HELENA - PPL Montana's protest of its property tax bill is a "short-sighted, self-serving" attempt to avoid paying taxes on the full value of its assets in Montana and should be rejected, an attorney for the state says.
The comments from C.A. Daw, a Boise, Idaho, lawyer hired by the state, came Monday during the first day of the arguments before the State Tax Appeal Board on PPL Montana's appeal of $16.8 million of its property tax bill over the past four years.
"I have never seen a taxpayer so blatant in its attempt to avoid being taxed on its fair market value," Daw said.
The company is protesting nearly 30 percent of its total property tax bill in Montana. More than one-third of the protested taxes are in Cascade County, where PPL Montana owns five hydroelectric dams.
Protested taxes are held in escrow accounts until the appeal is resolved.
PPL Montana says the state inflated the value of the company's electric power plants. The result has been much higher assessments and tax bills on properties largely unchanged from when PPL bought them, said Rob Sterup, a Billings lawyer representing PPL.
"Here's what they look like," he said Monday, holding up photographs of the plants that were identical to pictures taken before the purchase. "As you can see, they haven't changed. All the assets have remained in the same place, doing the same thing."
Daw said, however, that in campaigning against a 2002 ballot measure to study a state buyout of PPL Montana's hydro projects, the company argued that the dams were worth much more than their assessed value - and then filed its protest shortly after the election, saying their value should be lowered.
The value PPL Montana is protesting as too high has been verified by its own appraisers, has been reported to PPL shareholders and has been reported to the state and the Internal Revenue Service for tax purposes, Daw said.
If PPL Montana wins its tax appeal, "it's the honest taxpayers in Montana that will suffer," he said. Government services and budgets will be disrupted and the tax burden will be shifted to others, he said.
"I've not seen manipulations like this except on CNN Nightly News when you see CNN's report on corporate scandals in the United States," Daw said. "This is the same aggressive stance you see that leads to these corporate scandals."
Paul Farr, senior vice president for PPL Global of Allentown, Pa., called Daw's comparison "completely inappropriate."
"PPL and PPL Montana are not entities that operate like that," he said.
The company is simply exercising its legal right to object to what it sees as unfair tax treatment.
The hearing is expected to continue through Thursday. The board will reconvene May 24 to hear the response from the state Revenue Department.
A final decision is expected this summer.
In outlining PPL Montana's case, Sterup said the state increased the valuation of the plants from $504 million in 1999 to $788 million the next year, and then up to $915 million for 2002. That's an 81 percent increase over three years, he said, and the only change that occurred was the ownership of the plants: PPL Montana bought them in late 1999 from Montana Power Co. for $758 million.
In the same period, Montana's Department of Revenue reduced the valuation of other electric power plant owners in the state.
Sterup called the state's approach a "welcome, stranger" approach, which has been disallowed by state or federal courts. "They welcome the new owner with open arms, knowing that the newcomer will bear a disproportionate amount of the tax burden - and that's exactly what happened here," Sterup said.
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