SENATE BILL NO. 519
INTRODUCED BY M. COLE
A BILL FOR AN ACT ENTITLED: "AN ACT GENERALLY REVISING THE INDIVIDUAL INCOME TAX, CORPORATE LICENSE TAX, AND CORPORATE INCOME TAX AND PROPERTY TAXES TO ELIMINATE MOST TAX INCENTIVES AND CREDITS; RESTRUCTURING THE MEDICAL CARE SAVINGS ACCOUNT, FAMILY EDUCATION SAVINGS PROGRAM, AND THE FIRST-TIME HOME BUYER'S SAVINGS ACCOUNT TO ELIMINATE THE DEDUCTION OF CONTRIBUTIONS AND INTEREST; ELIMINATING THE NEW OR EXPANDING INDUSTRY PROPERTY TAX BREAK, THE TAX CREDIT FOR ENERGY-CONSERVING INVESTMENTS, THE SMALL BUSINESS CORPORATION DEDUCTION FOR DONATION OF COMPUTER EQUIPMENT TO SCHOOLS, THE SMALL BUSINESS DEDUCTION FOR CONTRIBUTIONS TO ITS INDEPENDENT LIABILITY FUND, THE TAX DEDUCTION FOR CONTRIBUTIONS TO THE CHILD ABUSE AND NEGLECT PREVENTION PROGRAM, THE TAX DEDUCTION FOR CONTRIBUTIONS TO THE DRUG ABUSE RESISTANCE EDUCATION PROGRAM, THE INVESTMENT TAX CREDIT, THE TAX CREDIT FOR CONTRIBUTIONS TO COLLEGE FOUNDATIONS, THE TAX CREDIT FOR ALTERNATIVE FUEL MOTOR VEHICLE CONVERSIONS, THE TAX CREDIT FOR PRESERVATION OF HISTORIC BUILDINGS, THE TAX CREDIT FOR PROVIDING DISABILITY INSURANCE FOR EMPLOYEES, THE TAX CREDIT FOR CERTAIN LOAN DIFFERENTIALS FOR ENERGY CONSERVATION INSTALLATIONS, THE TAX CREDIT FOR ENERGY-CONSERVING EXPENDITURES, THE TAX CREDIT FOR GEOTHERMAL SYSTEMS, THE TAX DEDUCTION FOR PURCHASING CERTAIN MONTANA-PRODUCED FERTILIZERS, THE TAX CREDIT FOR WIND-GENERATED ELECTRICITY, AND THE TAX CREDIT FOR PROPERTY USED TO COLLECT OR PROCESS RECLAIMABLE MATERIAL; REPEALING THE MONTANA CAPITAL COMPANY ACT; AMENDING SECTIONS 15-1-112, 15-6-134, 15-30-121, 15-32-102, 15-32-103, 15-32-106, 15-61-202, 15-61-203, 15-61-204, 15-62-204, 15-63-202, 15-63-203, 17-6-302, 17-6-311, 17-6-312, 17-6-313, 17-6-318, 30-10-105, 33-27-101, 33-27-102, AND 33-27-103, MCA; REPEALING SECTIONS 15-24-1401, 15-24-1402, 15-30-125, 15-30-126, 15-30-127, 15-30-129, 15-30-156, 15-30-157, 15-30-159, 15-30-160, 15-30-161, 15-30-162, 15-30-163, 15-30-164, 15-30-180, 15-31-132, 15-31-135, 15-31-136, 15-31-137, 15-32-107, 15-32-108, 15-32-109, 15-32-115, 15-32-201, 15-32-202, 15-32-203, 15-32-301, 15-32-302, 15-32-303, 15-32-401, 15-32-402, 15-32-403, 15-32-404, 15-32-405, 15-32-406, 15-32-407, 15-32-601, 15-32-602, 15-32-603, 15-32-604, 15-32-609, 15-32-610, 15-32-611, 69-3-713, 90-8-101, 90-8-102, 90-8-103, 90-8-104, 90-8-105, 90-8-106, 90-8-201, 90-8-202, 90-8-203, 90-8-204, 90-8-205, 90-8-301, 90-8-302, 90-8-303, 90-8-304, 90-8-305, 90-8-311, 90-8-312, 90-8-313, AND 90-8-321, MCA; AND PROVIDING A CONTINGENT ENACTMENT CLAUSE, A CONTINGENT EFFECTIVE DATE, AND A RETROACTIVE APPLICABILITY DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-1-112, MCA, is amended to read:
"15-1-112. Business equipment tax rate reduction reimbursement to local government taxing jurisdictions. (1)
On or before January 1, 1996, for the reduction in payment under subsection (4) and by June 1 of 1996, 1997, and 1998, for
all other reimbursements in this section, the department of revenue shall determine a reimbursement amount associated
with reducing the tax rate in 15-6-138 and provide that information to each county treasurer. The reimbursement amount
must be determined for each local government taxing jurisdiction that levied mills on the taxable value of property
described in 15-6-138 in the corresponding tax year. However, the reimbursement does not apply to property described in
15-6-138 that has a reduced tax rate under 15-24-1402.
(2) (a) The reimbursement amount to be used as the basis for the payment reduction under subsection (4) is the product of multiplying the tax year 1995 taxable value of property described in 15-6-138 for each local government taxing jurisdiction by the tax year 1995 mill levy for the jurisdiction and then multiplying by 1/9th.
(b) (i) The reimbursement amount for each local government taxing jurisdiction for tax year 1996 is the amount determined under subsection (2)(a) unless the tax year 1996 market value of property described in 15-6-138, for the particular local government taxing jurisdiction, is more than the tax year 1995 market value for property described in 15-6-138 in the same jurisdiction.
(ii) If the tax year 1996 market value is greater than the tax year 1995 market value for a particular jurisdiction, then the reimbursement amount for tax year 1996 is the result of subtracting the simulated 1996 tax from the 1995 tax. The 1995 tax is the tax for the particular jurisdiction, determined by multiplying the actual taxable valuation of property described in 15-6-138, for tax year 1995, by the tax year 1995 mill levy for the jurisdiction. The simulated 1996 tax for the particular jurisdiction is the actual tax year 1996 taxable value of property described in 15-6-138 multiplied by the tax year 1995 mill levy for the particular jurisdiction. If the simulated 1996 tax is greater than the 1995 tax, the reimbursement amount is zero.
(c) (i) The reimbursement amount for each local government taxing jurisdiction for tax year 1997 is the amount determined under subsection (2)(a) multiplied by two unless the tax year 1997 market value of property described in 15-6-138, for the particular local government taxing jurisdiction, is more than the tax year 1995 market value for property described in 15-6-138 in the same jurisdiction.
(ii) If the tax year 1997 market value is greater than the tax year 1995 market value for a particular jurisdiction, then the reimbursement amount for tax year 1997 is the result of subtracting the simulated 1997 tax from the 1995 tax. The 1995 tax is the tax for the particular jurisdiction, determined by multiplying the actual taxable valuation of property described in 15-6-138, for tax year 1995, by the tax year 1995 mill levy for the jurisdiction. The simulated 1997 tax for the particular jurisdiction is the actual tax year 1997 taxable value of property described in 15-6-138 multiplied by the tax year 1995 mill levy for the particular jurisdiction. If the simulated 1997 tax is greater than the 1995 tax, the reimbursement amount is zero.
