Louisiana Appeals Court Favors Oil Producer In Severance Tax Decision

摘要

LAKE CHARLES, LA.-A Louisiana appeals court says the state unfairly assessed additional severance taxes on an oil and gas production company operating in Beauregard County. The Third Circuit judges affirmed the Board of Tax Appeals decision in a case involving the Louisiana Department of Revenue alleging Avanti Exploration LLC impermissibly reduced its gross receipts in transactions involving two oil purchasers. According to the Louisiana Oil & Gas Association, the court rejected the department's position that differential in the pricing formula was an improper transportation cost or other deduction, and found that it was an element of the pricing formula in the crude oil purchase agreements. The revenue department had claimed that Avanti and the first producers conspired to manipulate Avanti's severance tax liability by taking a producer's transportation credit and hiding it in the pricing formula, LOGA explains. The appeals court found that the contracts called for oil delivery in the field at the lease, and Avanti took no transportation cost deduction.