BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.19.401, 42.19.406, and 42.19.501, relating to property tax assistance programs for the disabled veterans and elderly homeowners

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO:  All Concerned Persons

 

1.  On November 17, 2010, at 3:30 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the amendment of the above-stated rules.

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 8, 2010, 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) 444-4375; or e-mail [email protected].

 

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

 

42.19.401  PROPERTY TAX ASSISTANCE PROGRAM  (1)  The property owner of record or the property owner's agent must make annual application through the local department office, in order to receive the benefit provided for in 15-6-134, MCA.  An application must be made filed on a form available from the local county appraisal/assessment department office in on or before April 15 of the year for which the benefit is sought.  Applications received after April 15 will not be considered for that year unless the department determines the following conditions were met:

(a)  For the 2010 and subsequent tax years, applications postmarked after April 15 will not be considered for that tax year unless the department determines the applicant was unable to apply for the current year due to hospitalization, physical illness, infirmity, or mental illness.; and

(2)(b)  These these impediments must be demonstrated to have existed at significant levels from January 1 of the current year to the time of application, but in no case later than July 1.

(2)  Telephone extensions and written extensions will be granted through July 1 of the current year for the above-listed reasons.  Willful misrepresentation of facts pertaining to income or the impediments that prevent timely application filing will result in the automatic rejection of the application.

(3)  The applicant is required to list total household income from all sources, excluding losses, depletion, and depreciation, that is attributable to all owner occupants who are applying for the assistance.  Total household income includes, but is not limited to:

(a)  net business income modified to exclude losses, depletion, and depreciation; and

(b)  income of all other owners of the property.

(4)  Income includes, but is not limited to:

(a)  wages, salaries, and tips;

(b)  taxable interest;

(c)  ordinary and qualified dividends;

(d)  alimony received;

(e)  capital gains;

(f)  other gains;

(g)  taxable refunds, credits, or offsets of state and local income taxes;

(h)  business and/or farm income excluding losses, depreciation, and depletion;

(i)  taxable amounts of IRA distributions, pensions, and annuities;

(j)  rent, royalty, partnership, S corporation, and trust income before subtracting losses, depletion, or depreciation;

(k)  unemployment compensation;

(l)  taxable amounts of social security benefits; and

(m)  other income reported or reportable on the tax return or returns required by Title 15, chapter 30 or 31 of the Montana Code Annotated.

(5)  If the applicant is required to file an income tax return, a copy of the income tax return must be attached.

(6)  If the applicant has applied for an extension of time to file the applicant's income tax return, the applicant must provide a completed individual estimated income tax worksheet (ESW) for the tax year immediately preceding the year of the application.

(7)  If the applicant is not required to file an income tax return, they must complete the appropriate portion of the application and submit documentation, that supports the reported income, as defined in (3).  Examples of the required documentation include, but are not limited to, social security statements, pension statements, or bank statements.

(3)(8)  The department will review the application and any supporting documents.  The department may review income tax records to determine accuracy of information.  The department will approve or deny the application.  The applicant will be advised in writing of the decision.  An annual statement of eligibility is required unless a review of income tax records or other records related to the applicant's income demonstrates that the individual had no significant change in income level and successfully qualified during the preceding 12 months prior to January 1 of the current tax year.  In that situation, the department may waive the annual statement of eligibility required.

(9)  The department will advise the applicant of its decision in writing.  The date the taxpayer receives the department's determination shall be calculated by adding seven days to the date on the determination letter.  An applicant aggrieved by the department's determination may appeal the determination to the State Tax Appeal Board within 30 days of receipt as defined in this section.  In no case shall an appeal be accepted more than 37 days after the date of the department's determination letter.

(4)(10)  Any reduction in taxable value will apply to the first $100,000 or less of the taxable market value of any mobile home or improvement on real property and appurtenant land not exceeding five acres.

(5)  Income must be reported by the applicant as follows:

(a)  For the 2010 and subsequent tax years, the applicant is required to list total household income, which is income attributable to all owner occupant(s) who are applying for the Property Tax Assistance Program.

(6)  If the applicant is required to file an income tax return, a copy of the income tax return must be attached.  If the applicant is not required to file an income tax return, they must complete the appropriate portion of the application and submit the appropriate documentation, as requested.

 

AUTH: 15-1-201, MCA

IMP: 15-6-134, MCA

 

            REASONABLE NECESSITY:  The department is proposing to amend ARM 42.19.401 to describe the application process for documenting the total household income and explaining when a taxpayer may not be required to file an income tax return or extension.

            Section (9) advises the applicants of their appeal rights and timelines for appealing the department's decision.

