August 11th, 2011, Columbus, OH – The state must cough up $12 million and several counties a total of $4 million in tax money improperly collected from an unnamed entity, possibly a Texas company that built a pipeline across southern Ohio.
With local-government funds already slashed in the state budget that took effect last month, the additional loss will not be easy to deal with, said Pickaway County Commissioner Glenn Reeser.
“It was a very unpleasant surprise, that’s for sure,” he said. “That represents about 2 1/2 percent of our total general-fund budget.”
Jerry Lavy, a Muskingum County commissioner, echoed Reeser’s comments, but he said the ability to spread the loss of funds over the next two years would make the hit less damaging than having to pay all of the money in one lump sum.
The $4 million will be split unequally among 11 counties: Butler, Fairfield, Fayette, Greene, Guernsey, Monroe, Muskingum, Noble, Perry, Pickaway and Warren.
The $12 million being paid by the state will not come from any program or department, but from the dedicated Tax Refund Fund, said Office of Management and Budget spokesman Dave Pagnard.
Reeser said that although he would like to know which company is to receive the refund, he doesn’t think there is anything wrong with it getting its money back.
“I don’t fault the company for the action that they’ve taken at all,” he said. “I think any smart company would do that.”
The money is being paid back because the unnamed company paid the $16 million in “use tax” on items that are tax-exempt. A use tax is paid on items that aren’t subject to a sales tax, frequently when goods are purchased from an out-of-state retailer.
Because of taxpayer-confidentiality laws, Ohio Tax Commissioner Joe Testa said the company receiving the payback could not be identified, even though it is getting a huge check from the state.
The counties that are paying back the funds are roughly aligned with the layout of the Rockies Express Pipeline-East, a natural-gas pipeline built by energy company Kinder Morgan, based in Houston.
When asked if the repayment was going to the company, Kinder Morgan spokesman Allen Fore declined to comment other than to say, “We have a number of matters currently pending before the Department of Taxation,” and that both sides were working to a solution.
The annual report for the Taxation Department includes a use-tax exemption for “material used or consumed directly in the production of tangible personal property … or used in the production of and exploration for crude oil and natural gas.”
The repayments, which will include interest, will be deducted automatically from the sales-tax money normally sent to the county from the state, Reeser said.
By Ben Geier
Replicated only for posterity. All credit goes to Ben Geier and Columbus Dispatch (dispatch.com). Copyright 2011. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.