County tax appeal board denies $189.5 million Calumet protest

The Cascade County Tax Appeal Board denied a request from Calumet Montana Refining to lower their taxable valuation.

Calumet can appeal the decision to the Montana Tax Appeal Board as they did in 2018.

During a Nov. 9 hearing, representatives from Calumet said the Montana Department of Revenue had valued their land at $118,944; and the buildings, equipment and improvements at $299,428,094 for a total of $299,547,035.

Calumet asked the county tax appeal board to lower their market value for the buildings, equipment and improvements to $109,881,000 for a total of $109,999,944.

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That’s a reduction of $189.5 million.

Philip Murphy for Calumet, said that their taxes have quadrupled since the company purchased the refinery in 2012.

He said that in 2012, their taxes were $1.4 million. In 2021, Calumet paid $5.5 million and in 2022, $6.2 million in taxes.

Calumet spun off a portion of their property, operations and equipment to create Montana Renewables, a biodiesel fuel production company.

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Murphy said the whole property and operation was bifurcated into two closed loop systems, leaving Calumet with the lower value assets and reduced production capacity for crude oil.

Murphy said they weren’t contesting the valuation for Montana Renewables.

Calumet argued to the county tax appeal board that the DoR didn’t assess them equally, compared to the other three refineries in the state, as the local refinery was smaller with more limited operations than the others. They argued they should be assessed at a lower rate than the other refineries.

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Calumet argued that Exxon sold their Billings refinery for $310 million this year and that refinery had higher capacity than Calumet.

Michael Barber, an appraiser with DoR, said the department did consider Calumet’s concerns over the summer during their informal review of Calumet’s tax assessment.

Barber explained the department’s process, as defined by state law and regulations, and that DoR had to use a specific approach to determine Calumet’s market value since Calumet didn’t provide the requested data for a different approach.

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Of Calumet’s valuation, there’s $3,444,610 that’s taxed at 50 percent under an abatement approved by City and County Commissioners.

Barber said the refinery has made $370 million worth of improvements since purchasing the refinery in 2012.

Jill Gallagher of DoR said the department used the same process to determine valuations for the other refineries in the state.

During their Nov. 13 deliberations, Jean Clary said that “this is a pretty complex property,” but she was leaning toward sticking with the DoR valuation.

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Chuck Pankratz, board members, said that he was leaning toward the DoR valuation since they have a consistent method of valuing refineries.

During their board discussion, they said Calumet’s own documentation valued the property and operation at $341 million, accounting for depreciation.

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The board voted unanimously to uphold the DoR’s valuation for Calumet.

Calumet protested their taxes in 2019, which was a continuation of the 2017-2018 protest cast that was settled in 2020.

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The Montana Department of Revenue set Calumet’s value at $538 million for 2017. In February 2018, the three-person county tax appeal board lowered the value to $312.5 million. Calumet had requested their value be lowered to $190.7 million.

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Both Calumet and the DOR appealed that decision to the Montana Tax Appeal Board in 2018.

In 2020, the parties settled and according to DoR, of the roughly $17 million paid by Calumet under protest for tax years 2017-2019, about $9.5 million was released to the local jurisdictions and $1.5 million to the state.

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Once the protest was settled, the county issued a refund of $4.7 million to Calumet and milled a special levy to recoup $1.2 million of funds the school district had to pay back to Calumet since they accessed their portion of protested taxes.