The following definitions apply to this chapter:

(1) "Airline" means a company engaged in scheduled air commerce.

(2) "Allocation" is the term used to describe the assignment of a part of the unit valuation to Montana.

(3) "Apportionment" is the term used to describe the assignment of an allocated valuation to the proper taxing jurisdiction in this state.

(4) "Beneficial use" as it relates to electric energy producers is defined as the use of tax exempt power transmission lines having a capacity of at least 500 kv. for bulk power transfers.

(5) "Book depreciation" shall be determined by the department by using information that most accurately reflects the depreciation cost of the Montana property being assessed. This information may be gathered from documentation such as regulatory filings, independently audited financial statements, or other reliable and recognized sources.

(6) "Bulk power transfers" means transfers made by taxable electrical energy producers.

(7) "Correlate" as used in the unit method of valuation, is the blending of the indicator(s) of value that are available to the appraiser into one unit value with no specific weight applied to any indicator.

(8) "Depreciation," when used in the unit method of valuation, shall represent a reduction in value of a property as a result of physical deterioration. In addition it may represent an increase or decrease in value resulting from economic conditions or changes in utility.

(9) "Equivalent car count" is equal to the total number of miles a railcar travels in Montana annually, divided by the product of Montana miles per day, multiplied by the number of days in a year.

(10) "Installed cost" is the original cost of operating property adjusted for any additions, changes, transfers, retirements, etc., excluding depreciation.

(11) "Market value" is the exchange value of a property in a competitive market.

(12) "Montana miles per day" equals the following for tax year 2004 and subsequent tax years:

(a) for flat, box, gondola, and coal gondola railcars, when reported by specific railcar type, 450 miles;

(b) for all other railcars, 250 miles; or

(c) the number established by means of a speed study as described in (25).

(13) "New aircraft" means aircraft manufactured in the preceding calendar year, or aircraft which have not been previously registered except by the manufacturer of the aircraft.

(14) "Nonoperating property" is all property owned or leased from others which is not a necessary part of a centrally assessed company's intercounty or interstate business.

(15) "Operating property" is all real and personal property, owned, leased, or used, which is reasonable and necessary to the maintenance and operation of a centrally assessed company's interstate or inter-county business.

(16) "Other associated property" includes appurtenant land and improvements and personal property that are normally operated together to produce electric power as defined in the code of federal regulations as published in Title 18, CFR, Ch. 1 (4-1-99), pt. 1.

(17) "Property leased from others" is property leased by a centrally assessed company and used in the interstate or inter-county business operations.

(18) "Property leased to others" is property owned by a centrally assessed company which is leased out.

(19) "Related services" for property tax purposes, means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing or making available information via telecommunications through, but not limited to operator and information services, directory assistance, call waiting, call forwarding, caller ID, call rejection, last call return, priority call, speed calling, three-way calling, voice messaging, continuous redial, and line blocking.

(20) "Right-of-way" shall be the land beneath and adjacent to a continuous property which is needed for safe passage and maintenance of the property.

(21) "Rolling stock" includes but is not limited to all locomotives, passenger cars, dining cars, express cars, mail cars, baggage cars, grain cars, box cars, cattle cars, coal cars, flat cars, wrecking cars, special purpose cars, track repair, and construction cars, and all other cars used by a railroad or railroad car company.

(22) "Situs property for a centrally assessed company," other than a railroad, is operating property that is not part of a transmission or distribution system, rolling stock or airplanes, or by nature is immovable.

(a) Situs property includes but is not limited to:

(i) buildings;

(ii) dams;

(iii) powerhouses;

(iv) depots;

(v) stations;

(vi) shops;

(vii) furniture;

(viii) fixtures;

(ix) tools;

(x) substations;

(xi) electronic switching equipment;

(xii) machinery;

(xiii) meters;

(xiv) transformers; and

(xv) operating lands not in the right-of-way.

(b) Situs property does not include:

(i) automobiles;

(ii) trucks; and

(iii) special mobile equipment (as defined in 61-1-104, MCA) upon which property taxes or fees in lieu of property tax have been assessed and paid.

(23) "Situs property for a centrally assessed railroad" is all operating property used by the railroad that is by its nature located at a specific site, not part of the roadway, track structure, rails, roadbed or right-of-way, not rolling stock, and not signals or signal systems, such as computerized traffic control, and computerized traffic control (CTC) buildings.

(a) By way of illustration but not limitation, situs property of a railroad includes:

(i) all operating land located outside the right-of-way;

(ii) depots, stations, microwave and radio sites and towers;

(iii) telecommunications equipment not specifically excluded;

(iv) all shops and buildings not specifically identified elsewhere;

(v) permanent fixed improvements, such as parking lots and parking structures, and all associated costs of grading and improvements at the location;

(vi) construction work in progress associated with situs property; and

(vii) furniture and fixtures, materials and supplies, and machinery and equipment which are not moved or movable in the ordinary course of railroad operations.

(b) By way of illustration but not limitation, situs property of a railroad does not include:

(i) railroad signaling and switching structures, equipment, and devices;

(ii) ballast, grading, and construction work in progress associated with the track or roadbed;

(iii) machinery and equipment normally used to repair track; and

(iv) automobiles, trucks, and special mobile equipment (as defined in 61-1-104, MCA) upon which property taxes or fees in lieu of property tax have been assessed and paid.

