Montana Administrative Register Notice 42-2-938 No. 19   10/15/2015    
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In the matter of the amendment of ARM 42.15.214 pertaining to resident military salary exclusion






TO: All Concerned Persons


1. On November 4, 2015, at 1:30 p.m., the Department of Revenue will hold a public hearing in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana, to consider the proposed amendment of the above-stated rule. The conference room is most readily accessed by entering through the east doors of the building facing Sanders Street.


2. The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, advise the department of the nature of the accommodation needed no later than 5 p.m. on October 26, 2015. Contact Laurie Logan, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail lalogan@mt.gov.


3. The rule proposed to be amended provides as follows, new matter underlined, deleted matter interlined:


42.15.214 RESIDENT MILITARY SALARY EXCLUSION (1) The following items of military compensation received by a resident service member are exempt from Montana income tax:

(a) remains the same.

(b) basic, special, and incentive pay received by a member of a reserve component of the armed forces or a member of the National Guard, for active duty in a "contingent contingency operation" as defined in 10 USC 101; and

(c) basic, special, and incentive pay received by a member of the National Guard for active service authorized by the President of the United States or the Secretary of the Defense for a period of more than 30 consecutive days for the purpose of responding to a national emergency declared by the President and supported by federal funds performing a "homeland defense activity" as defined in 32 USC 901.

(2) Military compensation that is not exempt from Montana income tax includes:

(a) salary received for annual training and weekend duty inactive duty training;

(b) salary received by a member of a reserve component of the armed forces for service not described in (1)(b) or (1)(c); and

(c) salary received by a member of the National Guard engaged in "active Guard and Reserve duty" as defined in 10 USC 101, for service not described in (1)(b) or (1)(c); and

(c)(d) retired, retainer, or equivalent pay, or allowances.

(3) remains the same.


AUTH: 15-30-2620, MCA

IMP: 15-30-2101, 15-30-2117, MCA


REASON:  The department proposes amending ARM 42.15.214 to implement Senate Bill 378, L. 2015, which clarifies a Montana resident's eligibility to exempt military salaries in certain situations. The new legislation applies to tax years beginning after December 31, 2015.

As proposed, the amendment revises the phrase "contingent operation" to "contingency operation" and explains that individuals serving on active duty in a "contingency operation" or for performing a "homeland defense activity," as defined in 10 USC 101 and 32 USC 901 respectively, are exempt from Montana state income tax.

The department further proposes amending (2) to make it clear that military salaries received while on "inactive duty training" or while on "active Guard and Reserve duty" are not exempt from Montana state income tax unless such duty is also a homeland defense activity or a contingency operation. The proposed amendments establish in rule the department's current treatment of military exempt salaries.


4. Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Laurie Logan, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail lalogan@mt.gov and must be received no later than November 16, 2015.


5. Laurie Logan, Department of Revenue, Director's Office, has been designated to preside over and conduct this hearing.


6. The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notice regarding a particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the person in 4 above or faxed to the office at (406) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue.


7. An electronic copy of this notice is available on the department's web site at revenue.mt.gov/rules. 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.


8. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary sponsor of Senate Bill 378, Senator Elsie Arntzen, was contacted by letter on September 9, 2015 and September 18, 2015.


9. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rule will not significantly and directly impact small businesses. Documentation of the department's determination is available at revenue.mt.gov/rules or upon request from the person in 4.


/s/ Laurie Logan                          /s/ Mike Kadas

Laurie Logan                               Mike Kadas

Rule Reviewer                             Director of Revenue


Certified to the Secretary of State October 5, 2015





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