Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

In the matter of the adoption of New Rule I (42.23.805), and New Rule II (42.26.313); amendment of ARM 42.23.107, 42.23.605, 42.26.201, 42.26.202, 42.26.206, 42.26.207, 42.26.234, 42.26.237, 42.26.241, 42.26.242, 42.26.244, 42.26.253, 42.26.254, 42.26.255, 42.26.256, 42.26.261, 42.26.262, 42.26.263, 42.26.264, 42.26.302, 42.26.303, 42.26.310, 42.26.311, and 42.26.312; amendment and transfer of ARM 42.23.414 (42.23.803); transfer of ARM 42.23.412 (42.23.801), 42.23.413 (42.23.802), and 42.23.415 (42.23.804); and repeal of ARM 42.23.105 and 42.26.305 relating to corporation license tax - general and corporate multistate activities

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NOTICE OF ADOPTION, AMENDMENT, AMENDMENT AND TRANSFER, TRANSFER, AND REPEAL

TO: All Concerned Persons

1. On June 23, 2011, the department published MAR Notice No. 42-2-863 regarding the proposed adoption, amendment, amendment and transfer, transfer, and repeal of the above-stated rules at page 1107 of the 2011 Montana Administrative Register, Issue No. 12.

2. A public hearing was held on July 21, 2011, to consider the proposed adoption, amendment, amendment and transfer, transfer, and repeal. Oral and written testimony received at and following the hearing is summarized as follows along with the department's responses to the comments:

COMMENT NO. 1: Nancy Higgins Schlepp, President of the Montana Taxpayers Association, appeared and testified at the hearing and also provided written comments on New Rule I, stating that the new rule is an improper limitation on net operating loss (NOL) deductions and would be a significant and improper tax policy shift. She further commented that this approach ignores the underlying theory of combined reporting and the department's proposed revisions to ARM 42.23.414.

RESPONSE NO. 1: The department appreciates Ms. Schlepp's interest and comments on New Rule I. The proposal to adopt New Rule I is in response to concerns expressed by both taxpayers and department personnel about the administrative complexity of recalculating net operating losses for tax periods in which a change in filing methods has occurred. It is, and has been, the department's policy and practice that when applying a NOL deduction, the filing method used to calculate the loss must be the same filing method used to calculate the income to which the loss is being applied. This established practice helps ensure that losses are calculated on a consistent accounting basis. It also improves tax equity among taxpayers by preventing some taxpayers from manipulating filing methods to gain a tax advantage at the expense of the majority of other taxpayers.

In implementing this practice, the department has required the restatement, or recalculation, of the loss year to the same filing method used to calculate the income to which the loss is applied. This policy is reflected in New Rule I (3).

The department respectfully disagrees that New Rule I ignores the underlying theory of combined reporting and the department's proposed revisions of ARM 42.23.414. New Rule I addresses the filing method to be used in calculating and applying the net operating loss deduction, i.e. under what circumstances the loss must be restated to a different filing method. ARM 42.23.414 addresses the application of the loss (after the application of New Rule I determining the correct filing method), i.e. each member of a group must calculate its individual share of the loss. So, for instance, if it is determined under the provisions of New Rule I that a net operating loss must be restated to a worldwide combined unitary basis, under ARM 42.23.414, that loss must be apportioned individually to each member of the group with Montana activity. The loss will be calculated on a unitary combined basis, but each member of the group with Montana activity will calculate its individual share of that loss.

COMMENT NO. 2: Ms. Schlepp further commented on New Rule I regarding her concern of how an acquisition of a group of companies would be treated if one or more companies within such group had net operating losses and filed returns under a different filing method than the purchasing group of companies.

RESPONSE NO. 2: The department reiterates that New Rule I only applies to situations where there is a change in filing method. For example, if a company files a separate company, nonunitary return, and in a subsequent year files a combined unitary return with its affiliated group, any losses sustained during the separate company filings must be restated to a unitary combined basis before being applied to the years filed under a unitary combined basis.

New Rule I does not apply to situations in which a change of ownership has occurred. Assume for example that a company incurs a net operating loss in a year in which it files a separate company return. The following year, the company is acquired and included in a unitary combined filing. Because there was a change in ownership, the loss would be available for carry back and carry forward to offset the company's Montana taxable income calculated on a unitary combined basis; no recalculation of the loss is required.

