Summit Water Distrib. Co. v. Utah State Tax Comm’n

Summit Water was a mutual water company providing culinary grade water to residential and commercial shareholders. After the Utah State Tax Commission audited Summit Water's annual property tax affidavit and concluded that the value of the distribution facilities was substantially higher than Summit Water reported that year, Summit County assessed Summit Water for the back taxes owed for the previous four years. In all, Summit County assessed Summit Water $204,020 in additional taxes. The Summit County Board of Equalization determined that Summit Water failed to establish that the taxation of the property was incorrect or illegal, concluding (1) Summit Water was not eligible for the constitutional tax exemption afforded to entities that own a water distribution system providing water for irrigating lands because the water used by Summit Water's shareholders was for nonagricultural purposes, and (2) there was no double taxation of Summit Water's property. The Commission affirmed. The district court reversed in part, holding that the constitutional exemption at issue includes any artificial watering of land, including nonagricultural properties. The Supreme Court affirmed, concluding that the constitutional exemption encompasses the nonagricultural watering of lands and that no double taxation occurred.