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 42.2.613, 42.2.614, 42.2.615, 42.2.616, and 42.2.617 pertaining to the office of dispute resolution (ODR)

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

TO: All Concerned Persons

1. On March 8, 2018, at 9 a.m., the Department of Revenue will hold a public hearing in the 3rd Floor Reception 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 hearing 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, contact the department no later than 5 p.m. on February 26, 2018, to advise us of the nature of the accommodation you need. Please 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 as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

42.2.613 DEFINITIONS The following definitions apply to rules found in this subchapter.

(1) through (6) remain the same.

(7) "Form CAB-9" is a document titled Notice of Referral to the Office of Dispute Resolution for Centrally Assessed Companies that is available at revenue.mt.gov for use by a centrally assessed company to appeal an informal review determination to the ODR.

(7) and (8) remain the same, but are renumbered (8) and (9).

~~(9)~~(10) "Initial conference" means a conference conducted by the ODR with the parties involved to consider the issues ~~raised by the parties~~ in dispute and determine:

(a) whether the proceedings will be informal or formal,;

(b) the necessity of for discovery,; and

(d) whether the taxpayer will elect to bypass the ODR.

~~(10)~~(11) "Liquor matters" means disputes arising from the department's administration of the Montana Alcoholic Beverage Code (Title 16, chapters 1 through 4, and 6, MCA). Liquor matters are contested cases conducted pursuant to the Montana Administrative Procedure Act set out in Title 2, chapter 4, MCA. Liquor matters are not subject to the dispute resolution procedures established by 15-1-211, part 6, MCA.

(11) through (17) remain the same, but are renumbered (12) through (18).

AUTH: 15-1-201, 15-1-211, MCA

IMP: 15-1-211, 15-1-406, 15-23-102, ~~15-23-107,~~ MCA

REASON: The department proposes amending ARM 42.2.613 due to the enactment of Senate Bill 137, L. 2017, which revised taxpayer dispute resolution procedures to allow taxpayers the right to bypass the department's Office of Dispute Resolution (ODR) process and directly appeal to the state tax appeal board. The department proposes amending the definition of "initial conference," in newly numbered (10), to reflect a taxpayer's ability to bypass the ODR during the initial conference.

The department also proposes adding a definition for "Form CAB-9," a form used by centrally assessed companies in the appeal process, and proposes amending the definition of "liquor matters," in newly numbered (11), to specify that liquor matters are considered contested cases under the Montana Administrative Procedure Act and not subject to the dispute resolution procedures provided for in 15-1-211, MCA. The proposed addition and amendment of these two definitions are unrelated to the new legislation.

The department further proposes removing an unnecessary implementing citation from the rule.

42.2.614 PURPOSE (1) through (3) remain the same.

(4) The flowchart in (6) provides the ~~tax~~ dispute resolution procedure. A final agency decision must be issued within 180 days from the date the notice of referral to the ODR is received as provided for in 15-1-211, MCA, unless extended by mutual consent of the parties.

(5) remains the same.

(6) The following flowchart shows ~~how~~ the ~~tax~~ dispute resolution ~~procedure will flow from the initial notice to the final agency decision~~ process:

This flowchart is being stricken:

This flowchart is being added:

AUTH: 15-1-201, 15-1-211, MCA

IMP: 15-1-211, 69-8-414, MCA

REASON: The department proposes amending ARM 42.2.614 due to the enactment of Senate Bill 137, L. 2017, which revised taxpayer dispute resolution procedures to allow taxpayers the right to bypass the department's Office of Dispute Resolution (ODR) process and file an appeal with the state tax appeal board, after having first filed an appeal with the ODR. The proposed amendment to this rule is intended to inform taxpayers of their bypass opportunity by adding references to it in the dispute resolution flowchart in (6). The department further proposes restructuring the flowchart to remove steps unrelated to the dispute resolution process. The word "tax" is also proposed to be removed from the language in (4), (6), and the flowchart title because not all disputes that come before the ODR are tax related.

42.2.615 ~~REFERRAL REQUIREMENTS~~ REFERRALS TO THE ODR

(1) remains the same.

(2) A person or other entity who has filed an appeal with the ODR may, within 30 days of filing the appeal, elect to bypass review by that office and file an appeal with the state tax appeal board. If the person or other entity elects to bypass review by the ODR, the determination originally issued by the division will be deemed the final department decision.

(2) remains the same, but is renumbered (3).

AUTH: 15-1-201, 15-1-211, MCA

IMP: 15-1-211, MCA

REASON: The department proposes amending ARM 42.2.615 due to the enactment of Senate Bill 137, L. 2017, which revised taxpayer dispute resolution procedures to allow taxpayers the right to bypass the department's Office of Dispute Resolution (ODR) process and directly appeal to the state tax appeal board after having first filed an appeal with the ODR. The proposed amendment of the language in (2) is intended to inform taxpayers of the deadline for requesting a bypass of the ODR process and to notify them that upon bypass, the division's initial determination becomes the final department decision for purposes of appeal to the state tax appeal board. The department further proposes revising the rule's catchphrase to better capture the content of the rule as amended.

42.2.616 FORMALITY OF PROCEDURES (1) The department recognizes that a wide array of parties ~~appears~~ appear before the department with disputes to resolve. These disputes range from large corporations employing professional tax counsel to individuals appearing on their own behalf. It is the intent of the department to accommodate all such disputes to the greatest extent possible in a manner that is deemed most appropriate for each situation.

(2) and (3) remain the same.

(4) When conducting discovery, the parties shall attempt to obtain discovery through informal consultation or communication. If reasonable informal efforts to obtain information are unsuccessful, then formal discovery procedures may be used.

(4) remains the same, but is renumbered (5).

AUTH: 15-1-201, 15-1-211, MCA

IMP: 15-1-211, MCA

REASON: The department proposes amending ARM 42.2.616 due to the enactment of Senate Bill 137, L. 2017, which revised taxpayer dispute resolution procedures, and specified that discovery in matters before the ODR must be conducted informally if possible. The proposed addition of the language in new (4) is intended to inform taxpayers of this requirement. The department further proposes amending (1) to make a grammatical change.

42.2.617 INITIAL CONFERENCES (1) through (7) remain the same.

(8) Except for centrally assessed property and industrial property, a party must exhaust available administrative remedies prior to appealing a matter from the ODR to the next level. The parties may jointly stipulate to waive a written determination by the ODR.

(9) through (11) remain the same, but are renumbered (8) through (10).

AUTH: 15-1-201, 15-1-211, MCA

IMP: 15-1-211, MCA

REASON: The department proposes amending ARM 42.2.617 due to the enactment of Senate Bill 137, L. 2017, which revised taxpayer dispute resolution procedures and added a new provision allowing a taxpayer who wishes to bypass the ODR the right to do so. Therefore, the department proposes striking the language in (8) because taxpayers are no longer required to proceed before the ODR prior to appealing to the state tax appeal board.

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 March 16, 2018.

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, or through the Secretary of State's web site at sos.mt.gov/ARM/register.

8. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary sponsor of Senate Bill 137, L. 2017, Senator Duane Ankney, was contacted by regular mail on June 14, 2017, and January 11, 2018.

9. Regarding 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 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 January 30, 2018.