Bill Summary – FastDemocracy

67th Legislature                                                                                                     HB 672.1
                                                    HOUSE BILL NO. 672
                                              INTRODUCED BY J. HAMILTON
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   A BILL FOR AN ACT ENTITLED: “AN ACT REVISING THE CAPITAL GAINS TAX CREDIT TO PROVIDE FOR
   A PROPERTY TAX CIRCUIT BREAKER CREDIT; REDUCING THE CAPITAL GAINS TAX CREDIT FOR
   THOSE WITH ADJUSTED GROSS INCOME ABOVE $750,000; USING THE REVENUE FROM THE CHANGE
   IN THE CAPITAL GAINS TAX CREDIT TO FUND A PROPERTY TAX AND RENT-EQUIVALENT PROPERTY
   TAX CIRCUIT BREAKER CREDIT; PROVIDING THAT A TAXPAYER MAY CLAIM EITHER THE CIRCUIT
   BREAKER TAX CREDIT OR THE RESIDENTIAL PROPERTY TAX CREDIT FOR THE ELDERLY AND
   PARTICIPATE IN THE PROPERTY TAX ASSISTANCE PROGRAM OR THE DISABLED VETERAN
   ASSISTANCE PROGRAM OR RECEIVE THE INTANGIBLE LAND VALUE PROPERTY EXEMPTION;
   PROVIDING THAT THE CREDIT BE ADJUSTED IF THE REVENUE FROM THE CAPITAL GAINS CREDIT
   REDUCTION IS INSUFFICIENT TO FUND THE CREDITS; REQUIRING THE DEPARTMENT OF REVENUE
   TO REPORT THE STATUS OF THE CREDIT TO THE REVENUE INTERIM COMMITTEE; PROVIDING
   RULEMAKING AUTHORITY; PROVIDING DEFINITIONS; AMENDING SECTIONS 15-6-240, 15-6-302, 15-7-
   102, 15-16-101, 15-17-125, 15-30-2301, 15-30-2303, AND 15-30-2341, MCA; AND PROVIDING EFFECTIVE
   DATES AND A TERMINATION DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              NEW SECTION. Section 1.         Property tax and rent-equivalent property tax circuit breaker credit -
   - definitions. As used in [sections 1 through 4], the following definitions apply:
              (1)   "Claim period" means the tax year for claimants required to file a Montana tax return or returns
   under chapter 30 and the calendar year for claimants not required to file returns.
              (2)   "Claimant" means a person who is eligible to file a claim for a credit under [sections 1 through 4].
              (3)   "Gross rent" means the total rent in cash or its equivalent actually paid during the claim period by
   the renter or lessee for the right of occupancy of the qualified rental residence pursuant to an arm's-length
   transaction with the landlord.
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              (4)   (a) "Household" means an association of persons who live in the same dwelling, sharing its
   furnishings, facilities, accommodations, and expenses.
              (b)   The term does not include bona fide lessees, tenants, or roomers and boarders on contract.
              (5)   "Household income" means all income received by all persons of a household in a tax year while
   they are members of the household.
              (6)   (a) "Income" means, except as provided in subsection (6)(b), federal adjusted gross income,
   without regard to loss, as that quantity is defined in the Internal Revenue Code, plus all nontaxable income,
   including but not limited to:
              (i)   the amount of any pension or annuity, including Railroad Retirement Act benefits and veterans'
   disability benefits;
              (ii) the amount of capital gains excluded from adjusted gross income;
              (iii) alimony;
              (iv) support money;
              (v)   nontaxable strike benefits;
              (vi) cash public assistance and relief;
              (vii) interest on federal, state, county, and municipal bonds; and
              (viii) all payments received under federal social security except social security income paid directly to a
   nursing home.
              (b)   For the purposes of this subsection (6), income is reduced by the taxpayer's basis.
              (7)   "Property tax billed" means taxes levied against the qualified residence, including special
   assessments and fees but excluding penalties or interest during the claim period.
              (8)   (a) (i) "Qualified rental residence" means any class four residential dwelling that is a single-family
   dwelling unit, unit of a multiple-unit dwelling, trailer, manufactured home, or mobile home that is rented from a
   third party, located in the state, and subject to property taxes and as much of the surrounding land, not
   exceeding 1 acre, as is reasonably necessary for its use as a dwelling.
              (ii) The term includes a single-family dwelling or unit of a multiple-unit dwelling that is rented from a
   county or municipal housing authority as provided in Title 7, chapter 15.
