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| Montana Administrative Register Notice 42-2-999 | No. 23 12/07/2018 | |
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BEFORE THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On December 28, 2018, at 10:00 a.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 and repeal of the above-stated rules. The conference room is most readily accessed by entering through the east doors of the building.
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, please advise the department of the nature of the accommodation needed, no later than 5 p.m. on December 17, 2018. Please contact Todd Olson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or todd.olson@mt.gov.
3. GENERAL STATEMENT OF REASONABLE NECESSITY. This proposed rulemaking by the department addresses two tasks of importance to the public and the department: (1) the 2019 update of the department's trended depreciation schedules (schedules) for tangible personal property; and (2) the consolidation of several rules and the repeal of obsolete or redundant rules, which is the first step for the department's goal to reorganize ARM Title 42, chapter 21, and relocate certain schedule content to the department's web-based sources by January 1, 2020. ARM 42.21.155 through 42.21.157 currently require the department to update trends, trend factors, and depreciation schedules for the tangible personal property described in ARM Title 42, chapter 21, subchapter 1 on an annual basis. The schedules provide taxpayers with the current depreciation percentage for each of the personal property classifications for the upcoming year. The annual changes affect all businesses with taxable tangible personal property. The department develops the schedules from data provided from the guides and valuation manuals described or adopted in its administrative rules. Because the schedules change annually, the department must provide taxpayers with notice of those changes through the rulemaking process. It is reasonably necessary for the department to conduct this annual update of the schedules to reflect any changes for the upcoming year. If these schedules were not updated, small businesses would see a negative impact because they would not be able to accurately account for the impact an additional year of wear and tear has on the value of their taxable tangible personal property. Based on a periodic review of the department's rules, and in pursuit of the department's goal to eliminate redundancies and provide a more central source for valuation methodology and the schedules, the department proposes the consolidation of similar rules or rule language by amending four and repealing 12 rules in ARM Title 42, chapter 21, subchapter 1, which is necessary to reorganize the subchapter. This reflects the department's first step in its eventual goal to remove the schedules from its administrative rules and post them on the department's website, with the appropriate cross-referencing in rule. The department's goal for this transition is January 1, 2020. These proposed changes and the future transition of the schedules to an online medium are consistent with other department efforts intended to benefit taxpayers by simplifying their personal property reporting experience and providing a readily available source to the schedules. The department also proposes amending ARM 42.22.1311 to include relevant mining machinery and equipment language that is currently in ARM 42.21.132. The department is proposing to repeal ARM 42.21.132 in this rule notice to eliminate redundancy. While this general statement of reasonable necessity covers the basis for the following proposed rulemaking actions, it is supplemented below to explain
4. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
42.21.154 ANNUAL VALUATION OF (2) Leased or rental equipment that is not exempt under 15-6-202 or 15-6-219, MCA, is taxable and is valued in the same manner as similar non-leased equipment. (3) Rental videos that are not exempt under 15-6-202 or 15-6-219, MCA, are taxable and have a trended percent good of 25% in year one, 15% in year two, and 10% each year thereafter. (4) Locally assessed television cable system transmission line is valued at $2,000 per mile; service drops are valued at $25 each. (5) All downhole equipment installed in oil and gas wells, such as sucker rods, tubing, casing, and submersible pumps are exempt from taxation. Downhole equipment not installed in an oil or gas well as of the January 1 assessment date is taxable. (6) For farm machinery and equipment and heavy equipment, the department will apply the valuation methods in descending order beginning with the method in (a) and proceeding, where necessary, through the method in (e) until a market value can be determined for the equipment. (a) The market value will be the "average wholesale" or a comparable category of value as shown in the online version of the national agricultural and implement valuation guide known as Equipment Watch (Equipment Watch), as of September-October of the year prior to the year of assessment. Equipment Watch is adopted and incorporated by reference in accordance with 15-8-111, MCA, and may be reviewed in a department field office or purchased from the publisher: Dataquest, 1290 Ridder Park Drive, San Jose, California 95131. (b) If market value cannot be determined under (a), the department will approximate average wholesale value of farm machinery and equipment through application of its Farm Machinery Manual dated January 1, 1998, which the department adopts and incorporates by reference into this rule. The purpose of the Farm Machinery Manual is to function as a resource to approximate average wholesale value of farm machinery and equipment. The Farm Machinery Manual may be reviewed in a department field office or a copy of the Manual may be requested from the Department of Revenue, Property Assessment Division, P.O. Box 8018, Helena, MT 59604-8018. (c) For all farm machinery and equipment, and heavy equipment that cannot be valued under (a) and (b), the department may determine the original free (d) A trended average wholesale value will be applied to the equipment if: (i) the equipment cannot be valued under (a), but an average wholesale value is available for the same make and model with a different year new; and (ii) the equipment cannot be valued under (c) or the value as calculated under (c) results in a higher value being placed on a piece of equipment than the last year listed in Equipment Watch for the same make and model. The trended average wholesale value will be determined by trending the average wholesale value as found in Equipment Watch, for the same make and model with a different year new. (e) If the valuation methods in (a) through (d) cannot be used, the owner or applicant must certify to the department the year acquired and the acquired price. If the item was acquired through a means other than the open marketplace, the owner must provide a reasonable estimate of the item's value at the time of acquisition. The reported value will be trended and depreciated. (7) Items of farm machinery and equipment valued below $100 are exempt from taxation.
