BEFORE THE DEPARTMENT OF REVENUE
OF THE STATE OF MONTANA
NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION AND AMENDMENT
TO: All Concerned Persons
1. On August 7, 2008, at 1:30 p.m., a public hearing will be held in the Director's Office (Fourth Floor) Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the proposed 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., July 31, 2008, to advise us of the nature of the accommodation that you need. Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail firstname.lastname@example.org.
3. The proposed new rules do not replace or modify any section currently found in the Administrative Rules of Montana. The proposed new rules provide as follows:
NEW RULE I BEER REPORTING REQUIREMENTS (1) Each brewery located outside of Montana shall file with the department monthly reports, provided by the department, with the following information:
(a) A brewery that sells beer directly to a retailer located in Montana must pay the tax due, pursuant to 16-1-406, MCA, on or before the 15th of each month for beer sold in the previous month and complete Montana Form BET;
(b) A brewery that sells beer directly to a retailer shall report on or before the 15th of each month the amount of beer sold directly to retailers in the previous month on Form BET-3; or
(c) Each retailer that purchases beer from an out-of-state brewery shall report the amount of beer purchased on Form BET-2.
(2) Each brewery located in Montana selling directly to consumers or retailers must pay tax for beer sold in the previous month pursuant to 16-1-406, MCA, and complete Montana Form BET.
AUTH: 16-1-303, MCA
IMP: 16-1-406, 16-3-213, 16-4-401, MCA
REASONABLE NECESSITY: The department is proposing to adopt New Rule I because the 2007 Legislature enacted SB 524, which allows out-of-state breweries to ship beer directly to retailers. To ensure equitable collection of tax, all brewers engaging in self-distribution act as a distributor and take on the tax collection and reporting responsibilities.
NEW RULE II WINE REPORTING REQUIREMENTS (1) Each winery located outside of Montana shall file with the department monthly reports, provided by the department, with the following information:
(a) A winery that sells wine directly to a retailer located in Montana must pay the tax due, pursuant to 16-3-411, MCA, on or before the 15th of each month for wine sold in the previous month and complete Montana Form WIT;
(b) A winery that sells wine directly to a retailer shall report on or before the 15th of each month the amount of wine sold directly to retailers in the previous month on Form WIT-3; or
(c) Each retailer that purchases wine from an out-of-state winery shall report the amount of wine purchased on Form WIT-2.
(2) Each winery located in Montana that is licensed to do business in the state shall, each quarter, report to the department the quantity of wine sold to distributors and the name and address of distributors on or before the 15th of the following month.
(3) Any winery located in Montana selling directly to the consumer or the retailer must pay tax on or before the 15th of each month for wine sold in the previous month pursuant to 16-1-411, MCA, and complete Montana Form WIT.
AUTH: 16-1-303, MCA
IMP: 16-3-411, 16-4-107, MCA
REASONABLE NECESSITY: The department is proposing to adopt New Rule II because the 2007 Legislature enacted SB 127, which allows out-of-state wineries to ship wine directly to retailers. The winery shipping the product is responsible for the tax due on the wine sold to a retailer. To ensure equitable collection of tax, all wineries engaging in self-distribution act as a distributor and take on the tax collection and reporting responsibilities.
4. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:
42.13.107 EXTENSION OF TIME FOR NONUSE (1) remains the same.
(2) The department may grant up to three extensions of nonuse status in increments not exceeding 90 days. If the license is not put into use within one year, the department
must will consider quota limitations when whether extenuating circumstances exist when determining whether further extensions of nonuse status may be granted. If the quota area is full, extreme and unforeseen hardship must be justified.
(a) If the department determines the extensions are justified, the licensee may be granted an extension of nonuse status in excess of one year.
(b)(3) The licensee shall be required to attend an informal conference conducted by the department in Helena to afford the licensee or person(s) holding a security interest in the license the opportunity to present evidence establishing justification for any further extension of nonuse status. If the department determines additional nonuse time is justified, a letter granting nonuse status will be issued. If the department determines continued nonuse status is not justified, the department will issue a notice to lapse the license.