 

42.19.406  EXTENDED PROPERTY TAX ASSISTANCE PROGRAM

(1)  The department will determine which taxpayers are potentially eligible for the extended property tax assistance program and will mail applications to those taxpayers.  The department determines the taxpayers who are potentially eligible during the first year of the reappraisal cycle (tax year 2009 for the current cycle) based upon the following requirements set forth in 15-6-193, MCA:

(a)  A potentially eligible property is limited to a qualified residence which means any class four residential dwelling in Montana that is a single-family dwelling unit, unit of a multiple-unit dwelling, trailer, manufactured home, or mobile home, and as much surrounding land, not exceeding one acre, as is reasonably necessary for use of such a dwelling.  Qualifying land is limited to the legally described parcel upon which the qualified residence is located.  The dwelling must be actually occupied by itself or in combination with no more than one other class four residential dwelling in Montana for at least seven months each year;

(b)  The qualified residence must be the same residence as was owned by the taxpayer on December 31, 2008 of the year prior to the first year of the reappraisal cycle for which the assistance is sought;

(c)  The taxable value of the qualified residence must have experienced greater than a 24% increase due to reappraisal; and

(d)  The property taxes on the qualified residence must have increased by $250 or more between tax year 2008 and tax year 2009 the last year of the prior cycle and the first year of the reappraisal cycle for which the assistance is sought, based upon the tax year 2008 mill levy established for the last year of the prior cycle.

(2) remains the same.

(3)  For a taxpayer seeking assistance for a property that has more than one owner, only the owner that actually occupies the residence can qualify for the assistance.

(3)(4)  In order to receive the tax rate adjustment, the qualified residence property owner of record, the qualified residence property owner's agent, or a qualifying entity of a qualified residence must annually complete and forward an application to the Department of Revenue, P.O. Box 6169, Helena, Montana 59604-6169.

(a)  In order for qualifying taxpayers to receive the tax rate adjustment for tax year 2009, the department will mail applications to taxpayers advising them that completed applications must be postmarked on or before the due date preprinted on the application form, and returned to the department if they wish to be considered for the tax rate adjustment.  The preprinted due date will be 30 calendar days from the date of the application being mailed to the taxpayer by the department.  This notification will also advise the applicants that applications postmarked after the preprinted due date will not be considered for the tax rate adjustment.

(b)  Beginning with tax year 2010 and all subsequent tax years, the completed applications must be postmarked received by the department on or before April 15 in order for applicants to receive the tax rate adjustment for the year the tax rate adjustment is sought.  Applications postmarked received after April 15 will not be considered for the tax rate adjustment provided for under this section.

(4)(5)  The applicant is required to list total household income from all sources, including but not limited to:

(a) through (c) remain the same.

(5) through (8) remain the same but renumbered (6) through (9).

(9)(10)  The completed application form must include:

(a)  the applicant's social security number or federal identification number (FEIN); and

(b)  copies of the applicant's federal individual, partnership, estates or trusts, or corporate income tax return, including all schedules, for the tax year immediately preceding the year of the application.  For example: complete copies (including all schedules) of the appropriate 2009 tax year return must accompany a 2010 application for the extended property tax assistance program, which is due by April 15, 2010.

(11)  If the applicant has applied for an extension of time to file the applicant's income tax return, the applicant must provide a completed individual estimated income tax worksheet (ESW) for the tax year immediately preceding the year of the application.  This form is available at the department's web site or at the local revenue office.

(12)  If the applicant is not required to file an income tax return, the applicant must provide documentation that identifies the applicant's income as defined in (5).  Examples of the required documentation include, but are not limited to: social security statements, pension statements, or bank statements.

(10)(13)  Failure to provide the required information in (4) through (9)(12) will result in the application being denied.  All tax return information will be treated as confidential by the department.

(11) through (16) remain the same but renumbered (14) through (19).

 

AUTH: 15-1-201, MCA

IMP: 15-6-193, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.19.406 to assist taxpayers in understanding the eligibility process for applications for the extended property tax assistance program.  The amendments address the due dates for applications, income documentation and extensions, and residence and dwelling requirements.

            Subsection (1)(a) is necessary to advise taxpayers that the benefit applies only to the land upon which the residence sits rather than the contiguous parcels to the residence.  This clarification is consistent with how property is valued and taxed.

 

            42.19.501  PROPERTY TAX EXEMPTION FOR QUALIFIED DISABLED VETERANS  (1)  The property owner of record or the property owner's agent must make application to the local department office, in order to obtain a property tax exemption.  An application must be filed, on a form available from the local department office, on or before April 15 of the year for which the exemption is sought.  Applications postmarked received after April 15 will not be considered for that tax year unless the agent of the department determines the following conditions are met:

            (a)  the applicant successfully qualified during the preceding 12 months prior to the application date of the current tax year; and

            (b)  the applicant was unable to apply for the current year due to hospitalization, physical illness, infirmity, or mental illness. ; and

            (b)  These these impediments must be demonstrated to have existed at significant levels from January 1 of the current year to the time of application, but in no case later than July 1.

            (2)  Telephone extensions and written extensions will be granted through July 1 of the current year for the above-listed reasons.  Willful misrepresentation of facts pertaining to income or the impediments that prevent timely application filing will result in the automatic rejection of the application.