AUTH: 15-1-201, 15-23-108, MCA IMP: 15-6-135, 15-6-138, 15-6-202, 15-6-207, 15-6-213, 15-6-219, 15-8-111, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, it is necessary for the department to amend ARM 42.21.154 by placing similar content regarding the valuation of all categories of personal property into a single rule for efficiency and ease of reference. The department will achieve this by transferring certain relevant language into the rule from ARM 42.21.113, 42.21.123, 42.21.138, and 42.21.151, which are proposed for repeal. The department proposes adding the word "annual" to the catchphrase to better describe the valuation schedule of personal property and proposes removing "furniture and fixtures" as the proposed changes for this rule pertain to the valuation of all personal property. The department proposes revising the words "indexed" and "acquired" in (1) to "trended" and "original" to be a more accurate and appropriate description of market value determined by the cost approach. It is necessary for the department to strike the last two sentences in (1) as the content is present in the proposed amendments to ARM 42.21.155 and is unnecessarily redundant in this rule. In proposed (2), the department proposes to eliminate the lease and rental equipment category, and alternatively, value all leased and rental equipment that is not exempt under 15-6-202 or 15-6-219, MCA, in the same manner as similar In proposed (3), the department proposes transferring and revising language from ARM 42.21.113(1)(e), reflecting rental video media valuation and depreciation, which eliminates potentially outdated media formats and eliminates an unnecessary depreciation schedule. In proposed (4), the department proposes transferring language from ARM 42.21.151(1) to provide information on how locally assessed cable television systems are valued. In proposed (5), the department proposes transferring language from ARM 42.21.138(4) and (5) which describes which downhole equipment is exempt from taxation and which is taxable. The department proposes consolidating the valuation methods for farm machinery and equipment and heavy equipment provided in ARM 42.21.123(1) through (7) and (9), and ARM 42.21.131(1) through (4), and revising the transferred language to proposed (6) and (7). This transfer and revision is necessary for clarity because valuation methods for farm machinery and equipment and heavy equipment are substantially identical so consolidating and clarifying the language results in more efficient rulemaking. The department further proposes updating the applicable year reference in (8) which is necessary to advance the applicability of the rule and reflect renumbering through the proposed amendments. The department further proposes adding 15-23-108, MCA, as rulemaking authority, as it pertains to some centrally assessed personal property. The department is also updating the implementing citations to correspond with the relocation of language into this rule from repealed rules to ensure that the relevant statutes are cited both as a reference for users and as support for the rule content.
