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Permalink Reply by Frank Walker on January 24, 2011 at 2:49am

An ad valorem tax is one which is assessed according to the value of the natural gas extracted.

 

You need to make inquiry in two different places:

 

First, speak with your Ohio state senator and/or Rep;  your member of the Ohio legislature in other words.  Ask whether such a new tax, an ad valorem tax, recently went into effect in Ohio.  I hope you will post here whatever they tell you.  Even though I live in PA, I would be interested to learn something like that.

 

Second, you need to speak with your tax accountant.  Be certain he/she is aware you have paid, or been charged for, ad valorem tax.  There might be deductibility and/or capitalization aspects to the money you have (in effect) paid.  OTOH, if you prepare your own tax returns, you need personally to investigate this aspect.

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Permalink Reply by Mike Knapp on January 24, 2011 at 5:19am

Ad valorem is also associated with a rise in taxes due to a rise in the assessed value of a property due to natural gas reserves/production. 

 

 

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Permalink Reply by Frank Walker on January 24, 2011 at 1:41pm

Quite possibly so.  But Deb wrote that the gas company paid this tax, presumably on her behalf.

I hope it was paid on her behalf.  I hope the gas company was not charging her for taxes which are their responsibility.

If the tax is owing to assessed value increase, then inquiry must also be made of the local taxing authority . . . local in this instance being county or "city".  Bottom line, sufficient inquiry must be made to determine the source of this tax.  After that Deb will be in a position to decide whether this deduction by the gas company is appropriate . . . or not.

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Permalink Reply by FXEF on January 24, 2011 at 3:50pm

Deb,

 

You might find this link on Ohio Severance tax helpful.

http://tax.ohio.gov/divisions/communications/publications/documents...

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Permalink Reply by Frank Walker on January 25, 2011 at 3:04am

Thanks, FXEF.  That's a really good and helpful post;  an eye opener for me!

Thing is, though, that law goes all the way back into the last century.  Now I agree it still could be the source of Deb's plight.

However, coming forward into this century, and into 2010 even, Deb might also be suffering beneath the weight of this little Ohio gem (please click on link, below):

 

Ohio, On Brink Of Bankruptcy, Milks Natural Gas Cash Cow Once Again!

 

Sometimes it's really good to be a Pennsylvanian!  Here the gas companies can come in, prosper, and not be taxed to death.  And in these difficult financial times we need to encourage such activity and not stifle it.  At least Ohio ALLOWS development of its natural gas.  That's more than I can say for one very prominent nearby state!!

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Permalink Reply by Deb on January 25, 2011 at 3:51am

I appreciate the insite offered by everyone. I have a lot of reading to do now. I guess the puzzling component for me is when I questioned each company they could not offer a reasonable explanation for me.   Both said something to the effect of "Oh we need to deduct this one or two times a year", and my response was why has it not happened prior to this.

Yes I am a skeptic. The older well has been online for 25 years and over those years I have had "calculation" issues with the company where on one occasion I was supposidly over my annual allowance and was told "I must have left an attic window open" to use over my 300,000 cu' for a small single dwelling. When I pressed the issue, the reality was that THEIR meter readings and calcualtions where not accurate. I had to threaten legal action to get that resolved.

The bottom line is that as land owners it is our responsibility to be the watch dog, which it often difficult with all the legal mumbo jumbo and mounds of paper to read.  Thanks again for all of the information here.

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