BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.19.401 and 42.19.501 relating to the property tax assistance program and tax exemptions for disabled veterans

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO:  All Concerned Persons

 

1.  On November 24, 2009, at 4:00 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 9, 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 canderson@mt.gov.

 

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 application through the local department office, in order to receive the benefit provided for in 15-6-134, MCA.  An application must be made on a form available from the local county appraisal/assessment office before March 15 of in the year for which the benefit is sought. 

(a)  For tax years previous to 2009, Applications applications postmarked after March 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. 

(b)  For tax year 2009, applications were required to be postmarked by no later than 30 days after the taxpayer received their assessment notice.  Applications postmarked after that date 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.

(c)  For tax year 2010, 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.

(2)  These impediments must be demonstrated to have existed at significant levels from January 1 of the current year to the time of application.  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 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.

(3) (4)  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.

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

(a)  For the 2009 tax year, The the applicant is required to list total income from all sources, including otherwise tax-exempt income of all types report their federal adjusted gross income as reported on their federal income tax return for the preceding calendar year.  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.

(b)  For the 2010 and subsequent tax years, the applicant is required to list total household income, which includes otherwise tax exempt income of all types.  That income includes, but is not limited to, :

(i)  employment income, ;

(ii)  gross business income less ordinary operating expenses but before deducting depreciation or depletion allowance, ;

(iii)  social security, ;

(iv)  railroad pension, ;

(v)  teachers' pension, ;

(vi)  employment pension, ;

(vii)  veterans' pension, ;

(viii)  any other pension, ;

(ix)  alimony, ;

(x)  disability income, ;

(xi)  unemployment benefits, ;

(xii)  welfare payments, ;

(xiii)  aid to dependent children, ;

(xiv)  rentals, ;

(xv)  interest from investments, ;

(xvi)  stock/bond interest or dividends, ;

(xvii)  interest from banks and ;

(xviii)  any other income, but not including social security income paid directly to a nursing home, ;

(xix)  food stamps; or

(xx)  direct utility payments paid by the energy share program; or

(xxi)  capital gains.

(c)  Total household income is not reduced or otherwise modified by losses, depletion, depreciation, or any Montana or federal adjustment to income.

(5)(6)  Gross business income less ordinary operating expenses but before deducting depreciation or depletion allowance is reported on schedule C, or schedule F, of the federal income tax return.  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. 

(7)  The applications described in (5)(a) and (b) will require a copy of the appropriate form to be attached.

 

AUTH:  15-1-201, MCA

IMP: 15-6-134, 15-6-191, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.19.401 to better inform all Montana taxpayers about their potential eligibility for the property tax assistance program.  Prior to 2009, the income portion of the program required each taxpayer to report their income from all sources.  A March 15 application deadline was also a requirement.  There was concern that the income requirements were too difficult for taxpayers to gather and provide the information, it was difficult to understand and was an impediment to taxpayers.  The March 15 deadline also was viewed as a problem since much of the required information wasn't available to taxpayers until April 15.

Initially the 2009 Legislature through Senate Bill 115 (Ch. 6, L. 2009), addressed those issues by changing the income requirement to the federal adjusted income as identified on the preceding year's federal income tax form.  The legislation also extended the application deadline to April 15.  Senate Bill 115 provided a straightforward easy location to obtain the information not only from the taxpayer's perspective but also for the department's field staff.  It also accommodated the application deadline concerns.  The result of all the changes could have meant that a considerable increase in the number of taxpayers that would have been eligible for the program. 

As a result of concerns that the new law might provide unwarranted property tax relief to specific groups, the new language was modified further by the 2009 Legislature in House Bill 658 (Ch. 483, L. 2009).  That legislation provides that eligibility will be determined from total household income with no deductions for losses, depreciation, depletion, or any Montana or federal adjustment to income.  In an effort to give clear direction to potential eligible taxpayers, examples of what are considered household income are specified in the new rule. 

The application deadline was extended to July 15 for the 2009 tax year.  The provisions of House Bill 658 (Ch. 483, L. 2009) allowed for additional deadline extensions to accommodate reappraisal.  For the 2009 tax year, the department extended the July 15 deadline to 30 days after the taxpayer received their assessment notice.  That decision was made to allow all eligible taxpayers the maximum amount of time to make a successful application. 

The application deadline for 2010 and subsequent tax years is returned to April 15 in the provisions of House Bill 658 (Ch. 483, L. 2009).  These rules acknowledge that action.  The rules also continue the long standing practice of asking for a copy of the applicant's federal income tax return.

The department is deleting 15-6-191, MCA as an implementing cite because it has been repealed for 2010 and subsequent tax years.

 

42.19.501  PROPERTY TAX EXEMPTION FOR QUALIFIED DISABLED VETERANS  (1) remains the same.

(2)  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; and

(b)  copies of the applicant's federal or state income tax return for the tax year immediately preceding calendar the year.  of the application.  For example, complete copies (including all schedules) of the appropriate 2004 2008 tax year return must accompany a 2005 2009 application for the disabled American veteran application which is due by April 15, 2005 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.

(3) through (5) remain the same.

(6)  Tax exemptions for qualified veterans or their surviving spouses may not be prorated, except as provided for in (c):

(a)  If a qualified veteran or their surviving spouse purchases a home and applies for the exemption by the deadline, they would receive the exemption for the full year.

(b)  If a qualified veteran or their surviving spouse purchases a home after the application deadline, they would not receive the exemption for that year.

(c)  If a qualified veteran or their surviving spouse has the exemption on a home and sells it, the taxes are prorated and assessed to the new owner for the remainder of the year based on 15-16-203, MCA.

(7) remains the same.

 

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 better inform all Montana taxpayers about their potential eligibility for the disabled American veteran program.  The application deadline for this program has historically been April 15. 

The provisions of House Bill 658 (Ch. 483, L. 2009) allowed for additional deadline extensions to accommodate reappraisal.  For the 2009 tax year, the department extended the April 15 deadline to 30 days after the taxpayer received their assessment notice.  That decision was made to allow all eligible taxpayers the maximum amount of time to make a successful application.  The provisions of House Bill 658 (Ch. 483, L. 2009) returned the application deadline for the 2010 and subsequent tax years to April 15.  These rules acknowledge that action. 

The department is proposing language that will address questions, regarding the maintenance of exemption qualifications, posed by eligible disabled American veteran taxpayers that buy and sell property throughout the year.

As with the proposed amendments to ARM 42.19.401, the department is deleting 15-6-191, MCA, as an implementing cite because it has been repealed for the 2010 tax year and subsequent tax years.

 

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 canderson@mt.gov and must be received no later than December 4, 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 contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The primary bill sponsor for Senate Bill 115, Senator Christine Kaufmann, and the primary bill sponsor for House Bill 658, Representative Mike Jopek, were contacted on October 14, 2009, 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 19, 2009