BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.21.113, 42.21.123, 42.21.125, 42.21.131, 42.21.137, 42.21.138, 42.21.139, 42.21.140, 42.21.151, 42.21.153, 42.21.155, 42.21.158, 42.21.159, 42.21.160, 42.21.162, 42.22.1311 relating to property taxes and the trend tables for valuing property

) ) ) ) ) ) )

NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO:  All Concerned Persons

 

1.  On November 24, 2009, at 3:00 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the amendment of the above-stated rules.

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

 

2.  The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice.  If you require an accommodation, contact the Department of Revenue no later than 5:00 p.m., November 9, 2009, to advise us of the nature of the accommodation that you need.  Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail [email protected].

 

3.  The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

42.21.113  LEASED AND RENTAL EQUIPMENT  (1)  Leased or rental equipment that is leased or rented on an hourly, daily, or weekly, semimonthly, or monthly basis, but is not exempt under 15-6-201(1)(cc) 15-6-219(5) or 15-6-202(4), MCA, will be valued in the following manner:

(a)  For equipment that has an acquired cost of $0 to $500, the department shall use a four-year trended depreciation schedule. The trended schedule will be the same as ARM 42.21.155, category 1.

 

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	70%
2008	42%
2007	16%
2006 and older	8%

 

(b)  For equipment that has an acquired cost of $501 to $1,500, the department shall use a five-year trended depreciation schedule.  The trended schedule will be the same as ARM 42.21.155, category 2.

 

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	85%
2008	75%
2007	58%
2006	38%
2005 and older	22%

 

(c)  For equipment that has an acquired cost of $1,501 to $5,000, the department shall use a ten-year trended depreciation schedule.  The trended schedule will be the same as ARM 42.21.155, category 8.

 

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	92%
2008	89%
2007	83%
2006	75%
2005	67%
2004	59%
2003	47%
2002	37%
2001	29%
2000 and older	25%

 

(d)  For equipment that has an acquired cost of $5,001 to $15,000, the department shall use the trended depreciation schedule for heavy equipment.  The schedule will be the same as ARM 42.21.131.

 

 

 

(e)  For rental video tapes and digital video disks the following schedule will be used:

 

 

 

(2)  For all other leased property that is not rented on an hourly, daily, or weekly, semimonthly, or monthly basis, the valuation procedures shall be the same as other like personal property.

(3)  When a special mobile permit (SM plate), as defined in 61-1-104, 61-4-101(66), MCA, is purchased for lease or rental equipment, the equipment will be classified and valued the same as other SM equipment in class eight.

(4)  All leased and rental property not exempt under 15-6-201(1)(cc) 15-6-219(5) or 15-6-202(4), MCA, will be assessed and taxed as class eight property.

(5)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, 15-23-108, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: The department is proposing to amend ARM 41.21.113 to clarify through the trend tables how the department arrives at market value as required by 15-8-111, MCA.  Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property.

            To determine the market value of personal property, the department has historically used and adopted the concept of trending and depreciation.  The method by which trended depreciation schedules are derived is described in the existing rule, and that method is not being changed.

            The First Judicial District Court indicated in 1986 that the department must publish these trend tables annually and these amendments are in compliance with that order.

            The department is adding the language semimonthly or monthly to ARM 42.21.113(1) and (2) to be in compliance with Senate Bill 280, (Ch. 295, L. 2009), which was enacted by the 2009 Legislature to be effective for tax years beginning after December 31, 2009.

 

42.21.123  FARM MACHINERY AND EQUIPMENT  (1) through (4) remain the same.

(5)  The trended depreciation schedule referred to in (2) through (4) is listed below and shall be used for tax year 2009 2010.  The schedule is derived by using the guidebook listed in (1) as the data base.  The values derived through use of the trended depreciation schedule will approximate average wholesale value.

 

FARM MACHINERY & EQUIPMENT TRENDED DEPRECIATION SCHEDULE

YEAR NEW/ACQUIRED	TRENDED % GOOD AVERAGE WHOLESALE
2009	80%
2008	75%
2007	70%
2006	70%
2005	64%
2004	60%
2003	52%
2002	46%
2001	42%
2000	39%
1999	36%
1998	35%
1997	33%
1996	31%
1995	31%
1994	26%
1993 and older	23%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD AVERAGE WHOLESALE
2010	80%
2009	75%
2008	71%
2007	68%
2006	64%
2005	58%
2004	54%
2003	47%
2002	42%
2001	38%
2000	36%
1999	33%
1998	33%
1997	30%
1996	28%
1995	28%
1994 and older	23%

 

(6) remains the same.