(c) If the license issued has no quota limitations on the type of license issued nonuse status, 90-day extensions may be granted each time a written statement is received from the licensee, the licensee's representative, or the secured party that includes an explanation of the need for nonuse which is determined to be justified by the department.
(3) through (5) remain the same but are renumbered (4) through (6).
AUTH: 16-1-303, MCA
IMP: 16-3-310, MCA
REASONABLE NECESSITY: The department is proposing to amend ARM 42.13.107 to clarify when nonuse status will be approved to eliminate subjectivity in approving nonuse status.
42.13.109 SEVEN-DAY CREDIT LIMITATION (1) A
Montana brewery license, a beer wholesaler license, a Montana winery registration license, or a table wine distributor license will be suspended or revoked or otherwise sanctioned under 16-4-406, MCA, if credible evidence demonstrates that a brewer, a winery, a wholesaler, or distributor licensee extended credit to a retail licensee for more than seven days.
(2) through (6) remain the same.
AUTH: 16-1-303, MCA
IMP: 16-3-243, 16-3-406, 16-4-404, MCA
REASONABLE NECESSITY: The department is proposing to amend ARM 42.13.109 to remove the word "Montana" because the law was changed which allows licensees to ship beer or wine directly to retailers.
42.13.222 BEER WHOLESALER AND TABLE WINE DISTRIBUTOR RECORDKEEPING REQUIREMENTS (1) through (3) remain the same.
(4) A beer wholesaler or a table wine distributor may use a common carrier to deliver beer or wine to a retail license in limited quantities. The department may inspect the books and records of the common carrier regarding the conveyance of alcoholic beverages within the state.
(a) Quantity is limited to three cases a day for each licensed retailer.
AUTH: 16-1-303, MCA
IMP: 16-3-220, 16-3-243, 16-3-404, 16-3-406, MCA
REASONABLE NECESSITY: The department needs to clarify that a common carrier may be used to deliver beer or wine to retailers in limited quantities and that the records of such shipments are subject to inspection.
42.13.601 SMALL BREWERY RESTRICTIONS (1) through (3) remain the same.
(4) Product samples may not be sold, offered for sale, given away, consumed, or allowed to be consumed before 10 a.m. or after 8 p.m.
(5) A small brewery may sell growlers. A growler is a container of 1/2 gallon or more that a brewer fills on the brewery premises for off-premises consumption.
AUTH: 16-1-303, MCA
IMP: 16-3-213, 16-3-214, MCA
REASONABLE NECESSITY: The department is proposing to amend ARM 42.13.601 to clarify the restrictions for small brewery licensees of the limitations on sale and service of brewery samples. This rule relies on historical practices and treats small brewers in the same manner as all-beverage licensees, which allows no consumption after closing time. The division has received repeated complaints from on-premises licensees about breweries remaining open after 8 p.m. These breweries reportedly sell product up to 8 p.m. and then allow customers to remain on the premises and consume whatever they have purchased before 8 p.m. The division staff has observed this practice in Billings, Montana.
42.13.701 PRODUCTION THRESHOLD (1) through (4) remain the same.
(5) A brewery that sells directly to a retailer is responsible for the payment of the tax.
AUTH: 16-1-303, MCA
IMP: 16-1-406, MCA
REASONABLE NECESSITY: The department is amending ARM 42.13.701 because SB 524 passed in the 2007 legislative session allows out-of-state breweries to sell beer directly to retailers and the department wants to clarify who is responsible for paying the tax due.
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) 444-3696; or e-mail email@example.com and must be received no later than August 15, 2008.
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 of Public Hearing is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes." The department strives to make the electronic copy of this Notice of Public Hearing conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.
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) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue.
9. The bill sponsor notice requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor for 2007 Senate Bill 127 and 524, David Wanzenried, was notified on June 9, 2008, by electronic mail.
/s/ Cleo Anderson /s/ Dan R. Bucks
CLEO ANDERSON DAN R. BUCKS
Rule Reviewer Director of Revenue
Certified to Secretary of State July 7, 2008