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| Montana Administrative Register Notice 42-2-940 | No. 19 10/15/2015 | |
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BEFORE THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On November 4, 2015, at 11 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 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 26, 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 proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
42.22.101 DEFINITIONS The following definitions apply to this chapter: (1) through (27) remain the same. (28) "Telecommunications" (29) "Telecommunications service provider" means a telecommunication services company or a person providing retail telecommunication services as provided in 15-53-129, MCA. (30) through (33) remain the same.
AUTH: 15-23-108, 15-53-155, MCA IMP: 15-6-135, 15-6-137, 15-6-141, 15-6-156, 15-6-157, 15-6-158, 15-6-159, 15-23-101, 15-23-211, 15-23-213,
REASON: The department proposes amending ARM 42.22.101(28) to strike "for property tax purposes" because it is unnecessary language to include in a definition located in ARM Title 42, chapter 22, which exclusively covers centrally assessed property. The department also proposes amending the definition in accordance with current methodology, recent court decisions, and to harmonize it with the definition of "telecommunications service provider" in (29) and in 15-53-129, MCA. The department further proposes amending the list of implementing statutes to include references to additional statutes that this rule implements and to remove a reference to a statute which is not relevant.
42.22.104 TREATMENT OF MOTOR VEHICLES AND SPECIAL MOBILE EQUIPMENT (1) remains the same. (2) Motor vehicles with or without equipment attached are exempt and shall pay a fee in lieu of tax, 61-3-321 and 61-3-529 (3) through (6) remain the same. (7) The total net book value for equipment defined in (2), (3), and (4) shall be deducted on a market-to-cost basis from the state-allocated value, as defined in ARM 42.22.111. The market-to-book ratio shall be determined by dividing the system or unit market value (8) remains the same.
AUTH: 15-23-108, MCA IMP:
REASON: The department proposes amending ARM 42.22.104 to remove a reference to a repealed statute, 61-3-561, MCA, and adding a reference to 61-3-321, MCA, which imposes a fee in lieu of tax for certain motor vehicles. The amendment is proposed both in (2) and in the implementing section of the rule. The department also proposes amending ARM 42.22.104(7) to eliminate unnecessary language from the section. The department's current practice is to calculate a market-to-book ratio before the deduction of intangibles. The purpose is to keep the ratio consistent with the cost it is being applied to. Vehicles and special mobile equipment are removed using their depreciated cost before adjustment for intangibles, and therefore using a ratio before intangibles are removed is appropriate. The proposed amendment will comport and harmonize the rule with current practices. The department further proposes striking an unnecessary chapter reference from the implementing section of the rule.
42.22.105 REPORTING REQUIREMENTS (1) and (2) remain the same. (3) The report shall contain the following information on the operating properties: (a) and (b) remain the same. (c) statement of cash flow for the system; (c) through (p) remain the same, but are renumbered (d) through (q). (4) remains the same.
AUTH: IMP:
REASON: The department proposes amending ARM 42.22.105(3) to add in language to request information from a taxpayer that will enable the department to properly calculate the yield capitalization approach to value. The department began using this approach in 2004, but has never updated the rule to include a request for this necessary and helpful information. The department further proposes amending the list of authorization and implementation statutes to add an additional relevant authorization statute, to reflect current statutory renumbering, to remove a repealed statute, and to remove statutes not relevant to this rule.
42.22.107 ADDITIONAL REPORTING REQUIREMENTS FOR BENEFICIAL USE OF GOVERNMENT-OWNED TRANSMISSION LINES (1) Qualifying companies shall provide to the department information on any possession or beneficial use of government-owned transmission lines, as (a) and (b) remain the same. (c) original cost and accrued depreciation (d) through (f) remain the same.
AUTH: 15-1-201, 15-24-1207, MCA IMP: 15-24-1207, MCA
REASON: The department proposes amending ARM 42.22.107 to change a word in (1) for better accuracy and to strike language from (1)(c), because the department now relies solely on the original cost and accrued depreciation data to value the beneficial use of transmission lines. The language proposed to be stricken placed a requirement on entities, such as the Bonneville Power Administration, that may not have the market value information available to them.
42.22.108 MARKET VALUE OF AIR AND WATER POLLUTION CONTROL AND CARBON CAPTURE EQUIPMENT (1) The market value of approved class five air and water pollution control and carbon capture equipment shall be determined by multiplying the depreciated value of the approved class five pollution control equipment in Montana by a market-to-book ratio. The market-to-book ratio shall be determined by dividing the system or unit market value (2) remains the same.
AUTH: 15-23-108, MCA IMP: 15-6-135, MCA
REASON: The department proposes amending ARM 42.22.108 to add more detail to the title and (1) to reflect the current statutory language of 15-6-135, MCA. The department further proposes eliminating unnecessary language from (1) because the department's current practice is to calculate a market-to-book ratio before the deduction of intangibles. The purpose is to keep the ratio consistent with the cost it is being applied to. Pollution control equipment is removed using its depreciated cost before adjustment for intangibles, and therefore using a ratio before intangibles are removed is appropriate. The proposed amendment will comport and harmonize the rule with current practices.
