Oklahoma taxpayers may be out up to $160 million because a company is claiming it should have gotten tax credits on an $800 million investment made four years ago.
The company — a subsidiary of Bank of Oklahoma — filed an amended 2008 tax return in an effort to qualify for the tax credits. The Oklahoma Tax Commission is conducting an audit.
Skeptical of the whole thing is state Rep. Mike Reynolds, R-Oklahoma City, who learned of the amended tax return from a request for records he made to state tax officials.
“Somehow a publicly traded company can accidentally forget to report an $800 million so-called investment that could lead to a $160 million tax credit for one company,” Reynolds said. “The abuse of taxpayers by legislators who pass those kinds of programs is just beyond comprehension.”
The investment Reynolds is complaining about consisted of transferring $800 million from one Bank of Oklahoma subsidiary (CVV Partnership) to another subsidiary (Cottonwood Valley Ventures Inc.), according to redacted Tax Commission records.
The amendment wasn't filed until 2010 — a year after Cottonwood Valley Ventures filed its initial tax return, an internal Tax Commission email reveals.
The amendment — if allowed — could make Tulsa-based Bank of Oklahoma subsidiary Cottonwood Valley Ventures Inc. eligible for the tax credits long after the Legislature forced the expiration of this particular tax credit program at the end of 2008.
Tax credits, unlike tax deductions, represent a dollar for dollar break on tax liability. Once a company obtains them, if transferable, they can be sold at a discount to individuals who can use them to avoid paying a like amount in taxes.
Lawmakers unsuccessfully attempted this year to do away with some of the most costly and heavily abused tax credits that had been targeted for elimination by a special panel. Transferable tax credits were particularly targeted.
Sheila Curley, senior vice president and director of corporate communications for BOK Financial, said the company is limited in what it can say while the matter is pending before the Tax Commission.
“Many years ago the Oklahoma legislature created a tax credit program to encourage business expansion and diversify the Oklahoma economy,” she said. “As the state's largest bank, BOK embraces those legislative goals and engaged in the Oklahoma tax credit program. Although we cannot comment specifically on the inquiries about the Oklahoma Tax Commission or disclose the parties involved in private transactions, we can say that BOK followed the letter and spirit of the law.”
A certified public accountant at the Tax Commission said in an internal email acquired by Reynolds that he found it “hard to understand” how a public company could go more than a year before realizing an $800 million error had been made because public companies are required to file audited financial statements each year with footnotes that disclose related-party transactions.