Coping with Covid-19 and the Collapse in Oil Prices: 7 Ways to Reduce Your Tax Burdens

As the coronavirus pandemic continues to run rampant throughout the United States and around the globe, many industries—not just the health sector—are beginning to feel its devastating effects. This pandemic will be a game changer for one in particular—the energy industry. As people continue to stay home, businesses remain closed, and countries essentially shut down, oil prices have plummeted as the demand for crude oil is halted. Despite the unprecedented cuts to global oil production, not enough has been done to salvage commodity prices. Here in the US, WTI crude is hovering in the low $20s per barrel, and could decrease even more.

To add insult to injury, the 2020 property tax values for working interest and royalty owners in Texas, based on an average of the previous year’s pricing, have been released in the $50s per barrel—causing some royalty owners to pay more in tax than they will recoup in sales.

Merit Advisors can help your business navigate its current tax burdens by reducing your taxable value and working with you to create personalized solutions that will solve your current financial challenges and prepare you for the future.

So, how can we help?

  • Property Tax: We work with oil and gas operators to gather property-specific data to develop trends used to reduce taxable value, determine a fair market value after examining the physical, economic, and functional conditions of the business, and establish valuations that reflect the fair taxable value.
  • Indirect Tax: Our experts in the principal areas of refund studies, audit defense and taxability can prepare and file returns, conduct analysis on proposed transactions, represent and assist with audit defense, and conduct studies to collect overpaid taxes.
  • Severance Tax: We help our clients build and implement proactive best practices and procedures to reduce their overall tax liability and help mitigate exposure and risk. Severance tax varies widely by area, so our team tracks compliance, rate, and exemption issues across a broad spectrum.
  • Economic Development: Our economic development team is here to guide you through the process from site selection to negotiating business incentives. Whether you’re relocating, expanding, or establishing new facilities our experts are here to help.
  • Legislative Support: Working with trade associations, serving as experts in the rulemaking process, or providing critical data and technical support for legislative issues, our team does what it takes to meet the needs of our clients.
  • Appraisal and Valuation: Merit offers appraisal services by state certified professionals for real, commercial, and business personal property.
  • Restructuring Services: When times are tough, Merit’s broad swath of expertise in valuation, property tax, indirect tax and severance tax can minimize exposure and maximize overall cash recovery for both borrowers and creditors.

We are confident that our team of experts can help you achieve your tax and financial goals, and we’re here whenever you’re ready. Reach out to one of our advisors today to get started.