            (7)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

            AUTH: 15-1-201, MCA

            IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY:  The department is proposing to amend ARM 41.21.123 to clarify through the trend tables how the department arrives at market value as required by 15-8-111, MCA.

            Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property.  To determine the market value of personal property, the department historically uses and adopts the concept of trending and depreciation.  The method by which trended depreciation schedules are derived is described in the existing rule, and that method is not being changed.

            The First Judicial District Court indicated in 1986 that the department must publish these trend tables annually and these amendments are in compliance with that order.

 

42.21.125 BUSINESS EQUIPMENT  (1) remains the same.

(2)  Business equipment that is held by a dealers, pursuant to a dealer rental program, is not a part of the dealer's inventory except for farm implements and construction equipment that are in a purchase incentive rental program and that meet the criteria in (4).  The dealer shall report the equipment on the property reporting form provided by the department.  The dealer shall be assessed property tax on the equipment for the full tax year.

(3)  All business equipment that is part of a dealer sales program or a dealer demonstration program shall be considered a part of the dealer's business inventory.

(4)  Farm implements and construction equipment that meet all of the following criteria shall be considered a part of the dealer's business inventory:

(a)  the equipment must be owned by a farm implement or construction equipment dealership,

(b)  the equipment must be held for sale;

(c)  the equipment must be rented only once to a single user for nine months or less as an incentive for the purchase of the property.

(5)  Property brought into the state that meets the criteria in (4) is not taxable unless it is sold or otherwise disposed of in the state.

(6)  All farm implement and construction equipment dealers with equipment that meet the criteria in (4) shall report the qualifying equipment each calendar quarter for which the dealership has qualifying equipment on the form provided by the department.  As part of its audit responsibility, the department may request a copy of specific purchase rental program agreements from the respective dealers.

 

AUTH: 15-1-201, MCA

IMP: 15-6-202, MCA

 

            REASONABLE NECESSITY:  The department is proposing to amend ARM 42.21.125 so farm implement and construction equipment dealers clearly understand the conditions under which their property is exempt from property taxation. 

            Farm implement and construction equipment dealers historically allowed producers the opportunity to "test drive" new and used equipment by using it in their operation for specific time periods, normally several days or weeks.  The producer paid a rental or lease fee for use of the equipment.  The law provided no latitude – the fact that the equipment was rented or leased made it taxable.  Those situations created what was viewed by those dealers as an unwarranted property tax burden.  The dealers maintained that the equipment was actually business equipment that was for sale, thus tax exempt.  The 2009 Legislature provided an exception to the law by providing in House Bill 487 (Ch. 343, L. 2009), that business equipment that is part of a dealer sales program shall be considered a part of the dealer's inventory program.  The provisions of that program are contained in the proposed rule.  The department developed these provisions through discussions with the Implement Dealer's Association. 

            The rule also addresses the reporting requirements and complies with the provisions enacted by House Bill 487 (Ch. 343, L. 2009), which changed 15-6-138, 15-6-202, and 15-24-301, MCA.

 

42.21.131  HEAVY EQUIPMENT  (1) through (4) remain the same.

(5)  The trended depreciation schedule referred to in (2), (3), and (4) is listed below and shall be used for tax year 2009 2010.  The values derived through the use of these percentages approximate the "quick sale" values as calculated in the guidebooks listed in (1).

 

HEAVY EQUIPMENT TRENDED DEPRECIATION SCHEDULE

	TRENDED % GOOD
YEAR NEW/ACQUIRED	WHOLESALE
2009	80%
2008	65%
2007	63%
2006	56%
2005	50%
2004	44%
2003	40%
2002	37%
2001	35%
2000	32%
1999	28%
1998	29%
1997	29%
1996	29%
1995	26%
1994	26%
1993	24%
1992	23%
1991	22%
1990 and older	22%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD WHOLESALE
2010	80%
2009	65%
2008	58%
2007	56%
2006	50%
2005	44%
2004	41%
2003	38%
2002	36%
2001	36%
2000	29%
1999	25%
1998	24%
1997	24%
1996	25%
1995	22%
1994	21%
1993	22%
1992	21%
1991 and older	21%

 

(6)  This rule is effective for tax years beginning after December 31, 2008 2009, and applies to all heavy equipment.

