Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF TRANSPORTATION

OF THE STATE OF MONTANA

In the matter of the adoption of New Rule I and amendment of ARM 18.15.101 and 18.15.603, pertaining to Motor Fuels Tax Collection and IFTA

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NOTICE OF PROPOSED ADOPTION AND AMENDMENT

NO PUBLIC HEARING CONTEMPLATED

TO: All Concerned Persons

1. On February 25, 2018, the Department of Transportation proposes to adopt and amend the above-stated rules.

2. The Department of Transportation will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Transportation no later than 5:00 p.m. on February 16, 2018, to advise us of the nature of the accommodation that you need. Please contact Marie Stark, Department of Transportation, Collections Section, P.O. Box 201001, Helena, Montana, 59620-1001; telephone (406) 444-7274; fax (406) 444-5411; TTY Service (406) 444-7696 or (800) 335-7592; or e-mail [email protected].

3. The rule as proposed to be adopted provides as follows:

NEW RULE I NOTICES - REVIEW - HEARING (1) The department shall issue a notice to a taxpayer as follows:

(a) an assessment notice, stating an amount owed to the department;

(b) notice of intent to revoke or suspend, stating any violation of fuel tax or International Registration Plan statutes or rules;

(d) notice of refund reduction.

(2) The notice shall advise the taxpayer of the right to request review of or hearing on any notice.

(3) Notices are sent via U.S. mail or email to the taxpayer address on file with the department.

(4) An assessment notice in an amount exceeding $500, is sent via certified mail to the taxpayer's address on file with the department.

(5) If the taxpayer agrees with the notice, the matter is resolved upon compliance with, or acceptance of, the terms set forth in the notice.

(6) If the taxpayer disagrees with the notice, the taxpayer must submit a written request to the department for informal review or formal hearing within 30 days of receipt of the notice, as follows:

(a) A taxpayer may request an informal review by completing the informal review request form on the department's website.

(b) A taxpayer may request a formal hearing by written request.

(c) The request for review or hearing must be postmarked or received electronically within 30 days of the date of receipt of the notice. An extension to the deadline may be granted if both parties agree.

(d) Failure to respond within 30 days is an admission the debt in the assessment notice is due and owing, or the department determination in the notice is accepted.

(7) Informal review consists of pertinent department staff reviewing the taxpayer's request, information provided, and applicable laws and rules and making a recommendation to the appropriate department administrator. The administrator shall issue a written agency decision, which shall be mailed to the taxpayer, as follows:

(a) If the department concurs with the taxpayer, the matter is resolved by withdrawing or revising the notice.

(b) If the department disagrees with the taxpayer, the agency decision shall explain the reasons for the agency decision, in writing, and notify the taxpayer of the right to request a formal hearing. The agency decision may include an assessment for any balance owing. All agency decisions will be sent to the taxpayer through certified mail.

(c) A written request for formal hearing after informal review must be submitted to the department within 30 days of receipt of the agency decision. The taxpayer forfeits the right to a formal hearing if the taxpayer fails to submit a written request for formal hearing within the 30-day period.

(8) A formal hearing consists of a contested case proceeding under the Montana Administrative Procedure Act. After hearing or settlement, a final agency decision is issued, which may include an assessment if a balance is owing. All final agency decisions will be sent to the taxpayer through certified mail.

AUTH: 15-70-104, MCA

IMP: 15-70-417, MCA

REASON: New Rule I is necessary to establish a notice and hearing procedure for assessments actions and other license and permit enforcement actions. The proposed new rule will advise taxpayers of the available due process to contest or settle any notice issued by the department, including informal reviews and contested case rights under the Montana Administrative Procedure Act.

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

18.15.101 DEFINITIONS The following definitions apply in this chapter:

(1) through (12) remain the same.

(13) "Informal review" means a review by department staff to consider information and make a recommendation for disposition of an assessment or other notice to the appropriate agency administrator.

(14) "Notice" means a notice provided to the taxpayer as follows:

(a) "assessment notice" means a notice of an amount owed to the department, which may include, but is not limited to, a notice of refund reduction, notice of audit findings, tax debt, fine, penalty or interest assessment, or similar action;

(b) "notice of intent to revoke a license" means a violation of motor fuel tax or International Registration Plan statutes or rules administered by the department;

(c) "notice of cancellation" means a notice provided to a distributor, IRP, IFTA, or other department fuel tax licensee of the department's intent to cancel the license;

(d) "notice of refund reduction" means a notice stating a taxpayer's refund will be reduced from the claimed amount.