(c) Situs property for a railroad normally consists of property in the following accounts in Schedules 330 and 200 of the Annual Report R1 to the surface transportation board:

(i) Schedule 330

Line No. Account No.

11 16 station and office buildings

12 17 roadway buildings

13 18 water station

14 19 fuel stations

15 20 shops and engine houses

16 22 storage warehouses

17 23 wharves and docks

18 24 coal and ore wharves

19 25 tofc/cofc terminals

22 29 power plants

24 35 miscellaneous structures

27 44 shop machinery

28 45 power plant machinery

38 59 comp. systems and word proc. equipment

(ii) Schedule 200

Line No. Account No.

12 712 materials and supplies

(d) Situs property for a railroad normally consists of a portion of the property in the following accounts in Schedule 330 of the Annual Report R1 to the surface transportation board:

(i) Schedule 330

Line No. Account No.

1 2 land for transportation purposes

2 3 grading

10 13 fences, snowsheds, and signs

20 26 communication systems

23 31 power-transmission systems

25 37 roadway machines

26 39 public improvements-construction

29 other

37 58 miscellaneous equipment

42 90 construction work in progress

(24) "Speed" means the Montana miles per day.

(25) "Speed study" means a statistically valid sampling of railcar movement in Montana designed to establish the average number of miles that a railcar company's railcars travel in Montana per day for tax year 2004 and subsequent tax years.

(26) "Taxable period" refers to the entire period of the immediate preceding calendar year. All operations of a centrally assessed company during a taxable period are assessed during the immediate following calendar year.

(27) "Taxing units" are counties, municipalities, school districts, and other special districts.

(28) "Telecommunications" means the transmission of information between or among points specified by the user.

(29) "Telecommunications service provider" means a telecommunication services company or a person providing retail telecommunication services as provided in 15-53-129, MCA.

(30) "Unit method of valuation" is a method for determining the market value of a centrally assessed company. This involves appraising, as a going concern and as a single entity, the entire unit, wherever located, then deducting the intangible personal property value and then ascertaining the part thereof in this state. The resulting value is referred to as the state allocated value.

(31) "Unit or system value" is the value of all tangible and intangible property that is reasonable and necessary to the maintenance and operation of a centrally assessed company's interstate or inter-county business.

(32) "Unit valuation or centrally assessed appraiser" means a person who has completed the necessary training and is certified to appraise centrally assessed properties in Montana.

(33) "Wire miles" means, but is not limited to, route miles or fiber miles.

(1) The department shall centrally assess the interstate and inter-county continuous properties of the following types of companies:

(a) railroad;

(b) railroad car;

(c) microwave;

(d) telecommunications;

(e) telephone cooperatives;

(f) gas;

(g) electric;

(h) electric cooperatives;

(i) ditch;

(j) canal;

(k) flume;

(l) natural gas pipeline;

(m) oil pipeline; and

(n) airline.

(2) The property of a centrally assessed company is separated into two categories: operating and nonoperating.  All operating property will be apportioned to the taxing units as provided in ARM 42.22.121 and 42.22.122.

(3) The department will determine centrally assessed property based on the property's operating characteristics such as but not limited to property use, integration of operations, management, and corporate structure.

(1) To determine if a property is operating property, the department shall consider the use to which the property is put.

(2) Right-of-way or station grounds leased to others, except land leased to others for public grain elevator sites, cultivation, pasturage, public roads, parks, pole lines, pipelines, and microwave sites, will be considered nonoperating property and must be reported to the department by March 1 of each year.

(1) Special mobile equipment excluded from the definition of situs property as defined in ARM 42.22.101 is to be locally assessed.

(2) Motor vehicles with or without equipment attached are exempt and shall pay a fee in lieu of tax, 61-3-321 and 61-3-529, MCA.

(3) Each centrally assessed company having equipment defined in (1) shall provide the department with a statement showing a description and the total market value for each piece of equipment. The market value shall be the value shown on the special mobile equipment registration, or other tax payment receipt.

(4) Companies that license fleet vehicles with the Montana Motor Carrier Services (MCS) division will provide the net book value for each vehicle licensed by the MCS. This statement is to be filed at the same time the report required by ARM 42.22.105 is filed.

(5) Each centrally assessed company having equipment defined in (2), (3), or (4) shall provide the department with the net book value for each piece of equipment as of January 1 each year. Companies with prorated vehicles shall provide the department with the total number of miles traveled in and out of the state of Montana, a description and the net book value for each vehicle.

(6) The department may, at any time, ask for verification of the reported equipment's registration from the county, other agencies, other states or the company. This verification may be, but is not limited to, supplying the department with copies of each vehicle's Montana registration form. Omission of any requested information may result in loss of or a partial deduction for the equipment.

(7) The total net book value for equipment defined in (2), (3), and (4) shall be deducted on a market-to-cost basis from the state-allocated value, as defined in ARM 42.22.111. The market-to-book ratio shall be determined by dividing the system or unit market value by the system net book value.

