67th Legislature HB 638.1
1 HOUSE BILL NO. 638
2 INTRODUCED BY D. FERN
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT PROVIDING FOR A PROPERTY TAX FAIRNESS CREDIT;
5 PROVIDING THAT THE CREDIT IS A REFUNDABLE INCOME TAX CREDIT FOR PROPERTY TAX BILLED
6 OR RENT-EQUIVALENT TAX PAID; PROVIDING THAT THE CREDIT IS FUNDED WITH LODGING SALES
7 TAX REVENUE AND REVENUE FROM SALES OF UNCLAIMED PROPERTY; PROVIDING DEFINITIONS;
8 AMENDING SECTIONS 15-7-102, 15-16-101, 15-17-125, 15-30-2303, 15-30-2341, 15-68-820, 22-3-1303, 22-
9 3-1304, 22-3-1307, AND 70-9-813, MCA; AND PROVIDING AN APPLICABILITY DATE.”
10
11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
12
13 NEW SECTION. Section 1. Property tax fairness credit -- definitions. As used in [sections 1
14 through 3], the following definitions apply:
15 (1) (a) "Benefit base" means property tax billed during the tax year on the individual's homestead or
16 rent-equivalent tax paid by the individual during the tax year on a homestead not exceeding the following
17 amounts:
18 (i) for persons filing as single individuals, $2,050;
19 (ii) for persons that claim the federal child tax credit provided for in 26 U.S.C. 24 for no more than one
20 qualifying child or dependent or for persons filing joint returns, $2,650; and
21 (iii) for persons that claim the federal child tax credit provided for in 26 U.S.C. 24 for more than one
22 qualifying child or dependent or for persons filing joint returns that claim the federal child tax credit provided for
23 in 26 U.S.C. 24 for at least one qualifying child or dependent, $3,250.
24 (b) By November 1 of each year, the department shall multiply the amounts contained in subsection
25 (1)(a) by the inflation factor for the following tax year and round the amounts to the nearest $100. The resulting
26 amounts are effective for the following tax year.
27 (2) For the purposes of [sections 1 through 3], the following definitions apply:
28 (a) "Homestead" means:
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1 (i) a single-family dwelling or unit of a multiple-unit dwelling that is subject to property taxes in the
2 state and as much of the surrounding land, but not in excess of 1 acre, as is reasonably necessary for its use
3 as a dwelling; or
4 (ii) a single-family dwelling or unit of a multiple-unit dwelling that is rented from a county or municipal
5 housing authority as provided in Title 7, chapter 15.
6 (b) (i) "Income" means, except as provided in subsection (2)(b)(ii), federal adjusted gross income,
7 without regard to loss, as that quantity is defined in the Internal Revenue Code, plus all nontaxable income,
8 including but not limited to:
9 (A) the amount of any pension or annuity, including Railroad Retirement Act benefits and veterans'
10 disability benefits;
11 (B) the amount of capital gains excluded from adjusted gross income;
12 (C) alimony;
13 (D) support money;
14 (E) nontaxable strike benefits;
15 (F) cash public assistance and relief;
16 (G) interest on federal, state, county, and municipal bonds; and
17 (H) all payments received under federal social security except social security income paid directly to a
18 nursing home.
19 (ii) For the purposes of this subsection (2)(b), income is reduced by the taxpayer's basis.
20 (c) "Property tax billed" means taxes levied against the homestead, including special assessments
21 and fees, but excluding penalties or interest during the claim period.
22 (d) "Rent-equivalent tax paid" means 15% of the gross rent.
23
24 NEW SECTION. Section 2. Property tax fairness credit amount. (1) A resident individual is
25 allowed a credit against the taxes imposed by this chapter equal to 50% of the amount by which the benefit
26 base for the individual exceeds 6% of the individual's income.
27 (2) The credit may not exceed $750 for individuals under 62 years of age or $1,150 for individuals 62
28 years of age or older. In the case of married individuals filing a joint return, only one spouse is required to be 62
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1 years of age or older to qualify for the $1,150 credit limitation.
2 (3) If the amount of the credit exceeds the tax liability under this chapter, the amount of the excess
3 must be refunded.
4 (4) Only one individual in each household may claim the credit. To claim the credit, the individual
5 must have resided in the state for at least 9 months of the tax year and must have occupied one or more
6 dwellings in the state as an owner, renter, or lessee for at least 6 months of the tax year.
