Administrative Rules of the State of Montana

BEFORE THE Department of REVENUE

OF THE STATE OF MONTANA

In the matter of the amendment of ARM 42.21.158, 42.21.162, and 42.21.165 and the repeal of ARM 42.21.124 pertaining to personal property reporting requirements, personal property taxation dates, livestock reporting, and livestock per capita fee payments

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NOTICE OF AMENDMENT AND REPEAL

TO: All Concerned Persons

1. On October 15, 2015, the Department of Revenue published MAR Notice No. 42-2-937 pertaining to the public hearing on the proposed amendment and repeal of the above-stated rules at page 1673 of the 2015 Montana Administrative Register, Issue Number 19.

2. On November 5, 2015, a public hearing was held to consider the proposed amendment and repeal. Bob Story, Executive Director of the Montana Taxpayers Association, appeared and testified at the hearing and also provided written comments. The department received additional written comments from Jim Hagenbarth of Hagenbarth Livestock, in Dillon, Montana.

3. The department amends ARM 42.21.158 and 42.21.162, and repeals ARM 42.21.124, as proposed, effective January 1, 2016.

4. Based upon the comments received and upon further review, the department amends ARM 42.21.165 as proposed, effective January 1, 2016, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:

42.21.165 LIVESTOCK REPORTING AND PER CAPITA FEE PAYMENT

(1) through (3) remain as proposed.

(4) If a livestock owner ~~who reported in the previous year(s)~~ fails to submit a completed livestock reporting form by the March 1 deadline, the department shall use the owner's reported or estimated livestock counts from the previous ~~year(s)~~ year to estimate the livestock type and count for the current year. For livestock owners with livestock located on property owned by someone else that have not self-reported by the March 1 deadline, the department shall estimate the livestock owner's livestock type and count based on the livestock numbers provided by the landowner.

(5) remains as proposed.

(6) The Montana Department of Livestock (DOL) has access to the department's livestock reporting and billing/payment data for compliance purposes. If the DOL determines that a livestock owner has not been reporting their livestock counts to the department as required, the DOL ~~will~~ may provide the department with estimated livestock type and counts and the department will use this information to bill the livestock owner for the per capita livestock fees.

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

COMMENT 1: Bob Story, Executive Director, Montana Taxpayers Association (MonTax), commented that MonTax agrees with the proposed changes to ARM 42.21.158, stating that these changes are all designed to eliminate unneeded language.

RESPONSE 1: The department appreciates Mr. Story's support of the amendments to ARM 42.21.158.

COMMENT 2: Mr. Story commented on the proposed amendment of ARM 42.21.162(3), questioning the necessity of the reference to 30 days after acquisition of property, wondering if that deadline is required by statute. He commented that this seems to create unnecessary paperwork because all property in place on January 1 must be reported by March 1. Regardless of when the property is acquired, it is not taxable until January 1.

Mr. Story stated that he has the same concerns regarding livestock reporting requirements. Again, he questions the purpose of the reporting requirement, as the livestock may be gone by January 1 when it would be taxable.

RESPONSE 2: The department appreciates Mr. Story's comments. The language "30 days after acquisition of the property" in ARM 42.21.162(3) primarily pertains to the acquisition of motor vehicles and subsequent application for exemption. The acquisition and registration of motor vehicles may be at any time during the year; the above language allows an application for exemption of motor vehicle taxes within 30 days after acquisition. Section 15-6-231(7), MCA, does not require this deadline; it does however allow the department to adopt rules necessary for the implementation and administration of exemption applications.

With regard to livestock reporting, 15-24-903, MCA, requires all livestock owners to report by March 1 of each year the county location and number of livestock owned as of February 1. Department staff met with the Department of Livestock during the drafting stage of Senate Bill 62, L. 2015, and the meeting included a discussion about possibly changing the reporting dates. However, the only date change included in the final bill was for per capita fee reporting.

COMMENT 3: Mr. Story commented on the requirement in the proposed amendments to ARM 42.21.165(4), stating that if a livestock owner who reported in the previous year(s) fails to submit a completed livestock reporting form by the March 1 deadline, the department shall assume they have livestock. He stated that language seems too open-ended, as the reporting could have occurred anywhere from five to ten years previously. If a livestock owner had reported in the previous year and didn't file in the following year that would be something for the department to rely on. But if they had not reported for two years, there may be an explanation for that. He commented that he would like to see the look-back period changed to a specific number of years, preferably one. That would eliminate the possibility of the department stating that an owner had reported ten years ago and because they have not reported since the department assumes the owner still has that livestock.

RESPONSE 3: The department agrees that the verbiage "previous year(s)" could be misleading and has further amended ARM 42.21.165(4) to remove that language and make the process more clear.

COMMENT 4: Jim Hagenbarth, of Hagenbarth Livestock in Dillon, submitted comments relating to the proposed amendments to ARM 42.21.165. He stated that he has a grazing unit in Montana and also in Idaho and the cattle are moved back and forth depending on the time of year. In the past, this has resulted in the owner being taxed on cattle that were not actually in the state for a portion of the year.

Mr. Hagenbarth commented that the legislature subsequently enacted 15-24-922, MCA, which allowed a livestock owner to file for and receive a refund of excess taxes paid for livestock not in state during a portion of the year. Mr. Hagenbarth understands the need to update the tax code, but wants to ensure that the proposed amendments to ARM 42.21.165 do not change the process currently in place under 15-24-922, MCA.

RESPONSE 4: The department appreciates Mr. Hagenbarth's comments, and assures him the amendments to ARM 42.21.165 will not change the process currently in place under 15-24-922, MCA.

His question appears to stem from the department's proposed addition of 15-24-922, MCA, as an implementing citation for ARM 42.21.165 as amended. The addition is directly related to the department's repeal of another rule supported by that statute. The relevant language from the repealed rule, ARM 42.21.124, was relocated into this rule and the statute was added as an implementing citation to support that language addition.

/s/ Laurie Logan /s/ Mike Kadas

Laurie Logan Mike Kadas

Rule Reviewer Director of Revenue

Certified to the Secretary of State December 14, 2015