68th Legislature SB 3.1
1 SENATE BILL NO. 3
2 INTRODUCED BY M. CUFFE
3 BY REQUEST OF THE REVENUE INTERIM COMMITTEE
4
5 A BILL FOR AN ACT ENTITLED: “AN ACT REVISING FOREST TAXATION LAWS; REVISING THE CLASS
6 TEN FOREST PROPERTY REAPPRAISAL CYCLE; REVISING FOREST PROPERTY TAX RATES;
7 REQUIRING THE DEPARTMENT OF REVENUE TO VALUE FOREST PROPERTY; REVISING THE
8 STUMPAGE VALUE AVERAGING METHOD; AMENDING SECTIONS 15-6-143, 15-7-102, 15-7-111, 15-7-
9 112, AND 15-44-103, MCA; AND PROVIDING EFFECTIVE DATES AND A RETROACTIVE APPLICABILITY
10 DATE.”
11
12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
13
14 Section 1. Section 15-6-143, MCA, is amended to read:
15 "15-6-143. Class ten property -- description -- taxable percentage. (1) Class ten property includes
16 all f orest lands, as defined in 15-44-102, and property described in subsection (2).
17 (2) Any parcel of growing timber totaling less than 15 acres qualifies as class ten property if, in a
18 prior year, the parcel totaled 15 acres or more and qualified as forest land but the number of acres was reduced
19 to less than 15 acres for a public use described in 70-30-102 by the federal government, the state, a county, or
20 a municipality and, since that reduction in acres, the parcel has not been further divided.
21 (3) Class ten property is taxed at:
22 (a) 0.34% 0.29% of its forest productivity value in tax year 2021 2023;
23 (b) 0.31% 0.27% of its forest productivity value in tax year 2022 2024; and
24 (c) 0.37% of its forest productivity value in tax years after 2022 2024."
25
26 Section 2. Section 15-7-102, MCA, is amended to read:
27 "15-7-102. Notice of classification, market value, and taxable value to owners -- appeals. (1) (a)
28 Except as provided in 15-7-138, the department shall mail or provide electronically to each owner or purchaser
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1 under contract for deed a notice that includes the land classification, market value, and taxable value of the
2 land and improvements owned or being purchased. A notice must be mailed or, with property owner consent,
3 provided electronically to the owner only if one or more of the following changes pertaining to the land or
4 improvements have been made since the last notice:
5 (i) change in ownership;
6 (ii) change in classification;
7 (iii) change in valuation; or
8 (iv) addition or subtraction of personal property affixed to the land.
9 (b) The notice must include the following for the taxpayer's informational and informal classification
10 and appraisal review purposes:
11 (i) a notice of the availability of all the property tax assistance programs available to property
12 taxpayers, including the intangible land value assistance program provided for in 15-6-240, the property tax
13 assistance programs provided for in Title 15, chapter 6, part 3, and the residential property tax credit for the
14 elderly provided for in 15-30-2337 through 15-30-2341;
15 (ii) the total amount of mills levied against the property in the prior year;
16 (iii) the market value for the prior reappraisal cycle;
17 (iv) if the market value has increased by more than 10%, an explanation for the increase in
18 valuation;
19 (v) a statement that the notice is not a tax bill; and
20 (vi) a taxpayer option to request an informal classification and appraisal review by checking a box
21 on the notice and returning it to the department.
22 (c) When the department uses an appraisal method that values land and improvements as a unit,
23 including the sales comparison approach for residential condominiums or the income approach for commercial
24 property, the notice must contain a combined appraised value of land and improvements.
25 (d) Any misinformation provided in the information required by subsection (1)(b) does not affect the
26 validity of the notice and may not be used as a basis for a challenge of the legality of the notice.
27 (2) (a) Except as provided in subsection (2)(c), the department shall assign each classification and
28 appraisal to the correct owner or purchaser under contract for deed and mail or provide electronically the notice
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1 in written or electronic form, adopted by the department, containing sufficient information in a comprehensible
2 manner designed to fully inform the taxpayer as to the classification and appraisal of the property and of
3 changes over the prior tax year.
4 (b) The notice must advise the taxpayer that in order to be eligible for a refund of taxes from an
5 appeal of the classification or appraisal, the taxpayer is required to pay the taxes under protest as provided in
6 15-1-402.
