PUD pays wrong tax rate

Has to pay state $300,000 more

NEWPORT — The Pend Oreille Public Utility District must pay more than $300,000 for taxes it owes on $10 million it received in July 2020 shortly after Ponderay Newsprint Company went bankrupt, the state Department of Revenue ruled.

The PUD had paid more than $200,000 in taxes on the money, thinking that was a conservative approach to taxes since they didn’t think there should be any tax on the $10 million that was paid from a deposit from PNC. The Department of Revenue ruled differently, saying that taxes were not only owed, but that they were owed at a higher rate than the PUD had paid.

The PUD initially paid under the Washington Business and Opportunity tax rate of 1.75%. The DOR ruled that it should have been paid under the Public Utility tax rate of 3.87%.

“We didn’t think that was right,” financial director April Owen told commissioners at the July 15 board meeting. The PUD went through the DOR’s appeals process and the DOR came to the same conclusion, and the PUD agreed to pay. A tax attorney they hired told them they didn’t have a strong case and further litigation could have cost more than $100,000.

“We are paying the balance due of $323,952 this week,” Owen told The Miner in an email. “The amount includes interest owed and some other small adjustments, but we did not incur any penalties.”

PUD commissioner Troy Moody said he thought the PUD, as a non-profit, didn’t have to pay taxes, especially on the $10 million.

“Wasn’t the settlement recouping a loss?” he asked.

“It is,” Owen said, but actual damages would have been hard to prove. It was really lost revenue from a retail custom- er, she said.

PUD General Manager Chris Jones said that as a public utility, they want to make sure they were paying their taxes.

“At the same time, if we don’t think it’s right, we’re going to go as far as we need to go,” he said. After speaking with the tax expert, the PUD decided to cut its losses.

The PUD ended up paying attorney Tyler Whitney and the firm he works for, Cable Houston, which also employed the tax expert, about $35,000, Owen said. Whitney was the PUD’s former full-time attorney and assistant general manager. He now works for the PUD on a contract basis.

The DOR audited the PUD for the 2018–2021 tax years in the fourth quarter of 2022. The PUD received the results a year later and asked for an administrative review in November 2023. It received a hearing in April 2024 and received the unfavorable results in November 2024. The PUD asked for reconsideration and received another hearing in December 2024. It received the final determination in June 2025.