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4-Traders Homepage  >  Shares  >  Nyse  >  Hess Corp.    HES   US42809H1077

HESS CORP. (HES)

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Hess : In New York, District judge rejects HOVENSA case

07/04/2015 | 01:17am US/Eastern

July 03--ST. CROIX -- A decision by a federal judge in New York on Thursday means the territory will be the battleground for a lawsuit in which Hess Oil Virgin Islands Corp. contends the V.I. government owes it an $83.5 million tax refund.

On Thursday, Judge J. Paul Oetken, a U.S. District judge for the Southern District of New York, tossed out the case that Hess Oil Virgin Islands Corp., or HOVIC, had filed there against the territory and the V.I. Internal Revenue Bureau. The judge said his court does not have jurisdiction and the proper venue for the case is U.S. District Court in the Virgin Islands.

HOVIC wanted to litigate the case in New York, but a nearly identical case also is pending in the territory. HOVIC filed the V.I. lawsuit about the same time as the New York case to protect its right to pursue the matter in the Virgin Islands if the New York court decided it couldn't hear the case.

Hess Corporation -- the parent company of HOVIC -- is based in New York City.

A spokeswoman for Hess Corp. did not respond Thursday to a Daily News email seeking comment.

A Government House press release said Gov. Kenneth Mapp was elated by news of the case being dismissed in New York and quoted him saying he would "continue to fight on behalf of the people of the Virgin Islands and for the territory's best interests."

The dismissal was based on lack of jurisdiction and did not address the merits of the case.

The dismissed case in New York was one of 12 tax-related cases against the local government that the owners of HOVENSA and related entities have lodged in federal courts since late December, with hundreds of millions of dollars hanging in the balance.

HOVIC first filed the lawsuit in federal court in the Southern District of New York on Christmas Eve 2014, and then filed an almost identical lawsuit in U.S. District Court in the Virgin Islands a week later, seeking $83,554,763 from the V.I. Government, money that the company contends it is owed in refunds for the 2006 and 2007 tax years.

PDVSA V.I. also filed suit in late December in the territory, seeking $152,607,227 it contends the V.I. government owes it in refunds from tax years 2006, 2007 and 2008.

HOVENSA is a joint venture between HOVIC, a wholly-owned subsidiary of Hess Corporation, and PDVSA VI, a wholly-owned subsidiary of the national oil company of Venezuela, Petroleos de Venezuela.

Since the beginning of the year, the refinery entities have individually filed a number of additional cases against the V.I. Internal Revenue Bureau, most of them tax disputes that challenge determinations the bureau recently made that the refinery entities still owe the government money for tax years 2008, 2009 or 2010.

In recent months, the Internal Revenue Bureau issued the companies notices of deficiencies for those years.

Each company filed its own case, asking the court to make a redetermination of its taxes or Final Partnership Administrative Adjustment for a particular year, alleging that the Internal Revenue Bureau made a litany of errors in coming to its conclusions.

In the most recent case, filed June 25, PDVSA V.I. challenges a tax deficiency notice the Internal Revenue Bureau issued for the 2009 tax year that said the company owes the government an additional $183.9 million for that year.

Three of the cases involve HOVENSA challenging the Final Partnership Administrative Adjustments that the Internal Revenue Bureau has issued for those same tax years. One of those cases was dismissed because the Final Partnership Administrative Adjustment had not been issued yet for 2008.

The combined $236 million that HOVIC and PDVSA claim the V.I. government owes them in tax refunds -- the subject of the first cases that were filed -- involve a carry-back of tax losses, an accounting technique in which a company can retroactively apply net operating losses to a preceding year's income to reduce tax liabilities in that previous year.

In the refund cases, the companies contend that massive losses in 2008 and continuing into 2009 reduced their tax liabilities in previous years -- and therefore that they are owed a refund for those earlier years.

But in its notices of deficiencies to the companies, the Internal Revenue Bureau alleges that the companies still owe money for the 2008, 2009 and 2010 tax years, which could impact the prior year refunds the companies contend they are owed.

A variety of motions in the cases are pending.

- Contact Joy Blackburn at 714-9145 or email jblackburn@dailynews.vi.

___

(c)2015 The Virgin Islands Daily News (St. Thomas, VIR)

Visit The Virgin Islands Daily News (St. Thomas, VIR) at www.virginislandsdailynews.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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