House Bill No. 455
Introduced By _______________________________________________________________________________
A Bill for an Act entitled: "An Act encouraging small business reinvestment by exempting the first $25,000 of market value of certain property owned by the taxpayer from taxation; exempting the first $25,000 or less of the market value of agricultural implements and equipment from property taxation; exempting the first $25,000 or less of the market value of commercial establishment furniture, fixtures, and equipment from property taxation; exempting the first $25,000 or less of the market value of commercial establishment supplies and materials from property taxation; amending sections 15-6-138 and 15-6-201, MCA; and providing an immediate effective date and a retroactive applicability date."
Be it enacted by the Legislature of the State of Montana:
Section 1. 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 that are not exempt under 15-6-201(1)(x);
(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 trailers and semitrailers, including those prorated under 15-24-102, except those subject to taxation under 61-3-504(2) or exempt under 15-6-201(1)(v);
(e) all goods and equipment intended for rent or lease, except goods and equipment specifically included and taxed in another class;
(f) buses and trucks having a rated capacity of more than 1 ton, including those prorated under 15-24-102;
(g) truck toppers weighing more than 300 pounds;
(h) furniture, fixtures, and equipment that are not exempt under 15-6-201(1)(y), except that specifically included in another class, used in commercial establishments as defined in this section;
(i) x-ray and medical and dental equipment;
(j) citizens' band radios and mobile telephones;
(k) radio and television broadcasting and transmitting equipment;
(l) cable television systems;
(m) coal and ore haulers;
(n) theater projectors and sound equipment; and
(o) all other property not included in any other class in this part, except that property 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) Class eight property is taxed at:
(a) 9% of its market value for tax years ending on or before December 31, 1995; (b) 8% of its market value for tax year 1996; (c)(a) 7% of its market value for tax year 1997; and (d)(b) 6% of its market value for tax years beginning after December 31, 1997."
Section 2. 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 they occupy and furnishings in the buildings, 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 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 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) a truck canopy cover or topper weighing less than 300 pounds and having no accommodations attached. This property is also exempt from taxation under 61-3-504(2) and 61-3-537.
(j) a bicycle, as defined in 61-1-123, used by the owner for personal transportation purposes;
(k) motor homes, travel trailers, and campers;
(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) property that is owned and used by a corporation or association organized and operated exclusively for the care of persons with developmental disabilities, the mentally ill, or the vocationally handicapped as defined in 18-5-101 and that is not operated for gain or profit and property 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 not held or used for private or corporate gain or profit. For purposes of this subsection (q), "nonprofit corporation" means an organization 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 and semitrailers that have a licensed gross weight of 26,000 pounds or more or that are registered through a proportional registration agreement under 61-3-721. For purposes of this subsection (v), the terms "trailer" and "semitrailer" mean a vehicle with or without motive power that is:
(i) designed and used only for carrying property;
(ii) designed and used to be drawn by a motor vehicle; and
(iii) either constructed so that no part of its weight rests upon the towing vehicle or constructed so that some part of its weight and the weight of its load rests upon or is carried by another vehicle.
(w) all vehicles registered under 61-3-456
(x) the first $25,000 or less of market value of agricultural implements and equipment owned by the taxpayer;
(y) the first $25,000 or less of market value of furniture, fixtures, and equipment used in a commercial establishment, as defined in 15-6-138(3), classified for taxation under 15-6-138(1)(h), and owned by the taxpayer;
(z) the first $25,000 or less of market value of supplies and materials used in a commercial establishment, as defined in 15-6-138(3), classified for taxation under 15-6-138(1), and owned by the taxpayer.
(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."
NEW SECTION. Section 3. Effective date -- retroactive applicability. [This act] is effective on passage and approval and applies retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 1996.