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Montana Administrative Register Notice 42-2-873 No. 1   01/12/2012    
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BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the adoption of New Rule I, and the amendment of ARM 42.20.102 relating to property tax exemptions

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION AND AMENDMENT

 

TO:  All Concerned Persons

 

1.  On February 6, 2012, at 2:00 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, Helena, Montana, to consider the adoption and 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., January 27, 2012, 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) 444-4375; or e-mail canderson@mt.gov.

 

3.  The proposed new rule does not replace or modify any section currently found in the Administrative Rules of Montana.  The proposed new rule provides as follows:

 

NEW RULE I  TRIBAL GOVERNMENT'S APPLICATION FOR A TEMPORARY PROPERTY TAX EXEMPTION  (1)  A federally recognized tribe in Montana is eligible for a temporary property tax exemption of tribal fee land on January 1, under the following conditions:

(a)  the United States Department of Interior, Bureau of Indian Affairs, submits a written response to the tribe, or certification to the director of the department, that the tribe's initial application for the acquisition of trust title to the tribal fee land was complete as of a specific date; and

(b)  the tribe makes timely application to the local department office in the year in which the exemption is sought.

(2)  The tribe must file for a property tax exemption on a form available from the local department office in the county in which the tribal fee land is located on or before March 1 of the year for which the exemption is sought or within 30 days after receiving an assessment notice, whichever is later, or in the case of newly acquired land, within 30 days of receiving the initial assessment notice.  A tribe with tribal fee lands located in more than one county must file an application for a property tax exemption in each county.  Applications postmarked after March 1, will be considered for the following tax year.  For tax year 2012 only, the filing deadline is June 1.  All applications postmarked after that date will be considered for the following year.

(3)  The following documents must accompany the tribe's application to the department:

(a)  a United States Department of the Interior, Bureau of Indian Affairs' letter stating that the tribe's initial application is deemed complete, or certification to the director of the department, that the tribe's application for acquisition of trust title to the tribal fee land was complete as of a specific date; and

(b)  a tribal resolution identifying the fee land, by legal description, for which the tribe has applied for federal trust title.

(4)  The temporary exemption will:

(a)  apply only during the timeframe in which the tribe's application is pending with the United States Department of Interior, Bureau of Indian Affairs;

(b)  not exceed five years; and

(c)  be removed on December 31 of the year in which the United States Department of Interior, Bureau of Indian Affairs, denies the tribe's application for the acquisition of trust title.  The department will:

(i)  assess taxes on January 1 of the year after the tribe's application is denied; and

(ii)  no longer make available all property associated with a denied application.

(5)  The tribe shall annually certify to the director of the department, by March 1, that their trust application is still under consideration by the United States Department of Interior, Bureau of Indian Affairs.

(6)  The department will approve or deny the application based on whether the property qualified for the exemption as of January 1 of the year for which the exemption is sought.  The department will notify the tribe and the local department office, in writing, of its decision.

(7)  The department will remove trust property from the tax rolls, as required by federal law, when the director of the department receives notice that the property has been acquired by the federal government in trust status for a tribe.  The department will remove the property from the tax rolls on the date that the deed approving trust status is filed in the county in which the property is located.

(8)  When a tribe has administrative or contractual responsibilities, related to their own federal trust application process, the Secretary of Interior, or the person delegated authority by the Secretary of Interior, must certify to the director of the department that the property has been properly accepted into trust by, and is now subject to, the management of the United States, and the specific date that each property was taken into trust.  Upon receipt of the certification, the department will direct the local office to contact the county treasurer and remove the parcel(s) from the tax rolls.

 

AUTH:  15-1-201, 15-6-230, MCA

IMP:  15-6-230, MCA

 

REASONABLE NECESSITY:  The department is proposing to adopt New Rule I, following the passage of Ch. 288, L. 2011 (15-6-230, MCA), by the Legislature, which allows for federally recognized tribes to receive a temporary exemption of property taxes on tribal fee land when the tribe has a trust application for the land pending with the United States Department of Interior, Bureau of Indian Affairs.

Section (1) defines the eligibility requirements.  Section (2) states the March 1 application deadline. The March 1 deadline is necessary to allow the department sufficient time to review the applications and make the necessary adjustments in the property tax system before the department sends its certification of values to the county treasurers for tax billing.  This section also extends the 2012 application deadline for tribal governments to June 1, 2012, because 2012 is the first tax year in which this exemption will be in effect; and to allow sufficient time for the administrative rules process.  Section (3) identifies the documentation that must accompany the tribe's application.  Section (4) specifies timeframes of the exemption that include when the exemption will be applied, when it will be removed, and the maximum time allowed for the exemption.  Section (5) requires the tribe to annually certify to the department that the tribe's application with the federal government is still pending.

