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42.4.4104    ELECTRICAL GENERATION AND TRANSMISSION FACILITY – VERIFICATION

(1) The taxpayer must make available to the department in Helena, at a place, date, and time specified by the department, a copy of the contract and other information showing the basis for the application referred to in ARM 42.4.4102.

(2) The department will review the information required in ARM 42.4.4102 and may request additional supporting documentation.

(a) The requested information may include, but is not limited to:

(i) source documents detailing the total amount of power contracted and the total capacity of the plant;

(ii) source documents detailing the term of the contract (length in years) - if less than 20 years, proof of an offer for the remaining years will be required by a specific date;

(iii) price per kilowatt source documents and calculation;

(iv) gross revenue associated with the contract;

(v) costs associated with the contract;

(vi) net operating income after tax associated with the contract;

(vii) source documents providing the detail for the cost-based rate of return; and

(viii) total plant investment.

(3) In order for documents obtained during this verification process to be able to be considered for protection under ARM 42.4.4113, the taxpayer must indicate and mark those documents as such at the time they are provided to the department.

(4) The department may conduct an independent analysis to verify the cost-based rate of return, term or contract, and amount of power contracted.

(5) The allowable cost-based rate of return may only be based on those costs directly related to the electrical generation facility. Nonrelated costs will not be used in calculating the allowable costs of production. These nonrelated costs include, but are not limited to:

(a) nonrelated corporate overhead;

(b) advertising;

(c) benefit restoration;

(d) dues, contributions; and

(e) other settlement items.

(6) Notification to the taxpayer and review by the department will occur as follows:

(a) the taxpayer will be provided an initial approval or denial in writing within 30 days of receipt of all of the information required under ARM 42.4.4102;

(b) the department may request additional information to further verify the material provided in ARM 42.4.4102 within 30 days after the initial approval or denial is issued;

(c) the department may issue a notice of denial within an additional 180 days from the receipt of all requested additional information; and

(d) the dates referenced in (6) (a) through (c) may be extended by mutual consent of the parties.

(7) If the provisions of the contract are not being met, the department may issue a notice of disallowance at any time during the applicable statutory period, plus one year, in which the exemption, reduced tax rate, or credit applies. Such a disallowance would occur if the applicable percentage rate of the facility's net generating output is not maintained, or the taxpayer fails to perform the contract.

History: 15-1-201, 15-30-305, 15-31-501, 15-32-407, MCA; IMP, 15-24-3001, 15-32-403, 15-35-103, MCA; NEW, 2002 MAR p. 2924, Eff. 10/18/02; AMD and TRANS, from ARM 42.4.109, 2004 MAR p. 1965, Eff. 8/20/04.

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