Holland & Hart’s State and Local Tax group recently obtained a favorable ruling from the Utah Supreme Court for clients Anadarko Petroleum Corporation and Kerr-McGee Oil & Gas Onshore, L.P. regarding calculating Utah severance taxes on oil and gas.
The Utah Supreme Court ruled that, in calculating Utah severance taxes on oil and gas, the Utah State Tax Commission is required to deduct federal, state and Indian royalty interests for all purposes of the severance tax calculation in a landmark case, Anadarko v. Tax Comm’n, 2015 UT 25. The Tax Commission historically allowed taxpayers to deduct such royalties from the tax base, but then would add the royalties back in when determining the tax rate to apply. Utah has graduated 3 percent and 5 percent rates. The Court overturned this practice, holding that the royalties must be removed for all purposes of the severance tax calculation.
The decision is a substantial victory for Anadarko and Kerr-McGee as well as all other oil and gas producers who pay federal, state or Indian royalties in Utah. Steve Young and Nate Runyan, members of Holland & Hart’s State and Local Tax practice, represented Anadarko and Kerr-McGee in the suit.
Holland & Hart’s State and Local Tax group is among the broadest and deepest in the Mountain West, and its attorneys possess decades of experience addressing state and local tax issues in Colorado, Utah, Wyoming, New Mexico, Idaho, Montana, Nevada, and surrounding states. The firm’s attorneys represent numerous industries throughout the region, including oil and gas, mining, telecommunications, cable, utilities, pipelines, retail, and small businesses.
The Tax group handles administrative, trial court, and appellate court litigation on state and local tax issues; lobbying on state and local tax issues before state legislative and administrative bodies and cities and counties; state and local tax planning; and transactional state and local tax advice.