Sections (6), (7), and (8) follow the current practice of the department.  Section (6) states that the department will inform the tribe and local revenue office of the decision to grant or deny an application.  Section (7) cites the date that the department will remove property from the tax rolls.  Section (8) informs tribes with contracting or compacting agreements with the federal government that the Secretary of Interior is responsible for certifying to the department the specific date in which the property was taken into trust.

Portions of this new rule closely mirror the language of the statute, for example, "the United States Department of Interior, Bureau of Indian Affairs, has determined that the initial trust application submitted by the tribe is complete."  Restating the language in the rule helps elucidate the process and improves efficiency, but does not change the statute.

 

4.  The rule proposed to be amended provides as follows, stricken matter interlined, new matter underlined:

 

42.20.102  APPLICATIONS FOR PROPERTY TAX EXEMPTIONS  (1)  The property owner of record, or the property owner's agent, or a federally recognized tribe, must make application through the department in order to obtain a property tax exemption.  An application must be filed file an application for a property tax exemption on a form available from the local department office before March 1, except as provided in [NEW RULE I] for 2012, of the year for which the exemption is sought or within 30 days after receiving an assessment notice, whichever is later.  Applications postmarked after March 1 or more than 30 days of receiving the assessment notice, whichever is later, will be considered for the following tax year only, unless the department determines any of the following conditions are met:

(a)  the taxpayer is notified after March 1 by receives notice by way of an AB-34 (Removal of Property Tax Exemption Letter) that the property will be  placed on the tax roll.  The taxpayer shall have 30 days after receipt of the notice to submit an application for exemption; or

(b)  the local department office refuses to accept an application a taxpayer or organization is attempting to submit before March 1;

(c)  the local department office gives the applicant incorrect application information; or

(d)  the applicant was unable to apply for the current year due to hospitalization, physical illness, infirmity, or mental illness.  These impediments must be demonstrated to have existed at significant levels from January 1 of the current year to the time of application.  Extensions will be granted through July 1, or up to 30 days after the last general mailing of real property assessment notices has occurred in that county, for the current year for those impediments.

(2)  The following documents must accompany the all applications:

(a)  if the applicant is incorporated, a copy of the applicant's articles of incorporation (if incorporated);

(b)  if the applicant is not incorporated, a copy of the applicant's constitution or by-laws;

(b)(c)  if the applicant has been granted tax-exempt status by the Internal Revenue Service (IRS), a copy of the applicant's tax-exempt status letter, if they have one (501 determination letter);

(c)  deed or security agreement which is evidence of ownership (for real property only);

(d)  title of motor vehicle or mobile home or letter of explanation if title is not applicable which is evidence of ownership (for personal property only);  a letter:

(i)  identifying the parcel by geocode, assessor code, legal description, or physical address; and

(ii)  explaining how the organization, or society, believes it qualifies for property tax exemption and the specific use of the real or personal property.

(e)  letter explaining how the organization or society qualifies for property tax exemption and the specific use of the property; and

(f)  photograph of the property, if available.

(3)  For an exemption application of a federally recognized tribe, the following documents must accompany all applications:

(a)  a tribal resolution identifying the fee land, by legal description;

(b)  language stating the type of exemption the tribe is requesting;

(c)  language stating how the property qualifies for that type of exemption; and

(d)  a statement regarding the specific and exclusive use of the real or personal property.

(4)  For personal property exemption applications, the following documents must accompany all applications:

(a)  a copy of the title of motor vehicle or mobile home or letter of explanation if title is not applicable, a letter identifying ownership; and

(b)  photograph of the property.

(5)  For real property exemption applications, the following documents must accompany the applications:

(a)  a copy of a fully executed deed, contract for deed, or notice of purchaser's interest or security agreement identifying ownership.

(6)  For real property exemption applications where the applicant is requesting exemption of property used for religious purposes, the following documents must accompany the application:

(a)  if the application seeks exemption for parsonage, proof that the resident of the building identified as a parsonage is a member of the clergy; or

(b)  if the applicant is a federally recognized tribe, a copy of the tribal resolution identifying the fee land as sacred land to be used exclusively for religious purposes, by legal description, language stating the type of exemption the tribe is requesting, and language stating how the property qualifies for this type of exemption, not to exceed 15 acres.

(7)  For real property exemption applications where the applicant is requesting exemption of property used for educational purposes, the following documents must accompany the application:

(a)  documentation verifying the entity is not operated for gain or profit;

(b)  a copy of the applicant's attendance policy;

(c)  a copy of the applicant's curriculum which identifies the applicant's systematic course of instruction;

(d)  for property, of any acreage, owned by a tribal corporation created for the sole purpose of establishing schools, colleges, and universities (a) through (c) must accompany the tribe's application; and

(e)  if the applicant is a federally recognized tribe, a copy of the tribal resolution identifying the fee land to be used exclusively for educational purposes, by legal description, language stating the type of exemption the tribe is requesting, and language stating how the property qualifies for this type of exemption.

