HOUSE BILL NO. 272

INTRODUCED BY B. KRENZLER

A BILL FOR AN ACT ENTITLED: "AN ACT EXEMPTING THE FIRST $50,000 OR LESS OF MARKET VALUE OF BUSINESS EQUIPMENT OF A NEW SMALL BUSINESS FROM TAXATION FOR THE FIRST 5 YEARS THE BUSINESS IS IN OPERATION; AMENDING SECTION 15-6-138, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE."

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

NEW SECTION. Section 1. Business equipment tax abatement -- new small businesses. (1) The first $50,000 or less of market value of business equipment of a new small business is exempt from taxation for the first 5 years the business is in operation in the state.

(2) For the purposes of this section:

(a) "business equipment" means any personal property owned by a business and identified in 15-6-138; and

(b) "new small business" means any person, corporation, firm, partnership, association, or other group that establishes a new enterprise in Montana and qualifies as a small business under 15 U.S.C. 632(a), as distinguished from a mere expansion, reorganization, or merger of an existing small business.

Section 2. Section 15-6-138, MCA, is amended to read:

"15-6-138. Class eight property -- description -- taxable percentage. (1) Class eight property includes:

(a) all agricultural implements and equipment;

(b) all mining machinery, fixtures, equipment, tools that are not exempt under 15-6-201(1)(r), and supplies except those included in class five;

(c) all manufacturing machinery, fixtures, equipment, tools that are not exempt under 15-6-201(1)(r), and supplies except those included in class five;

(d) all goods and equipment that are intended for rent or lease, except goods and equipment that are specifically included and taxed in another class;

(e) special mobile equipment as defined in 61-1-104;

(f) furniture, fixtures, and equipment, except that specifically included in another class, used in commercial establishments as defined in this section;

(g) x-ray and medical and dental equipment;

(h) citizens' band radios and mobile telephones;

(i) radio and television broadcasting and transmitting equipment;

(j) cable television systems;

(k) coal and ore haulers;

(l) theater projectors and sound equipment; and

(m) all other property that is not included in any other class in this part, except that property that is subject to a fee in lieu of a property tax.

(2) As used in this section, "coal and ore haulers" means nonhighway vehicles that exceed 18,000 pounds per axle and that are primarily designed and used to transport coal, ore, or other earthen material in a mining or quarrying environment.

(3) "Commercial establishment" includes any hotel; motel; office; petroleum marketing station; or service, wholesale, retail, or food-handling business.

(4) Except as provided in [section 1], class eight property is taxed at

6% of its market value ."

NEW SECTION. Section 3. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 15, chapter 24, and the provisions of Title 15, chapter 24, apply to [section 2].

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

NEW SECTION. Section 5. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 1998.

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