HOUSE BILL NO. 157

INTRODUCED BY SQUIRES C

BY REQUEST OF THE STATE AUDITOR

A BILL FOR AN ACT ENTITLED: "AN ACT ESTABLISHING THE MONTANA LOW-INCOME MOTOR VEHICLE CASUALTY INSURANCE ASSOCIATION; PROVIDING FOR A BOARD OF DIRECTORS; REQUIRING CERTAIN INSURANCE COMPANIES TO BECOME MEMBERS OF THE ASSOCIATION; ESTABLISHING LIABILITY LIMITS FOR MEMBERS; GRANTING RULEMAKING AUTHORITY TO THE INSURANCE COMMISSIONER; ESTABLISHING FEES FOR ASSOCIATION MEMBERS; ALLOWING THE COMMISSIONER TO OFFSET PREMIUM TAXES WITH ASSOCIATION PLAN FEES; SETTING FORTH ELIGIBILITY CRITERIA FOR LOW-INCOME PERSONS; REQUIRING MINIMUM BENEFITS IN AN ASSOCIATION PLAN; EXEMPTING THE ASSOCIATION FROM PROPERTY AND INCOME TAXES; AND AMENDING SECTIONS 15-6-201 AND 15-31-102, MCA."

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

NEW SECTION. Section 1. Definitions. As used in [sections 1 through 11], the following definitions apply:

(1) "Association" means the Montana low-income motor vehicle casualty insurance association established in [section 3].

(2) "Association plan" means a policy of insurance coverage that is offered by the association.

(3) "Association plan fee" means the charge determined pursuant to [section 6] for mandatory membership by motor vehicle casualty insurers in the association plan.

(4) "Board" means the board of directors of the association.

(5) "Bodily injury coverage" means insurance coverage for bodily injury to or the death of a third party resulting from negligent acts of the insured.

(6) "Claims adjustment expenses" means those costs incurred in adjusting an insurance claim, including attorney fees and investigating expenses.

(7) "Collision coverage" means insurance coverage when the insured's vehicle has physical contact with another inanimate object resulting in damage to the insured's motor vehicle.

(8) "Comprehensive coverage" means insurance against theft or physical damage, other than collision damage, of an insured motor vehicle.

(9) "Costs" means the total of:

(a) claims from eligible persons;

(b) claims adjustment expenses;

(c) operating expenses of the lead carrier, which may include the cost of reinsurance; and

(d) operating expenses of the association.

(10) "Department" means the department of public health and human services provided for in 2-15-2201.

(11) "Eligible person" means an individual who is certified by the department as provided in [section 9].

(12) "Insurer group" means several insurers under common ownership.

(13) "Lead carrier" means the licensed administrator or insurer selected by the association to administer the association plan.

(14) "Medical payment coverage" means insurance coverage to pay medical expenses without regard to fault in the event of a motor vehicle accident.

(15) "Motor vehicle casualty insurer" means an insurer operating in accordance with the provisions in Title 33, chapter 2 or 3, offering or selling policies or contracts of motor vehicle casualty insurance, pursuant to Title 33, chapter 23, and having not less than $1 in direct written premiums as reported in the NAIC annual statement information.

(16) "NAIC annual statement information" means the information contained on the national association of insurance commissioners annual statement, pertaining specifically to direct written premiums in a line of business referred to as other private passenger auto liability.

(17) "Program" means supportive services from the welfare-to-work grants as found in 42 U.S.C. 603, a one-time only cash payment as used in 53-4-603(3)(d), or any other statutory authority for funding to pay for the premium of motor vehicle casualty insurance.

(18) "Property damage coverage" means insurance coverage to cover property damage to a third party resulting from negligent acts and omissions of the insured.

(19) "Public assistance" means families achieving independence in Montana or FAIM financial assistance, as defined in 53-4-201.

(20) "Reinsurance" means insurance that an insurer buys to reduce the insurer's possible maximum loss by transferring a portion of its liability to a reinsurer.

(21) "Reinsurer" has the same meaning as provided in 33-2-1501.

(22) "Underinsured coverage" means insurance coverage for an insured who is involved in a collision with a driver who does not have sufficient liability insurance to pay for the damages.

(23) "Uninsured coverage" means insurance coverage for an insured involved in a collision with a person who does not have liability insurance.

