SURE Lease Ad Valorum Tax: Getting Chesapeake to Pay

The SURE lease states that CHK is responsible for paying the Ad Valorum Tax bill that was recently received. What steps are you taking to make sure that CHK pays the bill?  I was told by the Carroll County Treasurers office that they could not bill Chesapeake directly. Has anyone contacted CHK about this?  Planning to send a letter with a copy of the lease and the bill to CHK via registered mail unless someone has a better idea? Thanks for your input!

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Permalink Reply by Dexter Green on February 11, 2015 at 2:46pm

I'm sorry Frank, I thought you were in Ohio.  Ohio's severance tax is based on volume and not on product value.  I don't know how the Commonwealth calculates theirs.

Permalink Reply by Frank Walker on February 11, 2015 at 3:07pm

Understood, Dex.  Not a big deal.  Ohio is a beautiful state and boasts The Ohio State Buckeye National Champion college football team, envy of the entire nation.  That is heady stuff!!

But I'm not able to live in Ohio.  Your taxes are, in general, way higher than I can afford!!  And Ohio taxes on landowner revenues from oil and gas are downright confiscatory!

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on May 10, 2016 at 10:44am

Just got my Chesapeake Refund for Carroll Counties New Real Estate Tax that I paid and then submitted per the ALOV lease.

Permalink Reply by Joseph-Ohio on May 11, 2016 at 2:12am

Ron,

Can you share what percentage of your royalty payment and / or sign on bonus / up front delay rental payments that your property / AD VALORUM tax increases (due to CHK well development) consumed ? ?

Taken, of course, at the time you paid them / prior to your receiving your CHK refund check.

Also, the way I see it, your lease provides a 'no interest loan' to CHK for the tax liability.  

Why doesn't your lease require that CHK get billed for the tax in the first place; keeping you as lessor out of the lessee's obligations ? ?

Permalink Reply by Cheryl on February 10, 2015 at 8:48am

After more research and studying the actual tax bill, I stand "half" corrected. :-)   It is calculated on the taxable land value, but I haven't figured out how they come up with  the "taxable land value" for the purposes of calculating the Ad Valorem oil and gas tax.

Permalink Reply by Dexter Green on February 10, 2015 at 9:16pm

So the property is taxed at 35% of the appraised value.  I assume they had someone create a flat per acre value for minerals and they're applying a similar formula to it.  I also assume that, because it's a government entity, they've done so in the most misguided and ham-fisted way possible.  Just a hunch.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 9, 2015 at 3:53pm

Cheryl,

     I would send the paragraph from the lease Cut & Pasted that addresses CHK paying all taxes from Federal, State and Local tax entities. Use the alov.us website March 2012 SURE LEASE to cut and paste from. The information should be the same.

Use the same heading that I did when I filed a complaint that CHK wasn't paying fair royalties, as if they didn't already know. They were probably surprised that I could read my Royalty Statement. 

Look in the Blogs for FILING A ROYALTY COMPLAINT under my name, then cut & paste the heading information. You want to be thorough including all the information CHK could possible want.

Carroll County Auditors office said it takes 3 years to figure out what a landowner owes after production starts. Must be a big secret as to how the amounts are calculated.

I should have a bill soon since Buck 1H Well started production Feb 2014. I don't have to worry much about a 1099 since CHK decided to start rationing royalties about the same time we started getting royalty statements.

Good Luck with you taxes.

Permalink Reply by Cheryl on February 9, 2015 at 6:03pm

Ron, I talked with the Auditor's office last year about the formula used to calculate the ad valorem tax...I have a Master's Degree, but it was beyond me.  Of course I didn't spend too much time trying to understand it either, because it's not something that I can reasonably expect to change.  It is what it is...

Permalink Reply by RO on February 10, 2015 at 7:17am
Hi Ron. I tried to friend request you but not sure if I did it correctly. You have offered to share your report on how Chk is cheating on paying royalities. I'm interested in seeing this report as we are being drilled by Chk right now, and I would like to get educated and be prepared as to what I need to watch for.
Thank you
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on May 11, 2016 at 10:17am

RO,

      Put the following in the Search Window above and you'll find one of my postings with the Hope Christian Fellowship vs Chesapeake Energy Complaint.

I'll Friend you in case I don't see your request.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on May 11, 2016 at 8:39pm

RO,

    I looked you up on my Freinds List and found you on my list.  You should be able to see my posts.

Here is the Hope Christian Fellowship vs Chesapeake complaint. It's well written and easy to follow with charts and figures to support the information. Take note of the Chesapeake Spreadsheet from their own Revenue Department detailing their methods of taking deductions on No Deduction Gross Leases.

Assuming the Court approves this Complaint as a Class Action, You will be included in the recovery unless you should Opt Out.

This is the best Complaint in the US since Chesapeake has provided the evidence for the Complaint.

Attachments:
Permalink Reply by AJ on February 13, 2015 at 7:07pm

There is no secret on how the tax is figured. I went to the Carroll County auditors office and asked that question a year ago now. they walked me through the entire calculation on our well. do I remember the steps,? no. but I do remember that the state sets much of the criteria and it is based on the amount of production from the well. this year the tax bill was lower because there was less production in the second year. You will see the bill for the 2014 production with the tax bill due in  Feb. 2016.

AND. I do not believe there is any way in the present system to have that bill sent directly to the O&G company. It is sent to the mineral owner's bill. You will have to ask for a refund every year.

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