$139B company hopes to sidestep fine

09/02/2010 12:00 AM |

Conoco-Phillips storage tanks above the Sound beach in Northville. The company, one of the country’s most profitable, is seeking to not pay a $167,727 penalty it owes Riverhead Town for late tax payments.

In 2010, ConocoPhillips ranked sixth on the Fortune 500, with reported annual revenues of $139 billion and profits totaling $4.85 billion.

But the Houston-based energy company recently asked Riverhead Town to waive a $168,000 penalty levied against it because it had failed to pay $899,000 in taxes owed to the Community Preservation Fund that were assessed to the company’s tank farm and offshore platform in Northville.

Town Board members rejected that request at last Thursday’s work session.

Deputy Town Attorney Ann Marie Prudenti said that when Phillips Petroleum and Conoco merged in 2002, the company did not realize it was required to pay the 2 percent land transfer tax that goes into the Community Preservation Fund, according to a letter sent to the town by Greg Cardwell, ConocoPhillips’ director of eastern region corporate real estate.

The CPF is used to preserve open space and farmland in the five East End towns. It is supported by a tax on the buyer whenever real estate is transferred.

ConocoPhillips did pay the tax about eight months ago, according to Ms. Prudenti, but it was assessed the late penalty for having missed the payments in the past.

The oil giant asked for a waiver on the penalty, saying it didn’t realize it was required to pay the CPF tax, according to Ms. Prudenti, who said town law permits the Town Board to waive tax penalties by resolution.

Supervisor Sean Walter, who has said the town has a deficit of more than $5 million, said the $168,000 was needed.

“This money goes right into the CPF,” he said. “The debt service in the CPF fund is $6.5 million. We need to maintain an income of $3.5 million a year to continue to pay it off before it comes out of the general fund, because we have some reserves there. Last year I think (the CPF revenue) came in at $2.5 million, and we’re not there yet this year.”

The supervisor wasn’t alone in his thinking.

“I know they have a corporate attorney, and they didn’t know they had to do this when they merged?” Councilman Jim Wooten said. “Sorry, you’ve got to pay the tax, or fire your top legal staff.”

“I don’t want to set a precedent,” Councilman John Dunleavy said. Councilwoman Jodi Giglio also opposed waiving the fine.

Councilman George Gabrielsen was absent from last Thursday’s work session.

ConocoPhillips spokesman John Roper declined comment.

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