7 (c) The department is not required to mail or provide electronically the notice to a new owner or
8 purchaser under contract for deed unless the department has received the realty transfer certificate from the
9 clerk and recorder as provided in 15-7-304 and has processed the certificate before the notices required by
10 subsection (2)(a) are mailed or provided electronically. The department shall notify the county tax appeal board
11 of the date of the mailing or the date when the taxpayer is informed the information is available electronically.
12 (3) (a) If the owner of any land and improvements is dissatisfied with the appraisal as it reflects the
13 market value of the property as determined by the department or with the classification of the land or
14 improvements, the owner may request an informal classification and appraisal review by submitting an
15 objection on written or electronic forms provided by the department for that purpose or by checking a box on the
16 notice and returning it to the department in a manner prescribed by the department.
17 (i) For property other than class three property described in 15-6-133, class four property
18 described in 15-6-134, and class ten property described in 15-6-143, the objection must be submitted within 30
19 days from the date on the notice.
20 (ii) For class three property described in 15-6-133, and class four property described in 15-6-134,
21 and class ten property described in 15-6-143, the objection may be made only once each valuation cycle. An
22 objection must be made in writing or by checking a box on the notice within 30 days from the date on the
23 classification and appraisal notice for a reduction in the appraised value to be considered for both years of the
24 2-year valuation cycle. An objection made more than 30 days from the date of the classification and appraisal
25 notice will be applicable only for the second year of the 2-year valuation cycle. For an objection to apply to the
26 second year of the valuation cycle, the taxpayer shall make the objection in writing or by checking a box on the
27 notice no later than June 1 of the second year of the valuation cycle or, if a classification and appraisal notice is
28 received in the second year of the valuation cycle, within 30 days from the date on the notice.
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1 (iii) For class ten property described in 15-6-143, the objection may be made at any time but only once
2 each valuation cycle. An objection must be made in writing or by checking a box on the notice within 30 days
3 f rom the date on the classification and appraisal notice for a red uction in the appraised value to be considered
4 f or all years of the 6-year appraisal cycle. An objection made more than 30 days after the date of the
5 classification and appraisal notice applies only for the subsequent remaining years of the 6-year reappraisal
6 cycle. For an objection to apply to any subsequent year of the valuation cycle, the taxpayer shall make the
7 objection in writing or by checking a box on the notice no later than June 1 of the year for which the value is
8 being appealed or, if a classification and appraisal notice is received after the first year of the valuation cycle,
9 within 30 days from the date on the notice.
10 (b) If the objection relates to residential or commercial property and the objector agrees to the
11 conf identiality requirements, the department shall provide to the objector, by posted mail or electronically, within
12 8 weeks of submission of the objection, the following information:
13 (i) the methodology and sources of data used by the department in the valuation of the property;
14 and
15 (ii) if the department uses a blend of evaluations developed from various sources, the reasons that
16 the methodology was used.
17 (c) At the request of the objector or a representative of the objector, and only if the objector or
18 representative signs a written or electronic confidentiality agreement, the department shall provide in written or
19 electronic form:
20 (i) comparable sales data used by the department to value the property;
21 (ii) sales data used by the department to value residential property in the property taxpayer's
22 market model area; and
23 (iii) if the cost approach was used by the department to value residential property, the
24 documentation required in 15-8-111(3) regarding why the comparable sales approach was not reliable.
25 (d) For properties valued using the income approach as one approximation of market value, notice
26 must be provided that the taxpayer will be given a form to acknowledge confidentiality requirements for the
27 receipt of all aggregate model output that the department used in the valuation model for the property.
28 (e) The review must be conducted informally and is not subject to the contested case procedures
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1 of the Montana Administrative Procedure Act. As a part of the review, the department may consider the actual
2 selling price of the property and other relevant information presented by the taxpayer in support of the
3 taxpayer's opinion as to the market value of the property. The department shall consider an independent
4 appraisal provided by the taxpayer if the appraisal meets standards set by the Montana board of real estate
5 appraisers and the appraisal was completed within 6 months of the valuation date pursuant to 15-8-201. If the
6 department does not use the appraisal provided by the taxpayer in conducting the appeal, the depart ment shall
7 provide to the taxpayer the reason for not using the appraisal. The department shall give reasonable notice to
8 the taxpayer of the time and place of the review.