(13) through (20) remain the same but are renumbered (15) through (22).

AUTH: 15-70-104, 15-70-115, 15-70-522, MCA

IMP: 15-70-403, 15-70-419, 15-70-426, 15-70-430, 15-70-455, 15-70-501, 15-70-502, 15-70-503, 15-70-511, 15-70-512, 15-70-513, 15-70-514, 15-70-521, 15-70-522, 15-70-523, 15-70-527, MCA

REASON: The proposed amendments to the definitions are necessary to define terms used in New Rule I which were not previously defined.

18.15.603 IFTA LICENSE BOND REQUIREMENT (1) International Fuel Tax Agreement (IFTA) licensees, or others as determined by the department, will be required to post a bond equivalent to twice the licensees' estimated quarterly tax liability but not less than $500, in the event of non-compliance with the filing of a fuel tax return(s) and payment of fuel tax liability. IFTA licensees, or others as determined by the department, who fail to file a fuel tax return(s) and pay fuel tax liability must post a bond equivalent to twice the licensee's estimated quarterly tax liability, but not less than $500. The bond ~~can~~ may be a surety, a certificate of deposit, or cash.

(2) ~~Non-compliance that triggers the requirement for a~~ A licensee to must post a bond ~~is as follows~~ for non-compliance events including:

(a) remains the same.

(b) non-payment or late payment of the tax liability of an IFTA quarterly tax return two or more times in a four-quarter period; or

(3) The bond dollar amount ~~of the bond will be~~ is increased by $500 for each additional non-compliance infraction.

(4) ~~The requirement for a bond will be removed and the bond released after three years if there has been timely compliance for those three years.~~ The bond requirement is removed and the bond released after three years if the licensee has timely complied with all applicable statutes and rules for those three years.

(5) The department, in its sole discretion, may waive the bond requirement if ~~it is determined that~~ the late filing or the nonpayment was not in the control of the licensee.

(6) Failure to post a required bond within 14 days of issuance of an IFTA bond requirement notice may result in revocation of the IFTA license.

AUTH: 15-70-104, MCA

IMP: 15-70-121, MCA

REASON: The proposed amendments are necessary to state the bond requirements for IFTA licensees, as well as the penalties which will be levied by the department for failure to follow the bond requirements. The bond requirements are allowed under the IFTA licensing agreement.

5. Concerned persons may submit their data, views, or arguments concerning the proposed actions in writing to: Marie Stark, Department of Transportation, Collections Section, P.O. Box 201001, Helena, Montana, 59620-1001; telephone (406) 444-7274; fax (406) 444-5411; TTY Service (406) 444-7696 or (800) 335-7592; or e-mail [email protected], and must be received no later than 5:00 p.m., February 23, 2018.

6. If persons who are directly affected by the proposed action[s] wish to express their data, views, or arguments orally or in writing at a public hearing, they must make written request for a hearing and submit this request along with any written comments to Marie Stark at the above address no later than 5:00 p.m., February 23, 2018.

7. If the agency receives requests for a public hearing on the proposed action from either 10 percent or 25, whichever is less, of the persons directly affected by the proposed action; from the appropriate administrative rule review committee of the Legislature; from a governmental subdivision or agency; or from an association having not less than 25 members who will be directly affected, a hearing will be held at a later date. Notice of the hearing will be published in the Montana Administrative Register. Ten percent of those directly affected has been determined to be 148 persons based on 1450 IFTA licensees and the 36 dyed fuel citation recipients for 2017.

8. The department 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, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in #5 above or may be made by completing a request form at any rules hearing held by the department.

9. An electronic copy of this proposal notice is available through the Department of Transportation's web site at www.mdt.mt.gov.

10. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

11. With regard to the requirements of 2-4-111, MCA, the department has determined that the adoption and amendment of the above-referenced rules will not significantly and directly impact small businesses.

12. With regard to the requirements of 2-15-142, MCA, the department has determined that the adoption and amendment of the above-referenced rules will not have direct tribal implications.

/s/ Carol Grell Morris /s/ Pat Wise

Carol Grell Morris Pat Wise

Rule Reviewer Deputy Director

Department of Transportation

Certified to the Secretary of State January 16, 2018.