Marathon Oil v. City of Milwaukee: WMC Files Brief in Support of Petition for Review


Marathon Oil is currently appealing a court of appeals ruling that would effectively allow municipalities to levy property taxes based on a business’s income. WMC has filed a brief in support of Marathon Oil’s petition requesting that the Wisconsin Supreme Court take up the case.

On March 20th the First District Court of Appeals ruled against Marathon Oil, holding that the income-generating capacity of oil terminals (i.e. business contracts) are inextricably intertwined with the property and thus may be included in the property assessment. The court applied the value of business contracts to the value of the property, reaffirming the trial court’s expansion of the “inextricably intertwined” test to tier two property assessments. Previously the test had only been used when using the business income approach (tier three under the Markarian hierarchy). This approach has been historically disfavored by the courts as a property assessment option. This session the Legislature attempted, and ultimately rejected, legislation that would have expanded the inextricably intertwined test. After the Legislature rejected this policy, the court went ahead and created the policy anyway. The court essentially invited assessors to use business income as one of the primary means of property assessment.

In the brief, WMC argues the state Supreme Court should take up the case in order to clarify the scope of the “inextricably intertwined” test. If the Court of Appeals decision were to stand, the amount of litigation would likely rise as municipalities look to raise business property assessments, and their property tax burden, based on business income. WMC’s brief can be found here.