(d) (i) The reimbursement amount for each local government taxing jurisdiction for tax year 1998 is the amount determined under subsection (2)(a) multiplied by three unless the tax year 1998 market value of property described in 15-6-138, for the particular local government taxing jurisdiction, is more than the tax year 1995 market value for property described in 15-6-138 in the same jurisdiction.
(ii) If the tax year 1998 market value is greater than the tax year 1995 market value for a particular jurisdiction, then the reimbursement amount for tax year 1998 is the result of subtracting the simulated 1998 tax from the 1995 tax. The 1995 tax is the tax for the particular jurisdiction, determined by multiplying the actual taxable valuation of property described in 15-6-138, for tax year 1995, by the tax year 1995 mill levy for the jurisdiction. The simulated 1998 tax for the particular jurisdiction is the actual tax year 1998 taxable value of property described in 15-6-138 multiplied by the tax year 1995 mill levy for the particular jurisdiction. If the simulated 1998 tax is greater than the 1995 tax, the reimbursement amount is zero.
(3) (a) For purposes of this section, "local government taxing jurisdiction" means a local government rather than a state taxing jurisdiction that levied mills against property described in 15-6-138, including county governments, incorporated city and town governments, consolidated county and city governments, tax increment financing districts, local elementary and high school districts, local community college districts, miscellaneous districts, and special districts. The term includes countywide mills levied for equalization of school retirement or transportation.
(b) The term does not include county or state school equalization levies provided for in 20-9-331, 20-9-333, and 20-9-360 or the university levy provided for in 15-10-106. It also does not include any state levy for welfare programs provided for in 53-2-813.
(c) Each tax increment financing district must receive the benefit of the state mill on the incremental taxable value of the district.
(4) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in June of 1996 by an amount equal to 38% of the reimbursement amount determined under subsection (2)(a) for all of the local government taxing jurisdictions in the county.
(5) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in December of 1996 by an amount equal to 31% of the reimbursement amount for tax year 1996 for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(6) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in June of 1997 by an amount equal to 31% of the reimbursement amount for tax year 1996 for all of the local government taxing jurisdictions in the county and by an amount equal to 38% of the reimbursement amount for tax year 1997 for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(7) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in December of 1997 by an amount equal to 31% of the reimbursement amount for tax year 1997 for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(8) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in June of 1998 by an amount equal to 31% of the reimbursement amount for tax year 1997 for all of the local government taxing jurisdictions in the county and by an amount equal to 38% of the reimbursement amount for tax year 1998 for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(9) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in December of 1998 by an amount equal to 31% of the reimbursement amount for tax year 1998 for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(10) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in June of 1999 by an amount equal to 69% of the reimbursement amount for tax year 1998 for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(11) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in December of the years 1999 through 2007 by an amount equal to 31% of the reimbursement amount determined in subsection (13) for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(12) County treasurers shall reduce the county payment to the state for the levy imposed under 20-9-360 in June of the years 2000 through 2008 by an amount equal to 69% of the reimbursement amount determined in subsection (13) for all of the local government taxing jurisdictions in the county, as determined by the department under subsection (2).
(13) (a) The reimbursement amount for tax year 1999 and each subsequent tax year for 9 years must be progressively reduced each year by 10% of the reimbursement amount for tax year 1999, according to the following schedule:
Tax Year Percentage of 1999
Reimbursement Amount
1999 90
2000 80
2001 70
2002 60
2003 50
2004 40
2005 30
2006 20
2007 10
2008 and following years 0
(b) The reimbursement amount for each tax year must be the basis for reducing the amount remitted to the state for the levy imposed under 20-9-360 in December of the same year and June of the following year.
(14) The county treasurer shall use the funds from the reduced payment to the state for the levy imposed under 20-9-360 to reimburse each local government taxing jurisdiction in the amount determined by the department under subsection (2). The reimbursement must be distributed to funds within local government taxing jurisdictions in the same manner as taxes on property described in 15-6-138 are distributed. The reimbursement in June must be distributed based on the prior year's mill levy, and the reimbursement in December must be based on the current year's mill levy.
(15) Each local government taxing jurisdiction receiving reimbursements shall consider the amount of reimbursement that will be received and lower the mill levy otherwise necessary to fund the budget by the amount that would otherwise have to be raised by the mill levy.
(16) A local government taxing jurisdiction that ceases to exist after October 1, 1995, will no longer be considered for revenue loss or reimbursement purposes. A local government taxing jurisdiction that is created after January 1, 1996, will not be considered for revenue loss or reimbursement purposes. If a local government taxing jurisdiction that existed prior to January of 1996 is split between two or more taxing jurisdictions or is annexed to or is consolidated with another taxing jurisdiction, the department shall determine how much of the revenue loss and reimbursement is attributed to the new jurisdictions."
Section 2. Section 15-6-134, MCA, is amended to read:
"15-6-134. Class four property -- description -- taxable percentage. (1) Class four property includes:
(a) all land, except that specifically included in another class;
(b) all improvements, including trailers, manufactured homes, or mobile homes used as a residence, except those specifically included in another class;
(c) the first $100,000 or less of the market value of any improvement on real property, including trailers, manufactured homes, or mobile homes, and appurtenant land not exceeding 5 acres owned or under contract for deed and actually occupied for at least 7 months a year as the primary residential dwelling of any person whose total income from all sources, including net business income and otherwise tax-exempt income of all types but not including social security income paid directly to a nursing home, is not more than $15,000 for a single person or $20,000 for a married couple or a head of household, as adjusted according to subsection (2)(b)(ii). For the purposes of this subsection (1)(c), net business income is gross income less ordinary operating expenses but before deducting depreciation or depletion allowance, or both.
(d) all golf courses, including land and improvements actually and necessarily used for that purpose, that consist of at least nine holes and not less than 3,000 lineal yards; and
(e) all improvements on land that is eligible for valuation, assessment, and taxation as agricultural land under 15-7-202, including 1 acre of real property beneath improvements on land described in 15-6-133(1)(c). The 1 acre must be valued at market value.
(2) Class four property is taxed as follows:
(a) (i) Except as provided in 15-24-1402 or 15-24-1501 and subsection (2)(a)(ii) of this section, property described in
subsections (1)(a), (1)(b), and (1)(e) of this section is taxed at 3.86% of its market value.
(ii) The taxable percentage rate in subsection (2)(a)(i) must be adjusted downward by subtracting 0.022 percentage points each year until the tax rate is equal to or less than 2.78%.
