Opinion ID: 2509156
Heading Depth: 1
Heading Rank: 24

Heading: The Exempt Royalty Issue

Text: 81. Storts testified that the calculations of the auditors were in error because the auditors failed to allow a deduction for state royalties, which are exempt from severance taxes. [Transcript Vol. III, pp. 426, 447-449]. Barrett's payments of state royalties were audited for the period February 1999 through December 1999. On March 15, 2002, the Department of Audit ordered Williams to report and pay additional state royalties. [Exhibit 152]. However, Wyoming State Lands and Investments had agreed to stay action pending current litigation regarding state royalties. [Transcript Vol. III, p. 565]. 82. Williams accrued the exempt royalties on its general ledger in a long-term liability account. [Transcript Vol. III, pp. 565, 568]. 83. Williams disagrees that the royalties should be paid, and has taken no action to comply with the March 15, 2002, order other than the accrual in its books. [Transcript Vol. III, pp. 572-573]. The Department refuses to allow a deduction for royalties that are in dispute. [Transcript Vol. IV, pp. 804-805]. Simmons likewise says that the auditors would allow an amount that has been accrued only after the dispute is resolved. [Transcript Vol. IV, pp. 962-963].