The filing of state returns under the unitary, water's edge or separate company methods is not a federal issue and, consequently, is not addressed in the Internal Revenue Code or federal regulations. The issue is entirely a matter of state law (see, for example, Title 15, chapter 31, part 3, MCA). Thus, the department believes it is appropriate to address the net operating loss deduction issues associated with changes in filing method in its administrative rules.

COMMENT NO. 3: Ms. Schlepp stated that on page 1108 of the rules notice under the reasonable necessity, the department states that, "The department is proposing to adopt New Rule I in response to concerns expressed by taxpayers and department personnel about the administrative complexity of recalculating net operating losses for tax periods in which changes in filing methods occurred. This proposed new rule simplifies the net operating loss calculation for multinational taxpayers." However, the last sentence on the same page regarding New Rule I(3) states, "This language reflects current department practice and is included to inform the public of that practice." Ms. Schlepp commented that these two excerpts seem contradictory to each other.

William Gregory Turner, Tax Counsel, Council on State Taxation, also provided written comments on New Rule I, including one that is similar in nature to Ms. Schlepp's comment in No. 1 above. Mr. Turner stated that the reasonable necessity is a response to concerns raised by taxpayers and the department about the administrative complexity of recalculating net operating losses for tax periods in which changes in filing methods occur. Mr. Turner pointed out that if taxpayers have raised concerns that the calculation of the carryover NOL is too administratively complex, it could not also be true that the department's current practice is to summarily deny the carryover as the regulation proposes to do.

RESPONSE NO. 3: The department appreciates Ms. Schlepp and Mr. Turner's interest and comments on this proposed rulemaking action. However, the department does not believe that the statements referenced above are contradictory. They are, in fact, separate statements that refer to two different sections of the proposed rule. The first excerpted language referenced addresses the proposed change in department policy addressing the limited situations when a taxpayer is changing to or from a water's-edge filing period to a non-water's-edge filing period. This change in policy is addressed in (2) of the new rule.

The second excerpt, ("This language reflects current department practice and is included to inform the public of that practice.") is in reference to (3) of the new rule. This is current department practice and deals with situations when there is a change in filing method from the year a net operating loss is incurred to a year when the loss is to be deducted. (See also Response No. 1 above). For example, if a company files a separate company, nonunitary return, and in a subsequent year files a combined unitary return with its affiliated group, any losses sustained during the separate company filings must be restated to a unitary combined basis before being applied to the years filed under a unitary combined basis.

COMMENT NO. 4: Mr. Turner further commented that if a taxpayer determines that claiming the NOL deduction is too administratively complex to be cost effective, it would simply not claim the deduction.

RESPONSE NO. 4: The department is not proposing to eliminate the net operating loss deduction afforded taxpayers under 15-31-119, MCA. Current application of net operating loss deductions when a taxpayer is changing to or from a water's-edge filing period to a non-water's-edge filing period has proven to be exceedingly difficult to administer and calculate for both taxpayers and the department. The department is proposing to allow application of these losses in a manner to simplify the deduction calculation and to ensure equitable allocation and apportionment of the taxpayer's income. These public policy goals justify the proposed rules.

COMMENT NO. 5: Mr. Turner comments that the reasonable necessity suggests that under the proposed rule it would be appropriate to deny an NOL carryover whenever a corporate structure changes, regardless of the taxpayer's filing method.

RESPONSE NO. 5: The department believes that New Rule I is clear, in that the only time the net operating loss deduction would be applied in this way is when there is a change to or from the water's-edge filing method. Again, as referred to in Response No. 4, the department is proposing to allow application of these losses in a manner to ensure equitable allocation and apportionment of the taxpayer's income.

COMMENT NO. 6: Ms. Schlepp and Mr. Walt Kero, Tax Director and Shareholder, Junkermier, Clark, Campanella, Stevens PC, submitted comments stating objections to New Rule II. Each questioned why an acquired corporation would not be allowed to elect out of a water's-edge election.

RESPONSE NO. 6: The department appreciates the comments to New Rule II and interest in this proposed rulemaking action. Electing out of a water's-edge election, as proposed by Ms. Schlepp and Mr. Kero is contrary to existing Montana law. Pursuant to 15-31-324(1), MCA, "A water's-edge election may be made by a taxpayer and is effective only if every affiliated corporation subject to the taxes imposed under this chapter consents to the election. Consent by the common parent of an affiliated group constitutes consent of all members of the group. An affiliated corporation that becomes subject to taxes under this chapter after the water's-edge election is considered to have consented to the election."

