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Cause I’m the Taxman: Louisiana’s Ad Valorem Tax Litigation against Exploration and Production Companies

Cause I’m the Taxman: Louisiana’s Ad Valorem Tax Litigation against Exploration and Production Companies. Aimee Williams H ebert & Sara Mouledoux. Ad Valorem Taxes . Louisiana does not tax oil & gas in place

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Cause I’m the Taxman: Louisiana’s Ad Valorem Tax Litigation against Exploration and Production Companies

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  1. Cause I’m the Taxman: Louisiana’s Ad Valorem Tax Litigation against Exploration and Production Companies Aimee Williams Hebert & Sara Mouledoux

  2. Ad Valorem Taxes Louisiana does not tax oil & gas in place Parish-level property tax on movables, based on a uniform percentage of assessed fair market value (La. R.S. § 47:1701-2332) Fair market value is “the price for property which would be agreed upon between a willing and informed buyer and a willing and informed seller under usual and ordinary circumstances.” (La. R.S. § 47:2321)

  3. Statutory Guidelines for Oil & Gas Properties Louisiana Administrative Code Title 61, Part V, Chapter 9

  4. LAT12 Form:

  5. Self-report taxable property on LAT12 form (April 1) • Official assessment based on LAT12 data • Notice to taxpayer on day 1 of 15-day mandatory inspection period (between August 15 and September 15) • Possible meeting with assessor to discuss assessment

  6. Challenge at Board of Review (7 days prior to hearing, held after inspection period above) • Possible appeal to La. Tax Commission (10 days) • Possible appeal to La. District Court (30 days) • Assessor files for collection by sheriff (November 15)

  7. Changes in Self-Reporting Louisiana allowed the oil & gas industry to self report taxable property beginning in the 1990s, following recommendations from LOGA. The state also shifted from a well-by-well valuation scheme to a total field valuation scheme. A decade later, enter VLS…

  8. VLS Report Issues • Owned vs. rented equipment • Component parts of field equipment • Economic obsoleteness • Public services (i.e. interstate pipelines) • Reliance on state records

  9. Plaquemines Parish versus Terrebonne Parish

  10. Plaquemines Parish: 2009 taxes: Reassessments according to Louisiana statutory procedure, based on both under-reported and unreported property 2006-2008 taxes: One-page settlement agreements largely based on unreported property only, but limited to those tax years --“Premium” penalty

  11. Terrebonne Parish: • Bonvillain v. Louisiana Land & Exploration Company: leading case filed May 14, 2009 • Named defendants: • LL&E • Employees who signed the LAT12 • Subsequent suits also name corporate officers • 31 suits filed against oil & gas companies and executives as of Oct 12, 2009

  12. BonvillainLitigation: • Three counts common to all 31 suits: • Seeking to recover unreported and/or under-reported parish ad valorem taxes since 1994 • RICO violations seeking treble damages • Fraud seeking damages “in the nature of” taxes

  13. RICO: The Racketeer Influenced and Corrupt Organizations Act • Criminal and Civil lawsuits… • A "person damaged in his business or property" can sue one or more "racketeers" for treble damages resulting from a “pattern of racketeering activity.” • A “racketeer” is a person who is a member of a “criminal enterprise” engaged in “a pattern of racketeering activity.” • A “pattern of racketeering activity” is defined as the commission of two or more acts of certain state or federal offenses, within a period of ten years.

  14. Racketeering acts: • Any violation of state statutes against gambling, murder, kidnapping, extortion, arson, robbery, bribery, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in the Controlled Substances Act); • Any act of bribery, counterfeiting, theft, embezzlement, fraud, dealing in obscene matter, obstruction of justice, slavery, racketeering, gambling, money laundering, commission of murder-for-hire, wire fraud, and several other offenses covered under the Federal criminal code (Title 18); • Embezzlement of union funds; • Bankruptcy fraud or securities fraud; • Drug trafficking; • Money laundering and related offenses; • Bringing in, aiding or assisting aliens in illegally entering the country (if the action was for financial gain); • Acts of terrorism.

  15. RICO allegations in the LL&E suit: • Employees were the “racketeers.” • LL&E was the “criminal enterprise.” • Using LL&E to mail false LAT12 tax forms to the assessor over several years was the RICO-predicate criminal act under U.S. wire-fraud laws. • Bonvillain seeks all taxes, treble damages under RICO, and damages under a fraud theory.

  16. "I think four or five more assessors are going to file shortly.” • Gene Bonvillain, Terrebonne Parish Tax Assessor

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