(8) The total market value for equipment defined in (1) is deducted from the state allocated value, as defined in ARM 42.22.111, to determine the amount of the state allocated value to be allocated under the provisions of ARM 42.22.122.  

(1) Each year all centrally assessed companies shall submit to the department a report of operations, called the Centrally Assessed Annual Reporting form, for the preceding year. Railroads, railroad car companies, and pipelines shall submit the report by April 15 and all others by March 31, on forms supplied by the department.

(2) If a centrally assessed company fails to file a report with the department the company will be subject to the penalties listed in 15-23-104, MCA. Submission of an annual business property reporting form to a local department county office does not relieve the company of its requirement to file the Centrally Assessed Annual Reporting form to the centrally assessed unit located in Helena. In addition, if the department determines that a company is a centrally assessed company, that company must cease to file the annual business property reporting form to the department's local county office.

(a) Based on the appropriate statutory authority, the department shall determine if a company meets the requirements to be centrally assessed. If a company believes that the department has improperly determined that the company is centrally assessed, the company must still file the required Centrally Assessed Annual Reporting form, and if desired, appeal the department's centrally assessed determination to the appropriate venue.

(3) The report shall contain the following information on the operating properties:

(a) balance sheet for the system;

(b) statement of income for the system;

(c) statement of cash flow for the system;

(d) original cost and book depreciation for system property, including an estimate of current value of property leased from others;

(e) statement of outstanding preferred stock, common stock, and debt, showing both book value and market value;

(f) statement of actual revenue and expense for the Montana operation (if actual amounts are not available, a statement of allocated revenue and expense may be substituted);

(g) if nonoperating properties are included in (3)(a) through (e), their original cost, book depreciation, market value, and income;

(h) general description, original cost, and book depreciation of Montana properties, including description and location of property leased from others, together with name of lessor, current value or annual rental, and responsibility for the property tax (lessor or lessee);

(i) if rolling stock is allocated to Montana, the method used;

(j) pertinent statistical data on the company's operations within and without this state;

(k) copy of annual report to stockholders;

(l) copy of annual report to the federal regulatory agency if one is filed;

(m) copy of annual report to the Montana Public Service Commission if one is filed;

(n) in the case of centrally assessed railroads, all information required under ARM 42.22.106;

(o) in the case of centrally assessed electric utilities, all information required under ARM 42.22.107, if applicable;

(p) all other information requested by the department which will assist in valuing the properties; and

(q) signed statement of correctness. 

(4) In addition to the report each centrally assessed company must revise and update statements of situs and mileage printouts provided by the department and return them along with the report. The information on the printouts shall be reported by county and taxing units in which they are situated. The situs printouts shall contain a general description and installed cost for operating situs property.

(1) Each year all centrally assessed railroads shall submit by April 15 (except that information required under ARM 42.22.103) a report of operations for the preceding year containing, in addition to that information required by ARM 42.22.105, the following information and items:

(a) copies of all Montana valuation maps;

(b) copies of all Montana track charts;

(c) a statement setting forth by individual counties the total acreage of Montana real property and right-of-way;

(d) a statement of all agreements authorizing the longitudinal use of Montana right-of-way, including for each agreement the names of the parties to the agreement, a summary of its terms, the amounts paid thereunder, the longitudinal use contemplated, and the location and length of right-of-way covered;

(e) total miles traveled by each type of car for each railroad car company operating on track owned or used by the railroad in the state of Montana, and any additional information that may be required by the department for the valuation and allocation of the railroad car companies.

(2) Information which is of a static nature need not be resubmitted on an annual basis as specified in (1) .  Each railroad shall have a continuing obligation to provide updated information whenever static information is changed, amended, revised, rescinded, or revoked.

(3) This rule shall be effective for all reporting years ending December 31, 1981, and thereafter.

(1) Qualifying companies shall provide to the department information on any possession or beneficial use of government-owned transmission lines, as referenced in 15-23-101 and 15-24-1207, MCA, during the preceding calendar year. The information shall be submitted beginning March 31, 1984, and each year thereafter and shall include the following:

(a) the name and address of the person, association, or corporation;

(b) the location of the (tax-exempt property) transmission lines; 

(c) original cost and accrued depreciation of the tax-exempt property;

(d) copies of all charges from the Bonneville Power Administration for bulk power transfers;

(e) copies of contracts with the Bonneville Power Administration for use of said line;

(f) any other information requested by the department which will assist in valuing the government owned electric transmission lines.

(1) The market value of approved class five air and water pollution control and carbon capture equipment shall be determined by multiplying the depreciated value of the approved class five pollution control equipment in Montana by a market-to-book ratio. The market-to-book ratio shall be determined by dividing the system or unit market value by the system net book value. This value shall then be deducted from the Montana value and certified to the counties as class five property.

(2) This methodology shall be effective for all reporting years ending December 31, 1988, and thereafter.

(1) The department adopts the 2009 WSATA-CCAP (Western States Association of Tax Administrators - Committee on Centrally Assessed Properties) appraisal handbook, published in August 2009, available at wsata-ccap.org, as the reference and overall appraisal guide for conducting unit valuations of centrally assessed properties in Montana.

(2) The department adopts the NCUVS (National Conference of Unit Valuation States) standards, published in October 2005, available at www.NCUVS.org, link to "standards," as standards when conducting unit valuations of centrally assessed properties. 

