BEFORE THE DEPARTMENT OF REVENUE
OF THE STATE OF MONTANA
In the matter of the amendment of ARM 42.2.325 relating to Confidentiality of Tax Records
NOTICE OF AMENDMENT
TO: All Concerned Persons
1. On June 10, 2010, the department published MAR Notice No. 42-2-832 regarding the proposed amendment of the above-stated rule at page 1398 of the 2010 Montana Administrative Register, issue no. 11.
2. A public hearing was held on July 8, 2010, to consider the proposed amendment. Oral and written testimony received at the hearing is summarized as follows along with the response of the department:
COMMENT NO. 1: Jane Egan, with the Montana Society of Certified Public Accountants (MSCPA), presented testimony asking the department to develop a way for tax practitioners to obtain withholding and estimated payment information via internet or telephone to assist them with timely preparation of tax returns.
Ms. Egan further recommended looking at internet options such as the RIS "Where's My Refund" site or the site created by the Internal Revenue Service (IRS) in March of 2010 for verifying receipt of the $250 stimulus rebate to retirees. She indicated that the society believes an internet option would reduce the number of telephone calls made to the department to verify withholding information. The department could ask for the tax preparer's identification number (TPIN) which all paid tax preparers will be required to have as of January 1, 2011, and the taxpayer's date of birth or social security number as qualifiers to get the information being sought.
John Steinhoff, CPA, Junkermier, Clark, Campanella and Stevens, P.C., stated that he supported the suggestion made by Jane Egan because it would make the tax preparer's work much easier if they could get the withholding and estimated payment information more directly.
RESPONSE NO. 1: The department appreciates Ms. Egan and Mr. Steinhoff's suggestions and comments regarding the ability for practitioners to obtain withholding and estimated payment information without the need to complete a Power of Attorney. The department recognizes the mutual benefits of the suggestions made by the Montana Society of Certified Public Accountants and supported by Mr. Steinhoff to the tax filing process for taxpayers, tax practitioners and the department.
The department explored the options suggested by the MSCPA in an attempt to accommodate the request, but ultimately found that the Taxpayer Bill of Rights prohibits this access without the acquired consent of the taxpayer. This consent is granted through the Power of Attorney issued by the taxpayer.
The department is responsible for achieving both convenient and efficient administration of the tax laws and protecting the confidentiality of taxpayer information under the Taxpayer Bill of Rights, specific confidentiality statutes, and the privacy clause of the Montana Constitution. The department will continue to explore additional methods of meeting the privacy interests of taxpayers while making the tax process easier and more convenient.
COMMENT NO. 2: Walt Kero, CPA, Junkermier, Clark, Campanella and Stevens, P.C., provided written comments regarding the proposed rule amendments. Mr. Kero stated the use of a Federal Form 2848 should also be permitted. The form number variation from the federal form number should not be a basis to refuse an otherwise properly executed "Power of Attorney."
RESPONSE NO. 2: The department appreciates Mr. Kero's suggestion concerning the Federal Form 2848. The department does accept the Federal Form 2848, as long as it states "Montana" and references the correct tax type and year(s) at issue. In response to Mr. Kero's comment the department has further amended the rule to provide guidance on how the form can be used and accepted by the department in place of the department's Power of Attorney.
COMMENT NO. 3: Ms. Mary Whittinghill, Montana Taxpayers Association, provided written comments regarding ARM 42.2.325(5), which references an internal department procedure for the Property Assessment Division. Ms. Whittinghill questioned whether it was appropriate to include this internal procedure in an administrative rule.
She asked if the department has a process to determine whether to adopt a rule or issue a procedure. She further questioned whether it would be possible to adopt a procedure by rule when it directly affects taxpayers and uses internal procedures for internal practices for employees.
RESPONSE NO. 3: The department appreciates Ms. Whittinghill's comments concerning the adoption of an internal procedure into an administrative rule. An agency may adopt, by reference, an internal procedure, policy, manual, or other document that is used as a reference to assist the public or the agency in administering an administrative rule. This requirement is allowed by 2-4-307, MCA.