 

AUTH: 15-1-201, 15-23-108, MCA

            IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.137  SEISMOGRAPH UNITS AND ALLIED EQUIPMENT

(1) through (3) remain the same.

(4)  The trended depreciation schedules referred to in (1) through (3) are listed below and shall be used for tax year 2009 2010.

 

SEISMOGRAPH UNIT

YEAR NEW/ACQUIRED

% GOOD

TREND FACTOR

TRENDED % GOOD

WHOLESALE FACTOR

WHOLESALE % GOOD

 

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD	WHOLESALE FACTOR	WHOLESALE % GOOD
2010	100%	1.000	100%	80%	80%
2009	85%	1.000	85%	80%	68%
2008	69%	1.041	72%	80%	57%
2007	52%	1.088	57%	80%	45%
2006	34%	1.153	39%	80%	31%
2005	20%	1.211	24%	80%	19%
2004 and older	5%	1.314	7%	80%	5%

 

SEISMOGRAPH ALLIED EQUIPMENT

YEAR NEW/ ACQUIRED

% GOOD

TREND FACTOR

TRENDED % GOOD

 

 

(5)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.138  OIL AND GAS FIELD MACHINERY AND EQUIPMENT  (1) and (2) remain the same.

(3)  The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2009 2010.

 

OIL AND GAS FIELD PRODUCTION

EQUIPMENT TRENDED DEPRECIATION SCHEDULE

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2009	100%	1.000	100%
2008	95%	1.000	95%
2007	90%	1.033	93%
2006	85%	1.094	93%
2005	79%	1.149	91%
2004	73%	1.247	91%
2003	68%	1.291	88%
2002	62%	1.317	82%
2001	55%	1.324	73%
2000	49%	1.336	65%
1999	43%	1.358	58%
1998	37%	1.365	50%
1997	31%	1.379	43%
1996	26%	1.396	36%
1995	23%	1.424	33%
1994 and older	20%	1.476	30%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	100%	1.000	100%
2009	95%	1.000	95%
2008	90%	1.041	94%
2007	85%	1.088	93%
2006	79%	1.153	91%
2005	73%	1.211	88%
2004	68%	1.314	89%
2003	62%	1.362	84%
2002	55%	1.387	76%
2001	49%	1.394	68%
2000	43%	1.408	61%
1999	37%	1.431	53%
1998	31%	1.438	45%
1997	26%	1.452	38%
1996	23%	1.471	34%
1995 and older	20%	1.500	30%

 

(4) and (5) remain the same.

(6)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-213, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.139  WORK-OVER AND SERVICE RIGS  (1) through (4) remain the same.

(5)  The trended depreciation schedule referred to in (2) and (4) is listed below and shall be used for tax year 2009 2010.

 

SERVICE AND WORKOVER RIG TRENDED DEPRECIATION SCHEDULE

YEAR NEW/ACQUIRED

% GOOD

TREND FACTOR

WHOLESALE FACTOR

TRENDED WHOLESALE % GOOD

2009	100%	1.000	80%	80%
2008	92%	1.000	80%	74%
2007	84%	1.033	80%	69%
2006	76%	1.094	80%	67%
2005	67%	1.149	80%	62%
2004	58%	1.247	80%	58%
2003	49%	1.291	80%	51%
2002	39%	1.317	80%	41%
2001	30%	1.324	80%	32%
2000	24%	1.336	80%	26%
1999 and older	20%	1.358	80%	22%

 

YEAR/NEW ACQUIRED	% GOOD	TREND FACTOR	WHOLESALE FACTOR	TRENDED WHOLESALE % GOOD
2010	100%	1.000	80%	80%
2009	92%	1.000	80%	74%
2008	84%	1.041	80%	70%
2007	76%	1.088	80%	66%
2006	67%	1.153	80%	62%
2005	58%	1.211	80%	56%
2004	49%	1.314	80%	51%
2003	39%	1.362	80%	42%
2002	30%	1.387	80%	33%
2001	24%	1.394	80%	27%
2000 and older	20%	1.408	80%	23%

 

(6)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.140  OIL DRILLING RIGS  (1) remains the same.