42.21.155 CATEGORIES FOR PERSONAL PROPERTY; TRENDED DEPRECIATION SCHEDULES; TREND FACTOR CALCULATION (1) The department has established eight categories of personal property for determination of trend factors and depreciation, and
(2) Each trended depreciation schedule contains a residual trended percent good, designated as "older" in the final row of each schedule, which is applied to an item of personal property that exceeds the typical lifespan because personal property remains taxable until its disposal. The purpose of trended depreciation is to bring the cost of equipment acquired in a previous year to an approximate current cost before depreciating it. (3) Prior to January 1 of each year, the department will use cost index trends for equipment and depreciation percentages for furniture and fixtures from the previous July's edition of Marshall & Swift Valuation Service Guide (Marshall & Swift Guide) to calculate the trend factors and the trended percent good for the schedules in (4). The Marshall & Swift Guide is a widely recognized valuation authority which the department adopts and incorporates by reference. The Marshall & Swift Guide may be reviewed at the department's central office or purchased from the publisher: Corelogic, 777 South Figueroa, 12th Floor, Los Angeles, California 90026-0307. (a) The trends from the Marshall & Swift Guide represent industry-wide national average changes in equipment costs - customarily increases - from the base year, 1926. Trends are typically greater than a value of one, but may be less than one. (b) For trended depreciation schedules, the department calculates the year one trend for each schedule as the average trend of the first three quarters of the current year. The trend for each successive year is the final trend for that year. (i) Using year one as the base year, the department calculates the changes in equipment costs - the trend factors - for each schedule in (4), as the quotient of the year one trend and any following year's trend. (ii) The department then uses the depreciation percentages from the Marshall & Swift Guide to calculate the "percent good" over the period of years that is typical for each property category. Trended percent good is then calculated as the product of the percent good and the trend factor for each year represented in a schedule. (4) The trended depreciation schedules for the categories of personal property equipment are as follows: (a) Computerized Equipment - a four-year depreciation and a residual percentage will be applied to computerized equipment such as computers, peripheral equipment that cannot function independently of a computer, computerized medical equipment, and gaming machines. The four-year depreciation schedule was developed and implemented after consultation with industry representatives; the trend factors are calculated from the office equipment category of the Marshall & Swift Guide.
Computerized Equipment
(b) Office and Commercial Equipment - a five-year depreciation and a residual percentage will be applied to non-computerized equipment such as office equipment and furnishings, specialized medical equipment, janitorial equipment, coin-operated washers and dryers, beauty and barber shop equipment, tanning beds, furnishings for hotels, motels, rental apartments, rental homes, nursing home and other care facilities, and locally assessed cable tv dishes. The trend factors are calculated from the average of all category of the Marshall & Swift Guide.
Office and Commercial Equipment
(c) Furniture, Fixtures, and Miscellaneous Equipment - a ten-year depreciation and a residual percentage will be applied to all other commercial furniture and fixtures such as handheld and non-handheld shop and construction tools and equipment, medical and dental chairs and tables, theater equipment, survey equipment, billboards and signage, garbage bins, coin-operated pool and other game tables, gas pumps, bar and restaurant equipment and furnishings, bowling alleys and equipment, excepting auto-scorers which have a four-year depreciation, photo and developing equipment, mortuary equipment, safes, security systems, port-a-potties, locally assessed cable tv towers, ski lift equipment including aerial lifts, surface lifts, portable lifts and tows including the towers, cables, ropes, sheave assemblies, the conveying devices, power units, and all accessories. The trend factors are calculated from the average of all category of the Marshall & Swift Guide.
Furniture, Fixtures, and Miscellaneous Equipment
(d) Seismograph Units and Allied Equipment - a five-year depreciation and a residual percentage will be applied to seismograph units and allied equipment. An 80 percent wholesale factor is used for wheeled seismograph units. The trend factors are calculated from the chemical industry category of the Marshall & Swift Guide.
Wheeled Seismograph Units
Seismograph Allied Equipment
(e) Oil Drilling, Workover, and Service Rigs - a ten-year depreciation and a residual percentage will be applied to all oil drilling, workover, and service rigs. An 80 percent wholesale factor is applied to self-propelled wheeled workover and service rigs. The trend factors are calculated from the chemical industry category of the Marshall & Swift Guide.
Self-Propelled Wheeled Workover and Service Rigs
Drill Rigs
(f) Oil and Gas Field Machinery and Equipment - a fifteen-year depreciation and a residual percentage will be applied to oil and gas field machinery and equipment. The trend factors are calculated from the chemical industry category of the Marshall & Swift Guide.
Oil and Gas Field Machinery and Equipment
(g) Farm Machinery and Equipment - a twenty-year depreciation and a residual percentage will be applied to farm machinery and equipment. An 80 percent wholesale factor is applied. The trend factors are calculated from the average of all category of the Marshall & Swift Guide.
Farm Machinery and Equipment
(h) Heavy Equipment - a twenty-year depreciation and a residual percentage will be applied to heavy equipment. An 80 percent wholesale factor is applied. The trend factors are calculated from the contractor's equipment category of the Marshall & Swift Guide.
