BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.19.401, 42.19.402, 42.19.405, 42.19.501, 42.19.502, 42.19.503, 42.19.506, and repeal of ARM 42.19.406 pertaining to property tax assistance programs

) ) ) ) ) )

NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT AND REPEAL

 

TO: All Concerned Persons

 

1. On October 15, 2015, at 10:30 a.m., the Department of Revenue will hold a public hearing in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana, to consider the proposed amendment and repeal of the above-stated rules. The conference room is most readily accessed by entering through the east doors of the building facing Sanders Street.

 

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, advise the department of the nature of the accommodation needed, no later than 5 p.m. on October 5, 2015. Contact Laurie Logan, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail [email protected].

 

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

 

42.19.401 PROPERTY TAX ASSISTANCE PROGRAM (PTAP) (1) The property owner of record or the property owner's agent must make annual application to the local department office, in order to receive the PTAP benefit provided for in 15-6-134 15-6-302, MCA.

(2) The benefit is administered through a reduction in taxable value reduced property tax rate that applies to the first $100,000 $200,000 or less of the taxable market appraised value of the applicant's residential real property any improvement on real property, including trailers, manufactured homes, or mobile homes, and appurtenant land not exceeding 5 acres owned or under contract for deed and actually occupied for at least 7 months a year as the primary residential dwelling of one or more qualified applicants. The 7-month occupancy requirement does not apply to an otherwise qualified applicant who lives in a nursing home or long-term care facility. The property must be owned by the applicant, or be under contract for deed, and be used as the applicant's primary residence.

(3) For purposes of this benefit, the appurtenant land not exceeding 5 acres shall not include any separately described or assessed parcels of land, regardless of whether the parcel is contiguous with or adjacent to the parcel upon which the primary residence is located, unless the primary residence is a mobile home or manufactured home that is assessed separately from the land. In which case, the benefit will apply to the land upon which the primary residence is located only if the land and the mobile home are owned by the applicant.

(4) An application must be filed, on or before April 15 of the year for which the benefit is sought, on a form available from the local department office. Applications postmarked after April 15 will be considered for the following tax year.

(5) The department may waive the April 15 deadline if the applicant:

(a) participated in the program in the prior year;

(b) was unable to apply for the current year due to hospitalization, physical illness, infirmity, or mental illness, and can demonstrate:

(i) one or more of the impediments, while not necessarily continuous, existed at sufficient levels between January 1 and April 15 of the tax year in which the applicant is applying, that prevented timely filing of the application; or

(ii) confusion caused by the infirmity may have prevented timely filing of the application.

(6) The department may waive the April 15 deadline on a case-by-case basis, if the applicant:

(a) qualified for the program in the prior year; and

(b) submits a written statement, plus any documents explaining any circumstances not identified in (5) that prevented timely filing of the application.

(7) The department may waive the April 15 deadline on a case-by-case basis if the applicant:

(a) did not previously participate in the PTAP;

(b) meets the requirements of (5) or (6); and

(c) provides a completed application that is submitted or postmarked no later than July 1 of the year for which benefit is sought.

(8) Willful misrepresentation of facts pertaining to income or the impediments that prevent timely application filing will result in the automatic rejection of the application.

(9) The applicant is required to list total household income from all sources, excluding losses, depletion, and depreciation. Total household income includes the income that is attributable to all owner occupants who occupied the property as their primary residence 7 months of the preceding calendar year.

(10) Total household income includes, but is not limited to:

(a) wages, salaries, and tips;

(b) taxable interest;

(c) ordinary and qualified dividends;

(d) alimony received;

(e) capital gains;

(f) other gains;

(g) taxable refunds, credits, or offsets of state and local income taxes;

(h) business and/or farm income excluding losses, depreciation, and depletion;

(i) taxable amounts of IRA distributions, pensions, and annuities;

(j) rent, royalty, partnership, S corporation, and trust income before subtracting losses, depletion, or depreciation;

(k) unemployment compensation;

(l) taxable amounts of social security benefits; and

(m) other income reported or reportable on the tax return or returns required by Title 15, chapter 30 or 31 of the Montana Code Annotated.

