68th Legislature SB 15.1
1 SENATE BILL NO. 15
2 INTRODUCED BY S. O'BRIEN
3 BY REQUEST OF THE REVENUE INTERIM COMMITTEE
4
5 A BILL FOR AN ACT ENTITLED: “AN ACT REVISING THE RESIDENTIAL PROPERTY TAX CREDIT;
6 PROVIDING THAT THE CREDIT IS AVAILABLE TO TAXPAYERS OF ALL AGES; REQUIRING A
7 COPAYMENT FOR TAXPAYERS UNDER 62 YEARS OF AGE; INCREASING THE MAXIMUM CREDIT
8 AMOUNT; EXTENDING RULEMAKING AUTHORITY; AMENDING SECTIONS 15-6-201, 15-7-102, 15-16-101,
9 15-17-125, 15-30-2303, 15-30-2338, AND 15-30-2340, MCA; AMENDING SECTIONS 11, 12, AND 13,
10 CHAPTER 476, LAWS OF 2021; REPEALING SECTIONS 7, 8, AND 9, CHAPTER 476, LAWS OF 2021; AND
11 PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE.”
12
13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
14
15 Section 1. Section 15-6-201, MCA, is amended to read:
16 "15-6-201. Governmental, charitable, and educational categories -- exempt property. (1) The
17 f ollowing categories of property are exempt from taxation:
18 (a) except as provided in 15-24-1203, the property of:
19 (i) the United States, except:
20 (A) if congress passes legislation that allows the state to tax property owned by the federal
21 government or an agency created by congress; or
22 (B) as provided in 15-24-1103;
23 (ii) the state, counties, cities, towns, and school districts;
24 (iii) irrigation districts organized under the laws of Montana and not operated for gain or profit;
25 (iv) municipal corporations;
26 (v) public libraries;
27 (vi) rural f ire districts and other entities providing fire protection under Title 7, chapter 33;
28 (vii) special districts created pursuant to Title 7, chapter 11, part 10; and
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1 (viii) subject to subsection (2), federally recognized Indian tribes in the state if the property is located
2 entirely within the exterior boundaries of the reservation of the tribe that owns the property and the property is
3 used exclusively by the tribe for essential government services. Essential government services are tribal
4 government administration, fire, police, public health, education, recreation, sewer, water, pollution control,
5 public transit, and public parks and recreational facilities.
6 (b) buildings and furnishings in the buildings that are owned by a church and used for actual
7 religious worship or for residences of the clergy, not to exceed one residence for each member of the clergy,
8 together with the land that the buildings occupy and adjacent land reasonably necessary for convenient use of
9 the buildings, which must be identified in the application, and all land and improvements used for educational or
10 youth recreational activities if the facilities are generally available for use by the general public but may not
11 exceed 15 acres for a church or 1 acre for a clergy residence after subtracting any area required by zoning,
12 building codes, or subdivision requirements;
13 (c) land and improvements upon the land, not to exceed 15 acres, owned by a federally
14 recognized Indian tribe when the land has been set aside by tribal resolution and designated as sacred land to
15 be used exclusively for religious purposes;
16 (d) property owned and used exclusively for agricultural and horticultural societies not operated for
17 gain or profit;
18 (e) property, not to exceed 80 acres, which must be legally described in the application for the
19 exemption, used exclusively for educational purposes, including dormitories and food service buildings for the
20 use of students in attendance and other structures necessary for the operation and maintenance of an
21 educational institution that:
22 (i) is not operated for gain or profit;
23 (ii) has an attendance policy; and
24 (iii) has a def inable curriculum with systematic instruction;
25 (f ) property, of any acreage, owned by a tribal corporation created for the sole purpose of
26 establishing schools, colleges, and universities if the property meets the requirements of subsection (1)(e);
27 (g) property used exclusively for nonprofit health care facilities, as defined in 50-5-101, licensed by
28 the department of public health and human services and organized under Title 35, chapter 2 or 3. A health care
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1 f acility that is not licensed by the department of public health and human services and organized under Title 35,
2 chapter 2 or 3, is not exempt.
