Oil company requests relief on late tax payment fees

Black Thunder Oil, the new owners of assets that once belonged to BW Oil, approached the Crook County Commissioners last week to request assistance with penalties on tax payments that the company didn’t know were owed.

Jeff Waliezer of Black Thunder explained that the company had not received any notice of these taxes until a bill arrived with a ‘past due’ penalty.

Black Thunder acquired the assets after BW Oil defaulted on three years of tax payments totaling over $300,000 in 2016, leading the Crook County Treasurer’s Office to launch the process of seizing property to equal the lost tax income.

This was the second time the county had been forced to intervene with the company. BW Oil took over the business after it went bankrupt around 2013, at which time the county filed a lien against and was able to recover back taxes from the previous owner’s tenure.

When Black Thunder took over, said Waliezer of BW’s assets, “It was a mess…and it continues to be so. We still haven’t got through all of it.”

Black Thunder is still in the process of deciding what to do with some of the wells, because, with inflation, taking some of them on is “really questionable”. Nevertheless, he pointed out that the tax revenue on just what the company has been able to bring online so far has been “significant for the county”.

Waliezer explained that he had been surprised to receive the bill.

“We recently received a bunch of ‘past due’ taxes and they’re from 2018, 2019 and 2021,” he said. “As you can see, at the top it’s labeled BW Oil and then it’s got ‘Attention: Black Thunder Oil’ underneath.”

The problem, said Waliezer, is that the bill includes about $1500 in penalties for late payment.

“We didn’t know we owed them,” he told the commission, let alone that the taxes had been owed for long enough to accrue penalties.

Waliezer also noted that none of the ex-BW Oil equipment was in use until about 2020, at which time Black Thunder began paying taxes on it.

Waliezer expressed his desire to fix the issue. At this time, he said the county is holding tax payments from Black Thunder without cashing them until the issue is resolved, to the tune of about $39,000.

However, County Attorney Joe Baron felt differently about Black Thunder’s responsibility to pay the taxes, whether or not the company knew about them. He began by explaining the background to the current situation.

BW Oil, he said, did not file its taxes. Consequently, “We filed tax lien of distraint on all their oil production and then they were brought into receivership by the all the investors, who sued them. The county got some money back then, in 2017 and 2018.”

As part of that deal, said Baron, purchasers Black Thunder Oil and Indian Creek bought mineral rights set forth in the case. In June, 2018, Black Thunder told the county commission that it was unable to bring the wells into production because of the past-due tax lien set up by the county, with a 2% overriding royalty interest.

“The commissioners ended up releasing that lien of the 2% override,” said Baron. “Then, Black Thunder was in and wanted to clear up these tax issues…The commissioners took it under advisement and then the commissioners issued a resolution.”

The resolution that releases the lien affects taxes on equipment or production before 2018. Everything before that time, said Baron, was waived.

However, he continued, the release authorized by the commissioners, “Does not release any taxes on equipment and production in later years.”

Because Black Thunder took possession of the property in 2018, Baron said, the company is responsible for any taxes on it after 2018.

However, according to Baron, Black Thunder did not file the necessary paperwork with the County Assessor’s Office to change the ownership.

“It’s on them to report this to the county assessor – it’s not the county assessor’s job to track all this stuff down. …They have to fill out a form, they have to bring it in to the county assessor,” Baron said.

“Well, apparently that never got done and so, since nothing got done there by Black Thunder, nothing triggered the notice to [change the ownership from BW Oil]. Stuff was still getting done in BW’s name, even though Black Thunder owned it at the time.”

Black Thunder should have contacted the county to find out what was happening when the company did not receive a tax bill, he said.

“The burden was upon them to get that stuff done and they didn’t do it. They owe the back taxes and they owe the interest just like any taxpayer in the county,” he said.

“Even if I don’t get a tax bill on my house, that doesn’t mean that I don’t have to pay taxes – that means that I have to go to the county treasurer and find out where is my tax bill, because everybody has got to pay taxes.”

However, Baron also felt that the issue could not be resolved at Wednesday’s meeting because no formal request had yet been received at that time.

“I don’t think you guys should be doing anything on this until he puts his request in writing and provides supporting documents on it, so somebody can go through this whole thing from beginning to end to figure this out as to who got notice to who and when,” he told the commissioners.

“…I still don’t see why, based on what I’ve heard here, they don’t owe the taxes.”

Waliezer pointed out that another deadline is upcoming, after which he will accrue further penalties. Commissioner Fred Devish suggested he file the official request and it can be placed on next month’s agenda, while Baron said that the tax and interest payments can be made to the county along with a request to put it in escrow until the issue is resolved, in order to stop it from accruing interest.

The matter will be placed on the agenda for May’s regular meeting of the county commissioners.