(11) The department requires specific documentation if the applicant:

(a) files an income tax return, a copy of the Montana state income tax return must be attached to the application;

(b) qualifies for an extension of time to file their income tax return, the applicant must indicate this on the application and, no later than October 25, provide a copy of their completed income tax return for the tax year immediately preceding the year of the application; or

(c) is not required to file an income tax return, they must complete the appropriate portion of the application and submit documentation, that identifies the reported income, as defined in (9). Examples of acceptable documentation include, but are not limited to:

(i) social security statements;

(ii) pension statements; or

(iii) bank statements.

(12) The department will advise the applicant of its decision in writing. The date the taxpayer receives the department's determination shall be calculated by adding 7 days to the date on the determination letter. An applicant aggrieved by the department's determination may appeal the determination to the State Tax Appeal Board within 30 days of receipt as defined in this section.

(13) The PTAP benefit is not available when a qualified applicant purchases a dwelling after the application deadline for the tax year in which the application is submitted. In this situation, the department will consider the application for the following year.

(14) The PTAP benefit is not available when a qualified applicant sells the dwelling. The tax benefit does not transfer to the new owner and the new owner is responsible for the proration of the taxes from the date of sale.  

(3) A taxpayer's primary residence is a dwelling in which the taxpayer can demonstrate they lived at least 7 months of the year for which the assistance is claimed. The primary residence:

(a) must be the only residence for which the taxpayer claims property tax assistance; and

(b) may include more than one Montana dwelling when the taxpayer resides in one dwelling for less than 7 months during the tax year and in another dwelling for less than 7 months of the same tax year, and the total between the two dwellings is at least 7 months of that year. In addressing such situations:

(i) the department will apply the full year benefit to the primary residence that the qualified applicant owns and occupies when their property taxes are billed; and

(ii) when such property transfers the department will notify the seller that they must provide their new property information to the department before the department will transfer the benefit to the applicant's new home.

(4) An applicant may demonstrate the 7-month occupancy requirement in (3) with such indicators including, but not limited to:

(a) the mailing address for receipt of bills and correspondence;

(b) the address on file with the applicant's employer as the place of residence; and

(c) the mailing address listed on the applicant's federal and state tax returns, driver's license, car registration, hunting and fishing licenses, or voter registration.

(5) A temporary stay in a nursing home or similar facility will not change an applicant's primary residence for the purposes of the PTAP.

(6) The PTAP benefit does not transfer to the new owner of the dwelling.

(7) A property owner of record or the property owner's agent must file an application that is postmarked by April 15 of the year for which the assistance is first claimed. Applications received after that date will be processed and entered into the department's income and eligibility verification process for the following year. 

(8) The department may accept applications through regular or electronic mail, in person, or by telephone. If by telephone, the employee shall verify that the applicant has affirmed their eligibility and affirmed that the dwelling is their primary residence by signing the form on the applicant's behalf and initialing the signature.

(9) Applicants and participants in the PTAP as it existed on December 31, 2014, shall be entered into the department's annual verification process and will not be required to submit a new application. An applicant is not required to reapply once the department has entered their application into its verification process except as provided in (3).

(10) In reappraisal years, the April 15 application deadline is waived if a first-time applicant forwards an application to the department within 30 days after the date on the classification and appraisal notice.

(11) In non-reappraisal years, the April 15 application deadline is waived if a first-time applicant forwards an application to the department postmarked before July 1.

(12) The department may waive the April 15 application deadline at any time the department's local office or the Office of Taxpayer Assistance consults with local aging services or disability offices and confirms a hardship case exists. The department must document its finding.

(13) The department shall coordinate with the Social Security Administration and the Veterans Affairs Administration in developing its process for verifying the income and eligibility of applicants and participants.

(14) Each year the department will:

(a) verify the qualifying income and eligibility of PTAP applicants and participants;

(b) grant or deny the applicant's benefit;

(c) advise applicants and participants of the department's determination in writing; and

(d) advise taxpayers of their right to appeal the department's determination to the State Tax Appeal Board within 30 days of receiving a determination letter.