Consequently, when an acquired corporation becomes part of the water's-edge combined group, it is considered to have consented to the election.

COMMENT NO. 7: Ms. Schlepp, Mr. Turner, and Mr. Kero also asked, "Why should an existing waters' edge taxpayer that survives reorganization have the water's-edge election apply to the new affiliated group?"

RESPONSE NO. 7: A water's-edge taxpayer cannot opt out of the election because of a reorganization. If the water's-edge taxpayer survives a reorganization, the election follows over to the new affiliated group. Pursuant to 15-31-324(3), MCA, a water's-edge election can only be changed with permission of the department. The practice reflected in New Rule II arrives at the most equitable allocation of income. In addition, it has been the department's experience that the proposed language reflects the preferred method of water's-edge taxpayers.

COMMENT NO. 8: Mr. Turner commented that New Rule II(2) appears inconsistent with the required consent of the other affiliates or the common parent provided for in 15-31-324, MCA.

RESPONSE NO. 8: The department appreciates Mr. Turner's comment, however, respectfully disagrees that New Rule II(2) is inconsistent with 15-31-324(1), MCA. Section 15-31-324(1) reads, in relevant part, "an affiliated corporation that becomes subject to taxes under this chapter after the water's-edge election is considered to have consented to the election." The department believes it is unfair to take away the perfected election of a Montana taxpayer because they are purchased or otherwise acquired by an entity that, prior to the purchase, had no taxable activity in Montana.

COMMENT NO. 9: Ms. Schlepp and Mr. Kero provided comments objecting to the amendment of ARM 42.23.107, with respect to the change of the gross income definition. Ms. Schlepp further stated that the amendment is more than a clarification of statute, that it expands current law and that it should be addressed legislatively.

RESPONSE NO. 9: The department respectfully disagrees with Ms. Schlepp and Mr. Kero on their interpretation of the proposed amendment to ARM 42.23.107. The department is not proposing to expand the definition of gross income. On the contrary, the department's proposed amendment is to delete the definition of "gross income" out of ARM 42.23.107 altogether and rely directly on the language of the law.

ARM 42.23.107(1) states "the following definitions apply to rules found in this chapter." Because the term "gross income" is no longer used in Chapter 23 of the administrative rules, the department is proposing to amend ARM 42.23.107 to remove the definition.

"Gross income" is already defined in 15-31-113, MCA. As stated in 2-4-305(2), MCA, a rule should not repeat statutory language. The department's proposed amendment brings the rule, as amended, into direct compliance with this statute. The department will rely upon and directly apply the current law as written by the Legislature. Relying on the exact language of the statute does not constitute an expansion of current law.

COMMENT NO. 10: Mr. Kero and Ms. Schlepp further commented that the rulemaking authority for ARM 42.23.107 was incorrect and that it seemed irrelevant to applying a definition change to all corporations.

RESPONSE NO. 10: The department reiterates its response to comment No. 9, in that there is no change to the definition of gross income being proposed. Regarding the authoritative cite, ARM 42.23.107 was adopted, in 1982, under the stated rulemaking authority. No changes are being proposed at this time to this cite. The department finds the cite to be correct.

COMMENT NO. 11: Mr. Kero and Ms. Schlepp commented on the proposed amendment to ARM 42.23.605, stating their opinion that interest should be paid on amended returns where tax credits are claimed for the year of amendment.

RESPONSE NO. 11: The department does not pay interest on refunds resulting from amended returns filed claiming a tax credit. In these situations, there is no change to either Montana taxable income or the tax liability before payments and credits. The taxpayer's failure to claim a tax credit on the original return as filed is treated the same as a taxpayer's failure to claim a payment on the original return. Refunds resulting from unclaimed payments similarly do not include interest, but are issued in a timely manner after receiving the claim.

