BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

TO: All Concerned Persons

1. On October 26, 2006, the department published MAR Notice No. 42-2-766 regarding a public hearing on the proposed adoption and amendment of the above-stated rules at page 2533 of the 2006 Montana Administrative Register, Issue No. 20. On December 22, 2006, the department published notice of adoption and amendment at page 3103 of the 2006 Montana Administrative Register, Issue No. 24. On January 11, 2007, the department published a corrected notice of adoption and amendment at page 56 of the 2007 Montana Administrative Register, Issue No. 1, regarding ARM 42.20.307.

2. The reason for the correction to ARM 42.20.106 is because on August 10, 2006, the department published an amendment to this rule at page 1961 of the 2006 Montana Administrative Register, Issue No. 15 and those amendments were not included in the text of the rule as published on October 26, 2006 in MAR Notice No. 42-2-766. The amendment reads as follows:

42.20.106 DEFINITIONS The following definitions apply to this subchapter:

(1) and (2) remain the same.

(3) "Comparable properties" means properties that have similar utility, use, function, and are of a similar type as the subject property. Comparable properties must be influenced by the same set of economic trends, and physical, economic, governmental, and social factors as the subject property. Comparable properties must have the potential of a similar use as the subject property. For any property that does not fit into this definition, the department will rely on the definition of comparable property contained in 15-1-101, MCA.

(a) Within the definition of comparable property in (1), the following types of property are considered comparable:

(i) through (12)(b) remain the same.

AUTH: 15-1-201, MCA

IMP: 15-6-101, 15-7-304, 15-7-306, 15-24-1501, MCA

3. The reason for the correction to ARM 42.20.503 is because the calculations for the phase-in values for 2007 and 2008 were inadvertently omitted from the proposal text in MAR Notice No. 42-2-766. The amendment reads as follows:

42.20.503 DETERMINATION OF CURRENT YEAR PHASE-IN VALUE FOR CLASS THREE, CLASS FOUR, AND CLASS TEN PROPERTY (1) For tax years 2003 through 2008, the department is required to determine the current year phase-in value for each property in class three, class four, and class ten annually. The current year phase-in value is determined by subtracting the 2002 VBR from the 2003 reappraisal value multiplied by the applicable phase-in percentage, the product of which is added to the 2002 VBR value. The calculations of the phase-in values are represented by the following formula:

2003 Phase-in =

[(2003 reappraisal value - 2002 VBR value) x 16.6%]

+ 2002 VBR

2004 Phase-in =

[(2003 reappraisal value - 2002 VBR value) x 33.32%]

+ 2002 VBR

2005 Phase-in =

[(2003 reappraisal value - 2002 VBR value) x 49.98%]

+ 2002 VBR

2006 Phase-in =

[(2003 reappraisal value - 2002 VBR value) x 66.64%]

+ 2002 VBR value

2007 Phase-in =

[(2003 reappraisal value - 2002 VBR value) x 83.30%]

+ 2002 VBR value

2008 Phase-in =

2003 reappraisal value

AUTH: 15-1-201, 15-7-111, MCA

IMP: 15-7-111, MCA

4. The reason for the correction to ARM 42.20.601 is to correct a typographical error. The adoption notice published on December 22, 2006 stated (14) through (23) remain as proposed and it should have stated (14) through (26) remain as proposed. The amendment reads as follows:

42.20.601 DEFINITIONS The following definitions apply to this subchapter:

(1) through (12) remain as proposed.

(13) "Income from agricultural production" means the gross amount of income received from the sale of food, feed, fiber commodities, livestock, poultry, bees, biological control insects, fruits, vegetables, and also includes sod, ornamental, nursery, and horticultural crops that are raised, grown, or produced for commercial purposes, income from farm rental, the sale of draft, breeding dairy, or sporting livestock, the share of partnership of S family corporation gross income received from a farming or ranching business entity, or the taxpayer's share of distributable income from an estate or trust involved in an agricultural business.

(a) Wages received as a farm employee or wages received from a farm corporation are not gross income from farming.

(14) through (26) remain as proposed.

AUTH: 15-7-111, MCA

IMP: 15-1-101, 15-6-133, 15-7-201, 15-7-202, MCA

5. Replacement pages for the corrected notice of adoption and amendment were submitted to the Secretary of State on December 29, 2006.

6. An electronic copy of this Corrected Notice is available through the department's site on the World Wide Web at www.mt.gov/revenue, under the Notice of Rulemaking section. The department strives to make the electronic copy of this Corrected Notice 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.

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

                     CLEO ANDERSON                                  DAN R. BUCKS

                     Rule Reviewer                                           Director of Revenue

Certified to Secretary of State January 16, 2007