Feb. 16, 2016 11:31 AM

Subsidiary of South African energy giant overpaid tax burden to Louisiana in 2000, appellate court finds.

A Louisiana appeals court has sided with a petrochemical giant that it over-paid state income taxes in 2000. As a result of the opinion released Feb. 10 by the 3rd Circuit Court of Appeal,

Sasol North America Inc., a subsidiary of the South African company planning — but currently scaling back due to plummeting oil prices — a $14 billion gasto-liquid plant in the Lake Charles area, stands to get a little more than $740,000 back from the Louisiana Department of Revenue.

The 3rd Circuit opinion reveals that Sasol bought an interest, along with Pittsburgh Paint & Glass, in PHH Monomers LLC in 1996 for $59 million. PHH produced vinyl chloride monomers, which Sasol, then operating under the name Condea Vista, and Pittsburgh Paint & Glass used to make other products.

Condea Vista sold its interest in PHH in 1999 for $37 million and claimed losses on its interest in PHH of just under $45 million for the years 1996 to 2000 in the form of depreciation. The company also claimed that its tax department overstated its capital gain on the sale by nearly $7.8 million. The Louisiana Department of Revenue conducted an audit, which also revealed the overpayment of income taxes in 2000. The state and Condea Vista/Sasol were almost immediately at loggerheads over the overpayment, with the state arguing that Sasol could not recover the overpaid taxes, essentially because it waited too long to act.

The matter landed before the state Board of Tax Appeals, which also denied Sasol its refund in siding with LDR that Sasol’s prescriptive period to seek the refund had expired. Sasol appealed to the 3rd Circuit, with LDR answering the appeal.

The 3rd Circuit reversed the Board of Tax Appeals’ decision and awarded Sasol $741,350 for its overpayment, adding in what reads like a tongue-in-cheek remark at the conclusion of its opinion: “All costs of this appeal, in the amount of $1,197, are taxed to the Louisiana Department of Revenue.”

“We have lots of problems with how LDR interprets the Louisiana prescription statutes with regard to refund claims,” notes Angela Bryson, a tax resolution attorney with the Bryson Law Firm in Lafayette. “They will often try to find a way to deny the claim and will use the refund statute expiration date as a crutch for doing so — even if it knows that its position is questionable. It can be super frustrating.”

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