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Montana must refigure coal tax from Wyoming company

Nov 5, 2013 - The Associated Press

The state alleges Cloud Peak Energy Inc. undervalued the material it sold between 2005 and 2007.

BILLINGS, Mont. -- Montana authorities must recalculate how much is owed by a Wyoming mining company that challenged its $3.4 million tax bill, after a judge ruled Monday that the state incorrectly valued the company's coal sales over a three-year period.

The ruling from District Judge Jeffrey Sherlock in Helena came in a lawsuit filed by Cloud Peak Energy Inc.

The state alleges the Gillette company undervalued coal that it sold between 2005 and 2007 and paid too little in taxes as a result. The coal was sold to affiliates that Cloud Peak partially owns -- a common industry practice that also is under scrutiny by federal regulators investigating royalties on coal shipped to Asia.

Sherlock said tax authorities erred in coming up with a value for Cloud Peak's coal based on when it was shipped. He agreed with Cloud Peak attorneys who said the value should be based on when the contract was signed.

"The date of the contract is the better metric of market value -- it is the 'actual sale date' more than the date when the coal is loaded onto a train," Sherlock wrote.

Montana officials said taxes, interest and penalties were owed on sales from Cloud Peak's Spring Creek strip mine near Decker, a 260-worker operation that dug up more than 17 million tons of coal last year.

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