NEW SECTION. Section 2. Duties of commissioner -- rules. The commissioner shall:

(1) adopt rules to carry out the provisions and purposes of this part;

(2) supervise the creation of the association in accordance with the provisions in [section 3];

(3) approve:

(a) the selection of the lead carrier by the association;

(b) the association's contract with the lead carrier, including the association plan coverage and the association plan fees to be charged; and

(c) the content of accounting and actuarial reports of the association; and

(4) conduct periodic audits to ensure the general accuracy of the financial data submitted by the lead carrier and the association.

NEW SECTION. Section 3. Montana low-income motor vehicle casualty insurance association -- powers and duties -- mandatory membership. (1) The commissioner shall file articles of incorporation for a public benefit corporation as defined in 35-2-114. The public benefit corporation must be named the Montana low income motor vehicle casualty insurance association. The participating membership of the association must consist of all motor vehicle casualty insurers licensed to do business in this state, as evidenced by a certificate of authority pursuant to 33-2-101. The association is exempt from taxation pursuant to 15-31-102, and all property owned by the association is exempt from taxation pursuant to 15-6-201.

(2) The association shall approve at least one association plan.

(3) All participating members shall maintain their membership in the association as a condition for writing motor vehicle casualty insurance policies or contracts in this state. The commissioner may suspend or revoke the certificate of authority of any insurer that refuses to maintain membership in the association.

(4) The association shall submit its articles, bylaws, and operating rules to the commissioner for approval.

(5) The association may:

(a) exercise the powers granted to insurers under the laws of this state;

(b) sue or be sued;

(c) enter into contracts with insurers, administrators, similar associations in other states, or other persons for the performance of administrative functions;

(d) establish administrative and accounting procedures for the operation of the association; and

(e) provide and administer for the risks incurred as a result of issuing the association plan by obtaining reinsurance.

NEW SECTION. Section 4. Association board of directors -- organization. (1) There is a board of directors of the association, consisting of the commissioner or the commissioner's designated representative, either of whom shall serve as presiding officer, and five individuals appointed as follows:

(a) two members appointed by the commissioner who must be Montana citizens who are not employed in the insurance industry and who work with low-income groups, each to serve a 4-year term;

(b) two members appointed by the commissioner who are representatives of insurers, each to serve a 3-year term;

(c) one low-income citizen, appointed by the director of the department, to serve in a nonvoting advisory capacity for a 2-year term.

(2) The commissioner or the director of the department shall fill a vacancy in the manner of the original appointment.

(3) (a) Each member of the board appointed by the commissioner may be reappointed by the commissioner, and the commissioner shall appoint or reappoint persons to serve as members at the end of each term specified in this section.

(b) The member appointed by the director of the department may be reappointed by the director, and the director shall appoint or reappoint a person at the end of the person's term specified in subsection (1)(d).

(4) The association may reimburse board members for expenses incurred in their service as board members, but board members may not otherwise be compensated by the association for their services.

NEW SECTION. Section 5. Liability of association members. The association is liable for its actions. The lead carrier is liable for its actions. A member of the association, except the lead carrier, is not liable for the actions of the association or its lead carrier, including but not limited to the failure to issue an association plan in a timely fashion, an improper rejection of an association plan, committing an unfair trade practice pursuant to Title 33, chapter 18, or an improper cancellation of an association plan.

NEW SECTION. Section 6. Association plan fees. (1) The board shall determine the initial and fiscal yearend association plan fee to be charged to each association member. The board of directors shall determine the association plan fee by taking the total annual premiums written for motor vehicle casualty insurers as found in the NAIC annual statement information and dividing that by the association member's annual premiums written as found in the NAIC annual statement information to arrive at a percentage. That percentage is then multiplied by the estimated costs for the year to arrive at the initial or fiscal yearend association plan fee for the association member. The board shall determine the initial and fiscal yearend premium volume by obtaining the information from the commissioner, who will use the NAIC annual statement information. The board shall estimate costs by obtaining an estimate from the department on the number of eligible persons who will obtain motor vehicle insurance through the association plan. In determining the estimated costs, the association shall use generally acceptable actuarial and underwriting principles.

(2) The association may also, subject to the approval of the commissioner, provide for interim assessments against the association members as may be necessary to ensure the financial capability of the association in meeting the incurred or estimated costs until the association's next annual fiscal yearend assessment.

(3) Payment of an assessment is due within 30 days of receipt by an association member of a written notice of an initial, fiscal yearend, or interim assessment.

(4) A motor vehicle casualty insurer ceasing to do business within the state remains responsible for assessments through the calender year during which business ceased.

