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Corporate tax protests a concern in Yellowstone County

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BILLINGS - Yellowstone County Treasurer Max Lenington is happy about the low delinquency rate in the property taxes collected this tax year, but concerned about the millions of dollars tied up in tax protests.

As of May 31, property owners owed the county a total of $2.2 million in delinquent taxes. That is 1 percent of the total tax assessment of $202 million, according to the treasurer’s report released this week.

“If we don’t go above 1 percent to 1.5 percent, we don’t have a problem,” Lenington said.

For the 2011 tax year ending six weeks ago, 2,912 property owners failed to pay their taxes and land developers were the most common delinquencies.

“There’s a ton of vacant properties,” Lenington said. “Real estate sales are going great guns right now, but I think the number of new residential homes is falling off a bit.”

If money is tight, developers generally choose to pay the bank before they pay the tax man.

One company, DC Capital Real Estate, is delinquent on 69 properties, including Skyline Court on North 26th Street, as well as undeveloped subdivided land.

The previous tax year had fewer delinquent payers, 2,427 of them, but they owed more — $2.6 million.

Last year, Sector Corp., which owns the Lockwood land used by Beall Trailers of Montana, topped the delinquency list, owning the largest single bill for $122,243. This year, Sector, based in Spokane, Wash., is late on $32,529 in taxes.

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Stockton Oil Co. and its affiliate Soco Development Co., plus executives Dan Stockton Jr. and Mykel Stockton, owed about $41,173 in back taxes on commercial property owned under the four names. Stockton Oil, a family company formed 60 years ago, distributes fuels and owns underground storage tanks.

With his office help on vacation, Mykel Stockton, a third-generation owner who runs the company with his two sons, said he just forgot.

“It was just an honest mistake and I blew it, but we are taking care of it,” he said, by mailing in two checks Friday to cover all the property taxes.

Protests are bigger concern

Delinquencies aren’t a problem, Lenington said, but he’s increasingly worried about companies protesting their tax bills.

Tax protests have already reached $30 million in Yellowstone County, or 7.8 percent of the total tax bill of $202 million. That is more than double the 2.8 percent protested in tax year 2009 and could climb by $10 million or more, Lenington said.

In February, he attended a public meeting called by ExxonMobil to tell Lockwood school officials the company might protest their property taxes this year, Lenington said.

Nearly all the protests come from seven refinery, utility and communications companies: Phillips 66’s Billings refinery (formerly ConocoPhillips), CHS refinery in Laurel, Optimum (formerly Bresnan Communications), AT&T, Verizon, Puget Sound Energy and WWC Holdings (Alltel Wireless).

When a company protests its tax bill, the money is placed in an escrow account, earning interest, until the argument is settled. Schools and other taxing entities who were counting on the funds can tap into these “frozen” taxes, but must repay some or all of the money with interest if the taxpayer wins the protest.

So far, Billings, Lockwood and Laurel school districts have tapped $5 million of the $30 million in the county tax protest escrow fund, Lenington said.

The Lockwood School District withdrew $140,577 from the account. School District 2 requested $2.3 million and the Laurel school district withdrew $2.9 million.

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