BEFORE THE Department of REVENUE
OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On March 4, 2016, the Department of Revenue published MAR Notice No. 42-2-950 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 442 of the 2016 Montana Administrative Register, Issue Number 5. On March 18, 2016, the department published a notice of extension of comment period on the proposed amendment of the above-stated rules at page 510 of the 2016 Montana Administrative Register, Issue Number 6.
2. On April 5, 2016, a public hearing was held to consider the proposed amendment. No members of the public appeared for the hearing. The department subsequently received written comments from Walter Kero, Certified Public Accountant.
3. The department amends ARM 42.2.615, 42.2.617, 42.2.618, 42.2.619, 42.2.620, and 42.2.621 as proposed.
4. Based on public comments received and additional amendments provided by the Office of Dispute Resolution for consideration at the hearing, the department amends ARM 42.2.613, 42.2.614, and 42.2.616 as proposed, but with the changes from the original proposal shown below. The change to ARM 42.2.613 adds a definition for a form referenced in the rules; the changes to ARM 42.2.614 add clarity in response to a public comment; and the change to ARM 42.2.616 is grammatical.
The amendments are as follows, new matter underlined, deleted matter interlined:
42.2.613 DEFINITIONS The following definitions apply to rules found in this subchapter.
(1) through (3) remain as proposed.
(4) "Form APLS101F" is a document titled Request for Informal Review that is available at revenue.mt.gov for use by a person or other entity to file a written objection with the Department of Revenue for issues concerning the first notice of a tax adjustment.
(4) through (16) remain as proposed, but are renumbered (5) through (17).
42.2.614 PURPOSE (1) through (3) remain as proposed.
dispute resolution flowchart in (6) provides the tax dispute resolution procedure. A final agency decision must be issued within 180 days from the date the notice of referral to the ODR is received as provided for in 15-1-211, MCA, unless extended by mutual consent of the parties.
(5) remains as proposed.
(6) The following flowchart shows how the tax dispute resolution procedure will flow from the initial notice to the final agency decision:
This flowchart is being stricken:
This flowchart is being added:
42.2.616 FORMALITY OF PROCEDURES (1) The department recognizes that a wide array of parties
appear appears before the department with disputes to resolve. These disputes range from large corporations employing professional tax counsel to individuals appearing on their own behalf. It is the intent of the department to accommodate all such disputes to the greatest extent possible in a manner that is deemed most appropriate for each situation.
(2) through (4) remain as proposed.
5. The department has thoroughly considered the comments received. A summary of the comments received and the department's responses are as follows:
COMMENT 1: Walter Kero, Certified Public Accountant, asked if the final agency decision (FAD) depicted in the dispute resolution flowchart in ARM 42.2.614 is a decision by the Office of Dispute Resolution (ODR) hearing officer, or by the department.
RESPONSE 1: The department appreciates Mr. Kero's review of the proposed rule amendments and thanks him for his comments. The final agency decision (FAD) set out in the dispute resolution flowchart in ARM 42.2.614 refers to decisions by the ODR hearing officer concerning tax matters. Final decisions by the ODR are FAD for the department in tax matters. The department has amended the language in the rule and the name of the flowchart to include a reference to "tax" for clarity.
COMMENT 2: Mr. Kero asked if the ODR is semi or fully independent of the department.
RESPONSE 2: By statute, the ODR is housed within the department. The ODR staff are employees of the department. However, as the adjudicatory body tasked with hearing and/or mediating cases between the department and external parties in an enumerated set of disputes, the ODR acts as neutral triers and finders of fact.
The ODR hearing officers issue written final agency decisions after analyzing the facts of each dispute and then applying the pertinent law to those facts. The hearing officers do not favor the department if the findings of fact and conclusions of law support a decision adverse to the department.
The ODR was created by the Legislature pursuant to 15-1-211, MCA, to reduce costs and risks inherent in adjudication or litigation for all parties involved in a dispute. The ODR hearing officers work diligently to provide a fair and efficient forum for the resolution of disputes.
COMMENT 3: Mr. Kero asked, relative to the power of attorney form referenced in ARM 42.2.617(2), if the IRS Form 2848 will suffice.
RESPONSE 3: Yes. In compliance with the Montana Uniform Power of Attorney Act, the department will accept a fully executed IRS Form 2848 as power of attorney.
COMMENT 4: With regard to the language proposed for ARM 42.2.619(1), Mr. Kero commented that the term "compelling," as used in the second sentence, should be defined in the rule.
RESPONSE 4: The department determined that defining the term, which was previously located in (4) and is not new to the rule, could inadvertently limit the ODR's ability to exercise its discretion to travel to a location in Montana other than Helena to conduct a hearing if a party in a dispute presents a unique set of circumstances not previously considered in a definition.
COMMENT 5: With regard to ARM 42.2.621, Mr. Kero stated that if the director disagrees with a mediation, he or she can trump the mediation which creates a sham. He commented that the director can have the final say but this should be separate from the mediation.
RESPONSE 5: The final agency decision provided for in ARM 42.2.621 doesn't apply to mediation outcomes. ARM 42.2.621 refers only to final agency decisions issued on the merits of a case.
Mediation procedures are provided for separately in ARM 42.2.618. Mediations are considered settlement negotiations that, when successfully resolved and mutually agreed to by all parties involved in that process, are final and do not go before a hearing examiner or the director for any further decision.
/s/ Laurie Logan /s/ Mike Kadas
Laurie Logan Mike Kadas
Rule Reviewer Director of Revenue
Certified to the Secretary of State June 6, 2016