Summit Operating v. State Tax Comm’n

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This case required the Supreme Court to determine when a well "started" under Utah Code 59-5-102. Although that statute imposes a severance tax on oil or gas produced from a well, section 59-5-102(5)(c) permits an exemption for "the first six months of production for development wells started after January 1, 1990." Summit Operating, LLC argued that a well starts when it begins commercial production. Under this interpretation, Summit asserted that it was entitled to a six-month tax exemption for its well, which started commercial production in 2008. The Utah State Tax Commission asserted that a well starts on the date that drilling begins, and thus, Summit was not entitled to the tax exemption because drilling for Summit's well began in 1983. The Supreme Court affirmed the Commission's order granting summary judgment to the Auditing Division of the Commission, holding that under the Tax Exemption Statute, a well "starts" when drilling begins. View "Summit Operating v. State Tax Comm'n" on Justia Law