CHARLESTON — The West Virginia Board of Public Works led by Gov. Jim Justice started the process Wednesday of finalizing property tax assessments for various utilities for the 2022 tax year and approved a deal with FedEx after the company’s tax filing included an error.
The Board of Public Works met Wednesday morning in the Governor’s Cabinet and Conference Room at the State Capitol Building in Charleston. The board was joined by State Tax Commissioner Matthew Irby and other members of the Tax Department.
The Board of Public Works consist of Justice, Secretary of State Mac Warner, Attorney General Patrick Morrisey, Agriculture Commissioner Kent Leonhardt, State Auditor J.B. McCuskey, State Treasurer Riley Moore and State Superintendent of Schools Clayton Burch.
A major role of the board is determining the value of public utility property for tax assessments. Although most real and personal property is assessed at the local level by county assessors, public utilities are unique because their property extends through many counties. Rather than have each of the 55 assessors determine the value, the property is appraised and assessed by the state.
The owner or operator of every public utility is required to file a report with the state tax commissioner no later than May 1 itemizing the utility’s property for the previous calendar year in detail set out by law. The tax commissioner reviews the reports, obtains any additional information needed, sets the tentative assessment for each utility and mails a copy to the owner or operator of the utility.
The Tax Commissioner must deliver the tentative assessments to the Board of Public Works by Sept. 15, and the board then orders the assessments at a meeting to be held no later than Oct. 1.
The types of utilities include airlines, private bridge owners, bus companies, electric providers, natural gas providers, non-cellular communication (paging services), railroads and carlines, pipelines, cell phone companies, private sewer services, landline telephone services, underground gas storage, water and water/sewer services.
The total tentative assessments for tax year 2022 total more than $12.9 billion, a 3.7 percent increase from $12.4 billion in total assessments in tax year 2021. Private sewer services saw their assessment increase by 40 percent, from $696,170 in tax year 2021 to $974,717 in tax year 2022. Airlines saw their assessments drop by 53.5 percent, from $13.7 million in tax year 2021 to $6.4 million in tax year 2022. Airlines include commercial air travel companies as well as commercial cargo and commuter airlines.
“In terms of the airlines, (are) FedEx and these guys moving assets out of the state and moving them somewhere else? Why the precipitous drop?” asked Moore.
“The valuation is based on July 1,” Irby answered. “I could not say whether or not the companies move property in and out of the state in order to avoid that assessment date. I think other states have indicated that they do notice activity around the assessment date to avoid taxation.”
Once the assessments are accepted, the Board of Public Works gives notice to the utility companies of their right to contest the valuation before the board, either in writing or at a hearing or both.
Board members heard such an appeal Wednesday from FedEx, which filed a request for relief from erroneous assessment. Branden Harbaugh, a senior tax analyst for FedEx, participated in the meeting by conference call. Harbaugh explained the $8.1 million assessment FedEx received for tax year 2021 was too high due to a clerical error on FedEx’s part by entering the wrong information into their tax filing.
“We were assessed based off of the original cost of the assets, not the book value, which is what we did report for both columns,” Harbaugh said. “We would just like to be assessed the same way we have in all prior years, which was book value and not original cost. There was a significant increase. I’d say it’s almost a 150% increase from book to total.”
“It sounds like a clerical error on their part. It’s not a clerical error on our part,” Irby said. “We took their word that the value of their assets was what they indicated on the return. There was nothing particularly that we had other than their word for that.”
“Did you have a new person filling out the form that has been filled out by (FedEx) for 50 years?” McCuskey asked.
“Yes, actually. This particular return was the first time I was responsible for it personally,” Harbaugh answered.
As a result of the clerical error, FedEx’s tax obligation from the tax year 2021 assessment was $186,896 instead of the $75,000 tax obligation FedEx was expecting to pay.
After going into executive session to discuss the legal issues of the request, the board proposed giving FedEx a one-year $111,896 credit instead of refunding that amount. Justice said writing a check for that amount would likely hurt county school systems that have already budgeted the tax revenue for tax year 2021.
“Counties have already made their budgets and already made their expenditures based on the dollars that we anticipated that are coming or have come,” Justice said. “The fairest thing the board is going to come up with and decide … is we’ll probably go along with the reduction … but we’re going to do it at the level of a credit to where we don’t just write a check back and pull dollars out of the counties where they have already expended dollars.”
“Yeah, I think that is perfectly fine,” said Bo White, senior legal counsel for FedEx. “I think that would work for our team.”
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