Oregon Targets Renewable Heating Companies for Increased Assessments

Biomass heating companies, which use renewable energy sources like wood, crop waste, or garbage to generate heat, will now come under central assessment in Oregon. Under central assessment, all of a company's property, including its intangible property – e.g. goodwill, trade secrets, and contract rights – is taxable by law. This reclassification will likely result in a significant increase to the amount of property taxes these companies pay.

The reclassification is not the result of a new law passed by the Legislature. It occurred because of a reinterpretation of existing law by the Oregon Department of Revenue in conjunction with the Department of Justice.

The DOR made a similar reclassification to a different group of companies in 2009. At that time, communications companies like Comcast and CenturyLink were targeted. Comcast's taxable value increased an estimated $500 million in a single year due to the reinterpretation. It also resulted in almost a decade of litigation that still isn't finished.

There are some important exceptions to this change. There are also several good reasons to believe that a legal challenge of this particular reclassification may be more successful and, at least, resolve more quickly than Comcast's appeal.