Montana Administrative Register Notice 42-1041 No. 24   12/23/2021    
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In the matter of the adoption of New Rule I and the amendment of ARM 42.4.803 and 42.4.804 pertaining to innovative educational program donations to school districts and student scholarship organizations (SSO)










TO: All Concerned Persons


1. On November 5, 2021, the Department of Revenue (department) published MAR Notice No. 42-1041 pertaining to the public hearing on the proposed adoption and amendment of the above-stated rules at page 1530 of the 2021 Montana Administrative Register, Issue Number 21.


2. On November 29, 2021, the department held a public hearing to consider the proposed adoption and amendment. There were no commenters present to provide testimony or commentary for the rulemaking. The department received written comments from the following interested persons:  Ross Izard, ACE Scholarships; and Liz Heaney.


3. The department has adopted New Rule I (42.4.801) as proposed.


4. The department has amended the following rules as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:



(1) and (2) remain as proposed.

(3) With respect to the aggregate limit of tax credits allowed for a year, the priority of donations is based upon the time and date stamp issued by the department's registration system when a school district or SSO completes registration of the donation. Donations made in excess of the aggregate limits and credit cap, which is the amount of the credit provided under 15-30-3110 and 15-30-3111, MCA, will not be eligible for the tax credit. 

(4) remains as proposed.


AUTH: 15-1-201, 15-30-3114, MCA

IMP: 15-30-3102, 15-30-3103, 15-30-3105, 15-30-3106, MCA


42.4.804 CREDIT LIMITATIONS AND CLAIMS (1) A taxpayer may claim a credit for contributions made in cash to a school district provided for in 20-9-901, MCA, and/or a student scholarship organization (SSO), provided for in 15-30-3110, MCA.  A contribution made in For the purpose of this rule, cash means includes:

(a) through (d) remain as proposed;

(e) bank draft; or

(f) an electronic bank account transfer (e.g., wire transfer, ACH draft);

(g)  a credit card transaction (less any transaction surcharges or fees); or

(f) remains as proposed but is renumbered (h).

(2) through (4) remain as proposed.


AUTH: 15-1-201, 15-30-3114, MCA

IMP: 15-30-3101, 15-30-3111, MCA


5. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:


COMMENT 1: Mr. Izard commented that ARM 42.4.803(3) references a "date stamp" with regard to how donations are prioritized for receipt of credits. ACE believes that credit caps may be met in a matter of hours or even minutes.  ACE recommends this text be changed to "time and date stamp" to allow for granularity of analysis and to avoid misunderstandings.


RESPONSE 1: The department agrees and based on the comment has amended ARM 42.4.803(3) upon adoption.


COMMENT 2: Mr. Izard commented that the various forms of cash donations that scholarship-granting organizations may accept in ARM 42.4.804 does not include credit cards.  ACE requests adding credit cards, potentially with a stipulation that any associated fee may be surcharged to the cardholder (but will not be eligible for the credit).


RESPONSE 2: While HB 279's amendment to 15-30-3102(2), MCA, defines "donation" as a gift of cash, the department's understanding of the legislative intent of limiting donations to cash was to prevent a donation of property other than cash with a cost basis lower than the value. Based on the comment, the department has added (1)(g) to include credit card transactions in the list specifying that any credit card transaction surcharge or fee imposed by a SSO or school district is ineligible for the credit.


COMMENT 3: Mr. Izard commented that ARM 42.4.804(1)(e) mentions bank drafts as an acceptable form of donation, but it does not stipulate precisely how that term is defined.  Mr. Izard would like to ensure that wire transfers, ACH, and other electronic transfers are included under this item in order to avoid confusion.


RESPONSE 3: The department appreciates the comments and agrees that wire transfers, ACH, and electronic transfers may meet the criteria, provided the electronic transfer does not have a non-cash source for the funds. Based on the comment, the department has amended the rule with a new (1)(f) for added clarity.


COMMENT 4: Ms. Heaney commented that she lived in Arizona where a similar program exists. It is a successful program and she enjoys seeing this program in Montana.


RESPONSE 4: The department thanks Ms. Heaney for her comments.


6. The effective date of the department's adoptions and amendments is January 1, 2022.



/s/ Todd Olson                                              /s/ Brendan Beatty                                      

Todd Olson                                                   Brendan Beatty

Rule Reviewer                                              Director of Revenue


Certified to the Secretary of State December 14, 2021


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