(5) Any income from association plan fees in excess of the costs incurred by the association must be held at interest and used by the association to offset past and future costs related to the association plan.

(6) Any initial, fiscal yearend, or interim assessment relating to the costs the association plan levied against an association member may be offset, in an amount equal to the assessment paid to the association, against the premium tax payable by that association member pursuant to 33-2-705 for the year in which the initial, fiscal yearend, or interim assessment is levied. The commissioner shall report to the office of budget and program planning, as a part of the information required by 17-7-111, the total amount of premium tax offset claimed by association members during the preceding biennium.

NEW SECTION. Section 7. Administration of association plan -- rules. (1) The association shall select one lead carrier to issue the association plan. The board shall prepare appropriate specifications and bid forms and may solicit bids from licensed administrators and the members of the association for the purpose of selecting the lead carrier. The selection of lead carrier must be based upon criteria established by the board. The three motor vehicle casualty insurer groups who write the greatest number of direct premiums, as determined in the NAIC annual statement information, shall submit bids to be the lead carrier.

(2) The lead carrier shall perform all administrative and claims payment functions required by this section upon the commissioner's approval of the policy forms and contracts submitted. The lead carrier shall provide these services for not less than 3 years, unless a request to terminate is approved by the association and the commissioner. The association shall invite submissions of policy forms from members of the association, including the lead carrier, 6 months prior to the expiration of each 3-year period. The association and the commissioner shall approve or deny a request to terminate within 180 days of its receipt. A failure to make a final decision on a request to terminate within the specified period constitutes an approval. The association shall follow the procedure provided in subsection (1) in selecting a lead carrier for the subsequent 3-year period or, if a request to terminate is approved, on or before the end of the 3-year period.

(3) The lead carrier shall provide all eligible persons an individual association plan setting forth the insurance protection to which the person is entitled pursuant to [section 11]. The association plan must indicate that coverage was obtained through the association.

(4) The lead carrier shall submit to the association and the commissioner on a semiannual basis a report, to include actuarial information, of the operation of the association plan. On a yearly basis, the lead carrier shall submit an accounting and actuarial report to the association and commissioner. The association shall determine the specific information to be contained in the report prior to the effective date of the association plan. The information that is to be contained in the report must be approved by the commissioner. The commissioner may establish rules as to what must be contained in the accounting and actuarial reports.

(5) The lead carrier shall pay all claims pursuant to this part and shall indicate that each claim was paid by the association. Each claim payment must include information specifying the procedure involved in the event that a dispute over the amount of payment arises.

(6) The lead carrier, when carrying out its duties under this part, is an independent contractor for the association.

NEW SECTION. Section 8. Determination of eligible persons. The department shall determine on a case-by-case basis whether a person is eligible for the association plan, based on the following criteria:

(1) A person may not be eligible for the association plan if the person already has motor vehicle casualty insurance or a state agency obtains motor vehicle casualty insurance for the person through a program.

(2) A person must either be starting a job within the next 30 days of the department completing the certificate of eligibility or require insurance under the association plan in order to retain a job.

(3) A person must have a license as defined in 61-11-203 that is not revoked, suspended, or canceled and have no more than 9 points against that license, pursuant to 61-11-203(2). The department shall obtain the person's driving record by obtaining a signed release from the person for their driving record pursuant to 61-11-105(1).

NEW SECTION. Section 9. Enrollment of eligible persons -- cancellation. (1) The association plan must be open to enrollment when a person is determined to be an eligible person under [section 8] and when the department submits a completed certificate of eligibility to the lead carrier. The certificate must provide:

(a) the name, address, and age of the eligible person;

(b) an explicit description of the motor vehicles owned or operated by the eligible person; and

(c) that the eligible person:

(i) is a person on public assistance;

(ii) will start a job within the next 30 days or needs the insurance to retain a job; and

(iii) has a license as defined in 61-11-203 that is not revoked, suspended, or canceled and has no more than 9 points against that license, pursuant to 61-11-203(2).

(2) Upon receipt of the certificate, the lead carrier shall mail a temporary binder, pursuant to 33-15-411, to the eligible person.

(3) Within 10 days of receipt of the certificate, the lead carrier shall either reject the application for failing to comply with the requirements of subsection (1) or mail the eligible person a notice of acceptance. Insurance is effective on the date that the notice is mailed to the eligible person.

(4) If the insurance application is rejected, the association shall mail the reasons for the rejection to the department and to the eligible person within 10 days of the rejection determination.

