BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.19.401, 42.19.405, 42.19.406, and 42.19.501 pertaining to property tax assistance and exemptions

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO: All Concerned Persons

 

1. On February 6, 2014, at 3 p.m., the Department of Revenue will hold a public hearing in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana, to consider the proposed amendment of the above-stated rules. The conference room is most readily accessed by entering through the east doors of the building.

 

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, please advise the department of the nature of the accommodation needed, no later than 5 p.m. on January 27, 2014. Please contact Laurie Logan, Department of Revenue, Director's Office, PO Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail lalogan@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 (PTAP) (1) The property owner of record or the property owner's agent must make annual application to the local department office, in order to receive the PTAP benefit provided for in 15-6-134, MCA. An application must be filed, on or before April 15 of the year for which the benefit is sought, on a form available from the local department office. Applications postmarked after April 15 will not be considered for that year unless:

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

(b) the taxpayer can demonstrate the impediments listed above, while not necessarily continuous, existed at sufficient levels in the period of January 1 to April 15 to prevent timely filing of the application. The department may waive the requirement set out in this section, on a case-by-case basis, and upon receipt of a written statement, plus any documentation explaining circumstances where:

(i) an applicant who participated in the program in the prior year, meets income requirements in the current year; and

(ii) confusion caused by the infirmity may have arisen.

(2) The benefit is a reduction in taxable value that applies to the first $100,000 or less of the taxable market value of any improvement on real property, including trailers, manufactured homes, or mobile homes, and appurtenant land not exceeding five acres owned or under contract for deed and actually occupied for at least seven months a year as the primary residential dwelling of one or more qualified applicants. Buildings used for agricultural purposes do not qualify for the benefit.

(3) For purposes of this benefit, the appurtenant land not exceeding 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 primary residence is located, unless the primary residence is a mobile home or manufactured home that is assessed separately from the land. In which case, the benefit will apply to the land upon which the primary residence is located only if the land and the mobile home are owned by the applicant.

(4) An application must be filed, on or before April 15 of the year for which the benefit is sought, on a form available from the local department office. Applications postmarked after April 15 will be considered for the following tax year.

(5) The department may waive the April 15 deadline if the applicant:

(a) participated in the program in the prior year;

(b) was unable to apply for the current year due to hospitalization, physical illness, infirmity, or mental illness, and can demonstrate:

(i) one or more of the impediments, while not necessarily continuous, existed at sufficient levels between January 1 and April 15 of the tax year in which the applicant is applying, that prevented timely filing of the application; or

(ii) confusion caused by the infirmity may have prevented timely filing of the application.

(2)(6) The department may waive the requirement set out in (1) April 15 deadline on a case-by-case basis, if the applicant:

(a) the applicant qualified for the program in the prior year; and

(b) upon receipt of submits a written statement, plus any documents explaining the circumstances of why the applicant failed to meet the deadline any circumstances not identified in (5) that prevented timely filing of the application.

(3)(7) The department may accept and process the application and proof of income if waive the April 15 deadline on a case-by-case basis if the applicant:

(a) did not previously participate in the PTAP;

(b) meets the requirements of (5) or (6); and

(c) provides a completed application that is submitted or postmarked no later than July 1 of the year for which benefit is sought.

(8) Willful misrepresentation of facts pertaining to income or the impediments that prevent timely application filing will result in the automatic rejection of the application.

(4)(9) 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 income of all other owners of the property the income that is attributable to all owner occupants who occupied the property as their primary residence seven months of the preceding calendar year.

(5)(10) Income Total household income includes, but is not limited to:

(a) through (m) remain the same.

(11) The department requires specific documentation if the applicant:

(6) If the applicant is required to file

(a) files an income tax return, a copy of the Montana state income tax return must be attached. to the application;

(7) If the applicant

(b) qualifies for an extension of time to file the applicant's their income tax return, the applicant must indicate this on the application and, no later than October 25, provide a copy of their completed income tax return for the tax year immediately preceding the year of the application.; or

(8) If the applicant

(c) is not required to file an income tax return, they must complete the appropriate portion of the application and submit documentation, that supports identifies the reported income, as defined in (4)(9). Examples of the required acceptable documentation include, but are not limited to,:

(i)  social security statements,;

(ii) pension statements,; or

(iii) bank statements.

(9) 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. A decision to deny such an application due to the inability to provide sufficient information will be forwarded to and reviewed by an area manager or regional manager.

(10) remains the same but is renumbered (12).

(11) 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.