(15) The information PTAP applicants provide the department is subject to the false swearing penalties established in 45-7-202, MCA. The department:

(a) may investigate the information provided in an application and an applicant's continued eligibility;

(b) may request an applicant to verify the occupancy of their primary residence; and

(c) will review, on a case-by-case basis, any applicant or participant for whom its verification process finds no source of income and record its findings for future use.

(16) The department may address unusual circumstances of ownership and income that arise in administering this program such as:

(a) confusion when a spouse dies and the other spouse is not yet on the property's deed; or

(b) one-time increases in income used for funeral or medical expenses.

 

AUTH:  15-1-201, 15-6-302, MCA

IMP: 15-6-134 15-6-301, 15-6-302, 15-6-305, MCA

 

REASON: The department proposes amending ARM 42.19.401 due to the passage of Senate Bill 157, L. 2015, which struck the subsections authorizing the Property Tax Assistance Program in 15-6-134, MCA, and created a separate section for the program within 15-6-305, MCA.

The new section in statute changes the program's benefit from the first $100,000 or less of taxable market value to $200,000 in appraisal value. It replaces the system of annual applications with a process to annually verify the income and eligibility of applicants and ongoing participants. Applicants now need to submit an application only once. The statute simplifies management of the program by using the concepts of residential real property instead of enumerating its components and by requiring the qualified property to be the taxpayer's primary residence.

The department proposes striking outdated language, adding new language, and restructuring any remaining language to align the rule content with the intent of the new law. The proposed rule amendment also incorporates language in new (4) to provide applicants with indicators to help demonstrate that they meet the 7-month occupancy requirement to qualify for assistance.

The department also proposes updating the implementing statutes for the rule based on the changes in law. Section 15-6-134, MCA, is proposed to be stricken because it no longer applies to PTAP and 15-6-301 and 15-6-305, MCA, are proposed to be added as the new implementing statutes that delineate the program. The department further proposes adding 15-6-302, MCA, as additional rulemaking authority for the administration of property tax assistance programs.

 

42.19.402 INFLATION ADJUSTMENT FOR PROPERTY TAX ASSISTANCE PROGRAM (1) Section 15-6-134, MCA, provides Sections 15-6-301 and 15-6-305, MCA, provide property tax relief to low income homeowners. The section requires Sections 15-6-301 and 15-6-305, MCA, also require the department to annually adjust the income schedules used to determine the eligibility and the amount of relief to account for the effects of inflation.

(2) The calculation of the inflation adjustment shall be made on a yearly basis as follows:

(a) Section 15-6-134, MCA, specifies Sections 15-6-301 and 15-6-305, MCA, specify that the implicit price deflator for personal consumption expenditures (PCE), published quarterly in the Survey of Current Business by the Bureau of Economic Analysis of the U.S. Department of Commerce, is to be used in the calculation of the inflation factor.

(b) The formula for the calculation of the inflation factor is as follows:

 

PCE _(t-1)

IF_t = ---------

PCE _{t o}

where:

IF_t equals the inflation factor for property tax year t,

 

PCE _(t-1) is the implicit price deflator for personal consumption expenditures for the second quarter April of the year prior to the tax year in question,

 

PCE _{t o} is the implicit price deflator for personal consumption expenditures for the second quarter of 1995 April 2015.

 

(c) The inflation factor, calculated per the previous section, is used to annually adjust the base year income schedules for the effects of inflation.

 

Each income figure in the base year table income schedule is multiplied by the inflation factor calculated for the tax year in question in order to update the table schedule. The product is then rounded to the nearest whole dollar amount.

 

The base year income schedule is below.

 

----------- Base Year Income Schedules Schedule -------------

 

Single Person		Married Couple		Percentage Multiplier
$0 - $6,000		$0 - $8,000		20%
6,001 - 9,200		8,001 - 14,000		50%
9,201 - 15,000		14,001 - 20,000		70%

 

Single Person		Head of Household or Married Couple		Percentage Multiplier
$0 - $8,413		$0 - $11,217		20%
$8,414 - $12,900		$11,218 - $19,630		50%
$12,901 - $21,032		$19,631 - $28,043		70%

 

AUTH: 15-1-201, MCA

IMP: 15-6-134, 15-6-191, 15-6-301, 15-6-305, MCA

 

REASON: The department proposes amending ARM 42.19.402 due to the passage of Senate Bill 157, L. 2015, which updated the income schedule for the Property Tax Assistance Program to reflect 2015 values and reset the personal consumption expenditures inflation factor to April 2015.