(5) The department may sanction a person for failing to comply with the terms of an agreement, pursuant to 53-4-608. After the appeals provided in 53-2-606 have been exhausted by an eligible person, the department shall send notice of the sanction to the lead carrier. The lead carrier shall subsequently cancel the person's association plan.

(6) Association plan coverage ceases when the department notifies the lead carrier that the eligible person:

(a) is no longer a resident of this state;

(b) has died; or

(c) has more than 9 points against the person's driver's license, pursuant to 61-11-203(2).

(7) The lead carrier shall mail a written notice of cancellation to an eligible person, and the effective date of the cancellation may not be sooner than 30 days after the date of the postmark on the cancellation notice.

NEW SECTION. Section 10. Limitation on eligibility. The association plan may cover an eligible person for only 1 year in any 5-year period.

NEW SECTION. Section 11. Association plan -- minimum benefits. (1) The association may certify a motor vehicle casualty policy as an association plan if it meets or exceeds the minimum standards established in this section.

(2) The association plan must:

(a) designate by explicit description of all motor vehicles owned or operated by the insured;

(b) insure the insured from the liability for damages arising out of the ownership or operation in the United States of the motor vehicles designated pursuant to subsection (2)(a);

(c) contain coverage limits as follows:

(i) $25,000 limit for bodily injury coverage of one person in any one accident;

(ii) $50,000 limit for bodily injury coverage of two or more persons in any one accident; and

(iii) $10,000 limit for property damage coverage.

(3) When the eligible person accepts coverage under the association plan, the eligible person automatically rejects uninsured coverage pursuant to 33-23-201(2).

(3) The association plan must state the name and address of the named insured, the coverage provided by the association plan, and the following language on the first page of the plan and in capital letters: "THE ASSOCIATION PLAN MAY NOT BE RENEWED AFTER IT EXPIRES IN 1 YEAR. YOU NEED TO OBTAIN OTHER MOTOR VEHICLE CASUALTY INSURANCE WHEN THE ASSOCIATION PLAN EXPIRES. THE ASSOCIATION PLAN COVERS ONLY THE NAMED INSURED OPERATING VEHICLES SPECIFICALLY NAMED AS OWNED BY THE INSURED OR OPERATED BY THE INSURED. PEOPLE WHO DRIVE THE INSURED'S VEHICLES MUST BE COVERED BY THEIR OWN CASUALTY INSURANCE. THE ASSOCIATION PLAN COVERAGE IS ONLY INTENDED FOR THE UNITED STATES. IF THE INSURED DRIVES IN A FOREIGN COUNTRY, THE INSURED SHALL OBTAIN ADDITIONAL INSURANCE. THE ASSOCIATION PLAN DOES NOT CONTAIN PHYSICAL DAMAGES COVERAGE, SUCH AS COMPREHENSIVE OR COLLISION COVERAGE, NOR DOES IT INCLUDE UNINSURED, UNDERINSURED, OR MEDICAL PAYMENT COVERAGES". The association plan must also state the limits of liability and the method and place of filing claims and must contain an agreement or be endorsed that the association plan is provided in accordance with the coverage defined in this part with respect to bodily injury and death, property damage, or both.

(5) The association plan is subject to the following provisions, which need not be contained in the policy:

(a) The association plan may not be canceled or annulled as a consequence of liability incurred by any agreement between the insurer and the insured after the occurrence of the injury or damage.

(b) The association plan may not require the insured to satisfy a judgment for injury or damage as a condition precedent to the lead carrier settling the claim.

(c) The lead carrier has the right to settle any claim covered by the association plan, and if the settlement is made in good faith, the amount is deductible from the limits of liability specified in subsection (2)(c).

(d) The association plan, the certificate of eligibility, and any rider or endorsement that does not conflict with the provisions of this part constitute the entire contract between the parties.

(6) The association plan is not subject to midterm cancellation due to injury or damage incurred by the insured unless the insured is determined to be 51% or more negligent in a court of law or by the arbitration proceedings or pays damages to another party in a settlement or the department notifies the lead carrier pursuant to [section 9(5) and (6)].

(7) When the lead carrier issues a binder pending the issuance of the association plan, the binder must fulfill the minimum requirements of this section.

