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 42.20.683 pertaining to specialty and unique crops; additional requirements for agricultural land classification

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NOTICE OF AMENDMENT

TO: All Concerned Persons

1. On November 8, 2019, the Department of Revenue published MAR Notice No. 42-1011 pertaining to the public hearing on the proposed amendment of the above-stated rule at page 2006 of the 2019 Montana Administrative Register, Issue Number 21.

2. On December 5, 2019, a public hearing was held to consider the proposed amendment. No proponents or opponents were present and no proponent or opponent oral testimony was received. The department received written comments requesting an additional change to the rule from an interested person.

3. The department has amended ARM 42.20.683 as proposed.

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

COMMENT 1: The sole commenter to the rulemaking requested a change to ARM 42.20.683(2)(c) to remove the words "marketing of" and "results," as well as changing the cited authority at the end of the subsection from ARM 42.20.683 to

15-7-202, MCA. The commenter believes the proposed additional amendments are necessary to eliminate unnecessary, inconsistent, and potentially confusing language with 15-7-202, MCA, as amended by Senate Bill 69 (2019), as it relates to the gross income requirement for agricultural parcels of less than 20 acres. Further, the commenter offers that a landowner does not market gross income which is what the current rule text implies.

The commenter also states that (2)(c) is not consistent with tax appeal board precedent which determined the department could not impose an acreage requirement in rule where statute did not contain such a requirement.

The commenter contends that the provisions of 15-7-202(1)(b), MCA, apply only to parcels of 20 to 160 acres and not to parcels of less than 20 acres, which are instead subject to the different provisions of 15-7-202(2), MCA.

RESPONSE 1: The department thanks the commenter for his comments. The department agrees that the provisions of 15-7-202(1)(b), MCA, apply to contiguous parcels of land 20 acres or more but less than 160 acres; however, the department's proposed rule amendment is not inconsistent with the statutory requirements for classification as agricultural. The department's proposed rule amendments in (2) summarize the statutory requirements for agricultural classification for both parcels of land 20 acres or more but less than 160 acres and parcels of land totaling less than 20 acres. Section 15-7-202(1)(b)(i)(A) and (2)(a), MCA similarly state that " . . .[t]he owner. . . . markets not less than $1,500 in annual gross income from the raising of agricultural products produced by the land." The department will leave in references to 'marketing' because this is consistent with the language in statute.

The department also disagrees with the commenter that the rule amendments run contrary to previous case decisions made by the Montana Tax Appeal Board since the department is not instituting an acreage requirement by rule. Although, the department acknowledges those case decisions were the basis for prior department rulemaking to remove such requirements from its rules.

The department also believes that it correctly cites to ARM 42.20.620 in the amendments to (2)(c), which is necessary to cross-reference the rule that provides the acceptable proof of gross income requirements because those standards are not found in 15-7-202, MCA.

Based on the foregoing, the department declines to make further amendment to ARM 42.20.683 and adopts the rule amendments as proposed.

/s/ Todd Olson /s/ Gene Walborn

Todd Olson Gene Walborn

Rule Reviewer Director of Revenue

Certified to the Secretary of State January 7, 2020.