BEFORE THE Department of REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.22.101, 42.22.104, 42.22.105, 42.22.107, 42.22.108, 42.22.109, 42.22.111, 42.22.121, 42.22.1312, 42.22.1313, 42.22.1315, 42.22.1316, and 42.22.1317 pertaining to centrally assessed property

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NOTICE OF AMENDMENT

 

TO: All Concerned Persons

 

1. On October 15, 2015, the Department of Revenue published MAR Notice No. 42-2-940 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 1686 of the 2015 Montana Administrative Register, Issue Number 19.

 

2. On November 4, 2015, a public hearing was held to consider the proposed amendment. Bob Story, Executive Director of the Montana Taxpayers Association, appeared and testified at the hearing and provided written comments. Other members of the public attended the hearing, but did not testify.

 

3. The department has amended ARM 42.22.101, 42.22.104, 42.22.105, 42.22.107, 42.22.108, 42.22.109, 42.22.111, 42.22.121, 42.22.1312, 42.22.1313, and 42.22.1315 as proposed. 

 

4. The department is not amending ARM 42.22.1316 and 42.22.1317 at this time.

 

5. The department has thoroughly considered the comments received. A summary of the comments and the department's responses are as follows:

 

COMMENT 1: Bob Story, Executive Director of the Montana Taxpayers Association (Montax), commented that the new language in ARM 42.22.105 requiring a statement of cash flow is information usually available in federal filings submitted for some types of taxpayers. As long as the information required is basically the same as reported federally, there should be no problem. If the taxpayer is required to generate other information, this will be an added burden on the taxpayer.

Mr. Story stated that the department should strive for uniformity in reporting when the same information is required by federal agencies.  He commented that the reason stated for this rule change implies that this is a request when it is actually a requirement, and asked that the department not require a duplicative filing of information that can be obtained elsewhere.

 

RESPONSE 1:  The department agrees that this information is already supplied and/or is available through federal filings for many taxpayers. Additional reporting requirements may not be necessary for the companies already supplying this information. However, there are also companies not regulated by a federal reporting agency that do not supply this information with their report. Therefore, the department finds it necessary to include this provision in the rule in order to request reporting of the information for the purposes of applying consistent appraisal methods to all companies.

 

COMMENT 2: Mr. Story commented that in ARM 42.22.108 the department proposes to remove the deduction of exempt intangible property from both the numerator and the denominator before calculating the market-to-book ratio. Depending on the make-up and location of the intangible property, this may change the ratio. He stated that Montax would be interested in seeing some actual examples of how this new language affects valuation before they would support the proposed change.

 

RESPONSE 2: Mr. Story is correct. The department is proposing calculating the market-to-book ratio before the removal of intangibles. The department also understands that this may result in a different ratio than calculating the market-to-book ratio after the removal of intangibles. However, this adjustment will result in a more accurate determination of the contributory value of the property to be removed. For example, motor vehicles are removed from the state-allocated value based on their net book value before any adjustments for intangibles. Thus a market-to-book ratio calculated before the removal of intangibles is the appropriate ratio to use. Per Mr. Story's request, the department is sending actual examples of how the new language will affect valuation directly to Montax.

 

COMMENT 3: Mr. Story commented that Montax does not think the WSATA-CCAP (Western States Association of Tax Administrators - Committee on Centrally Assessed Properties) appraisal handbook is an accurate or reliable basis for valuation and would like to see ARM 42.22.109 stricken entirely.

 

RESPONSE 3: The WSATA-CCAP appraisal handbook has existed since the 1950s and is a collaboration of tax administrators located in 14 western states. Following years of CCAP work and substantial public review and input, the current version of the manual was approved and adopted by a majority vote of the WSATA members in 2009. The handbook has also been deemed authoritative by Montana courts.

 

COMMENT 4: Mr. Story commented that Montax does not agree with the need for the proposed punctuation changes in ARM 42.22.1316 and 42.22.1317.

 

RESPONSE 4: The department will not proceed with the proposed amendment to these two rules.

 

COMMENT 5: Mr. Story commented, with regard to ARM 42.22.1317, that Montax would like to see a requirement of course work with an accrediting agency to become an accredited appraiser, not just time on the job.

 

RESPONSE 5: The department's current rules require the completion of nine courses to become certified as an appraiser. The courses are offered by a number of credible and leading professional appraisal organizations. While the rule does allow for certification through a combination of coursework and experience on a case-by-case basis, that allowance is predicated on the alternative coursework or experience being equal to or greater than the complexity of the courses required in the rule.

 

 

/s/ Laurie Logan                                    /s/ Mike Kadas       

Laurie Logan                                         Mike Kadas  

Rule Reviewer                                       Director of Revenue

 

         

Certified to the Secretary of State November 30, 2015