(b) (i) Property qualifying under the property tax assistance program in subsection (1)(c) is taxed at the rate provided in subsection (2)(a)(ii) of its market value multiplied by a percentage figure based on income and determined from the following table:
Income Income Percentage
Single Person Married Couple Multiplier
Head of Household
$0 - $ 6,000 $0 - $ 8,000 20%
6,001 - 9,200 8,001 - 14,000 50%
9,201 - 15,000 14,001 - 20,000 70%
(ii) The income levels contained in the table in subsection (2)(b)(i) must be adjusted for inflation annually by the
department of revenue. The adjustment to the income levels is determined by:
(A) multiplying the appropriate dollar amount from the table in subsection (2)(b)(i) by the ratio of the PCE for the second quarter of the year prior to the year of application to the PCE for the second quarter of 1995; and
(B) rounding the product thus obtained to the nearest whole dollar amount.
(iii) "PCE" means the implicit price deflator for personal consumption expenditures as published quarterly in the Survey of Current Business by the bureau of economic analysis of the U.S. department of commerce.
(c) Property described in subsection (1)(d) is taxed at one-half the taxable percentage rate established in subsection (2)(a)(i).
(3) Within the meaning of comparable property, as defined in 15-1-101, property assessed as commercial property is comparable only to other property assessed as commercial property and property assessed as other than commercial property is comparable only to other property assessed as other than commercial property."
Section 3. Section 15-30-121, MCA, is amended to read:
"15-30-121. Deductions allowed in computing net income. (1) In computing net income, there are allowed as deductions:
(a) the items referred to in sections 161, including the contributions referred to in 33-15-201(5)(b), and 211 of the Internal Revenue Code of 1954 (26 U.S.C. 161 and 211), or as sections 161 and 211 are labeled or amended, subject to the following exceptions, which are not deductible:
(i) items provided for in 15-30-123;
(ii) state income tax paid;
(iii) premium payments for medical care as provided in subsection (1)(g)(i) (1)(e)(i);
(iv) long-term care insurance premium payments as provided in subsection (1)(g)(ii) (1)(e)(ii);
(b) federal income tax paid within the tax year;
(c) expenses of household and dependent care services as outlined in subsections (1)(c)(i) through (1)(c)(iii) and (2) and subject to the limitations and rules as set out in subsections (1)(c)(iv) through (1)(c)(vi), as follows:
(i) expenses for household and dependent care services necessary for gainful employment incurred for:
(A) a dependent under 15 years of age for whom an exemption can be claimed;
(B) a dependent as allowable under 15-30-112(5), except that the limitations for age and gross income do not apply, who is unable to provide self-care because of physical or mental illness; and
(C) a spouse who is unable to provide self-care because of physical or mental illness;
(ii) employment-related expenses incurred for the following services, but only if the expenses are incurred to enable the taxpayer to be gainfully employed:
(A) household services that are attributable to the care of the qualifying individual; and
(B) care of an individual who qualifies under subsection (1)(c)(i);
(iii) expenses incurred in maintaining a household if over half of the cost of maintaining the household is furnished by an individual or, if the individual is married during the applicable period, is furnished by the individual and the individual's spouse;
(iv) the amounts deductible in subsections (1)(c)(i) through (1)(c)(iii), subject to the following limitations:
(A) a deduction is allowed under subsection (1)(c)(i) for employment-related expenses incurred during the year only to the extent that the expenses do not exceed $4,800;
(B) expenses for services in the household are deductible under subsection (1)(c)(i) for employment-related expenses only if they are incurred for services in the taxpayer's household, except that employment-related expenses incurred for services outside the taxpayer's household are deductible, but only if incurred for the care of a qualifying individual described in subsection (1)(c)(i)(A) and only to the extent that the expenses incurred during the year do not exceed:
(I) $2,400 in the case of one qualifying individual;
(II) $3,600 in the case of two qualifying individuals; and
(III) $4,800 in the case of three or more qualifying individuals;
(v) if the combined adjusted gross income of the taxpayers exceeds $18,000 for the tax year during which the expenses are incurred, the amount of the employment-related expenses incurred, to be reduced by one-half of the excess of the combined adjusted gross income over $18,000;
(vi) for purposes of this subsection (1)(c):
(A) married couples shall file a joint return or file separately on the same form;
(B) if the taxpayer is married during any period of the tax year, employment-related expenses incurred are deductible only if:
(I) both spouses are gainfully employed, in which case the expenses are deductible only to the extent that they are a direct result of the employment; or
(II) the spouse is a qualifying individual described in subsection (1)(c)(i)(C);
(C) an individual legally separated from the individual's spouse under a decree of divorce or of separate maintenance may not be considered as married;
(D) the deduction for employment-related expenses must be divided equally between the spouses when filing separately on the same form;
(E) payment made to a child of the taxpayer who is under 19 years of age at the close of the tax year and payments made to an individual with respect to whom a deduction is allowable under 15-30-112(5) are not deductible as employment-related expenses;
(d) in the case of an individual, political contributions determined in accordance with the provisions of section 218(a) and (b) of the Internal Revenue Code (now repealed) that were in effect for the tax year ended December 31, 1978;
(e) that portion of expenses for organic fertilizer and inorganic fertilizer produced as a byproduct allowed as a
deduction under 15-32-303 that was not otherwise deducted in computing taxable income;
(f) contributions to the child abuse and neglect prevention program provided for in 41-3-701, subject to the conditions
set forth in 15-30-156; and
(g)(e) the entire amount of premium payments made by the taxpayer, except premiums deducted in determining
Montana adjusted gross income, or for which a credit was claimed under 15-30-128, for:
(i) insurance for medical care, as defined in 26 U.S.C. 213(d), for coverage of the taxpayer, the taxpayer's dependents, and the parents and grandparents of the taxpayer; and
(ii) long-term care insurance policies or certificates that provide coverage primarily for any qualified long-term care services, as defined in 26 U.S.C. 7702B(c), for:
(A) the benefit of the taxpayer for tax years beginning after December 31, 1994; or
(B) the benefit of the taxpayer, the taxpayer's dependents, and the parents and grandparents of the taxpayer for tax years
beginning after December 31, 1996; and
(h) contributions to the Montana drug abuse resistance education program provided for in 44-2-702, subject to the
conditions set forth in 15-30-159.
(2) (a) Subject to the conditions of subsection (1)(c), a taxpayer who operates a family day-care home or a group day-care home, as these terms are defined in 52-2-703, and who cares for the taxpayer's own child and at least one unrelated child in the ordinary course of business may deduct employment-related expenses considered to have been paid for the care of the child.
(b) The amount of employment-related expenses considered to have been paid by the taxpayer is equal to the amount that the taxpayer charges for the care of a child of the same age for the same number of hours of care. The employment-related expenses apply regardless of whether any expenses actually have been paid. Employment-related expenses may not exceed the amounts specified in subsection (1)(c)(iv)(B).
(c) Only a day-care operator who is licensed and registered as required in 52-2-721 is allowed the deduction under this
subsection (2). (Subsection (1)(h) terminates on occurrence of contingency--sec. 12, Ch. 808, L. 1991.)"
Section 4. Section 15-32-102, MCA, is amended to read:
"15-32-102. Definitions. As used in this part, the following definitions apply:
(1) "Building" means:
(a) a single or multiple dwelling, including a mobile home or manufactured home; or
(b) a building used for commercial, industrial, or agricultural purposes that is enclosed with walls and a roof.