(12) For purposes of this benefit, the land beneath and immediately adjacent to the residence 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. In those cases in which the qualified residence is a mobile home that is assessed separately from the land, the benefit 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.

(13) The PTAP benefit is not available when a qualified applicant purchases a dwelling after the application deadline for the tax year in which the application is submitted. In this situation, the department will consider the application for the following year.

(14) The PTAP benefit is not available when a qualified applicant sells the dwelling. The tax benefit does not transfer to the new owner and the new owner is responsible for the proration of the taxes from the date of sale.

 

AUTH: 15-1-201, MCA

IMP: 15-6-134, MCA

 

REASONABLE NECESSITY: The department proposes to amend ARM 42.19.401 to more closely mirror the EPTAP language in ARM 42.19.406 and to ensure consistent and equitable treatment between the different property tax assistance programs. The department further proposes to amend the rule to remove redundancy in the language and to add clarity by providing further explanation within the rule in response to inquiries and feedback received from taxpayers. The department further proposes to add the acronym PTAP to the rule title and content.

 

42.19.405 DEFINITIONS The following definitions apply to rules found in this subchapter chapter.

(1) "Ancillary" means buildings of secondary importance in comparison to the primary residence, including but not limited to garages and storage sheds.

(2) "Entity" means a corporation, fiduciary, or pass-through entity, as defined in 15-30-101 15-30-2101, MCA, and an association, joint-stock company, syndicate, trust or estate, or any other nonnatural person.

(3) "Dwelling" means the following, depending upon the type of tax assistance program. For the purpose of:

(a) a property tax assistance program (PTAP) application, it means any building, structure, manufactured home, or mobile home, or part thereof, used and occupied for human habitation or intended to be so used, and includes any outbuildings and appurtenances belonging to the applicant, and as much surrounding land, not exceeding five acres, 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; or

(b)  an extended property tax assistance program (EPTAP) application, it 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.

(2)(4) "Household" is an association of persons who live in the same dwelling, sharing its furnishings, facilities, accommodations, and expenses.

(5) "Income" applies to the property tax exemption for qualified disabled veterans and means:

(a) the applicant's income, if the applicant files their federal tax return as single or head of household;

(b) the applicant's and spouse's income, if they file their federal tax return as married; or

(c) the applicant's income, if the applicant does not file a federal tax return; the applicant must report their income based upon what their filing status would be if they were required to file a federal tax return.

(6) "Primary residence" means the following, depending upon the type of tax assistance program. For the purpose of:

(a) the PTAP it means a residential dwelling that was owned and occupied for more than seven months of the preceding calendar year;

(b) the EPTAP it means a Montana residential dwelling actually occupied by itself or in combination with another residential dwelling in Montana for at least seven months a year; or

(c) the property tax exemption for qualified disabled veterans, it means a residential dwelling that is occupied by the disabled veteran or their surviving spouse at the time the application is filed.

(7) "Total household income" means the following, depending upon the type of tax assistance program. For the purpose of:

(a) the PTAP, it means the income as reported on the Montana tax return or returns for the year in which the assistance is being claimed excluding losses, depletion, and depreciation and before any federal or state adjustments to income; or

(b) the EPTAP, it means the sum of the income of all members of the household and all other persons who are owners of the property. Income, as used in this section, includes income from all sources, including net business income and otherwise tax-exempt income of all types but not including social security income paid directly to a nursing home. Net business income is gross income less ordinary expenses but before deducting depreciation or depletion allowance, or both.  Income also includes the income of any natural person or entity that is a trustee of or controls 25 percent or more of the applicant entity. For single-family rental dwellings, total household income does not include the income of the tenant.

 

AUTH: 15-1-201, MCA

IMP: 15-6-193, 15-30-101 15-30-2101, MCA

 

REASONABLE NECESSITY: The department proposes to amend ARM 42.19.405 by changing the introduction to the rule to cover terms used throughout the chapter rather than limiting the definitions to terms used in a single subchapter.

The proposed amendments expand and define additional terms and are being proposed to enhance taxpayer understanding of the criteria for qualifying for the different programs, because each program has different qualifying criteria and can be confusing to the taxpayer. Additionally, the department proposes to update an implementing citation due to recodification.

 

42.19.406 EXTENDED PROPERTY TAX ASSISTANCE PROGRAM (EPTAP) (1) The department will determine which taxpayers and dwellings used as primary residences, as defined in ARM 42.19.405, are potentially eligible for the extended property tax assistance program EPTAP and will mail applications to those taxpayers. The department determines the taxpayers who are potentially eligible during the first year of the reappraisal 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 1 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 7 months of each preceding year;

(b) through (d) remain the same, but are renumbered (a) through (c).