COMMENT NO. 12: Ms. Schlepp and Mr. Kero provided written comment on the proposed amendment to ARM 42.26.202. In their comments, each expressed a concern that the definition of "gross receipts" is broader than the statute intended. Mr. Kero states that under 15-31-501(2), MCA, if a term is not defined in the MCA chapter on taxation, the term has the same meaning as it does when used in a comparable context in the Internal Revenue Code. He commented that the definition of "gross receipts" cannot be defined or determined by administrative rule.

RESPONSE NO. 12: The department appreciates these comments; however, the term "gross receipts" is not defined in statute. As explained in the reasonable necessity statement in the proposal notice for amendments to ARM 42.26.202, the department is proposing to amend the rule to provide improved guidance for corporate taxpayers in reporting complex business transactions and circumstances. The existing brief definition does not adequately account for evolving situations occurring in today's complex global economy.

ARM 42.26.202 addresses "gross receipts" in the context of the sales apportionment factor for multistate corporate taxpayers. There is no comparable definition in the Internal Revenue Code for "gross receipts" in this context. Federal tax law does not contain any provisions addressing apportionment of income for state tax purposes. This is a state issue for corporations conducting business in more than one state. The department believes the proposed definition provides improved guidance on what constitutes a gross receipt with respect to the sales factor in the context of contemporary business conditions and also achieves greater consistency with other states for multistate taxpayers.

COMMENT NO. 13: Ms. Schlepp further commented that the following sentence, which is included in the Multistate Tax Commission's (MTC) definition of "gross receipts," has been excluded from the department's proposed definition. She strongly objects to the omission and has requested an explanation for the omission of the following sentence: "Amounts realized on the sale or exchange of property are not reduced for the cost of goods sold or the basis of the property sold."

RESPONSE NO. 13: With regard to the sentence Ms. Schlepp refers to, it is being proposed to be deleted because it is in conflict with the long-standing provision of ARM 42.26.259, which provides for receipts to be included at net for the sale or exchange of certain tangible or intangible property. The department does not find any policy basis for departing from the established practice in ARM 42.26.259.

COMMENT NO. 14: Ms. Schlepp requested clarification of ARM 42.26.202(11)(b)(x) with an example.

RESPONSE NO. 14: The department appreciates Ms. Schlepp's suggestion that an example may help clarify the intent of the proposed amendments to ARM 42.26.202, and has provided an example below. If a taxpayer enters into transactions to exchange inventory, the only amounts to be included in the sales apportionment factor would be the net amounts of payments received in excess of any net payments made during the year as part of these transactions. There are times when a taxpayer will enter into a contract to exchange inventory with a third party for various reasons, i.e. to maintain supply of inventory at certain locations, or to ensure supply of unfinished product at refineries or manufacturing facilities.

For example, there are many times when these agreements are comprised of several transactions in a given tax period between the taxpayer and an unrelated party. Including the gross receipts from each of these individual transactions merely exchanging inventory misrepresents the true sales activity of the taxpayer.

The department is proposing the amendments to ARM 42.26.202 whereby only the net receipts from these transactions will be included in the sales apportionment factor calculation; when the inventory is ultimately sold, rather than exchanged, to a customer of the taxpayer, the gross receipts from the sale of inventory will be included in the sales apportionment factor. This is consistent with current department practice.

COMMENT NO. 15: Ms. Schlepp also inquired about the treatment of intangible property under ARM 42.26.202(11)(b)(x).

RESPONSE NO. 15: To the extent the intangible property constitutes "inventory" to the taxpayer, and the taxpayer is engaged in exchanges of this inventory, only the net amounts of payments received in excess of net payments made during the year as a result of the exchanges would be included in the sales apportionment factor. For situations that include the sale of intangible property not held primarily for sale to customers in the ordinary course of the taxpayer's trade or business, taxpayer's are referred to ARM 42.26.259.

COMMENT NO. 16: Ms. Schlepp requested that the language in ARM 42.26.202(11)(b)(x) be rephrased for clarification.

RESPONSE NO. 16: The department has attempted to provide the necessary clarity Ms. Schlepp is seeking with the responses to Comment No.14 and Comment No.15. The department further reviewed the wording in ARM 42.26.202(11)(b)(x), and concluded that the current wording communicates the required calculations to taxpayers precisely, and that rephrasing it could reduce that precision. Again, the department is hopeful that the earlier responses in Comment No.14 and Comment No.15, provide the necessary clarity to this rule.