The department further proposes updating the implementing statutes for the rule to match the changes in law. Section 15-6-134, MCA, is proposed to be stricken because it no longer applies to the rule and 15-6-301 and 15-6-305, MCA, are proposed to be added as the new statutes that delineate the program.

 

 42.19.405 DEFINITIONS The following definitions apply to rules found in this chapter.

(1) "Ancillary" means buildings of secondary importance in comparison to the primary residence, including but not limited to garages and storage sheds.

(2) "Entity" means a corporation, fiduciary, or pass-through entity, as defined in 15-30-2101, MCA, and an association, joint-stock company, syndicate, trust or estate, or any other nonnatural person.

(3) "Dwelling" means the following, depending upon the type of tax assistance program. For the purpose of:

(a) a property tax assistance program (PTAP) application, it means any building, structure, manufactured home, or mobile home, or part thereof, used and occupied for human habitation or intended to be so used, and includes any outbuildings and appurtenances belonging to the applicant, and as much surrounding land, not exceeding 5 acres, as is reasonably necessary for use of such a dwelling. Qualifying land is limited to the legally described parcel upon which the qualified residence is located; or

(b) an extended property tax assistance program (EPTAP) application, it means any class four residential dwelling in Montana that is a single-family dwelling unit, unit of a multiple-unit dwelling, trailer, manufactured home, or mobile home, and as much surrounding land, not exceeding 1 acre, as is reasonably necessary for use of such a dwelling. Qualifying land is limited to the legally described parcel upon which the qualified residence is located.

(4) "Household" is an association of persons who live in the same dwelling, sharing its furnishings, facilities, accommodations, and expenses.

(5) "Income" applies to the property tax exemption for qualified disabled veterans and means:

(a) the applicant's income, if the applicant files their federal tax return as single or head of household;

(b) the applicant's and spouse's income, if they file their federal tax return as married; or

(c) the applicant's income, if the applicant does not file a federal tax return; the applicant must report their income based upon what their filing status would be if they were required to file a federal tax return.

(6) "Primary residence" means the following, depending upon the type of tax assistance program. For the purpose of:

(a) the PTAP it means a residential dwelling that was owned and occupied for more than 7 months of the preceding calendar year;

(b) the EPTAP it means a Montana residential dwelling actually occupied by itself or in combination with another residential dwelling in Montana for at least 7 months a year; or

(c) the property tax exemption for qualified disabled veterans, it means a residential dwelling that is occupied by the disabled veteran or their surviving spouse at the time the application is filed.

(7) "Total household income" means the following, depending upon the type of tax assistance program. For the purpose of:

(a) the PTAP, it means the income as reported on the Montana tax return or returns for the year in which the assistance is being claimed excluding losses, depletion, and depreciation and before any federal or state adjustments to income; or

(b) the EPTAP, it means the sum of the income of all members of the household and all other persons who are owners of the property. Income, as used in this section, includes income from all sources, including net business income and otherwise tax-exempt income of all types but not including social security income paid directly to a nursing home. Net business income is gross income less ordinary expenses but before deducting depreciation or depletion allowance, or both. Income also includes the income of any natural person or entity that is a trustee of or controls 25 percent or more of the applicant entity. For single-family rental dwellings, total household income does not include the income of the tenant.

(1) "Head of household" means a taxpayer who meets the head of household standard for federal income tax purposes.

(2) "Percentage reduction" means the amount by which the property tax rate is reduced based on the income schedule found in:

(a) ARM 42.19.402 for the property tax assistance program (PTAP); or

(b) ARM 42.19.503 for the Montana disabled veteran (MDV) property tax assistance program.

(3) "Qualifying income" means the federal adjusted gross income of an applicant and an applicant's spouse, excluding capital and income losses as they appear on their Montana income tax return for the prior tax year.

(4) "Residential real property" means the land and improvements of a taxpayer's primary residence.

