BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the adoption of New Rule I, amendment of ARM 42.20.432, and repeal of ARM 42.20.172 relating to validating sales information and extension of statutory deadline for assessment reviews

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION, AMENDMENT, AND REPEAL

 

TO:  All Concerned Persons

 

1.  On September 19, 2011, 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 adoption, amendment, and repeal 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., September 12, 2011, 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) 444-4375; or e-mail [email protected].

 

3.  The proposed new rule does not replace or modify any section currently found in the Administrative Rules of Montana.  The proposed new rule provides as follows:

 

NEW RULE I  STATUTORY DEADLINE FOR ASSESSMENT REVIEWS

(1)  For the current reappraisal cycle, tax years 2009-2014, the department will accept requests for informal assessment reviews (Form AB-26) for classes three, four, and ten.  The owner of any land and/or improvements who had not previously submitted a request for an informal review of their 2009 assessment notice and who is dissatisfied with the valuation may request an informal review of the assessment notice by submitting a request for informal review form (Form AB-26) to the local Department of Revenue office in the county in which the property is located, on or before the first Monday in June of the current tax year, or within 30 days of the receipt of an assessment notice to be considered for the current tax year.

(2)  For taxpayers who do not file on or before the first Monday in June of the current tax year, or within 30 days of receipt of an assessment notice, the informal review will be considered for the following year.

(3)  Any adjustments to taxable value will be reflected only in the tax year timely filed and ensuing years.  There will be no retroactive adjustments to the taxable value for years prior to the accepted filing date.

(4)  For subsequent reappraisal cycles, beginning in tax year 2015, taxpayers may file an informal assessment review in any year of the cycle, but only one time during a cycle unless the department determines that a change in value occurred and the taxpayer receives a new assessment notice during the cycle.

 

AUTH: 15-1-201, MCA

IMP: 15-7-102, MCA

 

REASONABLE NECESSITY:  The department is proposing to adopt New Rule I following the passage of Chapter 399, L. 2011, by the Legislature, which allows for the taxpayer to file an informal review (Form AB-26) with the department once in any year of the reappraisal cycle.

Chapter 399 has an effective date of July 1, 2012.  However, the department proposes the implementation of New Rule I at this time to reflect the general intent of the legislation.  By enacting New Rule I, the department simplifies the law for taxpayers and expands the property taxpayers' opportunity to file an informal review during this reappraisal cycle and subsequent cycles.  The current reappraisal cycle began January 1, 2009, and will end December 31, 2014.  The subsequent cycle will begin January 1, 2015, and will end December 31, 2020.

 

4.  The rule proposed to be amended provides as follows, stricken matter interlined, and new matter underlined:

 

42.20.432  PROCEDURE FOR VALIDATING SALES INFORMATION

(1) and (2) remain the same.

(3)  The department shall consider the following sales in distressed markets if the following foreclosure related transactions comprise more than 20 percent of sales in a specific market area for model calibration and ratio studies, in accordance with the International Association of Assessing Officers (IAAO) standards:

(a)  Real Estate Owned (REO) sales involving financial institutions as seller if:

(i)  represented and marketed as an REO listing with a real estate listing service;

(ii)  exposed for sale in the open market for a reasonable amount of time; and

(iii)  verified as an REO sale.

(iv)  the sales comprise more than 20 percent of sales in a specific market area; and

(v)  changes in property characteristics are accounted for in model calibration and ratio studies.

(b)  auction sales if:

(i)  the auction was well advertised;

(ii)  the auction was well attended;

(iii)  the seller had a minimum bid or the right of refusal on all bids; and

(iv)  the sales are not from absolute auctions that do not have a low bid clause or right of refusal and are advertised as such type of auctions.

(c)  short sales if:

(i)  represented and marketed as a short sale with a real estate listing service;

(ii)  exposed for sale in the open market for a reasonable amount of time; and

(iii)  verified as a short sale.

(4)  The following sales will not be considered in distressed markets:

(a)  vandalized property; and

(b)  forced sales resulting from a judicial order, i.e., when the seller is either a sheriff, receiver, or other court officer.

(3) remains the same but is renumbered (5).

 

AUTH: 15-1-201, MCA

IMP: 15-7-111, MCA

 

REASONABLE NECESSITY:  The department proposes to amend ARM 42.20.432 in response to a public discussion with the 2011 Legislature, Senate Tax Committee, concerning SB 295 (Ch. 399, L. 2011).  The discussion was that if they included the authorization for distressed sales in the information reported on the Realty Transfer Certificates (RTC), the department would then use its statutory authority to implement a rule consistent with the International Association of Assessing Officers (IAAO) nationally recognized industry standards for the inclusion of distressed sales in the valuation process.  IAAO standards are developed under the umbrella of the Uniform Standards of Professional Appraisal Practice (USPAP), specifically, mass appraisal standard 6.  The proposed amendments to ARM 42.20.432 implement that understanding.

The only nationally recognized standards for distressed sales are those promulgated by the IAAO.  Current rule language contained in ARM 42.20.432 does not consider the IAAO standard for sales in distressed markets when the department values property using the sales comparison methodology.  By amending the language to reference the IAAO standards, the department will be valuing property using the sales comparison methodology.

The proposed amendments to ARM 42.20.432 will provide the public with a better understanding of what the IAAO distressed market standards are, and when the department would use these standards in their market analysis.

Furthermore, these distressed sales standards implement Ch. 399 as enacted by the Legislature.

 

5.  The department proposes to repeal the following rule:

 

42.20.172  EXTENSION OF STATUTORY DEADLINE FOR ASSESSMENT REVIEWS which can be found on page 42-2027 of the Administrative Rules of Montana.

 

AUTH: 15-1-201, MCA

IMP: 15-7-102, MCA

 

REASONABLE NECESSITY:  The department proposes to repeal ARM 42.20.172 following the passage of Chapter 399, L. 2011 by the Legislature.  ARM 42.20.172 limits the filing of AB-26s for the current reappraisal cycle to June 30, 2010.  Chapter 399, L. 2011, allows for the taxpayer to file an informal review (Form AB-26) with the department in any year of the reappraisal cycle.  Therefore, because Ch. 399 renders ARM 42.20.172 obsolete, repealing this rule will simplify the law for taxpayers and disencumber the informal review filing process.  The current reappraisal cycle began January 1, 2009, and will end December 31, 2014.

 

6.  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) 444-4375; or e-mail [email protected] and must be received no later than September 23, 2011.

 

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

 

8.  An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov.  Locate "Legal Resources" in the left hand column, select the "Rules" link and view the options under the "Notice of Proposed Rulemaking" heading.  The department strives to make the electronic copy of this notice 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.

 

9.  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 6 above or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

10.  The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The primary bill sponsor, Senator Bob Lake, was notified by e-mail on August 3, 2011, and subsequently by e-mail on August 12, 2011.

 

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

CLEO ANDERSON                        DAN R. BUCKS

Rule Reviewer                                 Director of Revenue

 

Certified to Secretary of State August 15, 2011