(1) Cost, income, and market indicators can generally be expected to include the value of intangible personal property. To the extent that each unit valuation indicator includes the value of intangible personal property it shall not be relied upon unless such value of the intangible personal property is excluded or removed.

(2) The department recognizes that the following percentages may not necessarily provide a taxpayer-specific measurement of intangible personal property. However, accurately quantifying the value of intangible personal property is difficult and subject to controversy and litigation which would not clarify the issues for future appraisals. The percentages are a good faith effort to comply with the rulemaking requirements of 15-6-218, MCA, in a manner that is timely and efficient for both the taxpayers and the department.

(a) Subject to the provisions of (3), intangible personal property shall be removed from the cost indicator by using the following percentages:

(i) Airlines 10%

(ii) Pipelines 5%

(iii) Electric cooperatives 5%

(iv) Telephone cooperatives 5%

(v) Electric utilities 10%

(vi) Telecommunications 15%

(b) Subject to the provisions of (3), intangible personal property shall be removed from the income indicator by using the following percentages:

(i) Airlines 10%

(ii) Pipelines 5%

(iii) Electric cooperatives 5%

(iv) Telephone cooperatives 5%

(v) Electric utilities 10%

(vi) Telecommunications 15%

(c) Subject to the provisions of (3), intangible personal property shall be removed from the market indicator by using the following percentages:

(i) Airlines 10%

(ii) Pipelines 5%

(iii) Electric cooperatives 5%

(iv) Telephone cooperatives 5%

(v) Electric utilities 10%

(vi) Telecommunications 15%

(d) For railroads assessed according to the provisions of 15-23-205, MCA, exempt intangible personal property, which shall be deducted from the railroad system value, is equal to 5 percent of the system value. If a railroad is not assessed pursuant to 15-23-205, MCA, but assessed using cost, income and market indicators to value, 5 percent of the value determined by each indicator shall be removed to reflect the value of intangible personal property in each indicator subject to the provisions of (3).

(3) If any taxpayer believes that the value of its intangible personal property is greater than that allowed under (2), the taxpayer may propose alternative methodology or information at any time during the appraisal process and the department will give it full and fair consideration. If the department concludes that the value of intangible personal property is greater than that allowed in (2), the unit value will be decreased accordingly. In no event, however, will the value of intangible personal property be less than that allowed in (2).

(4) A taxpayer may, at any time, make recommendations to the department, regarding the percentages in (2)(a), (b), or (c).

(1) The unit method of valuation will be used to appraise centrally assessed companies whenever appropriate. When applying this method, the department will use commonly accepted methods and techniques of appraisal to determine market value. The application of the unit method may include a cost indicator, capitalized income indicator, and a market indicator of value when sufficient information is available. If the department determines that an individual indicator, the unit method of valuation or other method of valuation does not reflect a company's market value or that information is unavailable, it may adopt a different method or methods of valuation, including but not limited to net scrap, net salvage, corridor value in the case of railroads, comparative market sales, or any combination of methods of valuation which reflect the company's market value.

(2) When the unit method of valuation is used with multiple indices of value, they will be combined into one (system or unit) value. Combining of the indices shall require the department to review all available information including:

(a) reliability of the cost data;

(b) sufficiency of the depreciation allowed;

(c) frequency of full audit by a regulatory agency;

(d) quality of the income to be capitalized;

(e) level of income to be capitalized;

(f) accuracy of information used to set a capitalization rate;

(g) accounting principles used to report data from which the valuation is made;

(h) fluctuations in the stock market;

(i) methods used by other taxing authorities; and

(j) all other pertinent information.

(3) After examination of the above information the department shall correlate the indices into one system or unit value.

(4) Railroad transportation property in 15-6-145, MCA, are assessed based on the valuation formula described in 15-23-205, MCA.

(5) The valuation determined appropriate by the department shall be supported by a written explanation per 15-1-210, MCA.

(6) This rule shall be effective for all reporting years ending December 31, 1999, and thereafter. 

(1) The cost indicator of value shall be derived from information contained in the company's report to the department, report to a regulatory agency, property descriptions submitted to the department, and any other reliable source of information.   This includes properties both within and without the state.

(2) The type of cost used may be one of the following:

(a) replacement;

(b) replacement less depreciation;

(c) reproduction;

(d) reproduction less depreciation;

(e) historical;

(f) historical less depreciation;

(g) original; and

(h) original less depreciation.

(3) The choice of cost shall depend upon which type best reflects market value of the property at the time of valuation.   For taxable periods ending on or beginning after December 31, 1985, the cost indicator for railroads, airlines, and other federally protected taxpayers shall be treated consistent with federal law.

(4) Newly acquired aircraft which are purchased or acquired under a capitalized lease or operating lease by a scheduled airline company operating within this state, whose allocation of value within this state as determined by the procedures described in ARM 42.22.121 is 50 percent or more, and newly acquired equipment which is purchased by the airline for the direct and sole purpose of supporting these new aircraft shall be valued according to the following schedule.

