A dispute over the taxable valuation of an oil transload facility in Mountrail County is headed to district court.
That facility is in Ross. The state Board of Tax Equalization ordered Mountrail County to reduce its valuation of that facility. And the issue is what constitutes “real property” – which is subject to property taxes – and what is “personal property” – which is not.
"It's kind of a gray area," said state Tax Commissioner Ryan Rauschenberger. "Machinery or equipment that can be moved easily or transported easily is considered personal property, and is not subject to property tax."
But Mountrail County argues the equipment there is subject to property tax.
"The legal question is, can these things be removed from the structure without affecting the nature of the business," said Williston attorney Thomas Kalil, who was hired by the county to argue the case. "It's our position that if the owner of the property were to ship all of those things out, there wouldn't be anything left. The items we're talking about are essentially the entire structure."
Kalil says there’s a larger issue at play.
"As we go into the next biennium, the state is not going to have any of the oil and gas tax money that we in the west have come to rely on to help mitigate a lot of oilfield impacts," said Kalil. "Just because the price of oil has collapsed, there isn't going to be any oil tax revenue. So for western counties, if we don't have the ability to tax some of these oil improvements, there's going to be a substantial burden placed on the taxpayers of Mountrail County, and we don't think that burden should be there."
The case will be heard in South Central District Court, in Bismarck.