 

AUTH: 15-1-201, 15-6-302, MCA

IMP: 15-6-134, 15-6-193 15-6-301, 15-6-305, 15-6-311, 15-30-2101, MCA

 

REASON: The department proposes amending ARM 42.19.405 due to the passage of Senate Bill (SB) 157, L. 2015, which altered the property tax assistance and disabled veteran programs.

The department proposes striking the definitions for terms no longer used in the rules in this chapter due to the changes in statute.

The department further proposes defining terms being added into the rules in this chapter due to the changes in statute that are critical in implementing and understanding the property tax assistance and disabled veteran programs as they were altered by SB 157, L. 2015.

The department proposes striking 15-6-193, MCA, as an implementing statute from the rule because it was eliminated with the passage of SB 157.

The department proposes adding 15-6-301, 15-6-305, and 15-6-311, MCA, as new implementing statutes because they delineate the property tax assistance programs and adding 15-6-302, MCA, as additional rulemaking authority providing for the department's administration of these programs.

 

42.19.501 PROPERTY TAX EXEMPTION FOR QUALIFIED DISABLED VETERANS (1) The property owner of record or the property owner's agent must make annual application to the local department office, in order to obtain a property tax exemption under the Montana Disabled Veteran (MDV) program for property tax assistance.

(2) The exemption applies to any residential improvement on real property, including trailers, manufactured homes, or mobile homes, and appurtenant land, not to exceed 5 acres, the residential real property of a qualified veteran or qualified veteran's surviving spouse that is owned or under contract for deed and occupied by a used by a veteran or a qualified veteran's surviving spouse as a primary residence as provided for in 15-6-211 15-6-301 and 15-6-311, MCA.

(3) For purposes of this exemption, the land beneath and immediately adjacent to the residence shall not include any separately described or assessed parcels of land, regardless of whether the parcel is contiguous with or adjacent to the parcel upon which the qualified residence is located, unless the primary residence is a mobile home or manufactured home that is assessed separately from the land. In which case, the benefit will apply to the land upon which the primary residence is located, only if the land and the mobile home are owned by the applicant.

(4) An application must be filed, on or before April 15 of the year for which the exemption is sought, on a form available from the local department office. Applications postmarked after April 15 will be considered for the following tax year.

(5) The department may waive the April 15 deadline if the applicant:

(a) participated in the program in the prior year;

(b) was unable to apply for the current year due to hospitalization, physical illness, infirmity, or mental illness, and can demonstrate:

(i) one or more of the impediments, while not necessarily continuous, existed at sufficient levels between January 1 and April 15, of the tax year in which the applicant is applying, that prevented timely filing of the application; or

(ii) confusion caused by the infirmity may have prevented timely filing of the application.

(6) The department may waive the April 15 deadline, on a case-by-case basis, if the applicant:

(a) qualified for the program in the prior year;

(b) meets the income requirements in the current year; and

(c) submits a written statement, plus any document explaining any circumstances not identified in (5) that prevented timely filing of the application.

(7) The department may waive the April 15 deadline if the applicant:

(a) did not previously receive the exemption;

(b) meets the requirements of (5) or (6); and

(c) provides a completed application that is submitted or postmarked no later than July 1 of the year for which the exemption is sought.

(8) The department may accept and process the applications and proof of income if submitted or postmarked no later than July 1 of the year for which the benefit is sought.

(9) Willful misrepresentation of facts pertaining to income or the impediments that prevent timely application filing will result in the automatic rejection of the application.

(10) The following documents must accompany the application:

(a) a letter from the Veterans' Administration that verifies the applicant is currently rated 100 percent disabled or is paid at the 100 percent disabled rate. If the disability is permanent, the letter need be submitted only once;

(b) copies of the applicant's completed federal income tax return for the preceding calendar year, including all schedules;

(c) if the applicant qualifies for an extension of time to file the applicant's federal income tax return, the applicant must, no later than October 25, provide a copy of their completed income tax return for the tax year immediately preceding the year of the application; and

(d) if the applicant is not required to file an income tax return, the applicant must provide documentation that identifies the applicant's income. Examples of acceptable documentation include, but are not limited to:

(i) social security statements;

(ii) pension statements; or

(iii) bank statements.

