42.19.502    EXEMPTIONS INVOLVING AN OWNERSHIP TEST

(1) A tribal member who owns vehicles and other personal property in whole or in part is subject to the provisions of this rule. The following requirements apply to tribal personal property in order to meet the ownership test:

(a) The exemption applies to tribal members living on the reservation of the tribe in which they are an enrolled member;

(b) If the tribal member owns 100 percent of the interest in personal property (such as vehicles), the property is 100 percent exempt; and

(c) If the personal property is jointly owned by tribal members and nontribal members and there is no indication of the percentage of ownership for each owner, the exemption of the property is prorated among the owners as if each owner owned equal interests in the property. An example of this is when a tribal member and two nontribal members register a vehicle. The vehicle is on the reservation of the tribal member and there is no indication of the percentage of ownership for each owner. The vehicle receives a 33 percent exemption and is taxed for the remaining 67 percent.

(d) If there is an indication of percentage of ownership, the exemption will be prorated based on the indicated percentages. For motor vehicles, the percentage of ownership must be proven by submittal of a current title or registration indicating the percentage of ownership. For other personal property, the percentage of ownership can be proven by submittal of a bill of sale or an affidavit, signed by all owners, indicating each owner's percentage of ownership.

(2) The following requirements apply to tribal real property in order to meet the ownership test:

(a) The exemption involving an ownership test applies to real property located on the reservation in which the tribal member is an enrolled member. In most cases the percentage of ownership is stated on the deed or instrument that transfers intention that the land be subject to state taxation, or if the land is held by the United States government in trust for the enrolled member, it is not generally taxable and is exempt.

(b) Property acquired under a federal statute in which Congress expressed its intention that the land be subject to state taxation, such as the Indian General Allotment Act of 1887, is not entitled to an exemption and will remain on the tax roll, unless it was placed in trust after acquisition under the particular federal statute. If the local staff cannot determine whether the property was acquired under a federal statute authorizing state taxation or is held in trust by the United States, the property will be placed on the tax roll until the owner can produce proof that the property is entitled to an exemption. Therefore, if the tribal member owns 20 percent of the property and is entitled to an exemption, 20 percent of the property will receive an exemption and the remaining 80 percent of the property will remain on the tax roll. The assessment will be addressed to and sent to the nontribal member(s).

(3) Military personnel who own vehicles and other personal property in whole or in part are subject to the provisions of this rule.

(a) If a military person is entitled to an exemption for that person's personal property under the Soldiers and Sailors Relief Act, the amount of exemption will depend on their percentage of ownership. If there are owners other than the military person and the ownership document does not indicate the ownership interest, the property must be prorated among the owners as if each owner owned equal interests in the property. For example, if a vehicle is owned by a military person and his/her spouse and there is no legal indication of the percentage of ownership, the vehicle would receive a 50 percent exemption.

(b) To receive an exemption under the Soldiers and Sailors Relief Act, the military person must be a nonresident and provide the department with proof that they have orders assigning them to duty in Montana.

(c) There is no exemption allowed for real property of active military personnel or personal property used in or arising from a trade or business of the active duty military personnel.

(4) For other types of exemptions that require an application for exemption and an ownership test to qualify, the exemption is based on the percentage of ownership as contained in the document that evidences ownership, and on whether or not the property satisfies the use test required by the exemption statute (if a use test is required). If the document does not show the ownership interest, the value of the property must be prorated among the owners as if each owner owned equal interests in the property. An example would be if a church and a pastor are both listed as owners of a house. The house is occupied by the pastor and he is a member of the clergy. The church's 50 percent interest is exempt from taxation. The pastor's 50 percent interest is not exempt from taxation. This portion of the rule applies to properties which receive an exemption under 15-6-201, 15-6-203, 15-6-209, MCA.

History: 15-1-201, MCA; IMP, 15-6-201, 15-6-203, 15-6-209, 15-24-1208, MCA; NEW, 1993 MAR p. 2968, Eff. 12/10/93; AMD, 2015 MAR p. 2041, Eff. 11/13/15.