87-2093 - Mine Occupation - Minerals

 

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

XXXXX                                                                                  )           STIPULATION AND ORDER

            Petitioner,                                                         :

v.                                                                                 :

AUDITING DIVISION,                                              :

            UTAH STATE TAX COMMISSION,            :           Appeal No. 87-2093

            Respondent.                                                     :

_____________________________________

Petitioner and Respondent Stipulate as follows:

            1. Petitioner will pay Respondent $$$$$ in full settlement of Petitioner's mine occupation tax and interest liability for the tax years XXXXX.

            2. The $$$$$ payment represents tax and interest liability for XXXXX production transferred under the XXXXX, with the remaining portion of production valued pursuant to the surrogate valuation methodology set forth in paragraph three below.

            3. Petitioner and Respondent expressly recognize that the use of a surrogate methodology for valuation of production in lieu of the gross value standard set forth in the statute is necessitated by Petitioner's unique market situation, and the current lack of either a market price or bona fide sales of ore production.  To address this valuation problem and adhere to the statute as closely as possible, production shall be valued as follows:

            (a) The value of production as set forth in the statute for production sold under a bona fide contract of sale, and

            (b) To the extent that no bona fide contract of sale exists, the proportionate profits method based on XXXXX as a first marketable product.  (See Exhibit A.)

            4. Tax and interest for the tax years XXXXX remain subject to audit.  The valuation methodology specified in paragraph three will govern audits of this period.

            5. It shall be the duty of Petitioner to account for future tax under the proper valuation method.

            6. For metalliferous minerals consumed internally, XXXXX shall use the valuation method set forth in Exhibit A of this Stipulation as a substitute for gross proceeds received for the sale of XXXXX.  Using this valuation method, taxable value under U.C.A.59-5-201 shall be computed by multiplying the value of XXXXX, less the $$$$$ annual exemption, times %%%%%.  The tax rate of %%%%% shall be applied to the resulting value.

            7. This settlement agreement is strictly confidential.  Petitioner and Respondent agree that the settlement terms herein do not apply to litigation involving XXXXX and XXXXX shall be dismissed with prejudice, upon payment by Petitioner to Respondent of $$$$$.

            The surrogate valuation methodology described in paragraph three of the Stipulation shall be utilized until the Tax Commission promulgates a rule pursuant to U.C.A.59-2-503, and will govern tax years XXXXX.

            DATED this 19 day of July, 1988.

R. H. Hansen                                                                Roger O. Tew

Chairman                                                                      Commissioner

Joe B. Pacheco                                                            G. Blaine Davis

Commissioner   Commissioner