Year of acquisition:                    28% of full and true value

First year after acquisition:         36% of full and true value

Second year after acquisition:     44% of full and true value

Third year after acquisition:         52% of full and true value

Fourth year after acquisition:       60% of full and true value

Fifth year after acquisition:          68% of full and true value

Sixth year after acquisition:         76% of full and true value

Seventh year after acquisition:    84% of full and true value

Eighth year after acquisition:       92% of full and true value

All succeeding years:                  100% of full and true value

(1) A market, or stock and debt indicator, of value may be derived from the company's outstanding securities and liabilities.   The department may also construct a market indicator using sales comparison data for similar properties, or any analysis, study, database, or methodology which contains or generates market values or estimates of market values for similar properties.

(2) The department shall consider the market value of the company's preferred and common stocks, and outstanding debt.   The sum of these items represent an indicator of market value for all the company's property.   When the sum includes nonoperating property, the department will deduct the market value of the nonoperating property.

(3) If a company's stock is not traded in the market place, the department may use a price earnings ratio from similar companies or other appropriate methods.

(1) The income indicator may be determined by consideration of one or more of the following methods depending on the department's analysis of the future earning capacity of the company:

(a) capitalization of the company's historic income or average of historic incomes;

(b) capitalization of a projected level of income;

(c) discounted cash flow analysis;

(d) other accepted method.

(2) The capitalization rate utilized will be determined by the band of investment theory or other accepted methodology.

(1) On or before June 1 each year the department shall notify the centrally assessed companies of the appraisal report of their Montana properties.

(2) If additional time is needed for filing reports or preparing for hearings, the department must receive the request prior to the due date if the extension request is to be considered.

(1) To implement the statutory direction to compute an annualized tax rate for class twelve property, the department will employ the procedure outlined in this rule.

(2) The department will obtain the market and taxable value for all commercial, industrial and centrally assessed property from the department's computer data bases or other sources as necessary.   A copy of this information is available to taxpayers upon request.

(3) Upon obtaining the information referred to in (2) , the department will proceed to compute the tax rate reflected in 15-6-145, MCA.   It will employ the mathematical formula reflected in the statute.

(4) In the event that the required information is not available to the department, the taxable value for all commercial, industrial or centrally assessed property will be estimated.

(a) The department will use the reported market and taxable value for all commercial, industrial and centrally assessed property for the previous tax year in estimating the total market value and apply the current taxable percentage to arrive at the current taxable value of all commercial, industrial and centrally assessed property for the present tax year.

(b) This estimation may be challenged by the taxpayer in the event of litigation or in the event of an assessment appeal.

(c) If the department should estimate the class twelve tax rate pursuant to (4) (a) , the department shall review the estimated tax rate by comparing it with the actual class twelve tax rate to be computed by the department no later than September 1 of the present year.   If the actual tax rate varies from the estimated tax rate by more than 5%, the department shall issue revised assessments to the affected property taxpayers pursuant to 15-8-601, MCA.

(1) In order to implement the statutory direction to prepare an annualized sales assessment ratio study of all commercial and industrial real property and improvements, each January 1, the department will employ the following methodology.

(2) The department will endeavor to follow the sales assessment ratio study principles set forth in a document en-titled Sales Assessment Ratio Study Preparation published by the international association of assessing officers.   In the event that that publication is insufficient for purposes of the ratio study preparation, the department reserves the right to employ other statistically accepted methods for purposes of preparing the study.

(3) The department will rely upon the sales information which is reflected on realty transfer certificates filed pursuant to 15-7-302, MCA, for purposes of a sales assessment ratio study. The sales for all commercial and industrial property shall be identified in the department's computer system.

(a) The department shall rely upon the expertise and the judgment of its various appraisers in order to determine whether a particular sale is suitable for inclusion in the study. That judgment is exercised when the appraiser checks the appropriate block on the realty transfer certificate reflecting that the sale is a valid sale.

(b) The department will rely upon the sales confirmation process which is set forth in the document entitled Sales Assessment Ratio Study Preparation.

(c) For purposes of the sales assessment ratio study, the department shall rely upon all valid realty transfer certificate sales information for the preceding calendar year.

(4) The department may engage the services of various statisticians, experts, and other persons in order to facilitate the preparation of the sales assessment ratio study.

(5) When the department has prepared the annual sales assessment ratio study, it will be published. The final document will be available upon request to interested parties.

(6) When the department has determined the overall assessed to market value ratio for all commercial and industrial real property and improvements in Montana, it shall integrate that factor into the formula set forth in 15-6-145, MCA.

(7) The sales assessment ratio study will be conducted solely for the purpose of determining the tax rate applicable to class 12 properties.

(1) The department shall allot that portion of a unit valuation to Montana which represents the state's proper share of the market value of a centrally assessed company's operating property. The procedures used to assign Montana's portion of the unit value will vary depending upon the availability of information and the type of company.

(2) Except for railroad operating property, Title 15, MCA, does not provide procedures for the allocation of unit value. Therefore, the department will use ratios that are readily available, accurate, and arrived at by exercise of sound judgment which reflect the relationship between the unit value and the value of Montana property.