              (b)   Except for dwellings rented from a county or municipal housing authority, the term does not
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   include rented dwellings or rented lands that are not subject to Montana property taxes during the claim period.
              (9)   "Qualified residence" means any owner-occupied class four residential dwelling that is a single-
   family dwelling unit, unit of a multiple-unit dwelling, trailer, manufactured home, or mobile home located in the
   state that is subject to property taxes and as much of the surrounding land, not exceeding 1 acre, as is
   reasonably necessary for its use as a dwelling.
              (10) "Rent-equivalent property tax paid" means 15% of gross rent.
              (11) "Tax year" means the property tax year preceding the current year in which a claim for a property
   tax circuit breaker credit is made.
              (12) "Threshold amount" means the amount determined based on household income as follows:
              (a)   on the first $20,000 of household income, 2.6%;
              (b)   on the next $20,000 of household income, 5.8%;
              (c)   on the next $20,000 of household income, 9%;
              (d)   on the next $20,000 of household income, 12.2%;
              (e)   on the next $20,000 of household income, 15.4%; and
              (f)   on household income above $100,000, 18.6%.
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              NEW SECTION. Section 2.         Property tax and rent-equivalent property tax circuit breaker credit -
   - eligibility. (1) In order to make a claim for a credit under [sections 1 through 4], the individual must have:
              (a)   resided in the state for at least 9 months of the tax year for which the claim is made; and
              (b)   occupied one or more qualified residences as an owner or one or more qualified rental residences
   as a renter or lessee for at least 6 months of the tax year.
              (2)   A person is not disqualified from claiming the credit under [sections 1 through 4] because of a
   change of residence during the claim period if the person occupies a qualified residence as an owner or a
   qualified rental residence in the state as a renter or lessee for at least 7 months during the claim period.
              (3)   A taxpayer may not claim the credit provided for in [sections 1 through 4] and the residential
   property tax credit for the elderly provided for in 15-30-2337 through 15-30-2341.
              (4)   Only one claim for a property tax circuit breaker credit or the residential tax credit for the elderly
   provided for in 15-60-2337 through 15-30-2341 may be made with respect to any qualified residence.
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              (5)   A claim for the credit may not be allowed for any portion of property tax billed or rent-equivalent
   property tax paid that is derived from a public tax subsidy program or a public rent subsidy program.
              (6)   A claim is disallowed if the department finds that the claimant received title to the claimant's
   qualified residence primarily for the purpose of receiving benefits under [sections 1 through 4].
              (7)   When the landlord and tenant have not dealt at arm's length and the department judges the gross
   rent charged to be excessive, the department may adjust the amount considered gross rent to a reasonable
   amount.
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              NEW SECTION. Section 3.         Property tax and rent-equivalent property tax circuit breaker credit -
   - credit amount. (1) There is a credit against the taxes imposed by this chapter for a portion of property tax
   billed and rent-equivalent property tax paid by a claimant in the tax year as provided in this section.
              (2)   Subject to [section 5(3)], the amount of the credit allowed under this section is equal to the
   property tax billed or rent-equivalent property tax paid in the tax year times 0.75 minus the threshold amount.
              (3)   If the amount determined is equal to or less than zero, there is no credit.
              (4)   If two or more individuals share a qualified rental residence, each individual may claim the credit
   based on the proportional share that the individual pays of the gross rent.
              (5)   If the amount of the credit exceeds the claimant's liability under this chapter, the amount of the
   excess must be refunded to the claimant. The credit may be claimed even though the claimant has no taxable
   income under this chapter.
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              NEW SECTION. Section 4.         Property tax and rent-equivalent property tax circuit breaker credit -
   - filing date -- denial of claim. (1) Except as provided in subsection (3), a claim for the credit must be
   submitted at the same time the claimant's tax return is due under chapter 30. For an individual not required to
   file a tax return, the claim must be submitted on or before April 15 of the year following the year for which the
   credit is sought.
              (2)   A receipt showing property taxes billed or gross rent paid must be filed with each claim. Each
   claimant shall, at the request of the department, supply all additional information necessary to support a claim.
              (3)   The department may grant a reasonable extension for filing a claim whenever, in its judgment,
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   good cause exists.
              (4)   If an individual who would have a claim under [sections 1 through 4] dies before filing the claim,
   the personal representative of the estate of the decedent may file the claim.
              (5)   The department or an individual may revise a return and make a claim under [sections 1 through
   4] within 3 years from the last day prescribed for filing a claim for relief.