(2) "Capital investment" means any material or equipment purchased and installed in a building or land with or without improvements.
(3) "Energy conservation purpose" means one or both of the following results of an investment:
(a) reducing the waste or dissipation of energy; or
(b) reducing the amount of energy required to accomplish a given quantity of work.
(4) "Geothermal system" means a system that transfers energy either from the ground, by way of a closed loop, or from ground water, by way of an open loop, for the purpose of heating or cooling a residential building.
(5) "Low emission wood or biomass combustion device" means a noncatalytic stove or furnace that:
(a) (i) is specifically designed to burn wood pellets or other nonfossil biomass pellets; and
(ii) has a particulate emission rate of less than 4.1 grams per an hour when tested in conformance with the standard
method for measuring the emissions and efficiencies of residential wood stoves, as adopted by the department of
environmental quality pursuant to 15-32-203; or
(iii) has an air-to-fuel ratio of 35 to 1 or greater when tested in conformance with the standard method for measuring the
air-to-fuel ratio and minimum achievable burn rates for wood-fired appliances, as adopted by the department of
environmental quality pursuant to 15-32-203; or
(b) burns wood or other nonfossil biomass and has a particulate emission rate of less than 4.1 grams per an hour when
tested in conformance with the standard method for measuring the emissions and efficiencies of residential wood stoves, as
adopted by the department of environmental quality pursuant to 15-32-203.
(6) "Passive solar system" means a direct thermal energy system that uses the structure of a building and its operable components to provide heating or cooling during the appropriate times of the year by using the climate resources available at the site. It includes only those portions and components of a building that are expressly designed and required for the collection, storage, and distribution of solar energy and that are not standard components of a conventional building.
(7) "Recognized nonfossil forms of energy generation" means:
(a) a system that captures energy or converts energy sources into usable sources by using:
(i) solar energy, including passive solar systems;
(ii) wind;
(iii) solid waste; or
(iv) the decomposition of organic wastes;
(b) a system that produces electric power from solid wood wastes; or
(c) a small system that uses water power by means of an impoundment that is not over 20 acres in surface area."
Section 5. Section 15-32-103, MCA, is amended to read:
"15-32-103. Deduction for energy-conserving investments. (1) In addition to all other deductions from gross
corporate income allowed in computing net income under chapter 31, part 1, a taxpayer may deduct a portion of his the
taxpayer's expenditure for a capital investment in a building for an energy conservation purpose, in accordance with the
following schedule:
If the installation or If the installation or
investment is made in a investment is made in a
residential building: building not used
as a residence:
100% of first $1,000 expended 100% of first $2,000 expended
50% of next $1,000 expended 50% of next $2,000 expended
20% of next $1,000 expended 20% of next $2,000 expended
10% of next $1,000 expended 10% of next $2,000 expended
(2) This tax treatment is subject to approval of the department as provided in 15-32-106 and may not be claimed for so
as much of the expenditure and capital investment as that is financed by a state, federal, or private grant for energy
conservation."
Section 6. Section 15-32-106, MCA, is amended to read:
"15-32-106. Procedure for obtaining benefit of deduction or credit. The department of revenue shall provide forms
on which a taxpayer may apply for a tax credit under 15-32-109. The department of revenue shall approve a deduction or
credit under 15-32-103 or 15-32-109 that demonstrably promotes energy conservation or uses a recognized nonfossil form
of energy generation. The department of revenue may refer a deduction or credit involving energy generation to the
department of environmental quality for its advice, and the department of environmental quality shall respond within 60
days. The department of revenue may refer a deduction or credit involving energy conservation to the department of
administration for its advice, and the department of administration shall respond within 60 days. The department of revenue
may deny a deduction or credit that it finds to be impractical or ineffective."
Section 7. Section 15-61-202, MCA, is amended to read:
"15-61-202. Tax exemption -- conditions. (1) Except as provided in this section, the amount of principal provided for
in subsection (2) contributed annually by an employee or account holder to an account before January 1, 1999, and all
interest or other income on that principal before January 1, 2000, may be excluded from the adjusted gross income of the
employee or account holder and are exempt from taxation, in accordance with 15-30-111(2)(j), as long as the principal and
interest or other income is contained within the account or withdrawn only for payment of eligible medical expenses or for
the long-term care of the employee or account holder or a dependent of the employee or account holder. Any part of the
principal or income, or both, that has been excluded from taxation pursuant to this section and that is withdrawn from an
account may not be excluded under subsection (2) and this subsection if the amount is withdrawn from the account and
used for a purpose other than an eligible medical expense or the long-term care of the employee or account holder or a
dependent of the employee or account holder.
(2) An employee or account holder may exclude as an annual contribution in 1 year no more than $3,000. There is no limitation on the amount of funds contributed and interest or other income on those funds paid or accrued before January 1, 1999, that may be retained tax-free within an account, but any interest or other income paid or accrued after December 31, 1999, is taxable as otherwise provided in Title 15.
(3) A deduction pursuant to 15-30-121 is not allowed to an employee or account holder for an amount contributed to an
account. An employee or account holder may not deduct pursuant to 15-30-121 or exclude pursuant to 15-30-111 an
amount representing a loss in the value of an investment contained in an account.
(4) An employee or account holder may, prior to December 31, 1999, in 1 year deposit into an account more than the
amount excluded pursuant to subsection (2) if the exemption claimed by the employee or account holder in the year does
not exceed $3,000. An employee or account holder who deposits more than $3,000 into an account in a year may exclude
from the employee's or account holder's adjusted gross income in accordance with 15-30-111(2)(j) in a subsequent year
ending on or before December 31, 1999, any part of $3,000 per for each year not previously excluded.
(5) The Prior to January 1, 2000, the transfer of money in an account owned by one employee or account holder to the
account of another employee or account holder within the immediate family of the first employee or account holder does
not subject either employee or account holder to tax liability under this section. Amounts contained within the account of
the receiving employee or account holder are subject to the requirements and limitations provided in this section.
(6) The employee or account holder who establishes the account is the owner of the account. An Prior to January 1,
2000, an employee or account holder may withdraw money in an account and deposit the money in another account with a
different or with the same account administrator without incurring tax liability.
(7) The Prior to January 1, 2000, the amount of a disbursement of any assets of a medical care savings account pursuant
to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. 101 through 1330, by an employee or account
holder does not subject the employee or account holder to tax liability.
(8) Within 30 days of being furnished proof of the death of the employee or account holder, the account administrator shall distribute the principal and accumulated interest or other income in the account to the estate of the employee or account holder.
(9) This section does not allow a taxpayer to reduce the taxpayer's Montana taxable income."
Section 8. Section 15-61-203, MCA, is amended to read:
"15-61-203. Withdrawal of funds from account for purposes other than medical expenses and long-term care. (1) An employee or account holder may withdraw money from the individual's medical care savings account for any purpose other than an eligible medical expense or the long-term care of the employee or account holder or a dependent of the employee or account holder only on the last business day of the account administrator's business year. Money withdrawn from an account pursuant to this subsection that had been excluded from taxation pursuant to 15-61-202 must be taxed as ordinary income of the employee or account holder.
