BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

 

TO: All Concerned Persons

 

1. On November 3, 2008, at 10:30 a.m., a public hearing will be held in the Director's Office (Fourth Floor) 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., October 24, 2008, 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:

 

42.21.113 LEASED AND RENTAL EQUIPMENT (1) Leased or rental equipment that is leased or rented on an hourly, daily, or weekly basis, but is not exempt under 15-6-201(1)(cc) 15-6-219, MCA, will be valued in the following manner:

(a) For equipment that has an acquired cost of $0 to $500, the department shall use a four-year trended depreciation schedule. The trended schedule will be the same as ARM 42.21.155, category 1.

 

 

(b) For equipment that has an acquired cost of $501 to $1,500, the department shall use a five-year trended depreciation schedule. The trended schedule will be the same as ARM 42.21.155, category 2.

 

 

(c) For equipment that has an acquired cost of $1,501 to $5,000, the department shall use a ten-year trended depreciation schedule. The trended schedule will be the same as ARM 42.21.155, category 8.

 

 

(d) For equipment that has an acquired cost of $5,001 to $15,000, the department shall use the trended depreciation schedule for heavy equipment. The schedule will be the same as ARM 42.21.131.

 

 

(e) For rental video tapes and digital video disks the following schedule will be used:

 

 

(2) through (4) remain the same.

(5) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, 15-23-108, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: The department is proposing to amend ARM 41.21.113 to clarify through the trend tables how the department arrives at market value as required by 15-8-111, MCA. Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property. To determine the market value of personal property, the department has historically used and adopted the concept of trending and depreciation. The method by which trended depreciation schedules are derived is described in the existing rule, and that method is not being changed. The First Judicial District Court indicated in 1986 that the department must publish these trend tables annually and these amendments are in compliance with that order.

 

The department is further amending ARM 42.21.113 to correct the statutory reference found in (1) from 15-6-201(1)(cc), MCA to 15-6-219, MCA to reflect a change enacted by the 2005 Legislature in Senate Bill 68.

 

42.21.123 FARM MACHINERY AND EQUIPMENT (1) through (4) remain the same.

(5) The trended depreciation schedule referred to in (2) through (4) is listed below and shall be used for tax year 2008 2009. The schedule is derived by using the guidebook listed in (1) as the data base. The values derived through use of the trended depreciation schedule will approximate average wholesale value.

 

 

(6) remains the same.

7) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.131 HEAVY EQUIPMENT (1) through (4) remain the same.

(5) The trended depreciation schedule referred to in (2), (3), and (4) is listed below and shall be used for tax year 2008 2009. The values derived through the use of these percentages approximate the "quick sale" values as calculated in the guidebooks listed in (1).

 

HEAVY EQUIPMENT TRENDED DEPRECIATION SCHEDULE

 

 

(6) This rule is effective for tax years beginning after December 31, 2007 2008, and applies to all heavy equipment.

 

AUTH: 15-1-201, 15-23-108, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.137 SEISMOGRAPH UNITS AND ALLIED EQUIPMENT (1) through (3) remain the same.

(4) The trended depreciation schedules referred to in (1) through (3) are listed below and shall be used for tax year 2008 2009.

 

SEISMOGRAPH UNIT

 

 

SEISMOGRAPH ALLIED EQUIPMENT

 

 

(5) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.138 OIL AND GAS FIELD MACHINERY AND EQUIPMENT

(1) and (2) remain the same.

(3) The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2008 2009.

 

 

(4) through (5) remain the same.

(6) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-213, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.139 WORK-OVER AND SERVICE RIGS (1) through (4) remain the same.

(5) The trended depreciation schedule referred to in (2) and (4) is listed below and shall be used for tax year 2008 2009.

 

 

(6) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.140 OIL DRILLING RIGS (1) remains the same.

(2) The department shall prepare a ten-year trended depreciation schedule for oil drilling rigs. The trended depreciation schedule shall be derived from depreciation factors published by Marshall and Swift Publication Company. The "% good" for all drill rigs less than one year old shall be 100%. The trended depreciation schedule for tax year 2008 2009 is listed below.

 

 

(3) remains the same.

(4) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.151 TELEVISION CABLE SYSTEMS (1) through (3) remain the same.

(4) The trended depreciation schedules referred to in (2) and (3) are listed below and shall be in effect for tax year 2008 2009.

 

 

(5) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.153 SKI LIFT EQUIPMENT (1) and (2) remain the same.

(3) The depreciation schedules shall be determined by the life expectancy of the equipment and will normally compensate for the loss in value due to ordinary wear and tear, offset by reasonable maintenance, and ordinary functional obsolescence due to the technological changes during the life expectancy period.

 

 

(a) The taxpayer must initially list with the department:

(i) all equipment by year of installation; and

(ii) installed costs of that equipment.

(b) Each year thereafter, the taxpayer must list with the department:

(i) all additions or deletions from the previous year's list, with installed cost.

(4) This methodology is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.155 DEPRECIATION SCHEDULES (1) remains the same.

(2) The trended depreciation schedules for tax year 2008 2009 are listed below. The categories are explained in ARM 42.21.156. The trend factors are derived according to ARM 42.21.156 and 42.21.157.

 

 

(3) This rule is effective for tax years beginning after December 31, 2007 2008.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the first paragraph of the reasonable necessity for ARM 42.21.113.

 

42.21.156 CATEGORIES (1) remains the same.

(2) Category 1 consists of computer systems, data processing equipment, software, computerized medical equipment, and video games. The index used will be the "Producer Price Index for the 1972 Standard Industrial Classification Manual," Code #3674, "Semiconductors and Related Devices," published by the United States Department of Labor, Bureau of Labor Statistics. A four-year depreciation table will be used.

(3) through (9) remain the same.

 

AUTH: 15-1-201, MCA

IMP: 15-6-138, MCA

 

REASONABLE NECESSITY: The department is striking software from the rule due to the fact that it is exempt according to 15-6-218(2), MCA.

 

42.22.1311 INDUSTRIAL MACHINERY AND EQUIPMENT TREND FACTORS (1) and (2) remain the same.

(3) Tables 1 through 32 represent the yearly trend factors for each of the categories.

 

 

AUTH: 15-1-201, MCA

IMP: 15-6-138, 15-8-111, MCA

 

REASONABLE NECESSITY: The department is proposing to amend ARM 42.22.1311 to clarify through the trend tables how the department arrives at market value as required by 15-8-111, MCA. Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property. To determine the market value of centrally assessed property, the department has historically used and adopted the concept of trending and depreciation. The method by which trended depreciation schedules are derived is described in the existing rule, and that method is not being changed. The First Judicial District Court indicated in 1986 that the department must publish these trend tables annually and these amendments are in compliance with that order.

 

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 November 7, 2008.

 

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 September 29, 2008