Heavy Equipment
AUTH: 15-1-201, 15-23-108, MCA IMP: 15-6-135, 15-6-138, 15-6-202, 15-6-207, 15-6-213, 15-6-219, 15-8-111, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, it is necessary for the department to amend ARM 42.21.155 to place similar content regarding the depreciation schedules for all personal property categories into a single rule for efficiency and ease of reference. The eight personal property categories, their respective depreciation schedules, and references to trend factor schedules have historically been provided in ARM 42.21.123, 42.21.131, 42.21.137, 42.21.138, 42.21.139, 42.21.140, 42.21.151, 42.21.153, 42.21.156, and 42.21.157, which are proposed for repeal. The department proposes updating the catchphrase to include the words "trended" and "categories for personal property" and "trend factor calculation" to clarify the types of schedules referenced in the rule, to specify the categories of property to which the rule pertains, and to provide the methodology of the department's trend factor calculation. The department proposes revising language in (1) for clarity and brevity, which reflect current rule writing styles and preferences. The department proposes moving, and revising to comply with the Montana Administrative Procedure Act, the reference language to the Marshall & Swift Valuation Service Guide in (1) to proposed (3) and striking obsolete depreciation language in (1) given the relocation and reorganization of the trended depreciation schedules in this rule. The department proposes replacing outdated trended depreciation schedule information and rule cross-references in (2) to reflect the schedules in proposed (4). The department proposes to transfer from ARM 42.21.157, and revise for clarity, the explanation of how the department calculates trend factors. The department proposes the repeal of ARM 42.21.157. This consolidation of the two rules' most pertinent provisions into one is necessary to provide a more direct and cohesive reference for trended depreciation schedules and their underlying components. The department further proposes transferring equipment category description language for each proposed trended depreciation schedule provided in proposed (4). The proposed equipment categories transferred and revised from other rules in Chapter 21, Subchapter 1, which are proposed for repeal, are as follows: Computerized equipment language, with a four-year depreciation schedule, in proposed (4)(a) is a combination of lease and rental equipment language in ARM 42.21.113(1)(a) and related equipment language in ARM 42.21.156(2). Office and commercial equipment language, with a five-year depreciation schedule, in proposed (4)(b) is a combination of lease and rental equipment language in ARM 42.21.113(b), local cable tv "five-year dishes" language from ARM 42.21.151(4), and related equipment language in ARM 42.21.156(3) through (7). Furniture, fixtures, and miscellaneous equipment provisions, with a ten-year depreciation schedule, in proposed (4)(c) was combined with leased and rental equipment from ARM 42.21.113(1)(c), local cable tv "ten-year towers" from ARM 42.21.151(2), ski lift equipment from ARM 42.21.153, and current categories 7 and 8 from (2) of this rule. Seismograph units and allied equipment, with a five-year depreciation schedule, in proposed (4)(d) was moved from ARM 42.21.137(1) and revised to eliminate the unnecessary mention of units and equipment less than one year old or acquired in 2005 or before. The department deemed the prior practice, which is not based on or justifiable through use of the Marshall & Swift Guide, unsustainable under the equalization standards described in 15-9-101(1), MCA, and proposes to correct it as a part of the transfer and consolidation of depreciation schedules into ARM 42.21.155. Oil drilling, workover, and service rigs, with a ten-year depreciation schedule, in proposed (4)(e) were combined with work-over and service rigs rule text from ARM 42.21.139 and oil drilling rigs rule text from ARM 42.21.140. The text was revised to eliminate the unnecessary mention of units and equipment less than one year old for the same reasons described for seismograph units and allied equipment. Oil and gas field machinery and equipment, with a fifteen-year depreciation schedule, in proposed (4)(f) was moved from ARM 42.21.138(2). Farm machinery and equipment, with a twenty-year depreciation schedule in proposed (4)(g), was moved from ARM 42.21.123. Heavy equipment, with a twenty-year depreciation schedule in proposed (4)(h), was moved from ARM 42.21.131. Further, in proposed (4)(g) and (h), the department proposes using the Marshall & Swift Guide for calculating the trended schedules for farm machinery and equipment and heavy equipment, which is consistent for the valuation of other personal property described in the subchapter. The department also proposes to implement an 80% wholesale factor into those calculations to "approximate wholesale value." This reflects a substantial update in the method the department uses to develop the farm machinery and equipment and heavy equipment depreciation schedules, which consisted of a manual system of valuation by department staff that was unnecessarily burdensome, time-consuming, and problematic because of limited availability of valuation data, which can have a significant impact on the outcome of a valuation and may not result in a truly appropriate assessed value. The department believes that changing the way farm machinery and equipment and heavy equipment depreciation are calculated will provide taxpayers with a stable, consistent, and predictable trended depreciation schedule from year to year. The department further proposes renumbering and updating the year reference in proposed (5) which is necessary to advance the applicability of the rule and reflect renumbering through the proposed amendments. The department further proposes adding 15-23-108, MCA, as rulemaking authority as it pertains to some centrally assessed personal property. The revision of the rule's implementing citations is necessary to correspond with the relocation of rule text to this rule from the rules proposed for repeal and comply with 2-4-304, MCA.
