BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX :
c/o XXXXX, )
:
Petitioner, ) DECISION FROM
: INFORMAL
HEARING
v. )
: Appeal No.
85-0205
AUDITING
DIVISION OF THE )
UTAH STATE TAX
COMMISSION, :
)
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for an Informal Hearing on the
XXXXX. James E. Harward, Hearing
Officer, heard the matter for and in behalf of the Commission, with Joe B.
Pacheco, Commissioner.
The
Petitioner was represented by XXXXX, XXXXX and XXXXX. The Respondent was represented by XXXXX, Assistant Attorney
General, and XXXXX.
The
Petitioner argued that a producing well should be averaged with its disposal
well for the purposes of Utah Code Ann. §59-5-67 which grants an exemption for
a stripper well. A stripper well is one
in which produces less than twenty barrels of oil per day. The Petitioner has one producing well which
produces in excess of twenty barrels of oil per day, but in conjunction with
that well, there is a disposal well which is required for the disposal of waste
water from the producing well. The
Petitioner argues that the two bore holes should be averaged together for the
determination of stripper status. The
disposal well is one which does not produce oil and is used solely for the
injection of disposal water back into the ground.
FINDINGS AND CONCLUSIONS
Based
upon the arguments and evidence presented at the hearing, the Tax Commission
makes the following findings and conclusions:
1. That a well or wells means any well or wells
or other extractive means from which oil, gas or other hydrocarbon substances
are produced or extracted located within an oil field or gas field.
2. An exemption from the occupation tax will be
granted on oil, gas and other hydrocarbon substances when the well is a
stripper well.
3. A stripper well means an oil well whose
average daily production has been twenty barrels a day or less of crude oil
during any consecutive twelve month period, or a gas well whose average daily
production has been sixty XXXXX of less of natural gas during any consecutive
ninety day period.
4. There is no dispute that for the producing
well the Petitioner exceeds the minimum requirement for the application of the
exemption for a stripper well.
5. The waste bore hole is not a well for the
purposes of occupation tax as defined in §59-5-66(8), or for the application of
the exemption for a stripper well as defined in §59-5-67(5).
DECISION AND ORDER
It
is the decision of the Utah State Tax Commission that the determination of the
Audit Division was correct and therefore, is sustained, and Petitioner's Petition
for Redetermination is denied.
DATED
this 11 day of March, 1986.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
ABSENT
Mark K.
Buchi Joe
B. Pacheco*
Chairman Commissioner
R. H. Hansen Roger
O. Tew
Commissioner Commissioner
*
Since the hearing on this case, Commissioner Gary C. Cornia has been replaced
by Commissioner Joe B. Pacheco.
Commissioner Pacheco has been duly advised of the facts and
circumstances regarding this case and is qualified to sign this decision.