Section 12. Section 15-6-201, MCA, is amended to read:

"15-6-201. Exempt categories. (1) The following categories of property are exempt from taxation:

(a) except as provided in 15-24-1203, the property of:

(i) the United States, except:

(A) if congress passes legislation that allows the state to tax property owned by the federal government or an agency created by congress; or

(B) as provided in 15-24-1103;

(ii) the state, counties, cities, towns, and school districts;

(iii) irrigation districts organized under the laws of Montana and not operating for profit;

(iv) municipal corporations;

(v) public libraries; and

(vi) rural fire districts and other entities providing fire protection under Title 7, chapter 33;

(b) buildings, with land that they occupy and furnishings in the buildings, that are owned by a church and used for actual religious worship or for residences of the clergy, together with adjacent land reasonably necessary for convenient use of the buildings;

(c) property used exclusively for agricultural and horticultural societies, for educational purposes, and for nonprofit health care facilities, as defined in 50-5-101, licensed by the department of public health and human services and organized under Title 35, chapter 2 or 3. A health care facility that is not licensed by the department of public health and human services and organized under Title 35, chapter 2 or 3, is not exempt.

(d) property that is:

(i) owned and held by an association or corporation organized under Title 35, chapter 2, 3, 20, or 21;

(ii) devoted exclusively to use in connection with a cemetery or cemeteries for which a permanent care and improvement fund has been established as provided for in Title 35, chapter 20, part 3; and

(iii) not maintained and operated for private or corporate profit;

(e) property that is owned or property that is leased from a federal, state, or local governmental entity by institutions of purely public charity if the property is directly used for purely public charitable purposes;

(f) evidence of debt secured by mortgages of record upon real or personal property in the state of Montana;

(g) public museums, art galleries, zoos, and observatories that are not used or held for private or corporate profit;

(h) all household goods and furniture, including but not limited to clocks, musical instruments, sewing machines, and wearing apparel of members of the family, used by the owner for personal and domestic purposes or for furnishing or equipping the family residence;

(i) truck canopy covers or toppers and campers;

(j) a bicycle, as defined in 61-1-123, used by the owner for personal transportation purposes;

(k) motor homes;

(l) all watercraft;

(m) motor vehicles, land, fixtures, buildings, and improvements owned by a cooperative association or nonprofit corporation organized to furnish potable water to its members or customers for uses other than the irrigation of agricultural land;

(n) the right of entry that is a property right reserved in land or received by mesne conveyance (exclusive of leasehold interests), devise, or succession to enter land with a surface title that is held by another to explore, prospect, or dig for oil, gas, coal, or minerals;

(o) (i) property that is owned and used by a corporation or association organized and operated exclusively for the care of persons with developmental disabilities, persons with mental illness, or persons with physical or mental impairments that constitute or result in substantial impediments to employment and that is not operated for gain or profit; and

(ii) property that is owned and used by an organization owning and operating facilities that are for the care of the retired, aged, or chronically ill and that are not operated for gain or profit;

(p) all farm buildings with a market value of less than $500 and all agricultural implements and machinery with a market value of less than $100;

(q) property owned by a nonprofit corporation that is organized to provide facilities primarily for training and practice for or competition in international sports and athletic events and that is not held or used for private or corporate gain or profit. For purposes of this subsection (1)(q), "nonprofit corporation" means an organization that is exempt from taxation under section 501(c) of the Internal Revenue Code and incorporated and admitted under the Montana Nonprofit Corporation Act.

(r) the first $15,000 or less of market value of tools owned by the taxpayer that are customarily hand-held and that are used to:

(i) construct, repair, and maintain improvements to real property; or

(ii) repair and maintain machinery, equipment, appliances, or other personal property;

(s) harness, saddlery, and other tack equipment;

(t) a title plant owned by a title insurer or a title insurance producer, as those terms are defined in 33-25-105;

(u) timber as defined in 15-44-102;

(v) all trailers as defined in 61-1-111, semitrailers as defined in 61-1-112, pole trailers as defined in 61-1-114, and travel trailers as defined in 61-1-131;

(w) all vehicles registered under 61-3-456;

(x) (i) buses, trucks having a manufacturer's rated capacity of more than 1 ton, and truck tractors, including buses, trucks, and truck tractors apportioned under Title 61, chapter 3, part 7; and

(ii) personal property that is attached to a bus, truck, or truck tractor that is exempt under subsection (1)(x)(i);

(y) motorcycles and quadricycles; and

(z) property owned by the Montana low-income motor vehicle casualty insurance association established pursuant to [section 3].

(2) (a) For the purposes of subsection (1)(e), the term "institutions of purely public charity" includes any organization that meets the following requirements:

(i) The organization qualifies as a tax-exempt organization under the provisions of section 501(c)(3), Internal Revenue Code, as amended.

