High court hears tax issue
It will decide fairness of PacifiCorp burden during 1996-2000
Attorneys representing Utah counties, PacifiCorp and the state Tax Commission argued before the Utah Supreme Court on Monday about whether PacifiCorp was fairly taxed between 1996-2000 after the state's property tax division discovered PacifiCorp had furnished erroneous federal income deduction numbers for those years.
The result, according to county officials, is that PacifiCorp's property tax burden was reduced by about $700,000. Counties also take issue with the Tax Commission, which applied a different taxation method and reduced the overall property value, thus eliminating most of the "escaped property" taxes owed.
County representatives say they are concerned the case will set a precedent allowing the Tax Commission to change taxation methods in order to give Utah's big corporations a tax break.
David Scofield, attorney for 28 counties challenging the tax decision, said Utah's tax law states the Tax Commission should use the same tax method established for all companies within the same tax year.
David Crapo, attorney for PacifiCorp, said the objections raised by the counties are being thrown up to cover the shortcomings of the state's property tax division.
"This is very simply just plain neglect," Crapo told the high court, saying the property tax division dragged its feet in getting a new property tax value for PacifiCorp until four months after a five-year statute of limitations.
Because of that, Crapo argued the bell had tolled and the issue was moot.
Crapo also argued counties are setting a dangerous precedent of being able to haul in a taxpayer to court five years later, bringing into question the finality of tax assessments.
Speaking for the Tax Commission, Deputy Attorney General John McCarrey argued the commission was justified in changing the tax methods because the prior method had resulted in an unfair market value.
Justices questioned if the tax methodology did not result in a fair market value, yet was used for all other corporations the state taxed that year, which comes first: equality or fairness?
Scofield argued it was only fair that the state apply the same tax method for all corporations, regardless that it did not result in a fair market value. Crapo said PacifiCorp believes the original tax values were flawed, regardless of the inaccurate information the company supplied the state, and that the corporation has a right to challenge the value of the property.
The Supreme Court is expected to issue a ruling in writing in the coming weeks.
E-mail: gfattah@desnews.com
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