BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY

                                      OF THE STATE OF MONTANA 

 

In the matter of the adoption of New Rules I through V pertaining to the employer job growth incentive tax credit

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION

 

            TO: All Concerned Persons

 

            1. On January 6, 2022, at 10:00 a.m., the Department of Labor and Industry (department) will hold a public hearing via remote conferencing to consider the proposed adoption of the above-stated rules. There will be no in-person hearing. Interested parties may access the remote conferencing platform in the following ways:

            a.  Join Zoom Meeting, https://mt-gov.zoom.us/j/86787894730, Meeting ID: 867 8789 4730; or

            b. Dial by telephone, +1 406 444 9999 or +1 646 558 8656, Meeting ID: 867 8789 4730.

            The hearing will begin with a brief introduction by department staff to explain the use of the videoconference and telephonic platform. All participants will be muted except when it is their time to speak.

 

            2. The department 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 no later than 5:00 p.m., on December 30, 2021, to advise us of the nature of the accommodation that you need. Please contact Michael Peery, Workforce Services Division, P.O. Box 1728, Helena, Montana 59624-1728; telephone (406) 444-5539; facsimile (406) 444-4140; Montana TTD (406) 444-5549; or e-mail mpeery@mt.gov.

 

            3. GENERAL STATEMENT OF REASONABLE NECESSITY:  There is reasonable necessity for the department to implement 39-11-404, MCA, the Employer Job Growth Incentive Tax Credit, as authorized by Chapter 550, Laws of 2021 (House Bill 629). The new law creates a tax credit for employers who foster job growth in specific industries in Montana and includes rulemaking authority for the department to administer the certification necessary to claim the credit. The department will review applications for certification from employers.  The credit is available for tax years beginning after December 31, 2021.  This proposal includes New Rules I through V for qualifications to apply for the credit certificate.

 

            4. The proposed new rules are as follows:

 

            NEW RULE I CREDIT FOR EMPLOYER JOB GROWTH  (1)  Any employer seeking the tax credit must apply for the credit certificate by January 31 of the year following the tax year for which the certificate is requested.

            (2)  The department must provide the credit certificate before an employer may claim a tax credit.  Once a certificate is issued to an employer, the employer may claim it on a tax return.  An employer must provide the credit certificate number to the Department of Revenue when claiming the tax credit on a tax return.

 

            AUTH:  39-11-404, MCA

            IMP:  39-11-404, MCA

 

            NEW RULE II  REQUIRED DOCUMENTATION (1) A complete application shall include:

            (a) all information needed to determine the number of full-time employees (FTEs) employed by the company in Montana in 2021, including number employed and hours worked;

            (b) all statewide employees of the employer who have been hired during the last calendar year, along with identifying information;

            (c) dates of hire of each employee listed;

            (d) benefits provided to each employee listed;

            (e) Montana-source wages paid to each employee listed during the tax year; and

            (f) date of hire and date of separation if no longer employed for each employee listed.

            (2)  An employer shall submit a brief statement as to how the job growth is associated with a project in the state that encourages, promotes, and stimulates economic development in the sectors of construction, natural resources, mining, agriculture, forestry, manufacturing, transportation, utilities, as defined in the North American Industry Classification System (2017), or outdoor recreation, as defined by the Bureau of Economic Analysis.  This description must include the location of the project.

            (3) Employers must provide identifying information for any predecessors or business transfers as defined in 39-11-404, MCA, that have affected the company since 2021.

            (4)  The department may request any additional information necessary to determine whether an employer is eligible to receive the credit, including data needed for auditing purposes.

(5) If the employer did not pay any Montana-source wages in 2021, it must submit all information required by (1) through (4) on the date the employer began paying Montana-source wages.

           

            AUTH:  39-11-404, MCA

            IMP:  39-11-404, MCA

 

            NEW RULE III  DEFICIENT APPLICATIONS  (1) An employer seeking a credit certificate must apply on forms provided by the department.

            (2) Applications must be complete to be reviewed.

            (3) Incomplete applications will expire 90 days after submission.

            (4) If an application is deemed deficient, the department must notify the applicant in writing, with the specific reasons the application is deficient. 

            (a) An applicant may submit information to cure the deficiency within 30 days from the mailing of the department's notification of the deficiency.  Failure or refusal to submit further information means the department's notification is final.

            (b) If an applicant timely submits information intended to cure the deficiency, the department shall review the application and new information.  The department shall grant or deny the certification pursuant to these rules.  The denial of a certification may be appealed pursuant to [NEW RULE IV].

             

            AUTH:  39-11-404, MCA

            IMP:  39-11-404, MCA

 

            NEW RULE IV APPEAL OF CERTIFICATION DENIAL (1) An applicant who has attempted to cure deficiencies and whose certification was nonetheless denied may request a hearing.

            (2) A request for hearing must be made within 30 days of the date of mailing of the denial of certification.  The request must identify the denial being disputed and the basis upon which the dispute is being made.  The request for hearing must be sent to jobgrowthtaxcreditprogram@mt.gov.

            (3) A hearing requested pursuant to this rule will be conducted pursuant to Title 2, chapter 4, MCA.

            (4) The applicant bears the burden of demonstrating that the department's denial constitutes an abuse of discretion.

 

            AUTH: 39-11-404, MCA

            IMP: 39-11-404, MCA

 

            NEW RULE V  AMERICAN RESCUE PLAN ACT SAVINGS CLAUSE

            (1) The tax credit will be available to claim unless the budget director provides a certification in writing to the legislative finance committee as specified in [Section 25, Chapter 550, Laws of 2021] that the implementation of the credit in a given year will:

 (a)  result in a reduction of funds under the American Rescue Plan Act; or

            (b)  require the state to repay or refund the federal government pursuant to the American Rescue Plan Act.

            (2) If the relevant contingency as provided for in (1) occurs, the credit will not be available in the taxable year following the budget director's determination.

 

            AUTH:  39-11-404, MCA

            IMP:  39-11-404, MCA

 

            5. Concerned persons may present their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to Michael Peery, Workforce Services Division, P.O. Box 1728, Helena, Montana 59624-1728; facsimile (406) 444-4140; or e-mail mpeery@mt.gov, and must be received no later than 5:00 p.m., January 10, 2022.

 

            6. The department 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 the particular subject matter or matters regarding which the person wishes to receive notices. Such written request may be mailed or delivered to the contact person in paragraph 2 above or may be made by completing a request form at any rules hearing held by the agency.

 

            7. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted by e-mail on October 19, 2021.

 

            8. Pursuant to 2-4-111, MCA, the department has determined that the rule changes proposed in this notice will have a significant and direct impact upon small businesses.  

            Small businesses impacted by this proposal include any associated with a project in the state that encourages, promotes, and stimulates economic development in the sectors of construction, natural resources, mining, agriculture, forestry, manufacturing, transportation, utilities, or outdoor recreation that have fewer than 50 employees. 

            The probable significant and direct effects of the proposed rules on the small businesses identified include a tax credit based on a growth of the small business to include more employees. It is a positive significant and direct impact on the small businesses.

The department finds that the impact will allow small businesses to maintain excess funds or have cash available which would normally be as part of taxes paid to the state.  The department has not considered any alternative options to the implementation of the credit as it does not adversely affect small businesses and is required by legislation.

 

            9. Department staff has been designated to preside over and conduct this hearing.

 

/s/ QUINLAN L. O'CONNOR Quinlan L. O'Connor Alternate Rule Reviewer	/s/ LAURIE ESAU Laurie Esau, Commissioner DEPARTMENT OF LABOR AND INDUSTRY

 

 

            Certified to the Secretary of State November 30, 2021.