(3) For the purpose of allocating the unit value, quantity, use, and productivity ratios may be applied. Following are examples of possible ratios the department may apply to allocate unit value to Montana. The following examples shall not be construed to prohibit the use of other factors in the allocation process:

(a) for airlines:

(i) Western States Association of Tax Administrators formula which separates mobile and terminal property for the purpose of allocation;

(ii) originating and terminating tons;

(iii) equated ground hours;

(iv) equated flight hours;

(v) revenue ton miles;

(vi) arrivals and departures;

(b) for electric:

(i) cost;

(ii) revenue;

(iii) wire miles;

(iv) pole line miles;

(c) for gas:

(i) cost;

(ii) revenue;

(iii) pipe miles;

(iv) mcf miles;

(d) for pipelines:

(i) cost;

(ii) mcf miles;

(iii) pipe miles;

(iv) barrel miles;

(e) for telephone:

(i) cost;

(ii) revenue;

(iii) telephone;

(f) for microwave:

(i) cost;

(ii) revenue;

(g) for telecommunication:

(i) cost;

(ii) revenue;

(iii) number of customers;

(iv) billing addresses.

(4) As an alternative to the allocation formula provided in 15-23-213, MCA, the department will use an equivalent car count for each company as the sole factor for allocating railcar property in Montana.

(5) For tax year 2003, the department will utilize the following miles as the Montana miles per day:

(a) 475 miles for flat, box, gondola, and coal gondola railcars, when specifically reported by railcar type; and

(b) 265 miles for all other railcars.

(6) For tax year 2004 and subsequent tax years, and in the absence of a speed study supplied by a railcar company, the department will utilize the following default miles as the Montana miles per day:

(a) 450 miles for flat, box, gondola, and coal gondola railcars, when specifically reported by railcar type; and

(b) 250 miles for all other railcars.

(7) A railcar company must report by specific railcar type to qualify for the higher default figure.  In the event that a railcar company does not report by specific railcar type, the lower default figure will be applied to all of the railcar company's railcars.

(8) Commencing with the 2004 tax year, if a railcar company believes that 250 or 450 miles per day does not accurately reflect the speed of its cars, it may submit a speed study to establish its Montana miles per day.

(9) A speed study must include a statistically valid sample of the cars that reside or travel in the state, and must include data from one month, the month to be determined by the department.  The department shall identify to the railcar companies the month to be utilized in the speed study by February 1 of the prior tax year.

(10) For tax year 2004, the department shall identify to the railcar companies the month to be utilized in the speed study by May 1, 2003.

(11) The sample population for a speed study must include all railcars and railcar types that were present in the state at any time during the time period being analyzed for the speed study.

(12) Cars shall be selected randomly from the sample population.

(13) For each car selected for the speed study, the company will report the time required to travel from the nearest timing point before the car entered the state to the nearest timing point after the car left the state and the total miles between those points.  The company will then total the mileage and time for all cars in the study, and compute a speed from those totals.  Speed will be computed by dividing the total miles by the total time, multiplied by 24, to equal miles per day.

(14) If the department determines that a speed study is not representative of the movement of cars within the state, or that the data were incorrectly compiled, the speed study will not be utilized to determine Montana miles per day, and the department shall use the appropriate default number, pursuant to (6).

(15) A speed study will only be valid for three years. A new speed study must be resubmitted after three years, unless the department agrees in writing to accept a previously submitted speed study.

(16) A speed study must be submitted to the department no later than December 1 prior to the tax year for which the speed study is to be applied. The department will apply the default provision in (6) to railcar companies that fail to provide a speed study by the time specified in this section.

(17) When computing allocation factors for airline companies, the department shall find separate mobile and terminal factors. These factors will be combined to make a single allocation factor. The combination will be made according to the relationship of the mobile and terminal properties cost.

(1) Except for railroad car companies, the department shall apportion the Montana allocated value of centrally assessed companies to the taxing units.

(2) To determine the amount of value available for distribution to the taxing units, the department shall deduct the Montana situs property value from the state allocated value.

(a) The difference is apportioned to the taxing units as provided in (3) .

(b) The Montana situs property value is apportioned to the taxing units as provided in (4) .

(c) The Montana situs property value (MSPV) may be determined from the following equations:

(i) MSPV =

                    Installed cost                (Total unit value)

                    of Montana         X   Total installed cost of all

                    situs property         operating property for the unit

(ii) MSPV =

                    Installed cost                (MT unit value)

                    of Montana         X   Total installed cost of MT

                    situs property         operating property for the unit

(iii) MSPV =

                    MT unit value X     Total system situs costs

                                                        System total costs

(3) Apportionment under (2) (a) may be made by the following methods:

(a) airlines - arrivals and departures;

(b) electric - pole and wire mileage by capacity;

(c) gas - pipe mileage by size;

(d) microwave - situs of equipment;

(e) pipeline - pipe mileage by size;

(f) railroads - track mileage weighted at 100% for main line, 60% for branch line and 40% for side track.

(g) telecommunications - wire mileage and/or situs of equipment;

(h) telephone - wire mileage and situs of equipment.

(4) In addition to the methods in (3) the department may use other methods which properly apportion value among the taxing units.

(5) The Montana situs property value is apportioned to the taxing units in which the property is situated.  To accomplish this the total installed cost of situs property in each taxing unit is multiplied by the percentage computed by dividing the MSPV developed in (2) (c) by the total installed cost of Montana situs property.