(2)  The department shall prepare a ten-year trended depreciation schedule for oil drilling rigs.  The trended depreciation schedule shall be derived from depreciation factors published by Marshall and Swift Publication Company.  The "% good" for all drill rigs less than one year old shall be 100%.  The trended depreciation schedule for tax year 2009 2010 is listed below.

 

DRILL RIG TRENDED DEPRECIATION SCHEDULE

YEAR NEW/ACQUIRED

% GOOD

TREND FACTOR

TRENDED % GOOD

2009	100%	1.000	100%
2008	92%	1.000	92%
2007	84%	1.033	87%
2006	76%	1.094	83%
2005	67%	1.149	77%
2004	58%	1.247	72%
2003	49%	1.291	63%
2002	35%	1.317	46%
2001	30%	1.324	40%
2000	24%	1.336	32%
1999 and older	20%	1.358	27%

 

YEAR/NEW ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	100%	1.000	100%
2009	92%	1.000	92%
2008	84%	1.041	87%
2007	76%	1.088	83%
2006	67%	1.153	77%
2005	58%	1.211	70%
2004	49%	1.314	64%
2003	35%	1.362	48%
2002	30%	1.387	42%
2001	24%	1.394	33%
2000 and older	20%	1.408	28%

 

(3) remains the same.

(4)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.151  TELEVISION CABLE SYSTEMS  (1) through (3) remain the same.

(4)  The trended depreciation schedules referred to in (2) and (3) are listed below and shall be in effect for tax year 2009 2010.

 

TABLE 1:  FIVE-YEAR "DISHES"

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2008	85%	1.000	85%
2007	69%	1.029	71%
2006	52%	1.085	56%
2005	34%	1.136	39%
2004 and older	20%	1.221	24%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.034	71%
2007	52%	1.075	56%
2006	34%	1.133	39%
2005 and older	20%	1.186	24%

 

TABLE 2:  TEN-YEAR "TOWERS"

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2008	92%	1.000	92%
2007	84%	1.029	86%
2006	76%	1.085	82%
2005	67%	1.136	76%
2004	58%	1.221	71%
2003	49%	1.263	62%
2002	39%	1.285	50%
2001	30%	1.292	39%
2000	24%	1.303	31%
1999 and older	20%	1.327	27%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.034	87%
2007	76%	1.075	82%
2006	67%	1.133	76%
2005	58%	1.186	69%
2004	49%	1.275	62%
2003	39%	1.319	51%
2002	30%	1.342	40%
2001	24%	1.350	32%
2000 and older	20%	1.361	27%

 

(5)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.153  SKI LIFT EQUIPMENT  (1) and (2) remain the same.

(3)  The depreciation schedules shall be determined by the life expectancy of the equipment and will normally compensate for the loss in value due to ordinary wear and tear, offset by reasonable maintenance, and ordinary functional obsolescence due to the technological changes during the life expectancy period.

 

DEPRECIATION TABLE FOR SKI LIFT EQUIPMENT

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2008	92%	1.000	92%
2007	84%	1.029	86%
2006	76%	1.085	82%
2005	67%	1.136	76%
2004	58%	1.221	71%
2003	49%	1.263	62%
2002	39%	1.285	50%
2001	30%	1.292	39%
2000	24%	1.303	31%
1999 and older	20%	1.327	27%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.034	87%
2007	76%	1.075	82%
2006	67%	1.133	76%
2005	58%	1.186	69%
2004	49%	1.275	62%
2003	39%	1.319	51%
2002	30%	1.342	40%
2001	24%	1.350	32%
2000 and older	20%	1.361	27%

 

(a)  The taxpayer must initially list with the department:

(i)  all equipment by year of installation; and

(ii)  installed costs of that equipment.

(b)  Each year thereafter, the taxpayer must list with the department:

(i)  all additions or deletions from the previous year's list, with installed cost.

(4)  This methodology is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.155  DEPRECIATION SCHEDULES  (1) remains the same.

(2)  The trended depreciation schedules for tax year 2009 2010 are listed below.  The categories are explained in ARM 42.21.156.  The trend factors are derived according to ARM 42.21.156 and 42.21.157.