(2) (a) If Except as provided in subsection (2)(b), if the employee or account holder withdraws money from the account
other than for eligible medical expenses or long-term care or other than on the last business day of the account
administrator's business year, the administrator shall withhold from the amount of the withdrawal and, on behalf of the
employee or account holder, pay as a penalty to the department of revenue an amount equal to 10% of the amount of the
withdrawal. Payments made to the department pursuant to this section must be deposited in the general fund. Money
withdrawn from an account pursuant to this subsection must be taxed as ordinary income of the employee or account holder
if it had been excluded from taxation pursuant to 15-61-202.
(b) Between January 1, 2000, and December 31, 2000, an employee or account holder with carried-over excess contributions may withdraw the excess contributions without penalty.
(3) For the purposes of this section, "last business day of the account administrator's business year", as applied to an account administrator who is also the account holder or an employee, means the last weekday in December.
(4) This section does not allow a taxpayer to reduce the taxpayer's Montana taxable income."
Section 9. Section 15-61-204, MCA, is amended to read:
"15-61-204. Administration of account. (1) An account administrator shall administer the medical care savings
account from which the payment of claims is made and has a fiduciary duty to the person for whose benefit the account is
administered. Except for reporting and remitting of penalties to the department of revenue, a financial institution shall
administer a medical savings account as a regular deposit. A financial institution is not responsible for the use or
application of funds.
(2) Not more than 30 days after an account administrator begins to administer an account, the account administrator shall notify in writing each employee and account holder on whose behalf the account administrator administers an account of the date of the last business day of the account administrator's business year.
(3) An account administrator may use funds held in a medical care savings account only for the purpose of paying the eligible medical expenses of the employee or account holder or the employee's or account holder's dependents, purchasing long-term care insurance or a long-term care annuity for the long-term care of the employee or account holder or a dependent of the employee or account holder, or paying the expenses of administering the account. Funds held in a medical care savings account may not be used to pay medical expenses or used for a long-term care insurance policy or annuity of the employee or account holder or a dependent of the employee or account holder that is otherwise reimbursable, including medical expenses payable pursuant to an automobile insurance policy, workers' compensation insurance policy or self-insured plan, or another health coverage policy, certificate, or contract.
(4) The employee or account holder may submit documentation of eligible medical expenses paid by the employee or account holder or a dependent of the employee or account holder in the tax year to the account administrator, and the account administrator shall reimburse the employee or account holder from the employee's or account holder's account for eligible medical expenses. The burden of proving that a withdrawal from a medical savings account was made for an eligible medical expense is upon the account holder and not upon the account administrator or the employer of the account holder.
(5) The employee or account holder may submit documentation of the purchase of long-term care insurance or a long-term care annuity for the employee or account holder or a dependent of the employee or account holder to the account administrator, and the account administrator shall reimburse the employee or account holder from the employee's or account holder's account for payments made for the purchase of the insurance or annuity. The account administrator may also provide for a system of automatic withdrawals from the account for the payment of long-term care insurance premiums or an annuity.
(6) If Prior to January 1, 2000, if an employer makes contributions to a medical care savings account on a periodic
installment basis, the employer may advance to an employee, interest free, an amount necessary to cover medical expenses
incurred that exceeds exceed the amount in the employee's medical care savings account at the time that the expense is
expenses are incurred if the employee agrees to repay the advance from future installments or when the employee ceases
employment with the employer.
(7) In the case of an account administrator who is also the account holder or an employee:
(a) notice by the account administrator to the account holder pursuant to subsection (2) is not required;
(b) the account administrator may not use funds held in an account to pay expenses of administering the account;
(c) documentation of eligible medical expenses must be maintained but is not required to be submitted to the account administrator;
(d) contributions to a medical savings account must be established in a separate account and be segregated from other funds;
(e) the account holder is subject to the same yearend reporting requirements as all other account administrators; and
(f) the account holder is required to forward the 10% penalty on funds withdrawn for noneligible medical expenses to the state.
(8) This section does not allow a taxpayer to reduce the taxpayer's Montana taxable income."
Section 10. Section 15-62-204, MCA, is amended to read:
"15-62-204. Higher education expenses -- exemption from taxable income. A person may in any year deposit into
an individual trust or savings account up to $3,000 that is deductible for tax purposes under 15-30-111(2)(k) for any tax
year ending before January 1, 1999, to pay the qualified higher education expenses for the benefit of a designated
beneficiary."
Section 11. Section 15-63-202, MCA, is amended to read:
"15-63-202. Tax exemption -- conditions. (1) Except as provided in this section, the amount of principal provided for
in subsection (2) contributed annually by an account holder to an account before January 1, 1999, and all interest or other
income on the principal paid or accrued before January 1, 2000, may be excluded from the adjusted gross income of the
account holder and is exempt from taxation, in accordance with 15-30-111(2)(k) except as provided in subsection (2)(c), as
long as the principal and interest or other income is contained within the account or withdrawn only for eligible costs for
the purchase of a single-family residence by a first-time home buyer. Any part of the principal or income, or both, that had
been excluded from taxation pursuant to this section that is withdrawn from an account may not be excluded under
subsection (2) and this subsection if the amount is withdrawn from the account and used for a purpose other than for
eligible costs for the purchase of a single-family residence.
(2) (a) An account holder who files singly, head of household, or married filing separately may exclude as an annual contribution in 1 year up to $3,000.
(b) An account holder who files jointly may exclude as annual contribution in 1 year up to $6,000.
(c) There is no limitation on the amount of principal contributed and interest or other income on the principal paid or accrued before January 1, 1999, that may be retained tax-free within an account, but any interest accrued after December 31, 1999, is taxable as otherwise provided in Title 15.
(d) An account holder may not contribute to the first-time home buyer savings account for a period exceeding 10 years.
(3) An account holder may not deduct pursuant to 15-30-121 or exclude pursuant to 15-30-111 an amount representing
a loss in the value of an investment contained in an account.
(4) Each Prior to January 1, 1999, each year, an account holder may deposit into an account more than the amount
excluded pursuant to subsection (2) if the exemption claimed by the account holder in the year does not exceed the amount
specified in subsection (2)(a) or (2)(b). An account holder who deposits more than the amount specified in subsection (2)(a)
or (2)(b) into an account in a year ending before January 1, 1999, may exclude from the account holder's adjusted gross
income, in accordance with 15-30-111(2)(k), in a subsequent year ending before January 1, 2000, any part of the amount
specified in subsection (2)(a) or (2)(b) per for each year not previously excluded.
(5) The Prior to January 1, 2000, the transfer of money by a person other than the account holder to the account of an
account holder does not subject the account holder to tax liability under this section. Amounts contained within the account
of the receiving account holder are subject to the requirements and limitations provided in this section. The person other
than the account holder who transfers money to the account is not entitled to the tax exemption under this section.
(6) The account holder who establishes the account, individually or jointly, is the owner of the account. An Prior to
January 1, 2000, an account holder may withdraw money in an account and deposit the money in another account with a
different account administrator or with the same account administrator without incurring tax liability.