COMMENT NO. 17: Ms. Schlepp commented that the term "to contribute materially" is not used anywhere in the statutes, current, or proposed rules.

RESPONSE NO. 17: The department agrees with Ms. Schlepp and will further amend ARM 42.26.202 to remove this definition from the originally proposed amendments.

COMMENT NO. 18: Ms. Schlepp and Mr. Kero provided comments to the proposed amendments to ARM 42.26.206 and further requested the department provide an example of property being converted from business to nonbusiness use.

RESPONSE NO. 18: The department appreciates this suggestion and is pleased to provide Ms. Schlepp and Mr. Kero with the following example: Assume that a combined group had a subsidiary that was not part of its unitary operations. Assume also, that an asset that had been used in the unitary operations, for example a delivery truck, was transferred to the nonunitary subsidiary to be used in its business activities. This would be an asset being converted to a nonbusiness use.

If the delivery truck is sold the year after it was transferred out of the unitary group, any gain on the sale would be considered business income subject to apportionment by the unitary group. If the delivery truck is held by the nonunitary subsidiary for five years or more, as prescribed in ARM 42.26.232(3), before it is sold, the gain on the sale would be correctly classified as nonbusiness income.

COMMENT NO. 19: Mr. Kero commented with a concern that the proposed amendment to ARM 42.26.206 used broad statements such as "the classification of income by labels occasionally used, such as manufacturing income, compensation for services … is of no assistance in determining whether income is business or nonbusiness income."

RESPONSE NO. 19: The language Mr. Kero cites above and comments on is not new language in ARM 42.26.206. The department is moving this language from ARM 42.26.206(3) to ARM 42.26.206(2). As stated in the reasonable necessity, the department is proposing changes reflective of our current practices and to reflect the outcome of the Montana Supreme Court's decision in Gannett Satellite Information Network, Inc. v. State of Montana, Department of Revenue.

COMMENT NO. 20: Mr. Kero further commented that he disagrees with the dismissal of terms used for federal income tax purposes for determining whether income is business or nonbusiness.

RESPONSE NO. 20: ARM 42.26.206 addresses "business income" and "nonbusiness income" in the context of apportionment or allocation of income for multistate corporate taxpayers. There is no comparable definition in the Internal Revenue Code for "business income" or "nonbusiness income" in this context. Federal tax law does not contain any provisions addressing apportionment or allocation of income amongst the states. This is a state issue for corporations conducting business in more than one state and is governed by state law (see, for example, 15-31-301, MCA). The department believes the expanded definitions provide improved guidance as well as consistency with other states for multistate taxpayers.

COMMENT NO. 21: Ms. Schlepp commented on the proposed amendment to ARM 42.26.208(4), stating that she believes that the department lacks the necessary authority to adopt the proposed amendments to this rule.

RESPONSE NO. 21: The department respectfully disagrees with Ms. Schlepp's interpretation of the proposed amendment. Section 15-31-313, MCA, provides direct statutory authority for the department to adopt regulations that pertain to the allocation and apportionment of multistate income – the types of situations that this rule is intended to address. For instance, the department often encounters situations where a multistate taxpayer may exclude from its combined filing the income of a related subsidiary or parent corporation. In addition, another member of the combined group then deducts from apportionable income an expense paid to this same related subsidiary or parent corporation. This has the effect of reducing apportionable income by an item that would normally have been an intercompany wash. The adoption of this amendment to the rule is appropriate and deemed necessary to provide for the proper allocation and apportionment of business income under Title 15, chapter 31, MCA.

COMMENT NO. 22: Ms. Schlepp commented on the proposed amendment to ARM 42.26.261, stating that the amendment is a departure from current department practice. She further stated that the rule does not create confusion as claimed in the reasonable necessity.

RESPONSE NO. 22: The department believes the standard found in 15-31-312, MCA, is clear. There have been numerous situations since the adoption of ARM 42.26.261, in 1977, where both taxpayers and the department have agreed that the provisions of 15-31-312, MCA, should be applied even though there were no unusual fact situations. In other words, 15-31-312, MCA, has been historically invoked by taxpayers and the department to more accurately reflect the extent of a taxpayer's business activity in this state but, when doing so, focusing upon activities that were recurring and ordinary in nature.