7 (5) Except as provided in subsection (6), a credit may not be claimed for any portion of property taxes
8 billed or rent-equivalent taxes paid that is derived from a public rent or tax subsidy program.
9 (6) Except for dwellings rented from a county or municipal housing authority, a credit may not be
10 claimed on rented lands or rented dwellings that are not subject to Montana property taxes.
11 (7) A taxpayer may not claim the credit provided for in this section and the residential property tax
12 credit for the elderly provided for in 15-30-2337 through 15-30-2341.
13
14 NEW SECTION. Section 3. Property tax fairness account. (1) There is a property tax fairness
15 account in the state special revenue fund. The revenue allocated to the account as provided in 15-68-820(3)
16 and 70-9-813 must be deposited in the account and used as provided in this section.
17 (2) There is transferred from the general fund to the property tax fairness fund:
18 (a) lodging sales tax revenue distributed pursuant to 15-68-820(3)(a)(i) that exceeds $30,589,000 in
19 fiscal year 2022 and $36,575,000 in fiscal year 2023; and
20 (b) proceeds from the sale of abandoned property that exceed $12 million in fiscal years 2022 and
21 2023.
22 (3) (a) Except as provided in subsection (3)(b), the funds in the account must be used to pay for
23 property tax fairness credits claimed. If the funds are not sufficient to cover the cost of the credits claimed, the
24 remainder of credits must be paid from the general fund.
25 (b) A $1 million balance must remain in the account.
26 (4) The department of revenue shall report biennially, in accordance with 5-11-210, to the revenue
27 interim committee provided for in 5-5-227 whether the funds in the account are expected to cover the costs of
28 the credits to be claimed in the upcoming biennium.
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1
2 Section 4. Section 15-7-102, MCA, is amended to read:
3 "15-7-102. Notice of classification, market value, and taxable value to owners -- appeals. (1) (a)
4 Except as provided in 15-7-138, the department shall mail or provide electronically to each owner or purchaser
5 under contract for deed a notice that includes the land classification, market value, and taxable value of the
6 land and improvements owned or being purchased. A notice must be mailed or, with property owner consent,
7 provided electronically to the owner only if one or more of the following changes pertaining to the land or
8 improvements have been made since the last notice:
9 (i) change in ownership;
10 (ii) change in classification;
11 (iii) change in valuation; or
12 (iv) addition or subtraction of personal property affixed to the land.
13 (b) The notice must include the following for the taxpayer's informational and informal classification
14 and appraisal review purposes:
15 (i) a notice of the availability of all the property tax assistance programs available to property
16 taxpayers, including the intangible land value assistance program provided for in 15-6-240, the property tax
17 assistance programs provided for in Title 15, chapter 6, part 3, the property tax fairness credit provided for in
18 [section 2], and the residential property tax credit for the elderly provided for in 15-30-2337 through 15-30-2341;
19 (ii) the total amount of mills levied against the property in the prior year;
20 (iii) a statement that the notice is not a tax bill; and
21 (iv) a taxpayer option to request an informal classification and appraisal review by checking a box on
22 the notice and returning it to the department.
23 (c) When the department uses an appraisal method that values land and improvements as a unit,
24 including the sales comparison approach for residential condominiums or the income approach for commercial
25 property, the notice must contain a combined appraised value of land and improvements.
26 (d) Any misinformation provided in the information required by subsection (1)(b) does not affect the
27 validity of the notice and may not be used as a basis for a challenge of the legality of the notice.
28 (2) (a) Except as provided in subsection (2)(c), the department shall assign each classification and
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1 appraisal to the correct owner or purchaser under contract for deed and mail or provide electronically the notice
2 in written or electronic form, adopted by the department, containing sufficient information in a comprehensible
3 manner designed to fully inform the taxpayer as to the classification and appraisal of the property and of
4 changes over the prior tax year.
5 (b) The notice must advise the taxpayer that in order to be eligible for a refund of taxes from an
6 appeal of the classification or appraisal, the taxpayer is required to pay the taxes under protest as provided in
7 15-1-402.
8 (c) The department is not required to mail or provide electronically the notice to a new owner or
9 purchaser under contract for deed unless the department has received the realty transfer certificate from the
10 clerk and recorder as provided in 15-7-304 and has processed the certificate before the notices required by
11 subsection (2)(a) are mailed or provided electronically. The department shall notify the county tax appeal board
12 of the date of the mailing or the date when the taxpayer is informed the information is available electronically.