42.22.109 ADOPTION OF APPRAISAL METHODS AND APPRAISAL STANDARDS (1) The department adopts the 2009 WSATA-CCAP (Western States Association of Tax Administrators - Committee on Centrally Assessed Properties) appraisal handbook, published in August 2009, available at (2) remains the same.
AUTH: 15-1-201, MCA
REASON: The department proposes amending ARM 42.22.109 to update the web site address in (1) and to remove the password and user name information because they are no longer required to order the appraisal handbook.
42.22.111 VALUATION METHOD (1) through (4) remain the same. (5) The valuation determined appropriate by the department shall be supported by a written explanation (6) remains the same.
AUTH: 15-23-108, MCA IMP:
REASON: The department proposes amending ARM 42.22.111 to remove language not supported by 15-1-210, MCA. The proposed amendment will harmonize the rule with this statute. The department further proposes amending the list of implementation statutes to strike an unnecessary chapter reference and to include a reference to an additional statute that this rule implements.
42.22.121 ALLOCATION PROCEDURE (1) and (2) remain the same. (3) For the purpose of allocating the unit value, quantity, use, and productivity ratios may be applied. Following are examples of possible ratios the department may apply to allocate unit value to Montana. The following examples shall not be construed to prohibit the use of other factors in the allocation process: (a) through (c) remain the same. (d) for pipelines: (i) cost (ii) through (17) remain the same.
AUTH: 15-23-108, MCA IMP:
REASON: The department proposes amending ARM 42.22.121 to strike unnecessary language from (3)(d). The department has never used trended or depreciated costs for allocation purposes for pipeline companies. As set forth in ARM 42.22.109, the department relies on the WSATA-CCAP appraisal handbook to develop allocation formulas when the data is available. The proposed amendment will comport and harmonize the rule with current practices. The department further proposes amending the list of implementation statutes to strike a statute that is not currently relevant to this rule and to add a statute that is relevant.
42.22.1312 INDUSTRIAL MACHINERY AND EQUIPMENT DEPRECIATION SCHEDULE (1) and (2) remain the same.
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-156, 15-6-157, 15-6-158, 15-8-111, MCA
REASON: The department proposes amending ARM 42.22.1312 to include references to additional statutes that this rule implements.
42.22.1313 ASSESSMENT OF GRAIN, SEED, AND FERTILIZER STORAGE FACILITIES (1) through (7) remain the same.
AUTH: 15-1-201, MCA IMP: 15-6-134, 15-6-138, 15-7-103, 15-8-111, MCA
REASON: The department proposes amending ARM 42.22.1313 to include a reference to an additional statute that this rule implements.
42.22.1315 (1) Industrial properties are appraised by industrial appraisers and the resulting appraised values are distributed to the appropriate department field office. (2) remains the same. (3) This rule applies to tax years January 1,
IMP: 15-7-111, MCA
REASON: The department proposes amending ARM 42.22.131 to add language into the rule that distinguishes the difference between the annual reappraisal of industrial personal property and the two-year reappraisal of industrial real property. The department further proposes amending (3) to update the years in the rule due to the enactment of Senate Bill 157, L. 2015, which changed the property reappraisal cycle from six years to two years.
42.22.1316 INDUSTRIAL PROPERTY CERTIFICATION REQUIREMENTS (1) The employee must hold a bachelor degree from an accredited college or have at least five (2) through (4) remain the same.
AUTH: 15-1-201, MCA
REASON: The department proposes amending ARM 42.22.1316 to make a grammatical correction in (1). No language is proposed to be changed at this time. The department further proposes striking an implementing statute that is not relevant to this rule.
42.22.1317 UNIT VALUATION OR CENTRALLY ASSESSED PROPERTY APPRAISER CERTIFICATION REQUIREMENTS (1) The employee must hold a bachelor degree from an accredited college or have at least five (2) through (4) remain the same.
AUTH: 15-23-108, IMP: 15-7-107, 15-23-101,
REASON: The department proposes amending ARM 42.22.1317 to make a grammatical correction in (1). No language is proposed to be changed at this time. The department further proposes amending the list of authorization and implementing sections of the rule to add an additional implementing statute and to strike references to statutes that are not relevant.
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: 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 November 16, 2015.
5. Laurie Logan, Department of Revenue, Director's Office, has been designated to preside over and conduct this hearing.
6. 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 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.
7. 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.
8. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary sponsor of Senate Bill 157, Senator Bruce Tutvedt was contacted by letter on July 6, 2015 and September 1, 2015.
9. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rules will have little to no significant or direct impact on small business. Any impact will be the result of legislative changes, not rule changes. Documentation of the department's determination is available at revenue.mt.gov/rules or upon request from the person in 4.
/s/ Laurie Logan /s/ Mike Kadas Laurie Logan Mike Kadas Rule Reviewer Director of Revenue
Certified to the Secretary of State October 5, 2015
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A directory of state agencies is available online at http://www.mt.gov/govt/agencylisting.asp.
For questions about the organization of the ARM or this web site, contact [email protected].