3 (h) property that is:
4 (i) (A) owned and held by an association or corporation organized under Title 35, chapter 2, 3, 20,
5 or 21; or
6 (B) owned by a federally recognized Indian tribe within the state and set aside by tribal resolution;
7 and
8 (ii) devoted exclusively to use in connection with a cemetery or cemeteries for which a permanent
9 care and improvement fund has been established as provided for in Title 35, chapter 20, part 3; and
10 (iii) not maintained and not operated for gain or profit;
11 (i) subject to subsection (2), property that is owned or property that is leased from a federal, state,
12 or local governmental entity by institutions of purely public charity if the property is directly used for purely
13 public charitable purposes;
14 (j) evidence of debt secured by mortgages of record upon real or personal property in the state of
15 Montana;
16 (k) public museums, art galleries, zoos, and observatories that are not operated for gain or profit;
17 (l) motor vehicles, land, fixtures, buildings, and improvements owned by a cooperative association
18 or nonprofit corporation organized to furnish potable water to its members or customers for uses other than the
19 irrigation of agricultural land;
20 (m) the right of entry that is a property right reserved in land or received by mesne conveyance
21 (exclusive of leasehold interests), devise, or succession to enter land with a surface title that is held by another
22 to explore, prospect, or dig for oil, gas, coal, or minerals;
23 (n) (i) property that is owned and used by a corporation or association organized and operated
24 exclusively for the care of persons with developmental disabilities, persons with mental illness, or persons with
25 physical or mental impairments that constitute or result in substantial impediments to employment and that is
26 not operated for gain or profit; and
27 (ii) subject to subsection (2)(e), property that is owned and used by an organization owning and
28 operating facilities that are f or the care of the retired, aged, or chronically ill and that are not operated for gain or
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1 prof it;
2 (o) property owned by a nonprofit corporation that is organized to provide facilities primarily for
3 training and practice for or competition in international sports and athletic events and that is not held or used for
4 private or corporate gain or profit. For purposes of this subsection (1)(o), "nonprofit corporation" means an
5 organization that is exempt from taxation under section 501(c) of the Internal Revenue Code and incorporated
6 and admitted under the Montana Nonprofit Corporation Act.
7 (p) property rented or leased to a municipality or taxing unit for less than $100 a year and that is
8 used f or public park, recreation, or landscape beautification purposes. For the purposes of this subsection
9 (1)(p), "property" includes land but does not include buildings. The exemption must be applied for by the
10 municipality or taxing unit, and not more than 10 acres within the municipality or taxing unit may be exempted.
11 (2) (a) (i) For the purposes of tribal property under subsection (1)(a)(viii), the property subject to
12 exemption may not be:
13 (A) operated for gain or profit;
14 (B) held under contract to operate, lease, or sell by a taxable individual;
15 (C) used or possessed exclusively by a taxable individual or entity; or
16 (D) held by a tribal corporation except for educational purposes as provided in subsection (1)(f).
17 (ii) For the purposes of parks and recreational facilities under subsection (1)(a)(viii), the property
18 must be:
19 (A) set aside by tribal resolution and designated as park land, not to exceed 640 acres, or be
20 designated as a recreational facility; and
21 (B) open to the general public.
22 (b) For the purposes of subsection (1)(b), the term "clergy" means, as recognized under the
23 f ederal Internal Revenue Code:
24 (i) an ordained minister, priest, or rabbi;
25 (ii) a commissioned or licensed minister of a church or church denomination that ordains ministers
26 if the person has the authority to perform substantially all the religious duties of the church or denomination;
27 (iii) a member of a religious order who has taken a vow of poverty; or
28 (iv) a Christian Science practitioner.
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1 (c) For the purposes of subsection (1)(i):
2 (i) the term "institutions of purely public charity" includes any organization that meets the following
3 requirements:
4 (A) The organization offers its charitable goods or services to persons without regard to race,
5 religion, creed, or gender and qualifies as a tax-exempt organization under the provisions of section 501(c)(3),
6 Internal Revenue Code, as amended.
7 (B) The organization accomplishes its activities through absolute gratuity or grants. However, the
8 organization may solicit or raise funds by the sale of merchandise, memberships, or tickets to public
9 perf ormances or entertainment or by other similar types of fundraising activities.
10 (ii) agricultural property owned by a purely public charity is not exempt if the agricultural property is
11 used by the charity to produce unrelated business taxable income as that term is defined in section 512 of the
12 Internal Revenue Code, 26 U.S.C. 512. A public charity claiming an exemption for agricultural property shall file
13 annually with the department a copy of its federal tax return reporting any unrelated business taxable income
14 received by the charity during the tax year, together with a statement indicating whether the exempt property
15 was used to generate any unrelated business taxable income.