13 (3) (a) If the owner of any land and improvements is dissatisfied with the appraisal as it reflects the
14 market value of the property as determined by the department or with the classification of the land or
15 improvements, the owner may request an informal classification and appraisal review by submitting an
16 objection on written or electronic forms provided by the department for that purpose or by checking a box on the
17 notice and returning it to the department in a manner prescribed by the department.
18 (i) For property other than class three property described in 15-6-133, class four property described in
19 15-6-134, and class ten property described in 15-6-143, the objection must be submitted within 30 days from
20 the date on the notice.
21 (ii) For class three property described in 15-6-133 and class four property described in 15-6-134, the
22 objection may be made only once each valuation cycle. An objection must be made in writing or by checking a
23 box on the notice within 30 days from the date on the classification and appraisal notice for a reduction in the
24 appraised value to be considered for both years of the 2-year valuation cycle. An objection made more than 30
25 days from the date of the classification and appraisal notice will be applicable only for the second year of the 2-
26 year valuation cycle. For an objection to apply to the second year of the valuation cycle, the taxpayer must shall
27 make the objection in writing or by checking a box on the notice no later than June 1 of the second year of the
28 valuation cycle or, if a classification and appraisal notice is received in the second year of the valuation cycle,
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1 within 30 days from the date on the notice.
2 (iii) For class ten property described in 15-6-143, the objection may be made at any time but only once
3 each valuation cycle. An objection must be made in writing or by checking a box on the notice within 30 days
4 from the date on the classification and appraisal notice for a reduction in the appraised value to be considered
5 for all years of the 6-year appraisal cycle. An objection made more than 30 days after the date of the
6 classification and appraisal notice applies only for the subsequent remaining years of the 6-year reappraisal
7 cycle. For an objection to apply to any subsequent year of the valuation cycle, the taxpayer must shall make the
8 objection in writing or by checking a box on the notice no later than June 1 of the year for which the value is
9 being appealed or, if a classification and appraisal notice is received after the first year of the valuation cycle,
10 within 30 days from the date on the notice.
11 (b) If the objection relates to residential or commercial property and the objector agrees to the
12 confidentiality requirements, the department shall provide to the objector, by posted mail or electronically, within
13 8 weeks of submission of the objection, the following information:
14 (i) the methodology and sources of data used by the department in the valuation of the property; and
15 (ii) if the department uses a blend of evaluations developed from various sources, the reasons that the
16 methodology was used.
17 (c) At the request of the objector, and only if the objector signs a written or electronic confidentiality
18 agreement, the department shall provide in written or electronic form:
19 (i) comparable sales data used by the department to value the property; and
20 (ii) sales data used by the department to value residential property in the property taxpayer's market
21 model area.
22 (d) For properties valued using the income approach as one approximation of market value, notice
23 must be provided that the taxpayer will be given a form to acknowledge confidentiality requirements for the
24 receipt of all aggregate model output that the department used in the valuation model for the property.
25 (e) The review must be conducted informally and is not subject to the contested case procedures of
26 the Montana Administrative Procedure Act. As a part of the review, the department may consider the actual
27 selling price of the property and other relevant information presented by the taxpayer in support of the
28 taxpayer's opinion as to the market value of the property. The department shall consider an independent
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1 appraisal provided by the taxpayer if the appraisal meets standards set by the Montana board of real estate
2 appraisers and the appraisal was completed within 6 months of the valuation date pursuant to 15-8-201. If the
3 department does not use the appraisal provided by the taxpayer in conducting the appeal, the department must
4 shall provide to the taxpayer the reason for not using the appraisal. The department shall give reasonable
5 notice to the taxpayer of the time and place of the review.
6 (f) After the review, the department shall determine the correct appraisal and classification of the land
7 or improvements and notify the taxpayer of its determination by mail or electronically. The department may not
8 determine an appraised value that is higher than the value that was the subject of the objection unless the
9 reason for an increase was the result of a physical change in the property or caused by an error in the
10 description of the property or data available for the property that is kept by the department and used for
11 calculating the appraised value. In the notification, the department shall state its reasons for revising the
12 classification or appraisal. When the proper appraisal and