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The cable company's taxes have become a flash point in state politics.

(AP photo)

Comcast has extended a seven-year tax fight worth as much as $170 million to Oregon schools and local governments, asking the state's tax court to reduce its liability under an obscure application of tax law.

Comcast also asked the court to rule it eligible for Oregon's new "gigabit" tax break, after the Oregon Department of Revenue declined to grant the tax exemption to the company.

These are wonky disputes full of arcane arguments about tax methodology and valuation, but the protracted battle has very real implications for the cable TV company and for local governments, which already have waited several years for Comcast to pay its growing tax bill.

Comcast's taxes have also become a flash point in state politics.

The company was a poster child for supporters of Measure 97, the failed initiative on this month's ballot that sought to impose a tax on many companies' revenues. The initiative's backers listed Comcast among the out-of-state companies they contend are not paying their "fair share," and the cable TV giant contributed $465,000 to the campaign opposing the tax.

Erasing Comcast's tax exemptions is also among the demands of Portland's Resistance, which has led a series of downtown protests against Donald Trump.

"This is $170 million that should be going to schools, to essential services," said Shamus Lynsky, executive director of the Oregon Consumer League. "There seems to be no end to what Comcast will (do) to avoid paying their fair share."

The Department of Revenue declined to comment on Comcast's complaint, and the company said it would not elaborate on its filing with the tax court.

Many states and local governments levy taxes on cable TV companies, but the scale and nature of Comcast's dispute in Oregon appears unique.

Central assessment

Central assessment in Oregon dates to the 19th century, when counties sought to value railroads running through their territories by applying the value of the overall railroad network - not just the value of a thin strip of land and the railroad tracks themselves.

Oregon updated its law multiple times to account for new technologies, including the telegraph and telephone. The current version dates to 1973, written with microwave towers in mind. Lawmakers sought to apply the methodology to future telecommunications technologies, and that gradually expanded to include cable TV.

Instead of assessing property county-by-county, the state assesses it centrally, incorporating intangible elements such as the value of a company's cable TV franchises.

In 2015, hoping to lure Google Fiber to Portland, Oregon lawmakers created an exemption from central assessment for internet companies that offer connection speeds around 1 gigabit per second. Google Fiber dropped plans to serve Portland last July and isn't eligible for the tax break. But Comcast still hopes to benefit from the law.

The current tax fight dates to 2009, when Oregon tax assessors changed the way they valued Comcast's telecommunications equipment. The new methodology, known as central assessment, incorporates the value of Comcast's intangible assets, such as the value of its cable TV franchises.

Central assessment inflated the value of Comcast's Oregon property by more than $500 million, according to a complaint filed last month in the Oregon Tax Court, dramatically increasing its tax liability.

Comcast sued to block central assessment, ultimately losing two years ago before the Oregon Supreme Court. Comcast never paid its tax bills, though, holding onto the money while it pursued other legal avenues to fight the taxes.

The size of Comcast's tax liability isn't public, but the League of Oregon Cities said it estimates Comcast has withheld payments worth $170 million to local governments.

In its October complaint, Comcast argues that the state's $1.5 billion assessment of the company's Oregon property is too high.

Comcast operates in 10 Oregon counties, according to the Department of Revenue. Taxes vary county by county, but if Comcast were subject to the statewide average property tax rate its central assessed value would generate an annual tax bill of nearly $26 million.

Separately, the company argues in its complaint that it should be eligible for broad exemption from central assessment that Oregon legislators created in 2015. The exemption applies to companies that offer residential internet service of 1 gigabit per second.

Comcast says it meets that standard by virtue of a 2-gig service the company introduced last year, but the Department of Revenue declined to sign off on the tax break. The department's reasoning isn't public, but opponents had argued that Comcast's service shouldn't qualify because the company's service - which costs as much as $4,600 in the first year - was too expensive.

"We believe the Legislature did not intend that the services that Comcast is providing at this time would trigger the gigabit exemption," Wendy Johnson, lobbyist for the League of Oregon Cities, said in a statement to The Oregonian/OregonLive.

Comcast has said it will offer a mass-market, 1-gig service in Oregon next year, which might make it eligible for the gigabit tax break in future years even if the current service does not qualify.

-- Mike Rogoway

mrogoway@oregonian.com

503-294-7699

@rogoway