Representing Appellant: Randy B. Reed; Gregory C. Dyekman; and Kevin Walton of Dray, Dyekman, Reed & Healy, P.C., Cheyenne, WY. Argument by Mr. Dyekman.
Representing Appellee: Gregory A. Phillips, Wyoming Attorney General; Martin L. Hardsocg, Deputy Attorney General; Cathleen D. Parker, Senior Assistant Attorney General; and Karl D. Anderson, Senior Assistant Attorney General. Argument by Mr. Anderson.
Before KITE, C.J., and HILL, VOIGT, BURKE, and DAVIS, JJ.
[¶ 1] This appeal concerns the 2006 valuation of natural gas from numerous gas wells in Lincoln, Sweetwater, and Uinta counties for which Merit Energy was a take-in-kind owner. The State of Wyoming Board of Equalization (SBOE) determined that Merit Energy failed to timely appeal several final Wyoming Department of Revenue (DOR) decisions regarding the amount of taxable gas it had received, resulting in a lack of jurisdiction by the SBOE. The SBOE dismissed Merit's tax case with prejudice, and the district court affirmed the SBOE's dismissal. Merit appealed to this Court, and we affirm.
[¶ 2] Merit lists three issues on appeal:
1. The Wyoming State Board of Equalization erred when it dismissed Merit Energy Company's appeal for lack of jurisdiction.
2. The discrepancy letters sent by the Department of Revenue are not final administrative decisions.
3. The notice of valuation change sent by the Department of Revenue is a final administrative decision for purposes of appeal.
The DOR rephrases the issue as follows:
Wyoming taxpayers can appeal final administrative decisions of the Department of Revenue to the State Board of Equalization. But to have jurisdiction, the Board requires an appeal to occur within thirty days of the Department's decision. Merit did not appeal several " take-in-kind" mineral assessments within the thirty-day period but waited until a change in valuation notice was sent to county officials two years later. Did the mineral assessments constitute final administrative decisions so that Merit had to appeal from them within thirty days and, therefore, did Merit's delay divest the Board of jurisdiction to hear its eventual appeal?
[¶ 3] This dispute concerns Merit Energy's 2006 natural gas severance and ad valorem tax liability for various wells located in Sweetwater, Uinta, and Lincoln Counties. Merit is a take-in-kind interest owner, which is generally defined as a party who elects to take a portion of the mineral produced rather than receive monetary remuneration for its share of the production. Department of Revenue Rules, ch. 6 (Ad Valorem and Severance Taxes on Mineral Production), § 4 b.(s.) (2006).
[¶ 4] On October 3, 2007, the DOR notified Merit of take-in-kind volumetric discrepancies between what Merit reported and what was reported by various operators for 2006 production. In its notice, the DOR gave Merit sixty days to initiate contact with the operators and reconcile the discrepancies, but Merit did not resolve the issue. In fact, Merit did not respond in any fashion to the initial October 3rd letter.
[¶ 5] The DOR sent a second and third letter to Merit on March 17, 2008, and April 24, 2008, to notify the company of additional volumetric discrepancies for two additional mineral groups. As in the original letter, Merit was given sixty days to initiate contact with the operators and reconcile those discrepancies, and again, Merit did not respond.
[¶ 6] As a result of the unresolved volumetric discrepancies first brought to Merit's attention on October 3, 2007, the DOR also issued a take-in-kind assessment of additional taxable value in the amount of $15,671,697.00. On November 24, 2008, the DOR again issued assessments to Merit for additional taxable value occurring as a result of the take-in-kind reporting discrepancies brought to Merit's attention in the March 17 and April 24, 2008, letters. The assessment stated that
[t]hese volume allocation discrepancies will create taxable value increases for gross products purposes and also has the potential to result in taxable value increases for severance tax purposes, and is a final administrative decision by this Department.
[¶ 7] As well as stating the foregoing information, each letter notified Merit that the changes in taxable value would be the basis for severance and ad valorem tax increases. Each letter also advised Merit that the letter was a final administrative decision by the DOR and that Merit had thirty days to appeal the decision to the SBOE. Again, Merit did not appeal or respond in any fashion to these letters.
[¶ 8] On June 29, 2010, the DOR issued a notice of valuation change (NOVC) to Lincoln, Sweetwater, and Uinta county assessors setting forth the increase in taxable value for Merit Energy for 2006 in accordance with the March 17 and November 24, 2008, assessment letters. The NOVC notified the county assessors that Merit's time to appeal the discrepancies had lapsed. A courtesy copy of the NOVC was provided to Merit Energy, and a little over two weeks later, on July 16, 2010, Merit Energy appealed the NOVC to the SBOE, which dismissed it as untimely on December 6, 2010.
[¶ 9] Following the SBOE's dismissal, Merit Energy appealed that decision to the district court. On February 7, 2013, the district court issued a decision letter affirming the SBOE's dismissal. The court found that the 2008 letters were final administrative decisions by the DOR and that Merit Energy's failure to appeal ...