This proposed rule amendment does not mean, however, that an unusual or nonrecurring item could not give rise to the application of the relief provision. Rather, the proposed amendment simply intends to clarify that a taxpayer or the department may invoke the relief provision to more accurately represent the business activity of a multistate enterprise occurring within this state – without regard to the regularity or frequency of the item at issue. The plain language statute fully supports this application; consequently, the department believes the language in ARM 42.26.261(1) should be removed.

COMMENT NO. 23: Ms. Schlepp commented on the proposed amendment to ARM 42.23.414, asking how that proposed language and the proposed language in New Rule I reconcile as they seem contradictory.

RESPONSE NO. 23: New Rule I addresses the calculation of the loss for the entire group and provides guidance for the filing method to be used and under what circumstances the loss must be restated to a different filing method.

ARM 42.23.414 addresses the method of assigning the entire loss to each individual member of the combined group (after the application of New Rule I determining the correct filing method). So, for instance, if it is determined under the provisions of New Rule I that a net operating loss must be restated to a worldwide combined unitary basis, under ARM 42.23.414, that loss must be apportioned individually to each member of the group with Montana activity. The loss will be calculated on a unitary combined basis, but each member of the group with Montana activity will calculate its individual share of that loss.

3. Based on the comments received and further review, the department further amends New Rule I (ARM 42.23.805), ARM 42.26.202, 42.26.206, and 42.26.208, as follows, stricken matter interlined, new matter underlined:

NEW RULE I (42.23.805) TREATMENT OF NET OPERATING LOSSES SPANNING A CHANGE IN REPORTING METHODS (1) through (3) remain as proposed.

AUTH: 15-31-313, 15-31-501 MCA

IMP: 15-31-119, ~~15-31-312, 15-31-322,~~ MCA

42.26.202 DEFINITIONS The following definitions apply to this subchapter:

(1) through (23) remain as proposed.

(24) "To contribute materially" includes, without limitation, "to be used operationally in the taxpayer's trade or business." Whether property materially contributes is not determined by reference to the property's value or percentage of use. If an item of property materially contributes to the taxpayer's trade or business, the attributes, rights, or components of that property are also operationally used in that business.

(25) remains as proposed but is renumbered (24).

AUTH: 15-1-201, 15-31-313, 15-31-501, MCA

IMP: 15-1-601, 15-31-301, 15-31-302, 15-31-303, 15-31-304, 15-31-305, 15-31-306, 15-31-307, 15-31-308, 15-31-309, 15-31-310, 15-31-311, 15-31-312, 15-31-321, 15-31-322, 15-31-323, 15-31-324, 15-31-325, 15-31-326, MCA

42.26.206 BUSINESS AND NONBUSINESS INCOME DEFINED

(1) through (4) remain as proposed.

AUTH: 15-1-201, 15-31-313, 15-31-501, MCA

IMP: 15-1-601, 15-31-302, ~~15-31-301,~~ MCA

42.26.208 ALLOCATION OF INCOME AND DEDUCTIONS (1) through (3) remain as proposed.

(4) If two or more entities, whether or not organized or doing business in this state, are owned or controlled directly or indirectly by the same interest, the taxpayer may petition for or the department may require adjustments that distribute, apportion, or allocate gross income or deductions between or among such entities~~, if it determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes, or~~ to fairly represent the income of any such entities.

AUTH: 15-1-201, 15-31-313, 15-31-501, MCA

4. Therefore, the department adopts New Rule I (42.23.805) and amends ARM 42.26.202, 42.26.206, and 42.26.208 with the amendments listed above, and adopts New Rule II (42.26.313); amends ARM 42.23.107, 42.23.605, 42.26.201, 42.26.207, 42.26.234, 42.26.237, 42.26.241, 42.26.242, 42.26.244, 42.26.253, 42.26.254, 42.26.255, 42.26.256, 42.26.261, 42.26.262, 42.26.263, 42.26.264, 42.26.302, 42.26.303, 42.26.310, 42.26.311, and 42.26.312; amends and transfers ARM 42.23.414 (42.23.803); transfers ARM 42.23.412 (42.23.801), 42.23.413 (42.23.802), and 42.23.415 (42.23.804); and repeals ARM 42.23.105 and 42.26.305 as proposed.

5. 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.

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

CLEO ANDERSON DAN R. BUCKS

Rule Reviewer Director of Revenue

Certified to Secretary of State September 12, 2011