(1) "Electricity produced in the state for delivery outside of the state" as used in 15-72-104 , MCA, means electricity that is produced at an electrical generation facility in Montana, and delivered immediately and without interruption to entities beyond Montana borders via a transmission facility.

(2) "Electricity produced in the state for delivery within the state," means electricity that is not produced for delivery outside of the state.

(2) In all other circumstances, the distribution services provider is the taxpayer and the transmission services provider shall collect the tax and forward it to the department.

This rule has been transferred.

This rule has been transferred.

This rule has been transferred.

This rule has been transferred.

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This rule has been transferred.

This rule has been transferred.

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This rule has been transferred.

This rule has been transferred.

This rule has been transferred.

This rule has been transferred.

This rule has been transferred.

This rule has been transferred.

(1) "Industrial appraiser" means a person who has completed the necessary training and is certified to appraise industrial property in Montana.

(2) "Industrial improvements" means all improvements upon the land, of a civil construction character, utilized to house the industrial process. All storage facilities shall be treated as improvements to land.

(3) "Industrial plant" means a combination of land, land improvements, improvements and machinery that have been organized into a functioning unit. The value of the several components will be placed in the proper tax classification according to the use of the property.

(4) "Industrial property" means property used in the extraction, production, distribution, and changing the form of raw materials or assembling components and parts, packing and warehousing, and shipping of the finished products.

(5) "Manufacturing machinery and equipment" means all property used in the manufacturing process, whether permanently or temporarily in place, used to transform raw or finished materials into something possessing a new nature or name and adopted to a new use.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(2) All property that has been certified by the Department of Environmental Quality to control air or water pollution shall be placed in class five.

(3) All property that has been included in a new industry classification shall be placed in class five.

(4) See ARM 42.19.1235 for tax incentives for new or expanding industries.

(5) See 15-6-218 , MCA, for exempt intangible personal property deduction for industrial property.

(2) If adequate market data exist, the department may apply the approaches to valuation described in ARM 42.22.1309.

This rule has been repealed.

This rule has been repealed.

(1) When determining the market value of industrial properties, department appraisers may consider, based on generally accepted appraisal principles, the cost approach, the income approach, and the market approach to value, if the necessary information is available.

(2) Extraordinary functional and/or economic obsolescence is treated on a case-by-case basis.

(3) Through the appraisal process, the department shall arrive at a valuation that most accurately estimates market value.

This rule has been repealed.

(1) Prior to January 1 of each year, the department calculates trend factors to value industrial machinery and equipment for ad valorem tax purposes pursuant to ARM 42.22.1306. The department uses annual cost indexes from the Marshall & Swift Guide described in ARM 42.21.155. The current index is divided by the annual index for each year to arrive at a trending factor. Each major industry has its own trend factor table containing industry descriptions with the applicable trend table number and life expectancy. Where no index exists in the Marshall & Swift Guide for an industry, that industry is grouped with other industries using similar equipment. Industrial machinery and equipment remain taxable at the level of the final year of life expectancy until its disposal.

(2) The department shall post its trend factor tables for industrial machinery and equipment for the upcoming tax year on the department's internet website located at http://www.mtrevenue.gov. The department adopts and incorporates by reference its 2023 Personal Property Depreciation Schedules and Trend Tables publication, effective January 1, 2023. The Depreciation Schedules and Trend Tables publication contains the detailed schedules and tables the department uses for valuing personal property and industrial machinery and equipment.

(3) Mining machinery and equipment is engaged in the extraction, excavation, burrowing, or otherwise freeing raw material from the earth. Mobile mining equipment moves under its own power or on its own wheels and chassis, including any attachments used with or attached to such equipment, but does not include equipment that requires a foundation for the performance of the function for which it was designed and built. Mobile mining equipment used for extraction is valued by using the procedures established for heavy equipment found in ARM 42.21.154 and 42.21.155. 

This rule has been repealed.

(1) Grain storage facilities, seed treating plants, and fertilizer storage plants are improvements to real property for which the use is bulk storage of unprocessed grain, seed cleaning and treating, and bulk storage of fertilizers awaiting sale or processing. Blending, cleaning, treating, packaging, conditioning, dust removal, and pollution control are not considered a manufacturing process.

(2) All product moving or handling property used in grain storage facilities, seed cleaning facilities, and bulk fertilizer facilities is considered part and parcel to the facility and is assessed under 15-6-134, MCA. Property under this rule shall not be considered manufacturing equipment.

(3) Bulk fertilizer facilities are defined as an improvement to land for storing, blending, and distributing dry fertilizers. Blending, cleaning, treating, packaging, conditioning, dust removal, and pollution control in these facilities are not considered a manufacturing process. 

(4) Seed cleaning facilities are defined as an improvement to land if used either solely or in conjunction with a grain elevator for the cleaning and treating of seed grain. Blending, cleaning, treating, packaging, conditioning, dust removal, and pollution control in these facilities are not considered a manufacturing process.

(5) All property described in (1) and (2) shall be valued according to the reappraisal cycle established for other class four property in 15-7-103, MCA. The department will determine market value considering the cost approach, sales comparison approach, and income approach. When using the cost approach, a separate age/life schedule will be applied to the product handling portion of the facility to reflect physical depreciation and functional obsolescence. Economic obsolescence will be addressed on a case by case basis. Cost data used in developing the cost approach for property included in this rule is found in the Marshall & Swift Valuation Service Guide, adopted and incorporated by reference in ARM 42.21.155.

