BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.4.2902, 42.4.2904, and 42.4.2905 pertaining to tax credits for historic property preservation

) ) ) )

NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO: All Concerned Persons

 

1. On November 19, 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 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 November 9, 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:

 

42.4.2902 COMPUTATION OF THE TAX CREDIT FOR THE PRESERVATION OF HISTORIC PROPERTIES (1) Except as provided in (3), Montana's tax credit for the preservation of historic buildings is to be computed using the federal credit allowed by 26 USC 47, which is a component of the federal general business credit. No other component of the federal general business credit may be used to compute Montana's credit for the preservation of historic buildings.

(2) remains the same.

(3) For tax years beginning January 1, 2002, through December 31, 2011, an alternative credit may be claimed for placing a conservation easement on historically significant property equal to 20% of the cost of creating the conservation easement and the diminution in value of the historically significant property. Qualified costs used in computing the credit for creating a conservation easement are those direct costs incurred in connection with the creation of the conservation easement and do not include the cost of acquiring the property or for improvements made to the property unless they are directly related to creating the conservation easement.

 

AUTH: 15-30-2620, 15-31-501, MCA

IMP: 15-30-2342, 15-31-151, MCA

 

REASON: The department proposes amending ARM 42.4.2902 to remove (3) because it is no longer necessary. The credit for placing a conservation easement is no longer applicable other than the carryover of excess amounts.

 

42.4.2904 OWNERSHIP OF HISTORIC PROPERTY (1) and (2) remain the same.

(3) Third parties to whom the federal rehabilitation credit is transferred may not claim the Montana credit and, correspondingly, transfer of the federal credit by a person entitled to claim the Montana credit does not disqualify them from claiming the Montana credit.

(4)(3) A credit for the preservation of historic property jointly owned by more than one individual must be allocated between owners based on each owner's share of ownership in the property. Unless specified otherwise when the property is purchased, percentage of ownership will be considered equal to 100% percent divided by the number of owners.

(5) and (6) remain the same, but are renumbered (4) and (5).  

 

AUTH: 15-30-2620, MCA

IMP: 15-30-2342, 15-31-151, MCA

 

REASON: The department proposes amending ARM 42.4.2904 to remove (3) because it is no longer necessary. Recent Internal Revenue Service regulations and rulings provide an enforcement mechanism the department can use to address potential abuses in the area of transfers of the credit. 

The department also proposes revising the punctuation of a sentence in newly numbered (3).

 

42.4.2905 CLAIMING THE HISTORIC PRESERVATION CREDIT

(1) Except as provided in (2) and (3), federal Form 3468, the federal form used in claiming the federal rehabilitation credit, must be attached to the applicable Montana tax returns. S corporations and entities taxable as partnerships must attach the form to their information returns and the owners of the pass-through entities must also attach a copy to their individual income or corporate income tax returns.

(2) Taxpayers claiming the alternate credit for creating a conservation easement must attach a statement identifying the historically significant property for which the credit is claimed and the costs of creating the conservation easement and the diminution in value of the historically significant property used in calculating the alternate credit.

(3)(2) A taxpayer who elected made a valid election to transfer the federal rehabilitation credit to a lessee must attach a copy of the election statement required by U.S. Treasury regulation 26 C.F.R. 1.48-4(f) and (g), and the lessee's Form 3468 that identifies the taxpayer as the transferor. If the credit calculation for certified historic structures on the lessee's Form 3468 contains qualified rehabilitation expenditures other than those incurred by the taxpayer, the taxpayer must provide a schedule breaking out the taxpayer's own expenditures and a pro forma federal credit calculation. 

 

AUTH: 15-30-2620, MCA

IMP: 15-30-2342, 15-31-151, MCA

 

REASON: The department proposes amending ARM 42.4.2905 to remove (2) because it is no longer necessary. The credit for placing a conservation easement is no longer applicable other than the carryover of excess amounts.

The department also proposes amending newly numbered (2) to better specify that the election to transfer the federal credit must be made in conformance with the corresponding regulations.

 

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 December 1, 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, do not apply.

 

9. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment 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 4.

 

/s/ Laurie Logan                          /s/ Mike Kadas

Laurie Logan                               Mike Kadas

Rule Reviewer                             Director of Revenue

         

Certified to the Secretary of State October 19, 2015