(2) An individual unit of a multiple-unit dwelling that meets the qualification requirements of (1)(a) through (1)(d)(c) may be eligible for the benefits allowed under this program the EPTAP, provided that the owner of the individual unit meets the occupancy requirement in (1)(a) as defined in ARM 42.19.405. The department will mail one application form to the owner of a multiple-unit dwelling to determine if the owner meets the occupancy requirement on an individual unit, and if not, there will be no benefit granted to the owner of a multi-unit dwelling through this program the EPTAP.

(3) remains the same.

(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 8018, Helena, Montana 59604-8018

Department of Revenue

PO Box 8018

Helena, Montana 59604-8018.

 

Beginning with tax year 2010 and all subsequent tax years, the completed application must be postmarked no later than April 15 in order for an applicant to receive the tax rate adjustment for the year the tax rate adjustment is sought.

(5) An application must be filed, on or before April 15 of the year for which the benefit is sought, on a form provided by the department. Applications postmarked after April 15 will not be considered. for the tax rate adjustment provided for under this section unless:

(6) The department may waive the April 15 deadline if the applicant:

(a) the applicant participated in the program in the prior year;

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

(b) the taxpayer can demonstrate:

(i) one or more of the impediments listed above, while not necessarily continuous, existed at sufficient levels in the period of between January 1 to and April 15 of the tax year in which the applicant is applying, to prevent that prevented timely filing of the reporting form application; or

(ii) confusion caused by the infirmity may have prevented timely filing of the application.

(7) The department may waive this requirement, the April 15 deadline, on a case-by-case basis, and upon receipt of a written statement, plus any documentation explaining circumstances where if the applicant:

(i) an applicant who participated in

(a) qualified for the program in the prior year,;

(b) would meet meets income requirements in the current year; and

(c) submits a written statement, plus any documents explaining any circumstances not identified in (6) that prevented timely filing of the application.

(ii) confusion due to infirmity may have arisen; and

(c) The department may waive this requirement on a case-by-case basis, if:

(i) the applicant qualified for the program in the prior year; and

(ii) upon receipt of a written statement, plus any documents explaining the circumstances of why the applicant failed to meet the deadline.

(8) The department may waive the April 15 deadline, on a case-by-case basis, if the applicant:

(a) did not previously participate in the EPTAP;

(b) meets the requirements of (6) or (7); and

(c) provides a completed application that is submitted or postmarked no later than July 1 of the year for which the benefit is sought.

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

(a) through (c) remain the same.

(6) through (9) remain the same but are renumbered (10) through (13).

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

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

(b) copies of the applicant's federal individual, partnership, estates or trusts, or corporate Montana income tax return, including all state and federal schedules, for the tax year immediately preceding the year of the application. For example: complete copies of the appropriate 2009 2013 tax year return must accompany a 2010 2014 application for the extended property tax assistance program, which is due by April 15, 2010 2014.

(11)(15) 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 Individual Estimated Income Tax Worksheet (ESW) for the tax year immediately preceding the year of the application. This form is available at on the department's web site, revenue.mt.gov, or at the local revenue department office.

(12)(16) 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)(9). Examples of the required acceptable documentation include, but are not limited to:

(a)  social security statements,;

(b) pension statements,; or

(c)  bank statements.

(13)(17) Failure to provide the required information in (4) through (12)(16) will result in the application being denied. All tax return information will be treated as confidential by the department.

(14) through (19) remain the same, but are renumbered (18) through (23).

(20)(24) The new taxable value calculated due to the extended property tax assistance program EPTAP will be available for review at the local department office.

 

AUTH: 15-1-201, MCA

IMP: 15-6-193, MCA

 

REASONABLE NECESSITY: The department proposes to amend ARM 42.19.406 to enhance taxpayer understanding of the qualifying criteria for the EPTAP tax benefit by removing redundancy in the rule language, to more closely mirror the language with ARM 42.19.401 for consistency, and to provide further explanation in response to areas of taxpayer inquiries.

The department also proposes to add the acronym EPTAP to the rule title and content, and to capitalize proper names where used in the rule, as a matter of housekeeping.