(11) The department shall disapprove an application if it contains false information or in circumstances where the taxpayer:

(a) is required to file an income tax return for the year in which the applicant seeks the exemption and does not provide a copy of the return;

(b) is not required to file an income tax return for the year in which the applicant seeks the exemption and does not provide the documentation required in (10); or

(c) does not sign the application.

(12) A taxpayer who provides false information on an application may be charged with fraudulent misrepresentation under 45-6-317, MCA.

(13) The department will advise the applicant of its decision in writing. The date the taxpayer receives the department's determination shall be calculated by adding 7 days to the date on the determination letter. An applicant aggrieved by the department's determination may appeal the determination to the State Tax Appeal Board within 30 days of receipt as defined in this section.

(14) Tax exemptions for qualified veterans or their surviving spouses may not be prorated, except as provided for in (c):

(a) If a qualified veteran or their surviving spouse purchases a home and applies for the exemption by the deadline, they would receive the exemption for the full year.

(b) If a qualified veteran or their surviving spouse purchases a home after the application deadline, they would not receive the exemption for that year.

(c) If a qualified veteran or their surviving spouse has the exemption on a home and sells it, the taxes are prorated and assessed to the new owner for the remainder of the year based on 15-16-203, MCA.

(3) A taxpayer's primary residence is a dwelling in which the taxpayer can demonstrate they lived at least 7 months of the year for which the assistance is claimed. The primary residence:

(a) must be the only residence for which the taxpayer claims property tax assistance; and

(b)  may include more than one Montana dwelling when the taxpayer resides in one dwelling for less than 7 months during the tax year and in another dwelling for less than 7 months of the same tax year, and the total between the two dwellings is at least 7 months of that year. In addressing such situations:

(i)  the department will apply the full year benefit to the primary residence that the qualified applicant owns and occupies when their property taxes are billed; and

(ii)  when such property transfers the department will notify the seller that they must provide their new property information to the department before the department will transfer the benefit to the applicant's new home.

(4) An applicant may demonstrate the 7-month occupancy requirement in (3) with such indicators including but not limited to:

(a) the mailing address for receipt of bills and correspondence;

(b) the address on file with the applicant's employer as the place of residence; and

(c)  the mailing address listed on the applicant's federal and state tax returns, driver's license, car registration, hunting and fishing licenses, or voter registration.

(5) A temporary stay in a nursing home or similar facility will not change an applicant's primary residence for the purposes of the MDV.

(6) The MDV benefit does not transfer to the new owner of the dwelling.

(7) A property owner of record or the property owner's agent must file an application that is postmarked by April 15 of the year for which the assistance is first claimed. Applications received after that date will be processed and entered into the department's income and eligibility verification process for the following year. 

(8) The department may accept applications through regular or electronic mail, in person, or by telephone. If by telephone, the employee shall verify that the applicant has affirmed their eligibility and affirmed that the dwelling is their primary residence by signing the form on the applicant's behalf and initialing the signature.

(9) Applicants and participants in the MDV as it existed on December 31, 2014, shall be entered into the department's annual verification process and will not be required to submit a new application. A veteran is not required to reapply once the department has entered their application into its verification process except as provided in (3).

(10) In reappraisal years, the April 15 application deadline is waived if a first-time applicant forwards an application to the department within 30 days after the date on the classification and appraisal notice.

(11) In non-reappraisal years, the April 15 deadline is waived if a first-time applicant forwards an application to the department postmarked before July 1.

(12) The department may waive the April 15 deadline at any time in which the department's local office or the Office of Taxpayer Assistance consults with local aging services, disability, or veterans affairs offices and confirms a hardship case exists. The department must document its finding.

(13) The department shall coordinate with the Social Security Administration and the Veterans Affairs Administration in developing its process for verifying the income and eligibility of applicants and participants.

(14) Each year the department will:

(a)  verify the qualifying income and eligibility of MDV applicants and participants;

(b) grant or deny the applicant's benefit;

(c) advise applicants and participants of the department's determination in writing; and

(d) advise taxpayers of their right to appeal the department's determination to the State Tax Appeal Board within 30 days of receiving a determination letter.