(7) The account holder shall use the money in the account for the eligible costs related to the purchase of a single-family residence within 10 years following the year in which the account was established. Any principal and income in the account that were excluded from taxation under this section and are not expended on eligible costs at the time of purchase of a single-family residence or any principal or income that was excluded from taxation under this section and is remaining in the account on December 31 of the last year of the 10-year period must be taxed as ordinary income.
(8) The Prior to January 1, 2000, the amount of a disbursement of any assets of a first-time home buyer savings account
pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. 101 through 1330, by an account
holder does not subject the account holder to tax liability.
(9) Within 30 days of being furnished proof of the death of the account holder, the account administrator shall distribute the principal and accumulated interest or other income in the account to the estate of the account holder.
(10) This section does not allow a taxpayer to reduce the taxpayer's Montana taxable income."
Section 12. Section 15-63-203, MCA, is amended to read:
"15-63-203. Withdrawal of funds from account for purposes other than eligible costs for first-time home purchase. (1) An account holder may withdraw money from the first-time home buyer's savings account for any purpose other than eligible costs for the first-time purchase of a single-family residence only on the last business day of the account administrator's business year. Money withdrawn from an account pursuant to this subsection that had been excluded from taxation pursuant to 15-63-202 must be taxed as ordinary income of the account holder.
(2) (a) If Except as provided in subsection (2)(b), if the account holder withdraws money from the account other than
for eligible costs for the purchase of a single-family residence or other than on the last business day of the account
administrator's business year, the account administrator shall withhold from the amount of the withdrawal and, on behalf of
the account holder, pay as a penalty to the department an amount equal to 10% of the amount of the withdrawal. Payments
made to the department pursuant to this section must be deposited in the general fund. Money withdrawn from an account
pursuant to this subsection must be taxed as ordinary income of the account holder if it was excluded from taxation
pursuant to 15-63-202.
(b) Between January 1, 2000, and December 31, 2000, an account holder with carried-over excess contributions may withdraw the excess contributions without penalty.
(3) For the purposes of this section, "last business day of the account administrator's business year", as applied to an account administrator who is also the account holder, means the last weekday in December.
(4) This section does not allow a taxpayer to reduce the taxpayer's Montana taxable income."
Section 13. Section 17-6-302, MCA, is amended to read:
"17-6-302. (Temporary) Definitions. As used in this part, unless the context requires otherwise, the following definitions apply:
(1) "Board" means the board of investments created in 2-15-1808.
(2) "Capital company" means a Montana capital company created pursuant to Title 90, chapter 8.
(3)(2) "Clean and healthful environment" means an environment that is relatively free from pollution that threatens
human health, including, as a minimum, compliance with federal and state environmental and health standards.
(4)(3) "Employee-owned enterprise" means any enterprise at least 51% of whose stock, partnership interests, or other
ownership interests is owned and controlled by residents of Montana, each of whose principal occupation is as an
employee, officer, or partner of the enterprise.
(5)(4) "Financial institution" includes but is not limited to a state- or federally chartered bank or a savings and loan
association, credit union, or development corporation created pursuant to Title 32, chapter 4.
(6)(5) "Loan participation" means loans or portions thereof of loans bought from a financial institution and does not
include the purchase of debentures issued by a capital company.
(7)(6) "Locally owned enterprise" means any enterprise 51% of whose stock, partnership interests, or other ownership
interests are is owned and controlled by residents of Montana.
(8)(7) "Long-term benefit to the Montana economy" means an activity that strengthens the Montana economy and that
has the potential to maintain and create jobs, increase per capita income, or increase Montana tax revenues revenue in the
future to the people of Montana, either directly or indirectly.
(9)(8) "Montana economy" means any business activity in the state of Montana, including those which continue an
activity that continues existing jobs or create creates new jobs in Montana.
(10)(9) "Service fees" means the fees normally charged by a financial institution for servicing a loan, including amounts
charged for collecting payments and remitting amounts to the fund.
17-6-302. (Effective July 1, 1999) Definitions. As used in this part, unless the context requires otherwise, the following definitions apply:
(1) "Board" means the board of investments created in 2-15-1808.
(2) "Capital company" means a Montana capital company created pursuant to Title 90, chapter 8.
(3)(2) "Clean and healthful environment" means an environment that is relatively free from pollution that threatens
human health, including, as a minimum, compliance with federal and state environmental and health standards.
(4)(3) "Department" means the department of commerce provided for in 2-15-1801.
(5)(4) "Employee-owned enterprise" means any enterprise at least 51% of whose stock, partnership interests, or other
ownership interests is owned and controlled by residents of Montana, each of whose principal occupation is as an
employee, officer, or partner of the enterprise.
(6)(5) "Financial institution" includes but is not limited to a state- or federally chartered bank or a savings and loan
association, credit union, or development corporation created pursuant to Title 32, chapter 4.
(7)(6) "Loan participation" means loans or portions of loans bought from a financial institution and does not include the
purchase of debentures issued by a capital company.
(8)(7) "Locally owned enterprise" means any enterprise 51% of whose stock, partnership interests, or other ownership
interests is owned and controlled by residents of Montana.
(9)(8) "Long-term benefit to the Montana economy" means an activity that strengthens the Montana economy and that
has the potential to maintain and create jobs, increase per capita income, or increase Montana tax revenue in the future to
the people of Montana, either directly or indirectly.
(10)(9) "Montana economy" means any business activity in the state of Montana, including those that continue an
activity that continues existing jobs or create creates new jobs in Montana.
(11) (10) "Service fees" means the fees normally charged by a financial institution for servicing a loan, including
amounts charged for collecting payments and remitting amounts to the fund."
Section 14. Section 17-6-311, MCA, is amended to read:
"17-6-311. Limitation on size of investments. (1) Except as provided in subsections (2) through (4) and (3), an
investment may not be made that will result in any one business enterprise or person receiving a benefit from or incurring a
debt to the permanent coal tax trust fund the total current accumulated amount of which exceeds 1% of the permanent coal
tax trust fund.
(2) Subsection (1) does not limit the board's authority to make loans to the capital reserve account as provided in 17-6-308(2).
(3) Subsection (1) does not apply to the purchase of debentures issued by a capital company; however, the total amount
of such debentures purchased by the board may not exceed 1% of the Montana permanent coal tax trust fund at the time of
purchase.
(4)(3) The total amount of loans made pursuant to 17-6-309(2) may not exceed $20 million, and a single loan may not
be less than $500,000. A loan may not exceed $10,000 per job that is estimated to be created. In determining the size of a
loan made pursuant to 17-6-309(2), the board shall consider:
(a) the estimated number of jobs to be created by the project within a 4-year period from the time that the loan is made and the impact of the jobs on the state and the community where the project will be located;
(b) the long-term effect of corporate and personal income taxes estimated to be paid by the business and its employees;
(c) the current and projected ability of the community to provide necessary infrastructure for economic and community development purposes; and
(d) other matters that the board considers necessary."