42.21.158 PERSONAL PROPERTY REPORTING REQUIREMENTS (1) A taxpayer having property in the state of Montana on January 1 of each tax year, must complete the statement as provided in 15-8-301, MCA, by submitting a completed personal property reporting form. (2) The statement must provide pertinent information about each item of personal property, including the year acquired, acquired cost, and installation cost. For any items acquired through a means other than the open marketplace, the owner must provide a reasonable estimate of the item's open market value at the time of acquisition. Multiple smaller items acquired in the same year can be reported as a group rather than itemized, such as hand-held tools. (3) Personal property that is expensed or fully depreciated for other tax or accounting purposes remains taxable for property tax purposes and must be reported. (2) through (6) remain the same, but are renumbered (4) through (8).
(a) and (b) remain the same. (9) through (12) remain the same, but are renumbered (11) through (14).
IMP: 15-1-121, 15-1-123, 15-1-303, 15-6-138, 15-6-201,15-6-202, 15-6-203, 15-6-206, 15-6-213, 15-6-215, 15-6-217, 15-6-218, 15-6-219, 15-6-220, 15-6-225, 15-6-228, 15-8-104, 15-8-301, 15-8-303, 15-8-309, 15-9-101, 15-24-3001, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, it is necessary for the department to amend ARM 42.21.158 by adding clarifying language in proposed (2) and (3) for the benefit of taxpayers who are required to report their personal property or business equipment and to clarify the reporting process. The department also proposes revising the language in proposed (9) and (10) to clarify that reporting forms submitted electronically or by mail must have an electronic date stamp or postmark no later than March 1. Based on the department's proposed amendments, it will be necessary for the department to renumber the remaining rule sections. The department further proposes adding 15-1-123, MCA, as an implementing citation as it pertains to class eight personal property. The revision of the rule's implementing citations is necessary to comply with 2-4-304, MCA.
42.22.1311 INDUSTRIAL MACHINERY AND EQUIPMENT TREND FACTORS (1)
Industry Trend Table Life Description Expectancy (a) through (cj) remain the same.
(*) Equipment remains taxable at the level of the final year of life expectancy until its disposal.
(3) Mining machinery and equipment is engaged in the extraction, excavation, burrowing, or otherwise freeing raw material from the earth. Mobile mining equipment moves under its own power or on its own wheels and chassis, including any attachments used with or attached to such equipment, but does not include equipment that requires a foundation for the performance of the function for which it was designed and built. Mobile mining equipment used for extraction is valued by using the procedures established for heavy equipment found in ARM 42.21.154 and 42.21.155. (4) This rule is effective for tax years beginning after December 31, 2018.
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-8-111, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, it is necessary for the department to amend ARM 42.22.1311 by cross-referencing the Marshall & Swift Guide from ARM 42.21.155 into (1), striking language in (2) and incorporating the revised text within (1), and inserting the words "industry" in the heading for industry description and "expectancy" for the life expectancy heading for clarification purposes. In proposed (2), the department proposes to strike the word "categories" and insert "industries" as industries is the correct term for the tables provided under this section. The department further proposes inserting relevant mining machinery and equipment language in proposed (3) that defines mining machinery and equipment used for extraction and provides a reference for equipment valuation. This language has historically been provided in ARM 42.21.132(2) and (3), which the department is proposing to repeal. The department proposes inserting effective date language in proposed (4). The department further proposes adding 15-6-135, MCA, as an implementing citation to correspond with the relocation of rule text to this rule from the rules proposed for repeal and to comply with 2-4-304, MCA.
