Gas & Oil Industry Bilking NM for Millions Thru Tax Fraud

Yet another example of capitalism at its best/worst: If we can get away with it and make more money, why not both cheat the state of millions but in doing so, cause our neighbors and small-guy competitors to pay more. 

Before we begin, two alerts:

Retake Our Democracy KSFR at 11 This Saturday: A Very Special Hour.  Yesterday, I recorded a one-hour interview with Bill Ayers and Bernadine Dohrn, co-founders of the Weather Underground and it will air at 11am on Saturday on KSFR 101.1 FM. I think it might be the most informative and inspiring show I’ve done, so listen in….and then go to and click donate, as they still have not met their pledge drive goal;

Retake Donations Needed:  While you are in the mood to donate, yesterday Roxanne and I realized why Retake has been able to balance the books with only a few donations here and there. We had been paying a slew of the bills out of our own account. Of course, we want to contribute financially to this work, but there are limits. So if you can afford it, we’d appreciate some contributions to sustain our work. Please make checks payable to Retake Our Democracy and send to Retake, P.O. Box 32464, Santa Fe, NM 87594. This is kinda old fashioned, but we are working diligently to get our new website up and functioning with a ‘donate’ button.

Gas & Oil Playing the Capitalism Game to Perfection–At Our Expense, As Usual

Yesterday, we reported on how PNM is able to make far more money by operating dilapidated, leaking, constantly in need of repair energy facilities than low maintenance clean energy sources. So they do it. In a capitalist system, this is not even something to question. More profit, you do it, damn the long-term consequences because in this regulatory non-system, PNM will be allowed to bilk us for years, until there is no profit to be had and then they will just walk away, leaving the environmental mess to us.  That is just how it works.

Well, here we go again. As reported in this morning’s Santa Fe New Mexican, an appraisal of the gas and oil industry in just three counties has found that that the G&O industry has been systematically under-reporting property holdings, costing the state and honest tax payers millions. This should be a stunning finding, but in truth, it is exactly  what one would expect in a system run by and for industry, at our expense. I am not making this up but in NM gas and oil industry corporations self-report without audit on the equipment, pipelines, and other facilities involved in the production and transmission of gas and oil. This is called the “honor system.” Well, let’s examine just how honorably this system works.

Jerry L. Wisdom, an Oklahoma native who owns Total Assessment Solutions Corp., which specializes in valuing energy company assets, was contracted by Rio Arriba, Eddy and Lea counties to identify equipment that should be taxed but is missing from tax rolls. What you need to understand is that each county has X amount of funds to be generated from property taxes to pay off bonds and debt and to fund infrastructure. If a major source of that tax is not reporting and hence not paying, the small business, small farmer and homeowner’s rate goes up. So the rich avoid paying their share and the honest, working folk pick up their tab. Tell me if you’ve heard this refrain before. In just three counties, this is what Wisdom found:

“We deal with these companies, and we know how they report property,” Wisdom told lawmakers on the Taxation and Revenue Stabilization Committee this week. “It’s all self-reporting; this is the process we go through to find these items. These omissions are creating an inequity among the other taxpayers.” I would only quibble with the term “omissions” and replace it with the term ‘tax fraud.’

Among the items Wisdom presented to lawmakers:

  • “A map of Eddy County that showed operational drilling rigs on Jan. 1 of each year from 2007-16. Of 318 rigs, just 111 were reported as personal property and taxed. Seventeen of the 30 companies doing business in the county had no reports for their rigs.
  • Data for Lea County showed that of 247 operating rigs, 136 were omitted from the tax rolls. Seventy-nine of the 118 companies did not report a single rig.
  • An audit of pipelines in Eddy County showed 132 different company names on crossing posts, with 88 of them not reporting the lines to the assessor.
  •  As for natural gas compressors in Eddy County, 623 were physically inspected, but half were not reported.
  • The valuation table that the state Taxation and Revenue Department uses for specific equipment, which is a guideline for counties, has not been updated since 1978 while the cost of expensive new drilling rigs has nearly doubled. So even in cases where assets are being taxed, local governments are not capturing full values.
Calling this scale of non-reporting ‘omissions’ is laughable.  I could just hear the CEO of one of the large G&O corporations: “Damn, Mr. Wisdom, how’d we miss 2/3 of our rigs. Pretty happy our lobbyists have kept the valuation rate in 1978 dollars or we’d really ow you a pile.” This should be tax fraud, pure and simple, corporate accountants and execs should be go to jail for this, pay back taxes with steep interest, and fines. If this were the system, the ‘honor system’ might actually work.  No matter where you look in our government, working people are being robbed and there are some dots to be connected and when you connect them it all points to an economic system that is solely based on profit and a political system that has been constructed and purchased to ensure that we do not tinker with the rules.  How do you not reassess the rates for G&O property for 40 years?   
Yet, as reported in the New Mexican there are still some elected officials who can defend the system:  “Prices vary, so much of it goes up and down,” said Rep. Rod Montoya, R-Farmington. “I don’t know how anyone outside that company can create and come up with a value.”  And I don’t know too many big corporations who if they know no one is looking won’t hide as much profit from our eyes as possible. Thank you Rep. Montoya for defending them.

But despite Montoya’s defense, apparently it is possible to monitor the industry. Again from the New Mexican:  “Wisdom said that of the 4,000 companies doing business in Oklahoma, there has been just one lawsuit that challenged his valuations — and his company prevailed.”

You can add another initiative to the list of things we will be asking a Democratic Governor to implement: a system of monitoring tax reporting for G&O and for updating valuation rates on an ongoing basis, and an ongoing basis does not mean every 40 years.  Click here to read the full New Mexican report.

Folks, we are being entirely screwed: PNM yesterday and G&O today. And there is Trump’s tax plan being released this morning, a theft that makes G&O’s theft just chump change.  We gotta get organized folks.

In solidarity,

Paul & Roxanne



Categories: Economic Justice, Community & Economic Development, Election, Political Reform & National Politics

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1 reply

  1. I believe the state and counties involved should go back to the very beginning of their contracts with oil and gas companies and begin to add up, year by year, the taxes they evaded to pay. I am sure we could add quite a few teachers to our public schools, and more, with that money. But then, politician after politician, from the very beginning of oil and gas extraction (Or should I say robbery?) by American corporations (Or should I say transnational corporations with addresses in some unknown island?) have cut these corporations a sweet deal year after year while turning a blind eye to their fraudulent actions, year after year. So, everybody below our politicians’ social rank has been a victim. For how many generations, 2 or 3?

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