(15) The information MDV applicants provide the department is subject to the false swearing penalties established in 45-7-202, MCA. The department:

(a) may investigate the information provided in an application and an applicant's continued eligibility; and

(b) may request an applicant to verify the occupancy of their primary residence.

(16) The department may address unusual circumstances of ownership and income that arise in administering this program such as:

(a) confusion when a spouse dies and the other spouse is not yet on the property's deed; or

(b) one-time increases in income used for funeral or medical expenses.

 

AUTH: 15-1-201, 15-6-302, MCA

IMP: 15-6-211 15-6-301, 15-6-311, MCA

 

REASON: The department proposes amending ARM 42.19.501 due to the passage of Senate Bill (SB) 157, L. 2015, which struck the subsections authorizing the Montana Disabled Veteran (MDV) program for property tax assistance and created a new separate section for the program in 15-6-311, MCA.

The new section in statute replaces the system of annual applications with a process for the department to annually verify the income and eligibility of qualified veterans and veterans' surviving spouses. Applicants now need to submit an application only once. The statute also simplifies management of the program by using the concept of residential real property instead of enumerating its components and requiring the qualified property to be the taxpayer's primary residence.

The department proposes striking outdated language, adding new language, and restructuring any remaining language to align the rule content with the intent of the new law. The proposed rule amendment also incorporates language in new (4) to provide applicants with indicators to help demonstrate that they meet the 7-month occupancy requirement to qualify for assistance.

The department also proposes updating the implementing statutes for the rule based on the changes in law. Section 15-6-211, MCA, is proposed to be stricken because it was repealed with the enactment of SB 157. Section 15-6-311, MCA, is proposed to be added as the new implementing statute that delineates the program.

The department further proposes adding 15-6-302, MCA, as additional rulemaking authority providing for the department's administration of the property tax assistance programs.

 

42.19.502 EXEMPTIONS INVOLVING AN OWNERSHIP TEST (1) through (3)(a) remain the same.

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

(c) and (4) remain the same.

 

AUTH: 15-1-201, MCA

IMP: 15-6-201, 15-6-203, 15-6-209, 15-24-1208, MCA

 

REASON: The department proposes amending ARM 42.19.502 to remove outdated language. The term "county appraisal" is proposed to be stricken and replaced with a reference to the local Department of Revenue staff.

 

42.19.503 INFLATION ADJUSTMENT FOR QUALIFIED DISABLED VETERAN PROPERTY TAX EXEMPTION PROGRAM (1) Section 15-6-211 , MCA, provides Sections 15-6-301 and 15-6-311, MCA, provide a property tax exemption or partial exemption to qualified disabled veterans. Section 15-6-211, MCA, also requires Sections 15-6-301 and 15-6-311, MCA, also require the department to annually adjust the income schedules used to determine the eligibility and the amount of exemption to account for the effects of inflation.

(2) The calculation of the inflation adjustment shall be made on a yearly basis as follows:

(a) Section 15-6-211, MCA, specifies Sections 15-6-301 and 15-6-311, MCA, specify that the implicit price deflator for personal consumption expenditures (PCE), published quarterly in the Survey of Current Business by the Bureau of Economic Analysis of the U.S. Department of Commerce, is to be used in the calculation of the inflation factor.

(b) The formula for the calculation of the inflation factor is as follows:

 

PCE _(t-1)

IF_t = ---------

PCE _{t o}

where:

IF_t equals the inflation factor for property tax year t;

 

PCE _(t-1) is the implicit price deflator for personal consumption expenditures for the second quarter April of the year prior to the tax year in question;

 

PCE _{t o} is the implicit price deflator for personal consumption expenditures for the second quarter of 2002 April 2015.

 

(c) The inflation factor, calculated per (2)(b), is used to annually adjust the base-year income schedules for the effects of inflation.

 

Each income figure in the base-year table income schedule is multiplied by the inflation factor calculated for the tax year in question in order to update the table schedule. The product is then rounded to the nearest whole dollar amount.

