House Bill No. 451

Introduced By _______________________________________________________________________________

A Bill for an Act entitled: "An Act providing a tax credit to federal retirees who failed to timely file for refunds for taxes paid on federal pension income for tax years 1983 through 1987; providing that the credit does not include accumulated interest on taxes paid; providing that the credit is not refundable for any tax year; providing that the credit may be claimed by the taxpayer's estate or trust; requiring application for the credit; amending section 15-30-147, MCA; and providing an immediate effective date."

Be it enacted by the Legislature of the State of Montana:

NEW SECTION.  Section 1.  Credit for taxes paid on federal pension income. (1) For the tax year beginning after December 31, 1996, and for the succeeding 3 tax years, a taxpayer who was required to pay a tax on federal pension income for any of the tax years 1983, 1984, 1985, 1986, and 1987 and who failed to timely file a claim for a refund for any of the tax years 1983, 1984, 1985, 1986, and 1987 is allowed a tax credit against the taxes imposed by 15-30-103 for the amount certified pursuant to 15-30-147(2)(f). The credit may be claimed on returns filed after December 31, 1997.

(2)  The maximum credit that a taxpayer may claim on any year's tax liability is 25% of the original amount certified pursuant to 15-30-147(2)(f), not to exceed the total amount of the taxpayer's tax liability for the year in which the credit is claimed. The credit may not be claimed as a carryback or carryforward and may not be refunded if the taxpayer has no tax liability.

(3)  A credit may not be claimed for tax years beginning after December 31, 2000.

Section 2.  Section 15-30-147, MCA, is amended to read:

"15-30-147.   Application for revision -- appeal -- application for tax credit for federal pension income. (1) An application for revision may be filed with the department by a taxpayer within 5 years from the last day prescribed for filing the return as provided in 15-30-145(3), regardless of whether the return was filed on or after the last day prescribed for filing. If the department has revised a return pursuant to 15-30-145(3), the taxpayer may revise the same return until the liability for that tax year is finally determined. If the taxpayer is not satisfied with the action taken by the department, the taxpayer may appeal to the state tax appeal board.

(2) (a) (i) Notwithstanding the provisions of subsection (1), a taxpayer who included federal pension income in Montana adjusted gross income that resulted in the payment of a tax and who did not timely file a claim for a refund of taxes paid on federal pension income for any of the tax years 1983, 1984, 1985, 1986, and 1987 may file an application for a tax credit to be used for the payment of future tax liabilities as provided in [section 1].

(ii) For purposes of this section, "federal pension income" means pension income received from the United States government or an agency of the United States government.

(b)  A taxpayer who filed an income tax return using the status of married filing jointly and who did not receive federal pension income as the result of personal services performed by the taxpayer for any of the tax years 1983, 1984, 1985, 1986, and 1987 may not file a claim for a credit.

(c)  A taxpayer who filed an income tax return using the status of married filing jointly for any of the tax years 1983, 1984, 1985, 1986, and 1987, who along with the taxpayer's spouse received federal pension income, and whose spouse is now deceased may file a claim for a credit for the amount of federal pension income received by the taxpayer and for the amount received by the deceased spouse.

(d)  The application for credit must be made between [the effective date of this act] and September 30, 1997. The application may be made only for tax years 1983, 1984, 1985, 1986, and 1987.

(e)  (i) For a taxpayer who is physically or mentally incapacitated, a claim for the credit may be filed on the taxpayer's behalf by a person authorized by law to handle the taxpayer's affairs or to act for the taxpayer.

(ii) For a deceased taxpayer, a claim for the credit may be filed by either the fiduciary or the beneficiary of the deceased taxpayer's estate or trust for the full amount of the credit. The amount of the credit may not exceed the tax liability of the estate or trust.

(f)  Upon receipt of the application, the department shall review the application for completeness and accuracy. After review, the department shall certify to the taxpayer the amount of the taxpayer's credit for taxes paid on federal pension income. The credit does not include accumulated interest on taxes paid for the tax years 1983, 1984, 1985, 1986, and 1987."

NEW SECTION. Section 3.  Codification instruction. [Section 1] is intended to be codified as an integral part of Title 15, chapter 30, part 1, and the provisions of Title 15, chapter 30, part 1, apply to [section 1].

NEW SECTION. Section 4.  Effective date. [This act] is effective on passage and approval.

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