Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

In the matter of the proposed adoption of New Rule I relating to the temporary emergency lodging credit

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION

TO: All Concerned Persons

1. On November 12, 2008, at 1:00 p.m., a public hearing will be held in the Director's Office (Fourth Floor) Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the adoption of the above-stated rule.

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

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 of Revenue no later than 5:00 p.m., November 3, 2008, to advise us of the nature of the accommodation that you need. Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail [email protected].

3. The proposed new rule does not replace or modify any section currently found in the Administrative Rules of Montana. The proposed new rule provides as follows:

NEW RULE I CREDIT FOR TEMPORARY EMERGENCY LODGING

(1) The owner or operator of an establishment in Montana that is licensed by the Montana Department of Public Health and Human Services (DPHHS) to provide lodging may claim the credit described in (2) against the taxes imposed in 15-30-103 or 15-31-101, MCA, for furnishing temporary lodging in Montana, at no cost, to an individual who has been referred by a DPHHS designated charitable organization because the individual is in temporary immediate danger from an assault or potential assault by a partner or family member. The list of organizations designated by DPHHS as authorized to make a referral is available at http://www.dphhs.mt.gov/PHSD/Food-consumer/emergency-lodging.shtml. Additional information regarding the program is also available at this web site.

(2) The amount of credit is $30 for each night, up to five, of gratis lodging provided to a referred individual during a calendar year. The credit must be claimed by the person that owns or operates the licensed establishment in the Montana tax return or report that includes the establishment's lodging receipts for the period during which the creditable lodging was provided. If the credit is claimed by an entity taxed as an S corporation or partnership, the credit must be attributed to shareholders or partners in the same proportion used to report the corporation's or partnership's income or loss for Montana income tax purposes. The credit is "refundable," and if the amount of the credit exceeds the taxpayer's liability, if any, under 15-30-103 or 15-31-101, MCA, for the period during which the creditable lodging was provided, the excess will be refunded to the taxpayer.

(3) The credit is $30 per night regardless of the number of individuals in the room. For example, if two people are provided lodging in the same room for three nights, the amount of the credit is $90 (three nights of lodging multiplied by $30 per night). If two or more referred individuals share a room for one night, each is treated as having been provided one night of lodging. An establishment may offer a referred individual more than five night's emergency lodging during a calendar year, but only the first five nights qualify for the credit.

(4) The room must be provided at no cost to either the individual or the referring organization.

(5) The credit must be claimed on Montana Form TELC.

(6) The taxpayer claiming the credit must retain a voucher, letter, or similar documentation from the referring organization as support for the calculation of the credit. The documentation must be retained as a tax record and provide the following information:

(a) name of the referring organization;

(b) a statement describing the reason for the lodging;

(d) name and address of the establishment providing the lodging; and

(e) date(s) lodging was provided.

(7) An establishment that relies in good faith on information provided by a designated charitable organization is allowed the credit if it is subsequently determined that the reason for the referral was not valid.

(8) The owner or operator of an establishment may claim the credit even if they operated at a loss for the tax year during which the creditable lodging is provided and have no taxable income. The credit cannot be claimed by an organization that is not subject to tax, such as a nonprofit organization. A nonprofit organization can claim the credit if it is required to file a return and pay tax on unrelated business taxable income under the provisions of 15-31-102, MCA.

AUTH: 15-1-201, 15-30-305, 15-31-150, MCA

IMP: 15-30-103, 15-30-196, 15-31-101, 15-31-102, 15-31-171, MCA

REASONABLE NECESSITY: The department is proposing to adopt New Rule I because the 2007 Legislature through House Bill 240 enacted a new law which created a corporate and individual income tax credit for lodging facilities that provide temporary emergency lodging to individuals referred by certain charitable organizations. This rule directs the public to the DPHHS web site, which lists the designated charitable organizations that may refer qualified persons to a lodging facility in case of temporary immediate danger from assault by a partner or other family member. The rule further clarifies the calculation of the credit and provides information on how the owner or operator of an establishment may claim the credit and the necessary recordkeeping requirements.

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: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail [email protected] and must be received no later than December 22, 2008.

5. Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

6. An electronic copy of this Notice of Public Hearing is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes." The department strives to make the electronic copy of this Notice of Public Hearing 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. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

7. 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, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters. 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 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.

8. The bill sponsor notice requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor, Representative Bill Nooney, was notified on July 22, 2008, by regular mail.

/s/ Cleo Anderson /s/ Dan R. Bucks

CLEO ANDERSON DAN R. BUCKS

Rule Reviewer Director of Revenue

Certified to Secretary of State October 14, 2008