(ii) The organization accomplishes its activities through absolute gratuity or grants. However, the organization may solicit or raise funds by the sale of merchandise, memberships, or tickets to public performances or entertainment or by other similar types of fundraising activities.

(b) For the purposes of subsection (1)(g), the term "public museums, art galleries, zoos, and observatories" means governmental entities or nonprofit organizations whose principal purpose is to hold property for public display or for use as a museum, art gallery, zoo, or observatory. The exempt property includes all real and personal property reasonably necessary for use in connection with the public display or observatory use. Unless the property is leased for a profit to a governmental entity or nonprofit organization by an individual or for-profit organization, real and personal property owned by other persons is exempt if it is:

(i) actually used by the governmental entity or nonprofit organization as a part of its public display;

(ii) held for future display; or

(iii) used to house or store a public display.

(3) The following portions of the appraised value of a capital investment in a recognized nonfossil form of energy generation or low emission wood or biomass combustion devices, as defined in 15-32-102, are exempt from taxation for a period of 10 years following installation of the property:

(a) $20,000 in the case of a single-family residential dwelling;

(b) $100,000 in the case of a multifamily residential dwelling or a nonresidential structure."

Section 13. Section 15-31-102, MCA, is amended to read:

"15-31-102. Organizations exempt from tax -- unrelated business income not exempt. (1) Except as provided in subsection (3), there may not be taxed under this title any income received by any:

(a) labor, agricultural, or horticultural organization;

(b) fraternal beneficiary, society, order, or association operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system and providing for the payment of life, sick, accident, or other benefits to the members of the society, order, or association or their dependents;

(c) cemetery company owned and operated exclusively for the benefit of its members;

(d) corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual;

(e) business league, chamber of commerce, or board of trade not organized for profit, no part of the net income of which inures to the benefit of any private stockholder or individual;

(f) civic league or organization not organized for profit but operated exclusively for the promotion of social welfare;

(g) club organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, no part of the net income of which inures to the benefit of any private stockholder or members;

(h) farmers' or other mutual hail, cyclone, or fire insurance company, mutual ditch or irrigation company, mutual or cooperative telephone company, or similar organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses;

(i) cooperative association or corporation engaged in the business of operating a rural electrification system or systems for the transmission or distribution of electrical energy on a cooperative basis;

(j) corporations or associations organized for the exclusive purpose of holding title to property, collecting income from the property, and turning over the entire amount of the income, less expenses, to an organization that itself is exempt from the tax imposed by this title;

(k) wool and sheep pool, which is an association owned and operated by agricultural producers organized to market association members' wool and sheep, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses. Income, for this purpose, does not include expenses and money distributed to members contributing wool and sheep.

(l) corporation that qualifies as a domestic international sales corporation (DISC) under the provisions of section 991, et seq., of the Internal Revenue Code (26 U.S.C. 991, et seq.) and that has in effect for the entire taxable year a valid election under federal law to be treated as a DISC. If a corporation makes that election under federal law, each person who at any time is a shareholder of the corporation is subject to taxation under Title 15, chapter 30, on the earnings and profits of this DISC in the same manner as provided by federal law for all periods for which the election is effective.

(m) farmers' market association not organized for profit, no part of the net income of which inures to the benefit of any member, but that is organized for the sole purpose of providing for retail distribution of homegrown vegetables, handicrafts, and other products either grown or manufactured by the seller;

(n) common trust fund as defined in 26 U.S.C. 584(a);

(o) foreign capital depository chartered under the provisions of 32-8-104, 32-8-201, and 32-8-202;

(p) Montana low-income motor vehicle casualty insurance association established pursuant to [section 3].

(2) In determining the license fee to be paid under this part, there may not be included any earnings derived from any public utility managed or operated by any subdivision of the state or from the exercise of any governmental function.

(3) Any unrelated business taxable income, as defined by section 512 of the Internal Revenue Code of 1954 (26 U.S.C. 512), as amended, earned by any exempt corporation resulting in a federal unrelated business income tax liability of more than $100 must be taxed as other corporation income is taxed under this title. An exempt corporation subject to taxation on unrelated business income under this section shall file a copy of its federal exempt organization business income tax return on which it reports its unrelated business income with the department of revenue."

NEW SECTION. Section 14. Codification instruction. [Sections 1 through 11] are intended to be codified as an integral part of Title 33, chapter 23, part 2, and the provisions of Title 33, chapter 23, part 2, apply to [sections 1 through 11].

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