 

CATEGORY 1

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2008	70%	1.000	70%
2007	45%	0.851	38%
2006	20%	0.810	16%
2005 and older	10%	0.773	8%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	70%	1.000	70%
2008	45%	0.932	42%
2007	20%	0.793	16%
2006 and older	10%	0.755	8%

 

CATEGORY 2

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2008	85%	1.000	85%
2007	69%	1.022	71%
2006	52%	1.016	53%
2005	34%	1.022	35%
2004 and older	20%	1.034	21%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.089	75%
2007	52%	1.112	58%
2006	34%	1.106	38%
2005 and older	20%	1.113	22%

 

CATEGORY 3

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2008	85%	1.000	85%
2007	69%	0.905	62%
2006	52%	0.908	47%
2005	34%	0.897	30%
2004 and older	20%	0.878	18%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	0.966	67%
2007	52%	0.873	45%
2006	34%	0.876	30%
2005 and older	20%	0.865	17%

 

CATEGORY 4

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2008	85%	1.000	85%
2007	69%	0.977	67%
2006	52%	0.966	50%
2005	34%	0.953	32%
2004 and older	20%	0.925	19%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	0.988	68%
2007	52%	0.966	50%
2006	34%	0.955	32%
2005 and older	20%	0.943	19%

 

CATEGORY 5

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2008	85%	1.000	85%
2007	69%	1.014	70%
2006	52%	1.034	54%
2005	34%	1.062	36%
2004 and older	20%	1.088	22%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.043	72%
2007	52%	1.057	55%
2006	34%	1.078	37%
2005 and older	20%	1.108	22%

 

CATEGORY 6

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2008	85%	1.000	85%
2007	69%	1.022	71%
2006	52%	1.058	55%
2005	34%	1.129	38%
2004 and older	20%	1.177	24%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.026	71%
2007	52%	1.048	54%
2006	34%	1.085	37%
2005 and older	20%	1.159	23%

 

 

 

CATEGORY 8

YEAR NEW/ACQUIRED		% GOOD		TREND FACTOR		TRENDED % GOOD
	2008		92%		1.000		92%
	2007		84%		1.021		86%
	2006		76%		1.050		80%
	2005		67%		1.084		73%
	2004		58%		1.125		65%
	2003		49%		1.134		56%
	2002		39%		1.145		45%
	2001		30%		1.152		35%
	2000		24%		1.165		28%
	1999 and older		20%		1.179		24%

 

YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.063	89%
2007	76%	1.086	83%
2006	67%	1.116	75%
2005	58%	1.152	67%
2004	49%	1.197	59%
2003	39%	1.206	47%
2002	30%	1.217	37%
2001	24%	1.225	29%
2000 and older	20%	1.239	25%

 

(3)  This rule is effective for tax years beginning after December 31, 2008 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

            REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.123.

 

42.21.158  PROPERTY REPORTING REQUIREMENTS  (1) remains the same.

(2)  If the aggregate market value of a person or business entity's class eight property on a statewide basis is $20,000 or less, the person or business entity is exempt from class eight taxation.  In order to determine whether individual taxpayers or business entities are below that threshold, the department will require all persons or business entities with an aggregate market value over $5,000 to report their class eight property for the 2006 tax year.  In subsequent years of the reappraisal cycle, the department will not require annual reporting for those taxpayers that have demonstrated they are below the $20,000 exemption threshold for the 2006 tax year, unless the person or business entity acquires new class eight property or a departmental review as provided in 15-8-104, MCA, indicates a need to report.  To ensure fair and accurate reporting of all taxable class eight property, the department may require all persons or business entities to report their class eight property periodically.  It is the department's current plan to require a report of all class eight property for tax year 2010 2011 and, if judged necessary, for additional future tax years at intervals to be determined.

(3) through (9) remain the same.

(10)  This rule is effective for tax years beginning after December 31, 2005 2009.

 

AUTH: 15-1-201, MCA

IMP: 15-1-303, 15-8-104, 15-8-301, 15-8-303, 15-8-309, 15-24-902, 15-24-903, 15-24-904, 15-24-905, MCA

 

            REASONABLE NECESSITY: The department is proposing to amend the rule by changing the year in which the department will require a report of all class eight property from tax year 2010 to tax year 2011.  Since the department has conducted ongoing personal property discovery, review and audits from the time this rule was written in 2006 to the present, delaying it would not have a significant negative impact. 

            The department is further amending the rule to delete the language in (2) that covers tax year 2006 because that language is no longer necessary.  That language was originally adopted to clarify the thresholds to be used for Class 8 property for tax year 2006 and subsequent tax years, as well as reporting requirements. 