The department's process of determining whether to adopt a rule or develop a procedure is determined by the application of the administrative rule to an implementing statute and to, whether or not the process being developed has direct impact to the public or is more related to an internal process or guidance. Department procedures give guidance to the staff on how to do various tasks associated with the work performed in the department. Administrative rules give guidance to both the taxpayers and the department staff and must support a statute.
Based on Ms. Whittinghill's comments, the department has amended ARM 42.2.325 to remove the internal reference of procedure 2-4-003. The department will propose an administrative rule in the near future to cover the provisions taxpayers and their agents use when seeking confidential property tax information.
COMMENT NO. 4: Ms. Patty Lovaas provided written comments that this rule is another administrative deterrence for property owners to obtain information used to value their property. There is already a confidentiality agreement which is signed by property owners and representatives. This information is readily available at the local offices. To now require all property owners to make a request in writing and mail these requests to the department's Legal Services Office in Helena, appears, under the color of law, to limit openness and transparency. These requests can be intentionally delayed, misplaced, or ignored.
She further stated this is a poor administrative rule, the intent of which is to withhold personal information, in violation of the Montana Constitution, Article II, section 9. The Legislature should not permit this administrative rule to be adopted.
RESPONSE NO. 4: The department's full intent of the rule is to advise the taxpayers of the process that the department will follow when providing confidential taxpayer information to the taxpayer or their duly authorized representative.
Ms. Lovaas is correct; there is a process in place for property owners to obtain information used to value their own property. This rule advises everyone of that process by referencing the internal procedure that is followed in the local offices for those requests. In response to Ms. Lovaas' comments, the department has amended the rule to clarify what type of tax matters must be referred to the Legal Services Office.
There is no intent to withhold personal information from taxpayers. The rule is intended to explain how taxpayer information will be protected from unauthorized requests and provided when an authorized request is received.
3. As a result of the comments received, the department amends ARM 42.2.325 with the following changes:
42.2.325 ACCESS TO INFORMATION (1) remains the same.
(2) All requests for confidential tax returns or tax return information submitted by someone other than the taxpayer or an authorized agent of the taxpayer must be made to the department in writing directed to:
Department of Revenue
Legal Services Disclosure Office
P.O. Box 7701
Helena, MT 59604-7701.
(3) A taxpayer may authorize a representative to obtain the taxpayer's confidential tax information by completing and submitting the department's Power of Attorney form, form POA. The downloadable form is located on the department's web site at http:\\revenue.mt.gov under "forms and resources" "downloadable forms". The department will accept a fully executed Federal Form 2848 when section 3 of the Federal form entitled "tax matters" contains the type of tax, the form number with a reference to "Montana," and the tax years at issue.
(4) Except as provided in (5), when the department receives a written request for confidential tax return information from someone who is not statutorily authorized to receive it, the department's Disclosure Office will respond in writing refusing the request.
(5) The department complies with the State Tax Appeals Board's order to provide relevant confidential realty transfer certificate information to requesting taxpayers who are appealing the department's valuation of their property for comparable sales that the department used in valuing the taxpayer's property.
Confidential realty transfer certificate information is available in accordance with the department procedure entitled, "Taxpayer/Agent Review of Confidential Information," 2-4-003, dated August 12, 2003, last revised May 19, 2009.
(6) When the department is served with an administrative summons, judicial summons, or subpoena demanding confidential tax return information on behalf of someone who is not statutorily authorized to receive it, the department will oppose the request by filing a motion to quash with the judicial body that issued it or under whose authority it was issued, and will appeal any adverse ruling that implicates the department's view of proper tax administration. The department will
not disobey obey an order to provide the information according to a final judicial order.
AUTH: 15-1-201, 15-7-306, 15-30-2620, 15-31-501, 16-1-303, 16-10-104, 16-11-103, MCA
IMP: Montana constitution, Art. II, sections 8, 9, and 10, Title 2, chapter 3, part 1, 2-6-102, 2-6-109, 2-6-110, 2-6-202, 15-1-106, 15-7-310, 15-30-2618, 15-31-511, 15-38-109, 15-68-815, MCA
4. An electronic copy of this adoption notice 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 adoption 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.
/s/ Cleo Anderson /s/ Dan R. Bucks
CLEO ANDERSON DAN R. BUCKS
Rule Reviewer Director of Revenue
Certified to Secretary of State November 15, 2010