5. The department proposes to repeal the following rules:
42.21.113 LEASED AND RENTAL EQUIPMENT
AUTH: 15-1-201, 15-23-108, MCA IMP: 15-6-135, 15-6-138, 15-6-202, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.113 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department has proposed transferring the relevant leased and rental equipment language from ARM 42.21.113(1), (2), (3), and (4) to ARM 42.21.154(2). The references in ARM 42.21.113(1) and (2) to equipment that is leased on an hourly, daily, weekly, semimonthly, or monthly basis are not proposed for transfer because they unnecessarily repeat statute related to criteria under which leased and rental equipment can be exempt. The acquired cost groupings in ARM 42.21.113(1)(a) through (d) are not proposed for transfer; however the concepts contained in those provisions are incorporated into the depreciation schedules proposed for like equipment in ARM 42.21.155, since they have historical similarities and function.
42.21.123 FARM MACHINERY AND EQUIPMENT
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-202, 15-6-207, 15-6-219, 15-8-111, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.123 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to transfer the farm machinery valuation methods from 42.21.123(1) through (7), and (9), to ARM 42.21.154, which is proposed to contain all the relevant information concerning personal property valuation. The farm machinery depreciation schedule is proposed for transfer from ARM 42.21.123(8) to ARM 42.21.155, which would contain all the personal property depreciation schedules. More specific descriptions and necessity for each transfer of rule provisions are provided in the respective statements of reasonable necessity for ARM 42.21.154 and 42.21.155.
42.21.131 HEAVY EQUIPMENT
IMP: 15-6-135, 15-6-138, 15-6-202, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.131 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to transfer the heavy equipment valuation methods from 42.21.131(1) through (4) to ARM 42.21.154, which is proposed to contain all the relevant information concerning personal property valuation. The heavy equipment depreciation schedule is proposed for transfer from ARM 42.21.131(5) to ARM 42.21.155(4)(h). ARM 42.21.155 is proposed to contain all the personal property depreciation schedules. The necessity and descriptions of the transfers of rule provisions are described in the respective statements of reasonable necessity for ARM 42.21.154 and 42.21.155.
42.21.132 MINING EQUIPMENT
AUTH: 15-1-201, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.132 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 and ARM 42.22.1311 for efficiency and ease of reference. The department proposes utilizing the most relevant mining equipment language from this rule, revising it for clarity, and incorporating it into ARM 42.22.1311(3). Mining is one of the industry categories for which ARM 42.22.1311 provides life expectancy and trended depreciation schedules. The necessity and description of the transfer of rule provisions is described in the statement of reasonable necessity for ARM 42.22.1311.
42.21.137 SEISMOGRAPH UNITS AND ALLIED EQUIPMENT
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.137 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to eliminate the redundant cost approach language from ARM 42.21.137(1) by consolidating it with all other relevant personal property cost approach into ARM 42.21.154; and consolidating personal property reporting requirements into ARM 42.21.158. Further, the department proposes to transfer the most relevant language from ARM 42.21.137(2) through (4) including the depreciation schedules to ARM 42.21.155(4)(d) consolidating all the personal property depreciation schedules into ARM 42.21.155. These actions will render any remaining rule provisions in ARM 42.21.137 obsolete.
42.21.138 OIL AND GAS FIELD MACHINERY AND EQUIPMENT
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-213, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.138 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to eliminate the redundant language from ARM 42.21.138(1), transfer relevant language from ARM 42.21.138(4) and (5) to ARM 42.21.154(4), and consolidate the relevant information regarding reporting requirements into ARM 42.21.158. Further, the department proposes to transfer rule text from ARM 42.21.138(2) and (3), including the depreciation schedule, to ARM 42.21.155, which is the proposed location in rule for all the personal property depreciation schedules.
42.21.139 WORK-OVER AND SERVICE RIGS
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.139 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department contends that the valuation method described in this rule is obsolete. The department's efforts to solicit information from valuation sources in the industry have proven unsuccessful or too costly. Therefore, the department proposes to replace the obsolete method with the cost approach valuation method as described in ARM 42.21.154 which is used for valuing most other categories of personal property. The department also proposes to transfer relevant language from ARM 42.21.139(2) through (5), including the depreciation schedule, to ARM 42.21.155, which is the proposed location in rule for all the personal property depreciation schedules.