            The remaining language is intended to inform taxpayers that the next full report of all Class 8 property will not occur until the 2011 tax year and then only if it is deemed necessary.

 

42.21.159  PROPERTY AUDITS AND REVIEWS  (1) through (3) remain the same.

(4)  The department will seek access to the following records for purposes of conducting the audits and reviews, pursuant to 15-8-304, MCA:

(a)  personal property returns on file in the department's field offices;

(b)  income statements, receipts of purchase, asset listings, asset registers, asset ledgers, purchase rental program agreements, and any information in the possession of the property owner or lessee which would reflect capital asset investment costs;

(c)  any depreciation schedules, age/life programs, asset life schedules, or capital asset investment recovery records in the possession of the commercial personal property taxpayer or his representative; and

(d)  any other information in the possession of the department and/or property owner or lessee which is necessary in order to conduct a thorough audit or review.

 

AUTH: 15-1-201, MCA

IMP: 15-8-104, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend the rule in order to implement the provisions of House Bill 487, (Ch. 343, L. 2009), passed by the 2009 Legislature, to include "purchase rental program agreements" as some of the documentation that will be required if an audit or review is conducted by the department.  This change conforms to the legislative changes made by House Bill 487.

 

42.21.160  DEFINITIONS  For purposes of this chapter the following definitions apply:

(1) through (3) remain the same.

(4)  "Dealer demonstration purchase incentive rental program" is a program operated by equipment dealerships where the equipment is owned by the dealer and held for sale.  The dealer is allowed to demonstrate rent the equipment to a single user on a short term basis as an incentive for sales of the equipment.

(5) through (9)(c) remain the same.

 

AUTH: 15-1-201, MCA

IMP: 15-6-138, 15-8-104, MCA

 

            REASONABLE NECESSITY:  The department is proposing to amend the rule in order to implement the provisions of House Bill 487, (Ch. 343, L. 2009), passed by the 2009 Legislature, which requires changes to 15-6-138, 15-6-202, and 15-24-301, MCA.  The proposed amendments are necessary to bring the rule terminology into compliance with that of the statutes.

 

42.21.162  PERSONAL PROPERTY TAXATION DATES  (1) remains the same.

(2)  In order to obtain an exemption for personal property, other than class eight property that is exempt under 15-6-138(4), MCA, freeport merchandise or business inventories that are exempt under 15-6-202, MCA, or intangible personal property that is exempt under 15-6-218, MCA, an application for exemption must be filed before March 1 of the year for which the exemption is sought. If the applicant acquires the personal property after January 1, they must submit an application for exemption:

(a)  by March 1;

(b)  within 30 days of acquisition of the property; or

(c)  within 30 days of receipt of an assessment notice, whichever is later.

(3) through (7)(b) remain the same.

 

AUTH: 15-1-201, MCA

IMP: 15-8-201, 15-16-613, 15-24-301, 15-24-303, MCA

 

            REASONABLE NECESSITY: The department is proposing to amend ARM 42.21.162 to clarify the references for exempt personal property.

 

42.22.1311  INDUSTRIAL MACHINERY AND EQUIPMENT TREND FACTORS  (1) through (2)(cj) remain the same.

            (3)  Tables 1 through 32 represent the yearly trend factors for each of the categories.

 

 

 

 

 

 

 

 

 

 

 

YEAR	TABLE 26	TABLE 27	TABLE 28	TABLE 29	TABLE 30
	Refrigeration	Rubber	Steam Power	Textile	Warehousing
2008	1.000	1.000	1.000	1.000	1.000
2007	1.032	1.029	1.036	1.025	1.026
2006	1.092	1.085	1.106	1.069	1.064
2005	1.145	1.129	1.164	1.109	1.101
2004	1.234	1.211	1.269	1.187	1.178
2003	1.279	1.254	1.316	1.222	1.219
2002	1.305	1.280	1.343	1.240	1.233
2001	1.315	1.283	1.347	1.245	1.238
2000	1.328	1.294	1.358	1.255	1.245
1999	1.354	1.314	1.379	1.274	1.268
1998	1.359	1.319	1.381	1.276	1.270
1997	1.373	1.333	1.391	1.286	1.274
1996	1.395	1.352	1.405	1.308	1.295
1995	1.420	1.377	1.428	1.326	1.306
1994	1.473	1.426	1.485	1.366	1.343
1993	1.512	1.460	1.516	1.401	1.388
1992	1.541	1.488	1.534	1.429	1.420
1991	1.559	1.503	1.541	1.446	1.440
1990	1.594	1.537	1.566	1.478	1.466
1989	1.637	1.580	1.608	1.516	1.500