 

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

(2) The exemption applies to any improvement on real property, including trailers, manufactured homes, or mobile homes, and appurtenant land, not to exceed five acres, that is owned and occupied by a veteran or a veteran's spouse provided for in 15-6-211, MCA. Land in excess of five acres and buildings used for agricultural purposes will not be exempt.

(3) For purposes of this exemption, the land beneath and immediately adjacent to the residence 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, unless the primary residence is a mobile home or manufactured home that is assessed separately from the land. In which case, the benefit will apply to the land upon which the primary residence is located, only if the land and the mobile home are owned by the applicant.

(4) An application must be filed, on or before April 15 of the year for which the exemption is sought, on a form available from the local department office. Applications postmarked after April 15 will be considered for the following tax year.

(5) The department may waive the April 15 deadline if the applicant:

(a) the applicant participated in the program in the prior year;

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

(b) the taxpayer can demonstrate:

(i) one or more of the impediments listed above, while not necessarily continuous, existed at sufficient levels in the period of between January 1 to and April 15, of the tax year in which the applicant is applying, to prevent that prevented timely filing of the application.; or

(ii) confusion caused by the infirmity may have prevented timely filing of the application.

(6) The department may waive the requirement set out in this section, April 15 deadline, on a case-by-case basis, and upon receipt of a written statement, plus any documentation explaining circumstances where if the applicant:

(i) an applicant who participated in

(a) qualified for the program in the prior year,;

(b) meets the income requirements in the current year; and

(ii) confusion caused by the infirmity may have arisen

(c) submits a written statement, plus any document explaining any circumstances not identified in (5) that prevented timely filing of the application.

(2)(7) The department may waive the requirement set out in (1) on a case-by-case basis, if April 15 deadline if the applicant:

(a) the applicant qualified for the program in the prior year; and did not previously receive the exemption;

(b) upon receipt of a written statement, plus any documents explaining the circumstances of why the applicant failed to meet the deadline. meets the requirements of (5) or (6); and

(c) provides a completed application that is submitted or postmarked no later than July 1 of the year for which the exemption is sought.

(3)(8) The department may accept and process the applications and proof of income if submitted or postmarked no later than July 1 of the year for which the benefit is sought.

(9) Willful misrepresentation of facts pertaining to income or the impediments that prevent timely application filing will result in the automatic rejection of the application.

(4)(10) The following documents must accompany the application:

(a) through (c) remain the same.

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

(i) social security statements;

(ii) pension statements; or

(iii) bank statements.

(5) 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. A decision to deny such an application due to the inability to provide sufficient information will be forwarded to and reviewed by an area manager or regional manager.

(6)(11) The department shall disapprove an application if it contains false information under the following or in circumstances in which where 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 (3); (10); or

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

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

(7) and (8) remain the same, but are renumbered (12) and (13).

(9) 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 occupied by the applicant for more than seven months per year, and which may include a garage whether attached or detached." All other buildings, outbuildings, or improvements shall not be exempt.

(10) For purposes of this benefit, the land beneath and immediately adjacent to the residence 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.

(11) 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.

(12) remains the same, but is renumbered (14).

(13) The application referred to in (1) must be submitted on an annual basis pursuant to the requirements in (1). 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: 15-6-211, MCA

 

REASONABLE NECESSITY: The department proposes to amend ARM 42.19.501 to enhance taxpayer understanding of the qualifying criteria for the property tax exemption for qualified disabled veterans benefit by removing redundancy in the rule language. As proposed to be amended, the rule will more closely mirror the language in ARM 42.19.401 and will provide further explanation in response to topics raised by taxpayer inquiries. The department further proposes to make grammatical and punctuation amendments for consistency within the rule.

 

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: Laurie Logan, Department of Revenue, Director's Office, PO Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail lalogan@mt.gov and must be received no later than February 13, 2014.

 

5. Laurie Logan, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

6. An electronic copy of this notice is available on the department's web site at revenue.mt.gov. Select the "Resources" tab at the top of the homepage and then locate the "Proposal Notices - Hearing Information" section below. The department strives to make the electronic copy of this 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. While the department also strives to keep its web site accessible at all times, in some instances it may be temporarily unavailable 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 notice regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the person in number 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, do not apply.

 

9. With regard to the requirements of 2-4-111, MCA, the department has determined that the proposed amendments to the rules contained in this notice will not significantly and directly impact small businesses.

 

 

/s/ Laurie Logan                               /s/ Alan Peura acting for

LAURIE LOGAN                              MIKE KADAS

Rule Reviewer                                 Director of Revenue

 

Certified to the Secretary of State January 6, 2014