42.21.140 OIL DRILLING RIGS
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-219, MCA
REASONABLE NECESSITY: As explained in the general statement of reasonable necessity at the beginning of this notice, the department proposes repealing ARM 42.21.140 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The valuation method described in this rule is obsolete. The department's efforts to solicit information from valuation sources in the industry have proven unfruitful or too costly. Therefore, the department proposes to replace the obsolete method with the cost approach valuation method as described in ARM 42.21.154 which is used for valuing most other categories of personal property. Further, the department proposes to transfer relevant language from ARM 42.21.140(2), including the depreciation schedule, to ARM 42.21.155, which is the proposed location in rule for all the personal property depreciation schedules.
42.21.151 LOCALLY ASSESSED CABLE TELEVISION SYSTEMS
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.151 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to transfer the relevant content of ARM 42.21.151(1) to ARM 42.21.154(3) combining all the relevant information concerning personal property valuation into ARM 42.21.154. Further, the department proposes to transfer the relevant language from ARM 42.21.151(2) through (4), including the depreciation schedules, into ARM 42.21.155, consolidating 'five-year dishes' into ARM 42.21.155(4)(b) with other like equipment and "ten-year towers" into ARM 42.21.155(4)(c) with other like equipment.
42.21.153 SKI LIFT EQUIPMENT
AUTH: 15-1-201, MCA IMP: 15-6-135, 15-6-138, 15-6-219, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.153 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to consolidate the relevant content and the depreciation schedule from ARM 42.21.153(1) and (4) into ARM 42.21.155(4)(c), grouping it with other like equipment that also has a ten-year useful life and is calculated from the same trend category. By the department's proposal to consolidate valuation content into ARM 42.21.154 and reporting requirements into ARM 42.21.158, the department would eliminate redundant language from this rule and render the rule obsolete and unnecessary.
42.21.156 CATEGORIES
AUTH: 15-1-201, MCA IMP: 15-6-138, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.156 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The department proposes to combine certain property categories and depreciation schedules for property that have had the same historical useful life and nearly identical depreciation schedules into a single rule with other personal property valued using the Marshall & Swift Guide. Specifically, the department proposes to transfer relevant language from: 1) ARM 42.21.156(2) to ARM 42.21.155(4)(a); 2) ARM 42.21.156(3) through (7) to ARM 42.21.155(4)(b); and 3) ARM 42.21.156(8) and (9) to ARM 42.21.155(4)(c). By the department's proposal to consolidate trended depreciation schedule and personal property category content into ARM 42.21.155, the department would render this rule obsolete and unnecessary.
42.21.157 PREPARATION OF TREND FACTOR SCHEDULES
AUTH: 15-1-201, MCA IMP: 15-6-138, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity provided at the beginning of this notice, the department proposes repealing ARM 42.21.157 as part of reorganizing and combining the relevant content of the rules in ARM Title 42, chapter 21, subchapter 1 for efficiency and ease of reference. The repeal of this rule is necessary because the department is discontinuing the use of the Producer Price Indexes (PPI) published by the United States Department of Labor, Bureau of Labor Statistics, to compute trend factors in favor of the Marshall & Swift Guide that the department uses, as described in ARM 42.21.155. The department proposes to remove the trend factor schedules from ARM 42.21.157, and alternatively, describe the trend and trend factor methodology and calculation processes the department uses together with the Marshall & Swift Guide data to determine the depreciation schedules proposed in ARM 42.21.155(4). By the department's proposal to consolidate trend factor schedule and other depreciation percentage content into ARM 42.21.155, this rule would become obsolete and unnecessary.
6. 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: Todd Olson, 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 todd.olson@mt.gov and must be received no later than January 4, 2019.
7. Todd Olson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.
8. 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, which 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 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 number 6 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.
9. An electronic copy of this notice is available on the department's web site at revenue.mt.gov, or through the Secretary of State's web site at sosmt.gov/ARM/register.
10. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.
11. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment and repeal of the above-referenced rules will not significantly and directly impact small businesses.
/s/ Todd Olson /s/ Gene Walborn Todd Olson Gene Walborn Rule Reviewer Director of Revenue
Certified to the Secretary of State November 27, 2018. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A directory of state agencies is available online at http://www.mt.gov/govt/agencylisting.asp.
For questions about the organization of the ARM or this web site, contact sosarm@mt.gov.