16 (iii) up to 15 acres of property owned by a purely public charity is exempt at the time of its purchase
17 even if the property must be improved before it can directly be used for its intended charitable purpose. If the
18 property is not directly used for the charitable purpose within 8 years of receiving an exemption under this
19 section or if the property is sold or transferred before it entered direct charitable use, the exemption is revoked
20 and the property is taxable. In addition to taxes due for the first year that the property becomes taxable, the
21 owner of the property shall pay an amount equal to the amount of the tax due that year times the number of
22 years that the property was tax-exempt under this section. The amount due is a lien upon the property and
23 when collected must be distributed by the treasurer to funds and accounts in the same ratio as property tax
24 collected on the property is distributed. At the time the exemption is granted, the department shall file a notice
25 with the clerk and recorder in the county in which the property is located. The notice must indicate that an
26 exemption pursuant to this section has been granted. The notice must describe the penalty for default under
27 this section and must specify that a default under this section will create a lien on the property by operation of
28 law. The notice must be on a f orm prescribed by the department.
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1 (iv) not more than 160 acres may be exempted by a purely public charity under any exemption
2 originally applied for after December 31, 2004. An application for exemption under this section must contain a
3 legal description of the property for which the exemption is requested.
4 (d) For the purposes of subsection (1)(k), the term "public museums, art galleries, zoos, and
5 observatories" means governmental entities or nonprofit organizations whose principal purpose is to hold
6 property for public display or for use as a museum, art gallery, zoo, or observatory. The exempt property
7 includes all real and personal property owned by the public museum, art gallery, zoo, or observatory that is
8 reasonably necessary for use in connection with the public display or observatory use. Unless the property is
9 leased f or a profit to a governmental entity or nonprofit organization by an individual or for-profit organization,
10 real and personal property owned by other persons is exempt if it is:
11 (i) actually used by the governmental entity or nonprofit organization as a part of its public display;
12 (ii) held f or future display; or
13 (iii) used to house or store a public display.
14 (e) For the purposes of facilities for the care of the retired, aged, or chronically ill under subsection
15 (1)(n)(ii), the terms "retired" and "aged" mean an individual who satisfies the age and gross household income
16 limitations of 15-30-2338 and is 62 years of age or older. The property owner shall verify age and gross
17 household income requirements on a f orm prescribed by the department. Applicants are subject to the false
18 swearing penalties established in 45-7-202."
19
20 Section 2. Section 15-7-102, MCA, is amended to read:
21 "15-7-102. Notice of classification, market value, and taxable value to owners -- appeals. (1) (a)
22 Except as provided in 15-7-138, the department shall mail or provide electronically to each owner or purchaser
23 under contract for deed a notice that includes the land classification, market value, and taxable value of the
24 land and improvements owned or being purchased. A notice must be mailed or, with property owner consent,
25 provided electronically to the owner only if one or more of the following changes pertaining to the land or
26 improvements have been made since the last notice:
27 (i) change in ownership;
28 (ii) change in classification;
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1 (iii) change in valuation; or
2 (iv) addition or subtraction of personal property affixed to the land.
3 (b) The notice must include the following for the taxpayer's informational and informal classification
4 and appraisal review purposes:
5 (i) a notice of the availability of all the property tax assistance programs available to property
6 taxpayers, including the intangible land value assistance program provided for in 15-6-240, the property tax
7 assistance programs provided for in Title 15, chapter 6, part 3, and the residential property tax credit for the
8 elderly provided for in 15-30-2337 through 15-30-2341;
9 (ii) the total amount of mills levied against the property in the prior year;
10 (iii) the market value for the prior reappraisal cycle;
11 (iv) if the market value has increased by more than 10%, an explanation for the increase in
12 valuation;
13 (v) a statement that the notice is not a tax bill; and
14 (vi) a taxpayer option to request an informal classification and appraisal review by checking a box
15 on the notice and returning it to the department.
16 (c) When the department uses an appraisal method that values land and improvements as a unit,
17 including the sales comparison approach for residential condominiums or the income approach for commercial
18 property, the notice must contain a combined appraised value of land and improvements.
19 (d) Any misinformation provided in the information required by subsection (1)(b) does not affect the
20 val