9 (f ) Af ter the review, the department shall determine the correct appraisal and classification of the
10 land or improvements and notify the taxpayer of its determination by mail or electronically. The department may
11 not determine an appraised value that is higher than the value that was the subject of the objection unless the
12 reason f or an increase was the result of a physical change in the property or caused by an error in the
13 description of the property or data available for the property that is kept by the department and used for
14 calculating the appraised value. In the notification, the department shall state its reasons for revising the
15 classification or appraisal. When the proper appraisal and classification have been determined, the land must
16 be classified and the improvements appraised in the manner ordered by the department.
17 (4) Whether a review as provided in subsection (3) is held or not, the department may not adjust
18 an appraisal or classification upon the taxpayer's objection unless:
19 (a) the taxpayer has submitted an objection on written or electronic forms provided by the
20 department or by checking a box on the notice; and
21 (b) the department has provided to the objector by mail or electronically its stated reason in writing
22 f or making the adjustment.
23 (5) A taxpayer's written objection or objection made by checking a box on the notice and
24 supplemental information provided by a taxpayer that elects to check a box on the notice to a classification or
25 appraisal and the department's notification to the taxpayer of its determination and the reason for that
26 determination are public records. The department shall make the records available for inspection during regular
27 of fice hours.
28 (6) If a property owner feels aggrieved by the classification or appraisal made by the department
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1 af ter the review provided for in subsection (3), the property owner has the right to first appeal to the county tax
2 appeal board and then to the Montana tax appeal board, whose findings are f inal subject to the right of review
3 in the courts. The appeal to the county tax appeal board, pursuant to 15-15-102, must be filed within 30 days
4 f rom the date on the notice of the department's determination. A county tax appeal board or the Montana tax
5 appeal board may consider the actual selling price of the property, independent appraisals of the property, and
6 other relevant information presented by the taxpayer as evidence of the market value of the property. If the
7 county tax appeal board or the Montana tax appeal board determines that an adjustment should be made, the
8 department shall adjust the base value of the property in accordance with the board's order."
9
10 Section 3. Section 15-7-111, MCA, is amended to read:
11 "15-7-111. Periodic reappraisal of certain taxable property. (1) The department shall administer
12 and supervise a program for the reappraisal of all taxable property within class three under 15-6-133, class four
13 under 15-6-134, and class ten under 15-6-143 as provided in this section. All other property must be revalued
14 annually. Beginning January 1, 2015, all All property within class three, and class four, and class ten must be
15 revalued every 2 years, and all property within class ten must be revalued every 6 years.
16 (2) The department shall value newly constructed, remodeled, or reclassified property in a manner
17 consistent with the valuation within the same class and the values established pursuant to subsection (1) and
18 shall phase in the value of class ten property. The department shall adopt rules for determining the assessed
19 valuation of new, remodeled, or reclassified property within the same class and the phased-in value of class ten
20 property.
21 (3) The reappraisal of class three, and class four, and class ten property is complete on December
22 31 of every second year of the reappraisal cycle, and the reappraisal of class ten property is complete on
23 December 31 of the sixth year of the reappraisal cycle. The amount of the change in valuation from the base
24 year f or class ten property must be phased in each year at the rate of 16.66% of the change in valuation.
25 (4) During the second year of each reappraisal cycle, the department shall provide the revenue
26 interim committee with a report, in accordance with 5-11-210, of tax rates for the upcoming reappraisal cycle
27 that will result in taxable value neutrality for each property class.
28 (5) The department shall administer and supervise a program for the reappraisal of all taxable
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1 property within classes class three, and class four, and class ten. The department shall adopt a reappraisal
2 plan by rule. The reappraisal plan adopted must provide that all class three, and class four, and class ten
3 property in each county is revalued by January 1 of the second year of the reappraisal cycle, effective for
4 January 1 of the following year, and each succeeding 2 years, and must provide that all class ten property in
5 each county is revalued by January 1, 2015, effective for January 1, 2015, and each succeeding 6 years. The
6 resulting valuation changes for class ten property must be phased in for each year until the next reappraisal. If
7 a percentage of change for each year is not established, then the percentage of phasein for class ten property
8 each year is 16.66%.
9 (6) (a) In completing the appraisal or adjustments under subsection (5), the department shall, as