 

YEAR	TABLE 26	TABLE 27	TABLE 28	TABLE 29	TABLE 30
	Refrigeration	Rubber	Steam Power	Textile	Warehousing
2009	1.000	1.000	1.000	1.000	1.000
2008	1.039	1.042	1.040	1.036	1.037
2007	1.084	1.083	1.090	1.072	1.073
2006	1.148	1.141	1.164	1.118	1.113
2005	1.203	1.188	1.226	1.160	1.152
2004	1.297	1.274	1.336	1.242	1.232
2003	1.344	1.319	1.385	1.278	1.276
2002	1.371	1.346	1.413	1.297	1.290
2001	1.382	1.350	1.418	1.302	1.295
2000	1.395	1.361	1.429	1.313	1.303
1999	1.423	1.382	1.452	1.332	1.327
1998	1.428	1.387	1.453	1.334	1.328
1997	1.443	1.402	1.464	1.345	1.333
1996	1.466	1.422	1.479	1.368	1.355
1995	1.492	1.449	1.503	1.387	1.367
1994	1.548	1.500	1.563	1.429	1.405
1993	1.589	1.535	1.596	1.466	1.452
1992	1.620	1.565	1.614	1.495	1.486
1991	1.638	1.581	1.622	1.513	1.507
1990	1.675	1.617	1.649	1.546	1.533

 

YEAR	TABLE 31	TABLE 32
	Woodworking	Glass Mfg.
2008	1.000	1.000
2007	1.023	1.033
2006	1.064	1.095
2005	1.104	1.154
2004	1.179	1.256
2003	1.215	1.305
2002	1.234	1.331
2001	1.245	1.338
2000	1.246	1.351
1999	1.267	1.376
1998	1.269	1.380
1997	1.274	1.391
1996	1.306	1.409
1995	1.319	1.433
1994	1.357	1.491
1993	1.403	1.525
1992	1.452	1.548
1991	1.480	1.557
1990	1.505	1.583
1989	1.545	1.623

 

YEAR	TABLE 31	TABLE 32
	Woodworking	Glass Mfg.
2009	1.000	1.000
2008	1.029	1.039
2007	1.062	1.087
2006	1.105	1.152
2005	1.147	1.215
2004	1.225	1.321
2003	1.262	1.374
2002	1.281	1.401
2001	1.293	1.408
2000	1.294	1.422
1999	1.316	1.448
1998	1.318	1.452
1997	1.324	1.464
1996	1.356	1.483
1995	1.370	1.508
1994	1.410	1.570
1993	1.458	1.605
1992	1.508	1.629
1991	1.537	1.638
1990	1.563	1.666

 

            AUTH:          15-1-201, MCA

            IMP:                15-6-138, 15-8-111, MCA

 

            REASONABLE NECESSITY:  The department is proposing to amend ARM 42.22.1311 to clarify through the trend tables how the department arrives at market value as required by 15-8-111, MCA. 

            Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property.  To determine the market value of industrial property, the department historically uses and adopts the concept of trending and depreciation.  The method by which trended depreciation schedules are derived is described in the existing rule, and that method is not being changed.

            The First Judicial District Court indicated in 1986 that the department must publish these trend tables annually and these amendments are in compliance with that order.

 

4.  Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing.  Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail [email protected] and must be received no later than December 4, 2009.

 

5.  Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

6.  An electronic copy of this Notice of Public Hearing is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes."  The department strives to make the electronic copy of this Notice of Public Hearing conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered.  In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

7.  The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the person in 4 above or faxed to the office at (406) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

8.  The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The primary bill sponsor for House Bill 487, Representative Walter NcNutt, was contacted on October 15, 2009, by electronic mail. 

 

 

/s/ Cleo Anderson                             /s/ Dan R. Bucks

CLEO ANDERSON                          DAN R. BUCKS

Rule Reviewer                                   Director of Revenue

 

Certified to Secretary of State October 19, 2009