BEFORE THE DEPARTMENT OF REVENUE
OF THE STATE OF MONTANA
In the matter of the amendment of ARM 42.15.215 relating to senior interest income exclusions
TO: All Concerned Persons
1. On March 5, 2009, at 1:00 p.m., a public hearing will be held in the 4-East Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the amendment 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., March 2, 2009, 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 firstname.lastname@example.org.
3. The rule proposed to be amended provides as follows, stricken matter interlined, new matter underlined:
42.15.215 SENIOR INTEREST INCOME EXCLUSION (1) If a taxpayer or a taxpayer's spouse is age 65 or over, certain interest income is exempt as provided in this rule.
(2) If a taxpayer is single, the taxpayer may exclude up to $800 of interest income included in the taxpayer's
federal Montana adjusted gross income.
(3) If married taxpayers file a joint return, they may exclude up to $1600 of interest income included in their joint or in their separate
federal Montana adjusted gross income even if only one spouse is age 65 or over.
(4) If a married taxpayer who is age 65 or older files separately, the taxpayer may exclude up to $800 of interest income earned by them and included in their
federal Montana adjusted gross income. The taxpayer may not exclude interest income earned by the taxpayer's spouse.
(5) The exclusion cannot exceed the amount reported as taxable interest income.
AUTH: 15-30-305, MCA
IMP: 15-30-111, MCA
REASONABLE NECESSITY: The department is proposing to amend ARM 42.15.215 to correctly provide that it is interest included in a taxpayer's Montana adjusted gross income that is subject to exclusion under 15-30-111, MCA, and this rule. ARM 42.15.215 was originally adopted as ARM 42.15.113 and was subsequently amended and transferred to subchapter 2 in 2004. Before the amendment, the section did not specify what interest income was excluded – how this exclusion related to a separate exclusion for tax-exempt interest. The 2004 amended rule, by stating that the excluded interest had to be included in a taxpayer's federal adjusted gross income, was intended only to prevent double exclusion of tax-exempt interest. The language as written, however, incorrectly prevents seniors from excluding interest from other states' obligations that are not included in federal adjusted gross income.
Because the language now being corrected by this proposed amendment was adopted incorrectly, the department proposes to apply the proposed amendment retroactively to the adoption date of the 2004 transfer and amendment, which was December 17, 2004.
If adopted as proposed, the department will advise taxpayers of the retroactive application of the amendment to the rule by posting information on the department's web site, providing specific communications to tax practitioners, and through other appropriate reasonable measures to ensure taxpayers understand that they may file an amended tax return for tax years 2005 through 2007 to address this error.
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@example.com and must be received no later than March 13, 2009.
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, do not apply.
/s/ Cleo Anderson /s/ Dan R. Bucks
CLEO ANDERSON DAN R. BUCKS
Rule Reviewer Director of Revenue
Certified to Secretary of State February 2, 2009