FROM THE BOARD OF TAX APPEAL 3RD PARISH OF BOARD OF TAX
APPEAL 3RD, NO. BTA9608D HONORABLE ANTHONY JOHN GRAPHIA,
Simien, Jr. Roy Bergeron, Jr. Simien & Simien, L.L.C.
Defendant/Appellant - Kimberly Robinson, Secretary, Louisiana
Department of Revenue
C. Exnicios Cheryl Mollere Kornick Randy J. Marse, Jr. Liskow
& Lewis, APLC Plaintiff/Appellee - Avanti Exploration,
composed of Ulysses Gene Thibodeaux, Chief Judge, Billy
Howard Ezell, and John E. Conery, Judges.
ULYSSES GENE THIBODEAUX CHIEF JUDGE.
tax case, the plaintiff taxpayer, Avanti Exploration, LLC
(Avanti), disputes additional severance taxes assessed
against it by the defendant, Kimberly Robinson, Secretary,
Louisiana Department of Revenue (Department). Avanti filed a
petition with the Board of Tax Appeals (Board). Both Avanti
and the Department filed motions for summary judgment, and
the Board found in favor of Avanti. The Department now
appeals the Board's judgment granting summary judgment to
Avanti. Following our de novo review, we find no issue of
material fact and find that Avanti is entitled to summary
judgment as a matter of law. We affirm the judgment of the
decide whether the Board erred in applying La.R.S.
47:633(7)(a) and applicable law in granting summary judgment
AND PROCEDURAL HISTORY
is engaged in the oil & gas production business in
Louisiana, operating various wells and producing oil from
mineral leases in Beauregard Parish. As a producer who
severed the natural resource from the ground, Avanti was
subject to the Louisiana oil severance tax levied under
La.R.S. 47:633(7). The statute bases the tax on the value of
the oil at the time and place of severance on the lease in
the field. The severance tax is calculated on the
producer's gross receipts on sales or by the posted field
price, whichever is higher. However, if a producer incurs
transportation costs in getting his product to market, to a
point of sale off the lease, he can subtract the
transportation costs from his gross receipts and calculate
the severance tax on the reduced amount.
sold the oil produced from the leases pursuant to contracts
with buyers. The contracts obligated the initial buyer, the
"first purchaser," to take title and delivery of
the oil at the lease where production occurred. Therefore,
Avanti did not have to transport its oil to market, or to a
point of sale off the lease, and its severance tax payments
should have been based upon its gross receipts, without any
reduction/deduction for transportation costs.
issue in this case are Avanti's contracts with two of its
first purchasers, Phillips 66 Company (Phillips), and Cokinos
Energy Corporation (Cokinos). Each contract contained a
negotiated price formula to establish the sales price to be
paid to Avanti for the oil it conveyed to the buyer at the
lease each month during the term of the contract. The price
formulas in Avanti's contracts with its buyers began with
published, oil market center prices for the month of
production and made various positive and negative adjustments
to arrive at a lower price to be paid for the crude oil being
sold at the lease.
to the contracts and La.R.S. 47:638, the buyer was required
to calculate, deduct, and withhold from Avanti's gross
proceeds, the appropriate amount of severance tax due under
La.R.S. 47:633 before remitting payment to Avanti, but the
ultimate tax liability remained with Avanti under La.R.S.
47:637. After withholding the severance tax, the buyer would
then file the necessary severance tax returns and remit the
taxes to the Department. Following the payment of taxes on
Avanti's behalf by its purchasers, Phillips and Cokinos,
the Department performed an audit of Avanti's records and
found that Avanti had impermissibly reduced its gross
receipts, and its tax computation, by subtracting
transportation costs that were not allowed in its case since
it sold its oil on the lease.
Department issued a notice of assessment to Avanti for
additional severance taxes for the tax period of January 1,
2012, through December 31, 2014. The total assessment was
$119, 463.67, which included taxes in the amount of $79,
783.73, together with interest in the amount of $10, 567.65
and penalties in the amount of $29, 112.29. Except for
specific amounts that Avanti admitted to owing because of
well-classification errors and unfiled reports, Avanti
disputed the additional severance tax and filed a petition
for redetermination of the assessment. Subsequently, Avanti
and the Department filed motions for summary judgment.
a hearing, the Board found in favor of Avanti, granting its
motion for summary judgment while denying the
Department's motion for summary judgment. The Department
brought this appeal. For the following reasons, we affirm
summary judgment in favor of Avanti.
Summary judgments are reviewed de novo on appeal,
with the reviewing court using the same criteria that govern
the trial court's determination of whether summary
judgment is appropriate; whether there is any genuine issue
of material fact, and whether the movant is entitled to
judgment as a matter of law. La.Code Civ.P. art. 966.
Smith v. Robinson, 18-728, p. 5 (La. 12/5/18), So.3d
imposes a severance tax on oil and other natural resources as
they are severed from the ground or water. Louisiana
Constitution Article 7, § ...