Sept. 6, 2008
Bayer Chemical Battling Tax Assessments from 2001, 2002, 2003
Kanawha Court Wrote of Negligence and Company Not Knowing What Left and Right Hands Were Doing
By Tony Rutherford
Huntingtonnews.net Reporter
Charleston, WV (HNN) – Bayer Corporation, at whose plant the explosion and fire of chemicals killed one man and severely burned another, has a tax dispute case scheduled for arguments before the West Virginia Supreme Court of Appeals Wednesday, Sept. 10. A Kanawha County judge wrote that the company's inventory and accounting practices at that time were the result of negligence.
According to a Kanawha County Circuit Court ruling, an attorney preparing responses over the taxability of certain chemicals discovered what he believed to be "errors in Bayer's tax returns." A letter was sent to the Kanawha County Commission August 21, 2003 stating that "Bayer Corporation hereby applies for relief from erroneous personal property tax assessments for tax years 2001, 2002, and 2003 for its chemical plants at South Charleston and Institute. The errors in these assessments were the result of clerical errors or mistakes occasioned unintentional or inadvertent."
During its acquisition of the Kanawha County properties in 2000 Bayer's tax department restructured the company's domestic operations. However, the Judge concluded discrepancies in inventory reports.
Judge Jennifer Bailey Walker wrote: "Bayer used corporate level reports which because of systemic problems failed to actually reflect the intransit inventory of where the barges were loaded. The general lack of knowledge exhibited by Bayer was not a lack of knowledge of West Virginia's taxes laws but was a general lack of knowledge about what [Bayer] was acquiring and what [it] owned."
Judge Walker continued, "this court has determined that the accounting discrepancies were the result of negligence rather than clerical error or mistake."
Bayer argued that it had "systemic problems" whereby there was a "difference between accounting records from which the returns were prepared versus the accounting records that the plant sites must fail …because such constitutes negligence." The judge cited an Alabama case in which similar facts were called a "form of bureaucratic bungling in which the left corporate hand did not know what the right corporate hand was doing."
In fact, Bayer's brief to the West Virginia Supreme Court dated April 2, 2008, attorneys Herschel Rose III and Steven Broadwater state that Bayer made "inadvertent" errors that included "reporting inventory data for the wrong month, reporting raw materials as finished goods, [and] reporting materials as being in inventory that were actually in transit and had not yet arrived in Kanawha County."
Since the discovery of the inventory errors "were not apparent on the face of either the tax returns or the corporate documents Bayer employed in preparing its returns. Rather , it was not until [an attorney] began comparing data, in what Bayer characterizes as an out of the ordinary circumstance, that the discrepancies became manifest."
To read the Kanawha County Court order and briefs to the West Virginia Supreme Court, click: http://www.state.wv.us/wvsca/briefs/sept08/33871order.pdf and http://www.state.wv.us/wvsca/calendar/sept10_08ad.htm
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Bayer Chemical Battling Tax Assessments from 2001, 2002, 2003
Kanawha Court Wrote of Negligence and Company Not Knowing What Left and Right Hands Were Doing
By Tony Rutherford
Huntingtonnews.net Reporter
Charleston, WV (HNN) – Bayer Corporation, at whose plant the explosion and fire of chemicals killed one man and severely burned another, has a tax dispute case scheduled for arguments before the West Virginia Supreme Court of Appeals Wednesday, Sept. 10. A Kanawha County judge wrote that the company's inventory and accounting practices at that time were the result of negligence.
According to a Kanawha County Circuit Court ruling, an attorney preparing responses over the taxability of certain chemicals discovered what he believed to be "errors in Bayer's tax returns." A letter was sent to the Kanawha County Commission August 21, 2003 stating that "Bayer Corporation hereby applies for relief from erroneous personal property tax assessments for tax years 2001, 2002, and 2003 for its chemical plants at South Charleston and Institute. The errors in these assessments were the result of clerical errors or mistakes occasioned unintentional or inadvertent."
During its acquisition of the Kanawha County properties in 2000 Bayer's tax department restructured the company's domestic operations. However, the Judge concluded discrepancies in inventory reports.
Judge Jennifer Bailey Walker wrote: "Bayer used corporate level reports which because of systemic problems failed to actually reflect the intransit inventory of where the barges were loaded. The general lack of knowledge exhibited by Bayer was not a lack of knowledge of West Virginia's taxes laws but was a general lack of knowledge about what [Bayer] was acquiring and what [it] owned."
Judge Walker continued, "this court has determined that the accounting discrepancies were the result of negligence rather than clerical error or mistake."
Bayer argued that it had "systemic problems" whereby there was a "difference between accounting records from which the returns were prepared versus the accounting records that the plant sites must fail …because such constitutes negligence." The judge cited an Alabama case in which similar facts were called a "form of bureaucratic bungling in which the left corporate hand did not know what the right corporate hand was doing."
In fact, Bayer's brief to the West Virginia Supreme Court dated April 2, 2008, attorneys Herschel Rose III and Steven Broadwater state that Bayer made "inadvertent" errors that included "reporting inventory data for the wrong month, reporting raw materials as finished goods, [and] reporting materials as being in inventory that were actually in transit and had not yet arrived in Kanawha County."
Since the discovery of the inventory errors "were not apparent on the face of either the tax returns or the corporate documents Bayer employed in preparing its returns. Rather , it was not until [an attorney] began comparing data, in what Bayer characterizes as an out of the ordinary circumstance, that the discrepancies became manifest."
To read the Kanawha County Court order and briefs to the West Virginia Supreme Court, click: http://www.state.wv.us/wvsca/briefs/sept08/33871order.pdf and http://www.state.wv.us/wvsca/calendar/sept10_08ad.htm
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