that they plan to audit the company’s 2009-2013 tax assessments due to the favorable ruling from the CBAA.
The result could be millions of dollars in additional taxes owed by Kinder Morgan that would go towards county coffers, schools, and special districts.
“It could be a big boon for the county,” said Montezuma County commissioner Keenan Ertel.
The 2008 audit was supported by the county, who helped to fund tax experts and additional legal help needed to evaluate the complexities of energy company financial reports.
“I urge the county to continue that support the additional professional development required for these audits,” Vanderpool said.
Vanderpool, his staff and Mary Ellen Denomy, an energy industry tax expert concluded in 2008 that the energy company underestimated its assets by $50 million.
In the complex case, the county denied a deduction made by Kinder Morgan on a tariff it pays to Cortez Pipeline, which delivers carbon dioxide to Texas where it is used to pressurized played out wells to extract residual oil.
The audit concluded that because Kinder Morgan is more than a 50 percent partner of the pipeline, it does not qualify for the tariff deduction. The CBAA agreed, stating in its ruling that “Kinder Morgan . . . was a related party to the Cortez Pipeline Company,” therefore “a transportation deduction is not allowed.”
The commissioners have been careful not to brag about the favorable ruling, emphasizing that Kinder Morgan provides jobs and 40 percent of property tax revenues for the county.
The county has also expressed the importance of applying tax rules fairly whether it an individual or large company.
“It is a disagreement over the tariff deduction. We just want to treat all taxpayers fair, from the biggest to the smallest,” Vanderpool said.
Because of the appeal, the county and all tax districts are advised to keep in reserve their portion of the additional tax paid by Kinder Morgan in 2008 until all appeals are exhausted.
jmimiaga@cortezjournal.com