Section 15. Section 17-6-312, MCA, is amended to read:
"17-6-312. State participation in loans. (1) Subject to 17-6-311(4)(3), state participation in any loan to a business
enterprise, except for a loan guaranteed by a federal agency, must be limited to 80% of the outstanding loan. The state shall
participate in the security for a loan in the same proportion as the loan participation amount.
(2) The purchase of debentures issued by a capital company is not a loan participation and is not subject to subsection
(1).
(3)(2) State participation in loans to nonprofit corporations may qualify for the job credit interest rate reductions under
17-6-318 if the interest rate reduction passes through to a for-profit business creating the jobs."
Section 16. Section 17-6-313, MCA, is amended to read:
"17-6-313. Prior commitment of funds. The board may authorize the commitment of funds to financial institutions
and capital companies pursuant to rules adopted by the board, but the determination as to credit with respect to individual
investments must be made by the financial institution and the board or the capital company and the board."
Section 17. Section 17-6-318, MCA, is amended to read:
"17-6-318. Job credit interest rate reduction for small business loan participations. (1) A borrower who uses the
proceeds of a small business loan participation funded under the provisions of this part to create jobs employing Montana
residents is entitled to a job credit interest rate reduction for each job created over a 2-year period to employ a Montana
resident. A borrower who used the proceeds of a loan made pursuant to 17-6-309(2) to create jobs is entitled to a job credit
interest rate reduction for each job created in the 4-year period provided for in 17-6-311(4)(a) 17-6-311(3)(a). The date of
the formal written interim or permanent loan application to the financial institution will be used as a beginning date for
counting the number of jobs created. The job credit interest rate reduction may not apply to a loan participation of more
than 1% of the total of the permanent coal tax trust fund determined at the end of the last-completed fiscal year. The job
credit interest rate reduction is equal to 0.05% for each job created to employ a Montana resident, up to a maximum interest
rate reduction of 2.5%.
(2) If the salary or wage of the job created:
(a) exceeds the average weekly wage, as defined in 39-71-116, the amount of the job credit interest rate reduction may be increased proportionately for each increment of 25% above the average weekly wage to a maximum of two times the average weekly wage; or
(b) is less than the average weekly wage, as defined in 39-71-116, the job credit interest rate reduction is reduced proportionately for each 25% increment below the average wage.
(3) A job credit interest rate reduction may not be allowed for a job created by the borrower using the proceeds of the loan for which the salary or wage is less than the minimum wage provided for in 39-3-409.
(4) A job credit may not be given unless one whole job is created.
(5) To qualify for the job credit interest rate reduction, the borrower shall provide satisfactory evidence of the creation of jobs and make application in writing, through its financial institution, to the board when the loan is delivered to the board or not later than 45 days after the applicable anniversary dates of the loan."
Section 18. Section 30-10-105, MCA, is amended to read:
"30-10-105. Exempt transactions -- rulemaking. Except as expressly provided in this section, 30-10-201 through 30-10-207 do not apply to the following transactions:
(1) a nonissuer isolated transaction, whether effected through a broker-dealer or not. A transaction is presumed to be isolated if it is one of not more than three transactions during the prior 12-month period.
(2) (a) a nonissuer distribution of an outstanding security by a broker-dealer registered pursuant to 30-10-201 if:
(i) quotations for the securities to be offered or sold (or the securities issuable upon exercise of any warrant or right to
purchase or subscribe to the securities) are reported by the automated quotations system operated by the national
association of securities dealers, inc., (NASDAQ), or by any other quotation system approved by the commissioner by rule;
or
(ii) the security has a fixed maturity or a fixed interest or dividend provision and there has been no default during the current fiscal year or within the 3 preceding fiscal years or if the issuer and any predecessors have been in existence for less than 3 years and there has been no default in the payment of principal, interest, or dividends on the security.
(b) The commissioner may by order deny or revoke the exemption specified in subsection (2)(a) with respect to a specific security. Upon the entry of an order, the commissioner shall promptly notify all registered broker-dealers that it has been entered and give the reasons for the order and shall notify them that within 15 days of the receipt of a written request the matter will be set for hearing. If a hearing is not requested and is not ordered by the commissioner, the order remains in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to all interested persons, may modify or vacate the order or extend it until final determination. An order under this subsection may not operate retroactively. A person may not be considered to have violated parts 1 through 3 of this chapter by reason of any offer or sale effected after the entry of an order under this subsection if the person sustains the burden of proof that the person did not know and in the exercise of reasonable care could not have known of the order.
(3) a nonissuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to buy, but the commissioner may require that the customer acknowledge upon a specified form that the sale was unsolicited and that a signed copy of each form be preserved by the broker-dealer for a specified period;
(4) a transaction between the issuer or other person on whose behalf the offering is made and an underwriter or between underwriters;
(5) a transaction by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator in the performance of official duties;
(6) a transaction executed by a bona fide pledgee without any purpose of evading parts 1 through 3 of this chapter;
(7) an offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer or to a broker-dealer, whether the purchaser is acting for itself or in a fiduciary capacity;
(8) (a) a transaction pursuant to an offer made in this state directed by the offeror to not more than 10 persons (other than those designated in subsection (7)) during any period of 12 consecutive months, if:
(i) the seller reasonably believes that all the buyers are purchasing for investment; and
(ii) a commission or other remuneration is not paid or given directly or indirectly for soliciting a prospective buyer;.
provided, however, that However, a commission may be paid to a registered broker-dealer if the securities involved are
registered with the United States securities and exchange commission under the federal Securities Act of 1933, as
amended;.
(b) any transaction pursuant to an offer made in this state directed by the offeror to not more than 25 persons, other than those designated in subsection (7), during any period of 12 consecutive months if:
(i) the seller reasonably believes that all the buyers are purchasing for investment;
(ii) a commission or other remuneration is not paid or given directly or indirectly for soliciting any prospective buyer;
provided, however, that a commission may be paid to a registered broker-dealer if the securities involved are registered
with the United States securities and exchange commission under the federal Securities Act of 1933, as amended; and
(iii) the offeror applies for and obtains the written approval of the commissioner prior to making any offers in this state and pays a filing fee that must accompany the application for approval. The commissioner may deny an application.
(c) For the purpose of the exemptions provided for in this subsection (8), an offer to sell is made in this state, whether or not the offeror or any of the offerees is then present in this state, if the offer either originates from this state or is directed by the offeror to this state and received at the place to which it is directed (or at any post office in this state in the case of a mailed offer).
