Bitcoin Mine Operator Paid No Tax on Taxable Equipment in 2021 | WJHL

JOHNSON CITY, Tennessee (WJHL) – The company that operates a controversial Bitcoin mine in rural Washington County failed to pay taxes on millions of dollars in personal property in 2021, a News Channel 11 investigation found .

Red Dog Technologies, which is involved in a lawsuit with Washington County, said in a recent court filing that it was fully operational next to a BrightRidge substation in November 2020.

That meant the company, which also referred to $ 14 million in operational investment – the type of equipment subject to personal property taxes – would be required to submit a tax schedule in early 2021.

Paragraphs from Red Dog Technologies’ counter-action against Washington County indicate the value of the equipment it has been mining at its Bitcoin mine since late 2020.

No such annex has been filed. Real estate appraiser Scott Buckingham told News Channel 11 his office was told the equipment was part of a BrightRidge project when they noticed construction next to the utility’s substation on Bailey Bridge Road in the community of New Salem.

Since BrightRidge is tax exempt as a public service, the Buckingham office did not send out a tax schedule, he said.

In the past week or so – in part because of News Channel 11 questions to the Tennessee Comptroller’s Office – the Buckingham office sent a tax schedule to Red Dog in charge of BrightRidge. They were unable to find a business license or address for Red Dog, formerly known as GRIID.

“We’re going to try to get our taxes for sure,” Buckingham said on Monday. “We will also be collecting for last year (2021).”

If Red Dog’s equipment was valued at $ 14 million, it would generate just over $ 90,000 in property tax revenue for the county.

That income was one of the benefits for the community, Jeff Dykes, CEO of BrightRidge, when he spoke to News Channel 11 in May, just after neighbors started complaining about the noise the Red Dog site was making. , especially at night.

Red Dog Technologies did not file a tax schedule or pay personal property taxes on its millions of dollars in computer hardware in Limestone, Tennessee. (Photo WJHL)

Dykes mainly pointed to the benefit of massive electricity sales in helping to keep overall tariffs lower, but he also touched on taxes.

“Not only are they great customers, but they’re also great to the community from that perspective,” Dykes said. “Not only does this help BrightRidge and our customers, they pay county and state taxes.

“Their equipment, they pay taxes on the ones they own, and say if it was a $ 10 million investment, that’s about $ 260,000, $ 270,000 in taxes shared between the county and state. “

The state gets involved

When Red Dog sued Washington County, which was trying to shut down the Bitcoin operation for violating the county’s zoning ordinance, its counterclaim included the reference to starting operations in late 2020.

Believing it could provide data on details of the value of personal property and the resulting taxes, News Channel 11 filed for public registration for the information. The county records repository said such a record does not exist.

A call to the office of the real estate appraiser drew attention to OSAP – the Office of State Appraised Property, which encrypts taxes on private utilities and their equipment.

But Tennessee Comptroller Communications Director John Dunn has checked to see if Red Dog will fall under OSAP and has said he will not. He also said the comptroller’s property tax division was checking a situation that had new wrinkles.

“It provided us with a level of uniqueness and there was definitely an unusual aspect to the whole situation,” Dunn said.

On December 17, he said the office had shown strong interest in the project, including several communications with the Buckingham office. On Monday, he confirmed that Red Dog owed personal property taxes – and that the issue was significant for a state office that oversees the state’s 95 property assessment offices.

“The whole property tax system is based on justice and fairness,” Dunn said.

“For every taxpayer out there, they want to know that their neighbors are taxed like them as well, and if an entity is excluded from the tax roll or does not pay tax that year, it increases the tax burden for everyone. world. other.

“So when you have a significant property with a lot of value, it’s important to get it appraised so that they can do their part for equity. ”

Dunn said it had become clear to the comptroller’s office that Buckingham and the office of the real estate appraiser as a whole had not been negligent.

Dunn said the Buckingham office may have had conversations about the property to try to find out more “and just did not get the responses that perhaps would have led them to know he was was a private operation “.

“We find no fault with anything the reviewer has done,” Dunn said. “This stuff happens all the time all over the state. What is important now is that the property is appraised, added to the tax roll and if a retroactive appraisal needs to be taken care of, this is done as well.

Burden not only on the assessor

Regarding the responsibility for submitting tax schedules, Dunn said businesses have an obligation to make sure that happens. If an appraiser can’t find them, they should find the appraiser, in other words.

“Most businesses are aware of the tax structure within the states and local governments that they operate, so it wouldn’t be surprising to know that a business would be aware of the need to pay taxes,” he said. -he declares.

The lease between Red Dog and BrightRidge requires Red Dog to pay all applicable taxes.

And after reviewing the BrightRidge-Red Dog lease, Dunn said it certainly looks to be the case in this scenario. Article 7 of the lease deals specifically with taxes, saying that “the tenant must pay all property taxes … and all other taxes imposed or levied on the tenant’s operations, equipment and improvements on the premises”.

“Obviously, Red Dog and BrightRidge were in agreement that taxes had to be paid,” Dunn said. “There were no exempt portions of personal property here, so we think clearly this is a very straightforward situation where personal property taxes have to be paid on equipment at this site.”

Insult to injury to my neighbors

Preston Holley owns a house and farmland directly across from Lola Humphreys Road from the Red Dog Substation and Farm. He said the mine continued to emit high noise levels at night and he did not hold back when he learned of the tax situation.

Preston Holley says paying his taxes is one of the few things Red Dog Technologies can do to help offset Bitcoin mine noise levels and disruption to his community.

“It’s also very disturbing,” said Holley. “I pay my taxes regularly – I know I have to, I know it helps provide services to our county where we live. “

Holley said he was preparing to send a sizeable check to the county administrator and that Red Dog’s claims that he wanted to be a good community partner ringed hollow.

“If a business like this wants to step into a community and wants to be a good neighbor and wants to provide a benefit to that community… the only thing I see as a little benefit to our community is whatever it pays in taxes. land, because they don’t provide any other benefit, ”said Holley.

“There aren’t a lot of jobs, there’s no other way for them to benefit our community. So, of all things, this should be the first thing they do.

Red Dog did not respond to requests for comment on the tax matter.

The lawsuit to determine if the operation of the mine is an unauthorized use under the Washington County zoning resolution and may be forced to close is scheduled for mid-March.

“That would be the ultimate goal, that would be to see this business elsewhere,” said Holley.

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