If the Oregon Department of Revenue (DOR) wins its appeal before the Oregon Supreme Court, Lane County could get $7.2 million from communications giant Comcast in taxes. If the state loses, then Lane County Tax Assessor Mike Cowles says at least the county won’t owe any money, thanks to a bill that was passed in the 2011 Legislature after the Comcast dispute began in 2009. Ten Oregon counties are affected by the dispute: Lane, Multnomah, Benton, Clackamas, Columbia, Linn, Marion, Polk, Washington and Yamhill.
Local demographics mapper Joe Kosewic was researching delinquent taxpaying businesses in Lane County when he came across a couple of utilities property statements that appeared to show Comcast was delinquent as of May 28, 2013, on almost $5 million in local taxes. Given Lane County’s tax-strapped status that led to the recent jail tax levy, Kosewic, who has mapped everything from taxes to homeless children, started asking questions.
Comcast has long paid local taxes in Oregon (and made campaign donations to local and state politicians), but the current tax issue began in 2009 when Oregon decided to start “centrally assessing” the utility’s taxes using a new formula that said Comcast’s television and internet services are a communication business and took intangibles like patents into account. Airlines, railroads, utilities, communications and pipelines are all centrally assessed in Oregon. The new assessment increased the taxes by four times what Comcast had been paying when counties were locally assessing the taxes, and Comcast’s Oregon tax amount became $1 billion dollars. The company sued.
Comcast won an Oregon Tax Court Decision in August 2011, with the Oregon Department of Justice arguing the case for the DOR. Judge Henry C. Breithaupt ruled against the state’s assessment method, writing that the “primary use” of Comcast’s properties was cable television, which did not make Comcast subject to the new assessment method. Kosewic says he was told the decision “took everybody by surprise.”
The revenue department then appealed the case to the Oregon Supreme Court, which heard arguments in January. Kosewic says he was told a decision might come out in June or July. Cowles says he was told September. DOR spokesperson Derrick Gasperini says, “We don’t have any indication of when a decision will be issued. I’ll say light-heartedly that the Oregon Supreme Court doesn’t consult with us about their cases.”
Cowles explains that House Bill 2569, when it was passed in 2011, set up a system in which, when a property tax assessment worth over $1 million is appealed, the disputed amount is placed in a deferred billing credit account. The county has been calculating current taxes based on the pre-2009 formula and asking Comcast to pay that amount and be given deferred billing for the rest, which according to Cowles, Comcast has done. When the County Commission voted in 2011 to use the deferred billing, Comcast would have owed $3.2 million for 2009 and 2010, according to the board order. If the DOR loses in the Supreme Court, the county would have had to pay that back, plus 12 percent interest.
The deferred billing means that “essentially, the county collects the property taxes from the property owner and immediately sends an amount representing the disputed value back to the property owner,” according to Multnomah County’s Tax Supervising & Conservation Commission. Cowles says that if Comcast wins the deferred billing credit amount would be “ledgered off.” If Comcast loses, he says the company could owe anywhere from $0 to $7.2 million, depending on the ruling.
In 2012 the Oregon Legislature passed Senate Bill 1532, which exempted Facebook’s Prineville data center and other data storage sites located in enterprise zones from centralized taxation that would have increased their taxes.
The county is not the only taxing district that would be affected by the Comcast decision — school districts, fire, police, Lane Community College and the city of Eugene all show up on the tax documents as being owed Comcast taxes.