Chevron USA, Inc. has agreed to pay $28 million to the City of Richmond to settle the City's claim that Chevron underpaid taxes on the use of gas and electricity at its Richmond refinery. The agreement was approved by the Richmond City Council on February 17, 2009, bringing a successful conclusion to the City's audit of Chevron's gas and electrical use for a two- year period from 2006 to 2008.
Before 2006, Chevron had always elected to pay a “capped” amount of utility user taxes under a special provision of Richmond's municipal code. Starting in mid-2006, Chevron went “off the cap” significantly reducing its utility tax payments to the City.
The City hired Sideman & Bancroft LLP, a San Francisco law firm nationally known for its expertise in tax litigation, to conduct an audit of Chevron's utility tax liabilities. The firm engaged BPM, a regional accounting firm, to assist. After receipt of the audit team's preliminary analysis, Chevron elected to go back “on the cap” in mid-2008, and the parties thereafter began serious discussions leading to the $28 million settlement.
The City was represented by Bob Cross and Steve Katz of Sideman & Bancroft, and by Russell Burbank of BPM.
Chevron was represented by Andrew Zalewski of the company's tax department, Richard Nielsen of Pillsbury Winthrop, and Peter Haas of Richmond's Watson, Hoffe & Haas.