 

The base-year income schedule follows:

 

----------- Base Year Income Schedules Schedule -------------

 

Single                           Married                          Surviving            Percentage

Person                           Couple                            Spouse                Multiplier

$        0 - 30,000      $      0 - 36,000              $       0 - 25,000                 0%

 30,001 - 33,000      36,001 - 39,000                25,001 - 28,000                 20%

 33,001 - 36,000      39,001 - 42,000                28,001 - 31,000                 30%

 36,001 - 39,000      42,001 - 45,000                31,001 - 34,000                 50%

 

Single Person		Head of Household or Married Couple		Surviving Spouse	Percentage Multiplier
$0 - $37,404		$0 - $44,885		$0 - $31,170	0%
$37,405 - $41,145		$44,886 - $48,626		$31,171 - $34,911	20%
$41,146 - $44,885		$48,627 - $52,366		$34,912 - $38,651	30%
$44,886 - $48,626		$52,367 - $56,107		$38,652 - $42,392	50%

 

AUTH: 15-1-201, MCA

IMP: 15-6-211 15-6-301, 15-6-311, MCA

 

REASON: The department proposes amending ARM 42.19.503 due to the passage of Senate Bill (SB) 157, L. 2015, which updated the income schedule for Montana disabled veterans and their surviving spouses to reflect 2015 values and to reset the personal consumption expenditures inflation factor to April 2015.

The department further proposes updating the implementing statutes for the rule to match the changes in law. Section 15-6-211, MCA, is proposed to be stricken because it was repealed with the enactment of SB 157, and 15-6-301 and 15-6-311, MCA, are proposed to be added as the new statutes that delineate the program.

 

42.19.506 EXEMPTIONS INVOLVING A USE TEST (1) For property tax exemptions which require a use test, the following criteria apply:

(a) and (b) remain the same.

(c) examples of supporting documentation include, but are not limited to:

(i) through (viii) remain the same.

(ix) physical inspections of the property by the county appraisal local Department of Revenue staff; and

(d) and (2) remain the same.

(3) An example of the application of the use test in (1) is when 25 percent of a building was used for educational purposes in 1992 the current year and the remainder of the building was used for commercial purposes. The applicant applies for an exemption on January 1, 1993 owns the property on January 1 and applies for an exemption on March 1 of the current year. For 1993 the current year and until the use changes, the property receives a 25 percent exemption for the land and the building.

(4) and (5) remain the same.

 

AUTH: 15-1-201, MCA

IMP: 15-6-201, 15-6-203, 15-6-209, 15-24-1208, MCA

 

REASON: The department proposes amending ARM 42.19.506 to remove outdated language. The term "county appraisal" is proposed to be stricken and replaced with a reference to the local Department of Revenue staff.

The department also proposes updating the example in (3) to replace the references to specific years with the more generic term "current year" instead. The department further proposes restructuring one of the sentences in the example for better clarity.

 

4. The department proposes to repeal the following rule:

 

42.19.406 EXTENDED PROPERTY TAX ASSISTANCE PROGRAM (EPTAP) 

 

AUTH: 15-1-201, MCA

IMP: 15-6-193, MCA

 

REASON: The department proposes repealing ARM 42.19.406 due to the passage of Senate Bill 157, L. 2015, which eliminated the Extended Property Tax Assistance Program and renders the rule unnecessary.

 

5. 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: Laurie Logan, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail [email protected] and must be received no later than October 28, 2015.

 

6. Laurie Logan, Department of Revenue, Director's Office, has been designated to preside over and conduct this hearing.

 

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 that includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notice regarding a particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the person in 5 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. An electronic copy of this notice is available on the department's web site at revenue.mt.gov/rules. 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. While the department also strives to keep its web site accessible at all times, in some instances it may be temporarily unavailable due to system maintenance or technical problems.

 

9. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary sponsor of Senate Bill 157, L. 2015, Senator Bruce Tutvedt, was contacted by regular mail on July 6, 2015, and subsequently notified on August 31, 2015.

 

10. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment and repeal of the above-referenced rules will not significantly and directly impact small businesses. Documentation of the department's determination is available at revenue.mt.gov/rules or upon request from the person in 5.

 

/s/ Laurie Logan                          /s/ Mike Kadas                 

Laurie Logan                               Mike Kadas

Rule Reviewer                             Director of Revenue

         

Certified to the Secretary of State September 14, 2015.