This rule has been repealed.

This rule has been repealed.

(1) The employee must hold a bachelor degree from an accredited college or have at least five years experience in the industrial or complex property valuation field.

(2) Training and testing criteria shall be as follows:

(a) The employee will be required to take the International Association of Assessing Officers (IAAO) Courses I and II or their equivalents. The employee will be required to take the Appraisal Institutes (AI) Courses 101, 102, 201, and 202 or their equivalents. The employee will be required to take the Uniform Standards of Professional Appraisal Practices (USPAP) course. A USPAP refresher will be required every five years thereafter. These courses will be made available annually if funding is available. 

(b) The employee shall attend the first scheduled IAAO courses after accepting the industrial property responsibilities. Satisfactory completion of the IAAO training session(s) shall include successful completion of the written examination conducted at the conclusion of the IAAO training session(s). If the employee fails to successfully complete the first written examination, attendance at the next unit valuation training session(s) shall be required. Failure to successfully complete the second written examination(s) shall result in immediate termination of employment. Previous appraisal designations may be considered as substitutes for this course as determined by the unit manager. The appraiser shall attend the first scheduled AI Courses 101,102, 201, and 202. Satisfactory completion of the AI training session shall include successful completion of the written examination(s) conducted at the conclusion of the unit valuation training session(s). If the employee fails to successfully complete the first written examination(s), attendance at the next AI training session(s) shall be required. Failure to successfully complete the second written examination(s) shall result in immediate termination of employment. Previous appraisal courses may be considered as substitutes for these courses as determined by the unit manager.

(3) Upon commencement of employment with the department as an industrial property appraiser, the employee shall undertake a one-year period of on-the-job appraisal work during which time the employee will begin the process of meeting the requirements set forth in (1) and (2). For employees new to state government, this one-year period will run concurrently with and in addition to the automatic six-month probation period set forth in department policy 3.1.4. The commencement of the year experience requirement will coincide with the employee's notification of being assigned industrial property appraisal responsibilities. All work will be supervised by the department. Failure to perform the appraisal work satisfactorily may result in immediate termination of employment.

(4) The department may waive the criteria set forth in (1) and (2) if sufficient proof is presented that the employee has previously fulfilled such criteria. For example, the employee may have completed a course of instruction from a professional appraisal and real estate related organization, provided that the organization is a member of The Appraisal Foundation as defined in 37-54-102, MCA. The course must be equal to or greater in complexity than that of courses required above. An employee who has attained a Certified General License through the Board of Real Estate Appraisers of the Business and Occupational Licensing Bureau of the Montana Department of Labor and Industry is also eligible for a waiver under this subsection.

(2) Training and testing criteria shall be as follows:

(a) The employee will be required to take the International Association of Assessing Officers (IAAO) Courses I and II or their equivalents. The employee will be required to take the American Society of Appraisers (ASA) Courses BV201N, BV202N, and BV203N1 or their equivalents. The employee will be required to take the Uniform Standards of Professional Appraisal Practices (USPAP) course. An USPAP refresher will be required every five years thereafter. The employee will be required to attend the Western States Association of Tax Administrators, Committee on Centrally Assessed Properties (WSATA-CCAP) Courses 101, 102, and 103 or their equivalents. These courses will be made available annually if funding is available.

(b) The employee shall attend the first scheduled WSATA-CCAP course after accepting the unit valuation or centrally assessed appraiser responsibilities. Satisfactory completion of the unit valuation training session shall include successful completion of the written examination conducted at the conclusion of the unit valuation training session. If the employee fails to successfully complete the first written examination, attendance at the next unit valuation training session shall be required. Failure to successfully complete the second written examination shall result in immediate termination of employment. Previous appraisal designations may be considered as substitutes for this course as determined by the Unit Manager. The appraiser shall attend either the first scheduled IAAO Courses I and II, or ASA Courses BV201N, BV202N, and BV203N. Satisfactory completion of the IAAO or ASA training session shall include successful completion of the written examination conducted at the conclusion of the unit valuation training session. If the employee fails to successfully complete the first written examination, attendance at the next IAAO or ASA training session shall be required. Failure to successfully complete the second written examination shall result in immediate termination of employment. Previous appraisal courses may be considered as substitutes for these courses as determined by the Unit Manager.

(3) Upon commencement of employment with the department as a unit valuation or centrally assessed appraiser, the employee shall undertake a one-year period of on-the-job appraisal work during which time the employee will begin the process of meeting the requirements set forth in (1) and (2). For employees new to state government, this one-year period will run concurrently with and in addition to the automatic six-month probation period set forth in department policy 3.1.4. The commencement of the year experience requirement will coincide with the employee's notification of being assigned unit or centrally assessed appraisal responsibilities. All work will be supervised by the department. Failure to perform the appraisal work satisfactorily shall result in immediate termination. 

This rule has been repealed.

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This rule has been transferred.

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This rule has been transferred.

This rule has been transferred.

This rule has been transferred.