In re Tax Appeal of Barker
116034
| Kan. Ct. App. | Jun 30, 2017Background
- Robert and R. Gay Barker owned surface land and operated low-producing oil wells; BOTA previously found their wells qualified as "oil leases" under the low-production exemption in K.S.A. 2016 Supp. 79-201t(a).
- After the exemption was granted for the leases, Neosho County assessed ad valorem taxes on the production equipment the Barkers used to operate those exempt wells.
- The Barkers sought summary judgment that equipment is part of an "oil lease" and thus exempt; the County objected and relied on guidance from the Division of Property Valuation (DPV) and the Oil and Gas Appraisal Guide, which treat equipment as non-exempt.
- BOTA held a hearing and concluded that "oil lease" as used in the exemption does not include production equipment; BOTA denied the Barkers' summary judgment and declined to award attorney fees.
- The Barkers appealed, arguing: (1) the County unlawfully relied on the appraisal guide; (2) BOTA was biased and wrongly denied summary judgment without a County response; (3) equipment is included in the exemption; and (4) they were entitled to attorney fees.
Issues
| Issue | Barker's Argument | County's Argument | Held |
|---|---|---|---|
| Did the County err by consulting the DPV Oil & Gas Appraisal Guide? | Guide is not law-making and cannot substitute for statutory authority. | Guide is adopted guidance; county appraiser must follow DPV policies. | No error; DPV guide is an official document county appraisers may rely on. |
| Did BOTA act as advocate by denying summary judgment without County brief? | County failed to respond as required; summary judgment should have been entered. | County objected and requested a hearing on unsettled legal issue. | No; facts were settled and the legal question required full adjudication—denial proper. |
| Does "oil lease" in K.S.A. 2016 Supp. 79-201t(a) include production equipment (so equipment is exempt)? | "Oil lease" includes tangible personal property per K.S.A. 79-329; equipment is integral to production and value. | Statutory scheme treats leases and equipment separately; appraisal guide and statutes show equipment taxed separately. | Equipment is not part of an "oil lease" for the low-production exemption; exemption strictly construed against taxpayer. |
| Are the Barkers entitled to attorney fees under K.S.A. 79-3268(f)? | Assessment lacked reasonable basis in law and fact; fees should be awarded. | Nonprevailing party not entitled; assessment reasonably based on DPV guidance. | No; County reasonably relied on DPV guide and statute, so fees denied. |
Key Cases Cited
- State ex rel. Stephan v. Martin, 230 Kan. 759 (Kansas 1982) (official state documents may be judicially noticed)
- Board of Ness County Comm'rs v. Bankoff Oil Co., 265 Kan. 525 (Kansas 1998) (valuation of oil leases based on present worth of future production)
- Cimarex Energy Co. v. Board of Seward County Comm'rs, 38 Kan. App. 2d 298 (Kan. Ct. App. 2007) (county appraisers obligated to follow DPV Oil and Gas Appraisal Guide)
- Scholastic Book Clubs, Inc., 260 Kan. 528 (Kansas 1996) (burden on party challenging BOTA to prove error; exemptions construed narrowly)
- LaFarge Midwest, 293 Kan. 1039 (Kansas 2012) (taxation statutes construed in favor of taxation; exemption statutes construed against taxpayer)