Montana Administrative Register Notice 42-2-781 No. 1   01/17/2008    
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In the matter of the adoption of New Rule I (42.4.702) and II (42.4.703) relating to tax year 2007 property tax credit


TO: All Concerned Persons


1. On November 8, 2007, the department published MAR Notice No. 42-2-781 regarding the proposed adoption of the above-stated rules at page 1807 of the 2007 Montana Administrative Register, issue no. 21.


2. A public hearing was held on November 28, 2007, to consider the proposed adoption. No oral comments were received during the hearing. Written comments were received subsequent to the hearing and are summarized as follows along with the response of the department:


COMMENT NO. 1: Senator John Cobb commented on New Rule II, stating that the unaudited general fund revenue must be certified using generally accepted accounting under 15-30-140, MCA. He contends that the department did not certify the revenue using generally accepted accounting. Therefore, he argues, there can be no tax credit since the certification was not done correctly and that if the department had certified using generally accepted accounting under the statute, there would have been no "trigger" for the tax credit since the revenue using generally accepted accounting would have been under the threshold amount of $1,802,000,000.

He further stated that, one can also argue that there has been no certification on the unaudited general fund revenue and whatever was certified on July 27, 2007 from the Department of Administration to the Budget Director had nothing to do with implementing 15-30-104, MCA. The certification must use generally accepted accounting principles and it did not do so.


RESPONSE NO. 1: The department thanks Senator Cobb for his comments. The responsibility of certifying the surplus amount to be considered in the calculation was the responsibility of the Department of Administration. The Department of Administration's methodology and basis for the calculation were explained and defended by the administration in the litigation Senator Cobb initiated with the state. The department, as an executive branch agency, abides by and adopts this explanation and defense. These rules were developed solely to implement the calculation of the tax credit amount based on the certification of the surplus amount certified by the Department of Administration to the Budget Office as required in 15-30-140, MCA. The methodology that the Department of Administration uses to calculate its certification is not addressed by the rules.


3. The department amends New Rule I (42.4.702) to correct the title and language of the rule to reflect that this rule applies to a "tax credit" not a "tax refund". The rule is amended with the following changes:


NEW RULE I (42.4.702) QUALIFYING FOR THE 2007 PROPERTY TAX REFUND CREDIT (1) If a taxpayer or taxpayers changed principal Montana residences during 2007, the department may consider the ownership and occupancy of the successive residence as a principal residence when determining whether the taxpayer or taxpayers qualify for the minimum term of residence for the property tax refund credit as provided in 15-30-140, MCA.

(2) For the successive residence to be considered as a principal residence for purposes of a minimum term of residence for the property tax refund credit as stated in 15-30-140, MCA, the taxpayer or taxpayers must, during the tax year:

(a) move out of the primary principal residence in Montana and into the successive principal residence in Montana; and

(b) have paid Montana property taxes on either or both residences for at least seven months.

(3) The taxpayer or taxpayers may only make a claim for a refund credit under 15-30-140, MCA, for one of the residences.

(4) remains the same.


AUTH: 15-1-201, 15-30-105, 15-30-140, MCA

IMP: 15-1-201, 15-30-140, MCA


4. Therefore, the department adopts New Rule I (42.4.702) with the amendments listed above and adopts New Rule II (42.4.703) as proposed.


5. 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


Rule Reviewer                  Director of Revenue


Certified to Secretary of State January 7, 2008

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