            (2)(3)  The following documents must accompany the application:

            (a)  letter from the Veterans' Administration which verifies that the applicant is currently rated 100% disabled or is paid at the 100% disabled rate.  If the disability is permanent, the letter need be submitted only once; and

            (b)  copies of the applicant's completed federal income tax return for the preceding calendar year., including all schedules;  For example, complete copies (including all schedules) of the appropriate 2008 tax year return must accompany a 2009 application for the disabled American veteran application which is due by April 15, except that for tax year 2009 it was due 30 days after the taxpayer received their assessment notice.  For the 2010 tax year, and subsequent tax years, the disabled American veteran application is due by April 15.  An applicant that is not required to file income tax for the preceding calendar year must determine what their federal adjusted gross income would have been had they been required to file.

(c)  if applicable, an extension of time to file the applicant's income tax return, along with the completed individual estimated income tax worksheet (ESW) for the tax year immediately preceding the year of the application; and

(d)  if the applicant is not required to file an income tax return, the applicant must provide documentation that identifies the applicant's income.  Examples of the required documentation include, but are not limited to:

(i)  social security statements;

(ii)  pension statements; or

(iii)  bank statements.

            (3)(4)  The department or its agent will review the application and the supporting documents and may perform a field evaluation.  The department or its agent will approve or deny the application.  The applicant will be advised in writing of the decision.

            (5)  The department shall disapprove an application under the following circumstances in which the taxpayer fails to properly apply:

            (a)  the taxpayer is required to file an income tax return for the year in which the applicant seeks the exemption and does not provide a copy of the return;

            (b)  the taxpayer is not required to file an income tax return for the year in which the applicant seeks the exemption and does not provide the documentation required in (2);

            (c)  the taxpayer does not sign the application; or

            (d)  the department determines an application includes false information.

            (6)  A taxpayer who provides false information on an application may be charged with fraudulent misrepresentation under 45-6-317, MCA.

            (7)  The department will advise the applicant of its decision in writing.  The date the taxpayer receives the department's determination shall be calculated by adding seven days to the date on the determination letter.  An applicant aggrieved by the department's determination may appeal the determination to the State Tax Appeal Board within 30 days of receipt as defined in this section.  In no case shall an appeal be accepted more than 37 days after the date of the department's determination letter.

            (4)(8)  The residence of the disabled veteran or the surviving spouse of a disabled veteran is defined as "that house or dwelling owned by the applicant on the date of application of the tax year for which exemption is sought, which is used occupied by the applicant for more than six seven months per year, and which may include a garage whether attached or detached".  All other buildings, outbuildings, or improvements shall not be exempt.

(5)(9)  A lot for For purposes of the property tax exemption, will be defined as this benefit, the land beneath and immediately adjacent to the residence not to exceed five acres shall not include any separately described or assessed parcels of land, regardless of whether the parcel is contiguous with or adjacent to the parcel upon which the qualified residence is located.  Land in excess of five acres will not be exempt.

(10)  In those cases in which the qualified residence is a mobile home that is assessed separately from the land, the benefit provided by 15-6-211, MCA, will apply to the land upon which the qualified residence is located only if the land and the mobile home are owned by the applicant.

(6) remains the same but is renumbered (11).

(7)(12)  The application referred to in (1) must be submitted on an annual basis pursuant to the requirements in (1) unless a review of income tax records demonstrates that an individual who met the provisions of (1)(a) had no significant change in income level.  In that situation the annual application required may be waived by the department or its agent.  If the department or its agent does not receive an annual application from the property owner and the property owner is not eligible for the previously described waiver, the property tax exemption will be rescinded.

 

AUTH:  15-1-201, MCA

IMP:  15-6-191, 15-6-211, MCA

 

            REASONABLE NECESSITY:  The department is proposing to amend ARM 42.19.501 to assist taxpayers in understanding the requirements when making an application for a property tax exemption.

            The proposed amendments to (3) describe the documentation requirements in cases of taxpayer's filing income tax extensions or in cases of taxpayer's not required to file an income tax return.

            New (5) outlines the department's reasons upon which it will deny an application.

            New (6) refers to the statutory action that could be taken if information provided on an application is determined to be false.

            New (7) advises the applicants of their appeal rights and timelines for appealing the department's decision.

            New (8) is being amended to change the length of time that the applicant must have occupied the house or dwelling owned by the applicant from six to seven months to make the rule consistent with 15-6-134, MCA, which requires occupancy in the house or dwelling for seven months.

            New (9) and (10) explain the exempt land associated with the qualified residence.

 

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) 444-4375; or e-mail [email protected] and must be received no later than November 26, 2010.

 

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) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

8.  The bill sponsor contact requirements of 2-4-302, MCA, do apply and have been fulfilled.  The primary bill sponsor, Senator Christine Kaufman, sponsor of SB 115, was contacted on October 14, 2010, by electronic mail and Representative Mike Jopek, sponsor of HB 658, was contacted on October 14, 2010, by electronic mail.

 

 

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

CLEO ANDERSON                          DAN R. BUCKS

Rule Reviewer                                   Director of Revenue

 

Certified to Secretary of State October 18, 2010