              (6)   A person filing a false or fraudulent claim under the provisions of [sections 1 through 4] must be
   charged with the offense of unsworn falsification to authorities pursuant to 45-7-203. If a false or fraudulent
   claim has been paid, the amount paid, penalties, and interest may be recovered as provided in 15-1-216.
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              NEW SECTION. Section 5.        Property tax circuit breaker credit account. (1) There is a property tax
   circuit breaker account in the state special revenue fund. Revenue in the account must be used to fund the
   property tax and rent-equivalent property tax circuit breaker credit as provided in this section.
              (2)   The department shall transfer annually to the account on May 15 and November 15 increased
   revenue from the reduction in the capital gains tax credit provided for in 15-30-2301(2)(b) as amended by [this
   act].
              (3)   The department shall determine annually on December 31 whether the revenue in the account is
   sufficient to fund the credit provided for in [section 3]. If the revenue is anticipated to be insufficient to fund the
   credit in the first 4 years after revenue is transferred to the account, the department shall reduce the allowed
   credit to 90% of the amount calculated under [section 3]. If the revenue in the account is greater than the
   amount necessary to fund the credits, the excess revenue must remain in the account and may not be
   transferred to the general fund.
              (4)   The department shall report annually, in accordance with 5-11-210, to the revenue interim
   committee, provided for in 5-5-227, the balance of the account and whether the balance is expected to cover
   the anticipated credits claimed.
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              Section 6. Section 15-6-240, MCA, is amended to read:
              "15-6-240.   Intangible land value property exemption -- application procedure. (1) There is an
   intangible land value assistance program that provides graduated levels of property tax exemptions to assist
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   owners of primary residences with land values that are disproportionate to the value of a primary residence and
   improvements. To be eligible for the exemption, applicants must meet the requirements of this section.
              (2)   If the total appraised value of the land is equal to or less than 150% of the appraised value of the
   primary residence and improvements situated on the land, then the land exemption provided in this section
   does not apply.
              (3)   Subject to subsection (6) (7), if the total appraised value of the land is greater than 150% of the
   appraised value of the primary residence and improvements situated on the land, then the land is valued at
   150% of the appraised value of the primary residence and improvements situated on the land, subject to the
   minimum equalization of value requirement in subsection (4), and the remainder of the land value is exempt
   from taxation.
              (4)   If the calculation in subsection (3) creates a land value that is less than the statewide average
   value of land, then the value of the land may not be reduced in an amount that is less than the statewide
   average value of land multiplied by the acreage of land for the subject property.
              (5)   This section does not provide an exemption for the primary residence and improvements situated
   on the land.
              (6)   Property eligible for the exemption provided for in this section is not eligible for the property
   assistance programs provided for in Title 15, chapter 6, part 3.
              (6)(7)   (a) A claim for assistance must be filed by March 1 of the tax year for which the exemption is
   sought, on an application form provided by the department. After an exemption is approved, the applicant
   remains eligible for the exemption for the remainder of the 2-year valuation cycle provided for in 15-7-111 as
   long as the property is continually used as a primary residence by the applicant. An applicant who does not
   apply for assistance during the first year of the valuation cycle may apply during the second year of the cycle.
              (b)   The application form must contain:
              (i)   an affirmation that the applicant owns and maintains the land and improvements as the primary
   residence;
              (ii) an affirmation that the land has been owned by the applicant or a family member of the applicant
   within the third degree of consanguinity for at least 30 consecutive years; and
              (iii) any other information required by the department that is relevant to the applicant's eligibility.
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              (c)   When providing information to the department for qualification under this section, applicants are
   subject to the false swearing penalties established in 45-7-202.
              (d)   The department may investigate the information provided in an application and an applicant's
   continued eligibility.
              (e)   The department may request applicant verification of the primary residence.
              (7)(8)   As used in this section the following definitions apply:
              (a)   "Land" means:
              (i)   parcels of land or lots of not more than 5 acres under single ownership that support the primary
   residential improvements. The term does not include parcels of land or lots that do not support the primary
   residential improvements, regardless of whether those parcels or lots are contiguous with or adjacent to the
   primary residential property.
              (ii) subject to the limitations in subsection (7)(a)(i) (8)(a)(i), separately assessed land on which a
   mobile or manufactured home is located, but only if the mobile or manufactured home and the land are both
   owned by the applicant.
              (b)   "Primary residence" means a single-family dwelling:
              (i)   in which an applicant can demonstrate the applicant lived for at least 7 months of the year for
   which benefits are claimed;
              (ii) that is the only residence for which the land exemption claimed