(9) an offer or sale of a preorganization certificate or subscription if:
(a) a commission or other remuneration is not paid or given directly or indirectly for soliciting a prospective subscriber;
(b) the number of subscribers does not exceed 25; and
(c) a payment is not made by a subscriber;
(10) a transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than 90 days of their issuance, if:
(a) a commission or other remuneration (other than a standby commission) is not paid or given directly or indirectly for soliciting any security holder in this state; or
(b) the issuer first files a notice specifying the terms of the offer and the commissioner does not by order disallow either subsection (10)(a) or the notice specifying the terms of the offer;
(11) an offer, but not a sale, of a security for which registration statements have been filed under both parts 1 through 3 of this chapter and the Securities Act of 1933 if a stop, refusal, denial, suspension, or revocation order is not in effect and a public proceeding or examination looking toward an order is not pending under either law;
(12) an offer, but not a sale, of a security for which a registration statement has been filed under parts 1 through 3 of this chapter and the commissioner does not disallow the offer in writing within 10 days of the filing;
(13) the issuance of a stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the distribution other than the surrender of a right to a cash dividend when the stockholder can elect to take a dividend in cash or stock;
(14) a transaction incident to a right of conversion or a statutory or judicially approved reclassification, recapitalization, reorganization, quasi-reorganization, stock split, reverse stock split, merger, consolidation, or sale of assets;
(15) a transaction in compliance with rules that the commissioner may adopt to serve the purposes of 30-10-102. The
commissioner may require that 30-10-201 through 30-10-207 apply to any or all transactional exemptions adopted by rule.
(16) a transaction in the securities of a certified Montana capital company or a certified Montana small business
investment capital company as defined in 90-8-104, provided that the company first files all disclosure documents, along
with a consent to service of process, with the commissioner. The commissioner may not charge a fee for the filing.
(17)(16) the sale of a commodity investment contract traded on a commodities exchange recognized by the
commissioner at the time of sale;
(18)(17) a transaction within the exclusive jurisdiction of the commodity futures trading commission as granted under
the Commodity Exchange Act;
(19)(18) a transaction that:
(a) involves the purchase of one or more precious metals;
(b) requires, and under which the purchaser receives within 7 calendar days after payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased. For the purposes of this subsection, physical delivery is considered to have occurred if, within the 7-day period, the quantity of precious metals, whether in specifically segregated or fungible bulk, purchased by the payment is delivered into the possession of a depository, other than the seller, that:
(i) (A) is a financial institution, meaning a bank, savings institution, or trust company organized under or supervised pursuant to the laws of the United States or of this state;
(B) is a depository the warehouse receipts of which are recognized for delivery purposes for any commodity on a contract market designated by the commodity futures trading commission; or
(C) is a storage facility licensed by the United States or any agency of the United States; and
(ii) issues, and the purchaser receives, a certificate, document of title, confirmation, or other instrument evidencing that the quantity of precious metals has been delivered to the depository and is being and will continue to be held on the purchaser's behalf, free and clear of all liens and encumbrances other than:
(A) liens of the purchaser;
(B) tax liens;
(C) liens agreed to by the purchaser; or
(D) liens of the depository for fees and expenses that previously have been disclosed to the purchaser.;
(c) requires the quantity of precious metals purchased and delivered into the possession of a depository, as provided in
subsection (19)(b) (18)(b), to be physically located within Montana at all times after the 7-day delivery period provided for
in subsection (19)(b) (18)(b), and the precious metals are in fact physically located within Montana at all times after that
delivery period;
(20)(19) a transaction involving a commodity investment contract solely between persons engaged in producing,
processing, using commercially, or handling as merchants each commodity subject to the contract or any byproduct of the
commodity;
(21)(20) an offer or sale of a security to an employee of the issuer, pursuant to an employee stock ownership plan
qualified under section 401 of the Internal Revenue Code (26 U.S.C. 401); or
(22)(21) (a) an offer or sale of securities by a cooperative association organized under the provisions of Title 35, chapter
15, or under the laws of another state that are substantially the same as the provisions of Title 35, chapter 15, if the offer
and sale are only to members of the cooperative association or if the purchase of the securities is necessary or incidental to
establishing membership in the cooperative association;
(b) a cooperative organized under the laws of another state may not take advantage of the exemption created by this
subsection (22) (21) unless, not less than 10 days before the issuance or delivery of the securities, the cooperative has
furnished the commissioner with a general written description of the transaction and any other information the
commissioner may require by rule or otherwise. The commissioner shall promulgate rules establishing a list of states whose
laws are considered substantially the same as Title 35, chapter 15, for the purposes of this subsection (22) (21)."
Section 19. Section 33-27-101, MCA, is amended to read:
"33-27-101. Short title. Sections 15-30-107, 15-30-127, 15-31-117, 15-31-118, and this chapter may be cited as the
"Independent Liability Fund Act"."
Section 20. Section 33-27-102, MCA, is amended to read:
"33-27-102. Purpose. The purpose of 15-30-107, 15-30-127, 15-31-117, 15-31-118, and this chapter is to create a
means by which small businesses operating in Montana may establish independent liability funds to set aside assets or
make investments to meet any liability claims that might be made against the small businesses by third parties."
Section 21. Section 33-27-103, MCA, is amended to read:
"33-27-103. Definitions. As used in 15-30-107, 15-30-127, 15-31-117, 15-31-118, and this chapter, the following
definitions apply:
(1) "Fiscal year" means the 12-month period used by a particular small business in preparing and filing its Montana individual income tax, corporate license tax, or corporate income tax return.
(2) "Independent liability fund" means a collection of money, assets, and investments that has been set aside by a small business to meet the needs of any liability claims, except workers' compensation claims, brought against it by third parties.
(3) "Liability claim" means any legal or extralegal action by a third party asserting a right to compensation for a wrong done to it by a small business with an independent liability fund.
(4) "Small business" means any commercial or nonprofit enterprise qualified to do business in the state and qualified as a small business under the criteria established by the federal small business administration on April 20, 1987.
(5) "Third party" means a person other than an employee or the management of a small business or of a subsidiary or closely related enterprise of a small business."
NEW SECTION. Section 22. Repealer. Sections 15-24-1401, 15-24-1402, 15-30-125, 15-30-126, 15-30-127, 15-30-129, 15-30-156, 15-30-157, 15-30-159, 15-30-160, 15-30-161, 15-30-162, 15-30-163, 15-30-164, 15-30-180, 15-31-132, 15-31-135, 15-31-136, 15-31-137, 15-32-107, 15-32-108, 15-32-109, 15-32-115, 15-32-201, 15-32-202, 15-32-203, 15-32-301, 15-32-302, 15-32-303, 15-32-401, 15-32-402, 15-32-403, 15-32-404, 15-32-405, 15-32-406, 15-32-407, 15-32-601, 15-32-602, 15-32-603, 15-32-604, 15-32-609, 15-32-610, 15-32-611, 69-3-713, 90-8-101, 90-8-102, 90-8-103, 90-8-104, 90-8-105, 90-8-106, 90-8-201, 90-8-202, 90-8-203, 90-8-204, 90-8-205, 90-8-301, 90-8-302, 90-8-303, 90-8-304, 90-8-305, 90-8-311, 90-8-312, 90-8-313, and 90-8-321, MCA, are repealed.
NEW SECTION. Section 23. Contingent enactment. If Constitutional Initiative No. 75, enacting Article VIII, section 17, of the Montana constitution, is not declared invalid by December 31, 1999, then [this act] is void.
NEW SECTION. Section 24. Effective date. [This act] is effective on the date, if it occurs prior to January 1, 2000, of the occurrence of the contingency provided for in [section 23].
NEW SECTION. Section 25. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to tax years ending after December 30, 1998.
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Latest Version of SB 519 (SB0519.01)
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