House Bill No. 612
Introduced By hibbard, story, ream
By Request of the House Tax Committee
A Bill for an Act entitled: An Act changing the distribution of corporate license tax payments from banks and savings and loan associations to counties to provide for payments based on a 5-year average; amending sections 15-31-141, 15-31-701, and 15-31-702, MCA; and providing an immediate effective date, a retroactive applicability date, and an applicability date.
Be it enacted by the Legislature of the State of Montana:
Section 1. Section 15-31-141, MCA, is amended to read:
"15-31-141. Consolidated returns -- computation and procedure
-- prohibition on financial institutions. (1)
Corporations which that are affiliated may not file a consolidated return unless at least 80% of all classes of stock of each
corporation involved is owned directly or indirectly by one or more members of the affiliated group.
(2) Corporations may not file a consolidated return unless the operation of the affiliated group constitutes a unitary
business and, except for a unitary business operation described in subsection (2)(b), permission to file a consolidated return
is given by the department
of revenue. For purposes of this section, a "unitary business operation" means one in which:
(a) the business operations conducted by the corporations in the affiliated group are interrelated or interdependent to the extent that the net income of one corporation cannot reasonably be determined without reference to the operations conducted by the other corporations; or
(b) all of the corporations in the affiliated group
are incorporated and operate exclusively in Montana, are not multistate
corporations, and have filed a consolidated federal return for the tax year.
(3) The election to file a consolidated return is binding as long as the affiliated group continues to file a federal consolidated return.
(4) If the conditions of subsections (1) and (2)
of this section are met, the department may require corporations to file a
consolidated return when the department considers a consolidated return necessary.
(5) Any corporation liable to report under this chapter and owning or controlling, either directly or indirectly, at least 80%
of all classes of stock of each corporation involved may be required to make a consolidated report showing the combined
such the assets of the corporation as that are required for the purposes of this chapter, and such any other
information as that the department may require, but excluding intercorporate stockholdings and intercorporate accounts.
Any corporation liable to report under this chapter and owned or controlled, either directly or indirectly, by another
corporation may be required to make a report consolidated with the owning company, showing the combined net income,
such the assets of the corporation as that are required for the purposes of this chapter, and such any other information as
that the department may require, but excluding intercorporate stockholdings and intercorporate accounts. In case If it shall
appear appears to the department that any arrangement exists in such a manner as to that improperly reflect reflects the
business done, the segregable assets, or the entire net income earned from business done in this state, the department is
authorized and empowered to may equitably adjust the tax in such a manner as that it may determine. (6) (a) A majority of the corporation license tax collected from financial institutions is paid to local government areas in
which each financial institution is located. However, consolidated returns for financial institutions do not reflect the true tax
attributable to each local government. In addition, consolidated returns would permit financial institutions to offset income
against losses of nonfinancial institutions, thereby distorting the true income of each financial organization. (b) In accordance with subsection (6)(a), financial institutions are prohibited from filing consolidated returns under this
section. (7)(6) (a) When an affiliated group elects to file a consolidated return under the provisions of this section, a corporation of
the affiliated group shall file a separate return for any portion of its taxable year in which its income is not included in the
consolidated return of the group. The separate return must be filed no later than the 15th day of the 5th month following the
close of the taxable year for which a consolidated return of the affiliated group is filed.
(b) A 1-month to 6-month extension of time is automatically allowed for filing a return
, provided that if on or before the
due date of the return, an application for an extension is made by the corporation. The application must be made on forms
prescribed by the department."
Section 2. Section 15-31-701, MCA, is amended to read:
of revenue -- special duties for transmitting corporation license tax revenues revenue
collected from banks or savings and loan associations to counties. (1) Within 30 days after receiving corporation license
tax returns and payments from banks or savings and loan associations, the The department of revenue shall transmit to the
county treasurer of the county in which the business is located the revenues revenue calculated under 15-31-702(1)(b).
(2) If the department
of revenue determines, under the provisions of 15-31-503 and 15-31-531, that a bank or savings and
loan association owes more taxes than shown on the original return or has paid more than the tax, penalty, or interest due in
any year, it shall notify the bank or savings and loan association pursuant to 15-1-211. Review may be sought pursuant to
15-1-211. County treasurers shall issue warrants for their portion of the overpayment received and interest, as provided in
(3) The department shall continue to exercise all its duties and powers outlined in this title with respect to auditing returns
and enforcing payment of the corporation license taxes owed by banks and savings and loan associations.
taxes collected from the sale of property of a bank or savings and loan association under the provisions of 15-31-525 shall
be transmitted to the county in which the corporation owing the delinquent taxes is located. The only duties duty of the
county treasurers in this regard are issuing refunds and is distributing the taxes received pursuant to 15-31-702(1)(b) to
local taxing jurisdictions."
Section 3. Section 15-31-702, MCA, is amended to read:
"15-31-702. Distribution of corporation license taxes collected from banks or savings and loan associations. (1) All corporation license taxes, interest, and penalties collected from banks and savings and loan associations must, in accordance with the provisions of 15-1-501, be distributed in the following manner:
20% Twenty percent must be allocated as provided in 15-1-501(3) ; and.
80% Eighty percent is statutorily appropriated, as provided in 17-7-502, for allocation to the various taxing
jurisdictions within the county in which the a bank or savings and loan association is located.
(2) The corporation license taxes, interest, and penalties distributed under subsection (1)(b) must be allocated to each taxing jurisdiction in the proportion that its mill levy for that fiscal year bears to the total mill levy of the taxing authorities of the district in which the bank or savings and loan association is located.
(3) "Taxing jurisdictions" means, for the purposes of this section, all taxing authorities within a county permitted under state law to levy mills against the taxable value of property in the taxing district in which the bank or savings and loan association is located.
(4) If a return filed by a bank or savings and loan association involves branches or offices in more than one taxing
jurisdiction, the department
of revenue shall provide a method by rule for equitable distribution among those taxing
(5) All corporation license taxes paid from consolidated returns in which 50% or more of the income is from banks or savings and loan associations must be distributed as provided in subsection (1).
(6) (a) The department shall annually distribute to each county having a bank or savings and loan association a percentage of the total amount collected pursuant to subsection (1), including penalties, interest, or additional taxes from assessments and less any refunds, from July 1 of the previous year through June 30 of the current year. The distribution must be sent to each county treasurer for distribution to the taxing jurisdictions in each district on or before August 1 of each year.
(b) The percentage for distribution must be calculated by taking an average of the ratios of total bank tax liability within a school district to total bank tax liability for all school districts in which a bank or savings and loan association is located in each of the 5 years preceding the current year. The total tax liability must be computed for each year by including all returns filed during that year and all amended returns and adjustments to tax filings made by the department during that year, no matter to which tax year the amended return actually applied."
Section 4. Effective date -- applicability -- retroactive applicability. (1) [This act] is effective on passage and approval.
(2) [Section 1] applies retroactively, within the meaning of 1-2-109, to tax years after December 31, 1996.
(3) [Sections 2 and 3] apply to revenue collected after July 1, 1997.