Montana Administrative Register Notice 42-2-888 No. 2   01/31/2013    
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In the matter of the amendment of ARM 42.15.107, 42.15.110, 42.15.213, 42.15.216, 42.15.315, 42.15.316, 42.15.318, 42.15.403, 42.15.605, 42.15.901, 42.15.902, and 42.15.903 relating to income tax









TO:  All Concerned Persons


1.  On November 23, 2012, the department published MAR Notice Number 42-2-888 regarding the proposed amendment of the above-stated rules at page 2339 of the 2012 Montana Administrative Register, Issue Number 22.


2.  A public hearing was held on December 17, 2012, to consider the proposed amendments.  No one appeared at the hearing to testify.  Written comments were received from Jane Egan, of the Montana Society of Certified Public Accountants, and Nancy Higgins Schlepp, President of the Montana Taxpayers Association.  The comments are summarized as follows, along with the response of the department:


COMMENT NO. 1:  Ms. Egan and Ms. Schlepp both commented on the addition of the language in ARM 42.15.318(5).  They stated that the proposed change unnecessarily complicates the NOL election, and the election to forego the carryback period at the federal level should govern at the Montana level unless the taxpayer affirmatively elects to depart from the federal election.  This simplifies the election and eliminates the problem of failing to elect on Montana by relying on the Federal election.  Montana should follow federal elections whenever possible for simplicity. 


RESPONSE NO. 1:  The department thanks Ms. Egan and Ms. Schlepp for their comments and appreciates this opportunity to address their concerns.  The calculation of a Montana net operating loss is separate from the calculation of a federal net operating loss.  Accordingly, a taxpayer filing a Montana income tax return is allowed to forego the carryback of a Montana net operating loss regardless of the election they made on the federal return.

The change will ensure that taxpayers are provided with an important opportunity to evaluate whether or not an election to forgo the carryback of a Montana net operating loss is beneficial for them.  The change in reporting requirements will ensure that the Montana Department of Revenue receives the proper documentation to support a taxpayer's separate election and will also provide assurance to the taxpayer that their separate election was made for Montana purposes.


3.  The department amends ARM 42.15.107, 42.15.110, 42.15.213, 42.15.216, 42.15.315, 42.15.316, 42.15.318, 42.15.403, 42.15.605, 42.15.901, 42.15.902, and 42.15.903, as proposed.


4.  An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov.  Select the "Laws and Rules" link in the left hand column, and click on the "Rules" link within to view the options under the "Current Rule Actions – Published Notices" heading.  The department strives to make the electronic copy of this 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.  While the department also strives to keep its web site accessible at all times, in some instances it may be temporarily unavailable due to system maintenance or technical problems.



/s/ Cleo Anderson                                         /s/ Mike Kadas

CLEO ANDERSON                                      MIKE KADAS

 Rule Reviewer                                               Director of Revenue


Certified to Secretary of State January 22, 2013


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