(8)  For real property exemption applications where the applicant is requesting exemption of property used for nonprofit healthcare facilities, the following documents must accompany the application:

(a)  a copy of the health care facility's license from the Department of Public Health and Human Services; or

(b)  if the applicant is a federally recognized tribe, a copy of the tribal resolution identifying the fee land to be used exclusively for health care services, by legal description, language stating the type of exemption the tribe is requesting, and language stating how the property qualifies for this type of exemption.

(9)  For real property exemption applications where the applicant is requesting exemption of property used solely in connection with a cemetery or cemeteries, the following documents must accompany the application:

(a)  proof of a permanent care and improvement fund;

(b)  verification that the entity is not operated for gain or profit; and

(c)  if the applicant is a federally recognized tribe, a copy of the tribal resolution identifying the fee land to be used exclusively as a cemetery or cemeteries, by legal description, language stating the type of exemption the tribe is requesting, and language stating how the property qualifies for this type of exemption.

(10)  For real property exemption applications submitting use for parks and recreational facilities, the following documents must accompany the applications:

(a)  documentation verifying the park and/or recreational facility is open to the general public; or

(b)  if a federally recognized tribe, a tribal resolution identifying the fee land to be used exclusively for parks and recreational facilities, by legal description, language stating the type of exemption the tribe is requesting, and language stating how the property qualifies for this type of exemption, not to exceed 15 acres.

(3) remains the same but is renumbered (11).

(4)(12)  If the property is owned by a governmental entity (such as city, county, or state), the federal government (unless Congress has passed legislation allowing the state to tax property owned by a federal entity), tribal government, nonprofit irrigation districts organized under Montana law, municipal corporations, public libraries, or rural fire districts and other entities providing fire protection under Title 7, chapter 33, MCA, the department will employ the following exemption criteria for real property when considering exemption claims based upon 15-6-201, MCA:

(a)  the properties will be tax-exempt as of the purchase date that is reflected on the deed or security agreement;

(b)  if a property is tax-exempt as of January 1 of the current tax year and is sold to a nonqualifying purchaser after January 1 of the current tax year, it becomes taxable upon the transfer of the property.  The tax is prorated according to 15-16-203, MCA; and

(c)  if a property is tax-exempt, as stated in (4)(12)(b), and is sold as tax-deed property to a nonqualifying purchaser after January 1 of the current tax year, it becomes taxable on January 1 following the execution of such contract or deed as provided in 7-8-2307, MCA.

(5)(13)  The department will employ the following exemption criteria for real properties when considering exemption claims based upon 15-6-201, 15-6-203, and 15-6-209, 15-6-211, 15-6-216, 15-6-221, and 15-6-230, MCA.

(a)  Real property purchased by a qualifying exemption applicant after January 1 of the current tax year will become exempt on the date of acquisition as evidenced by the deed and realty transfer certificate, if an application (if one is required for the exemption) is filed by the application deadline for that tax year and the property meets statutory requirements.

 

AUTH:  15-1-201, 15-6-230, MCA

IMP:  7-8-2307, 15-6-201, 15-6-203, 15-6-209, 15-6-211, 15-6-216, 15-6-221, 15-6-230, 15-7-102, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.20.102 following the passage of Ch. 278, L. 2011 (15-6-201, MCA) by the Legislature, which allows federally recognized tribes to receive certain property exemptions for property located within the exterior boundaries of the reservation for the purposes of essential government services, education facilities, religious and sacred land, cemeteries, and parks and recreational facilities.

Section (1) is proposed to be amended to allow tribes a one-time extension for tax year 2012 to submit the exemption application and to define the deadline in the instance of a property taxpayer receiving notice that the property is being removed from tax-exempt status.  Sections (2) through (10) are proposed to be amended to define the documentation required for each type of exemption for applicants.  These proposed sections also include specific language related to tribal governments.  Section (13) is proposed to be amended to update statutory citations.  These proposed amendments to the rule ensure mutual accountability between the department and the exemption applicants by specifying the property exemption process in greater detail.  They also provide specific guidelines for tribal governments to follow when making determinations about applications for property exemptions within the exterior boundaries of the reservation.

 

5.  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) 444-4375; or e-mail canderson@mt.gov and must be received no later than February 10, 2012.

 

6.  Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

7.  An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov.  Locate "Legal Resources" in the left hand column, select the "Rules" link and view the options under the "Notice of Proposed Rulemaking" heading.  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.  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.

 

8.  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 5 above, or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

9.  The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The primary bill sponsor of SB 412, L. 2011, Senator Shannon Augare, and the primary bill sponsor of HB 618, L. 2011, Representative Carolyn Pease-Lopez, were notified by regular mail on November 14, 2011, and again on December 19, 2011, by electronic and regular mail.

 

 

  

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

CLEO ANDERSON                         DAN R. BUCKS

Rule Reviewer                                 Director of Revenue

 

Certified to Secretary of State January 3, 2012

 

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