Senate Bill No. 389

Introduced By baer, orr, adams, curtiss, molnar, burnett, denny, depratu, m. taylor, sliter, debruycker, stang, mohl, devlin, boharski, soft, gage, devaney, brainard, prouse, rehbein, stovall, mesaros, aklestad, thomas, jenkins, beck, jabs, harp, hertel, sprague, halligan, clark, holden, benedict, grosfield, hargrove, van valkenburg, crippen, mcnutt, keating, crismore, mahlum, emerson, jore, estrada, bankhead



A Bill for an Act entitled: "An Act establishing tax credits to offset the effects of the 1996 reappraisal on certain real property and improvements; establishing a process for calculating the tax credits; requiring a credit calculation form to be sent to taxpayers; providing state recourse for credits claimed incorrectly or fraudulently; and providing a retroactive applicability date."



Be it enacted by the Legislature of the State of Montana:



NEW SECTION. Section 1.  Reappraisal credit -- purpose. (1) As provided in [sections 1 through 7], an individual is entitled to a credit against taxes due under this chapter.

(2) The purpose of the credit is to compensate certain property taxpayers for increased property taxes resulting from the effects of the 1996 reappraisal conducted pursuant to 15-7-111. The credit is available to eligible taxpayers whether or not the taxpayer's tax liability under this chapter exceeds the amount of the credit.



NEW SECTION. Section 2.  Reappraisal credit -- definitions. As used in [sections 1 through 7], the following definitions apply:

(1) "Claimant" means an individual natural person who is eligible under [sections 1 through 7] to file a claim for the reappraisal credit.

(2) "Claim period" means the current property tax year that corresponds to the calendar year in which the property is assessed and the first property tax payment is due.

(3) "Household" means an association of individuals who live in the same dwelling and who share its furnishings, facilities, accommodations, and expenses. The term does not include bona fide lessees, tenants, or roomers and boarders on contract.

(4) "Owner-occupied residence" means a single-family residence, including a trailer or mobile home described in 15-6-134(1)(b), or a condominium unit that is subject to property taxes and that is owned by a claimant, individually or jointly. The residence includes all improvements used for residential purposes and associated outbuildings. A taxpayer with a life estate is an owner for purposes of [sections 1 through 7].



NEW SECTION. Section 3.  Reappraisal credit -- eligibility. (1) In order to be eligible to claim a credit under [sections 1 through 7], the claimant must:

(a) have occupied an owner-occupied residence in Montana as the owner or contractor for deed for at least 7 months of the claim period;

(b) be the owner on January 1 of the claim period of an owner-occupied residence that the claimant also owned on January 1, 1996; and

(c) be the owner of the owner-occupied residence described in subsection (1)(b) that has an assessed value for the current tax year that was greater than the assessed value on January 1 of the 1996 tax year.

(2) A claimant may own and occupy more than one owner-occupied residence in this state during the year and still meet the occupancy requirement in subsection (1)(a) if the total occupancy is for 7 months or more.

(3) In determining the increase in assessed value required by [section 5] and subsection (1)(c) of this section, new construction and any remodeling or additions to existing improvements may not be considered.

(4) If the claimant meets the requirements of subsection (1) on any one owner-occupied residence, all other owner-occupied residences owned by the claimant that meet the requirements of subsection (1) are eligible for the credit, whether or not the owner-occupied residence was occupied by the owner for the required time. However, a claimant may claim a credit only for a single owner-occupied residence and the credit may not be claimed for a residence that was leased or rented for more than 5 months during the claim period.



NEW SECTION. Section 4.  Reappraisal credit -- calculation form. (1) The department shall mail a form for calculating the credit to each person owning residential property on January 1 of the claim period if the residential property, exclusive of new construction and remodeling or additions to existing improvements, increased in assessed value from the 1996 tax year to the current tax year. The form:

(a) must be mailed at approximately the same time as property tax notices required by 15-16-101 are mailed;

(b) must include all information necessary for the owner of the residence to calculate the reappraisal credit; and

(c) may require information necessary for the department to verify the credit, if claimed.

(2) The department shall also include in the instructions for preparing a return under this chapter, instructions and a generic form that may be used to calculate the reappraisal credit.



NEW SECTION. Section 5.  Reappraisal credit -- amount. (1) The amount of the credit is determined by multiplying:

(a) the amount of assessed value of the residence identified in [section 3(1)(b)], including land and improvements, for the current tax year that exceeds the assessed value for the 1996 tax year that is attributable to a reappraisal conducted pursuant to 15-7-111; multiplied by

(b) the tax rate that applied to the residence in the current tax year; multiplied by

(c) the mill levy that applied to the residence in the current tax year.

(2) The assessed value of improvements that were not part of the assessed value of the residence in the 1996 tax year may not be counted for the purposes of the credit provided in [sections 1 through 7].



NEW SECTION. Section 6.  Reappraisal credit -- limitations. (1) A household may claim only one reappraisal credit in a claim period.

(2)(1)  A reappraisal credit is not allowed for an owner-occupied residence that is not subject to property taxes in Montana during the claim period or that was not subject to property taxes in the 1996 tax year.

(2) THE REAPPRAISAL CREDIT MAY NOT EXCEED THE ACTUAL INCREASE IN PROPERTY TAXES PAID FOR PROPERTY TAX YEARS BEGINNING AFTER DECEMBER 31, 1996.



NEW SECTION. Section 7.  Reappraisal credit -- fraudulent claim -- penalty -- interest. (1) (a) If the claimant has not paid the property taxes due on the residence for the claim period, has filed a false or fraudulent claim for the credit, or if a tax appeal renders the claimant ineligible for credit, the claimant may not claim the credit for the claim period.

(b) If a tax appeal is pending on property for which the claimant has claimed a credit, the credit may be claimed as if an appeal was not pending. When the appeal is decided, the department shall recalculate the amount of the credit and:

(i) if the amount is greater than the credit claimed, refund the difference; or

(ii) if the amount is less than the credit claimed, notify the claimant of the additional amount due.

(2) If a claim for the credit is disallowed or reduced under subsection (1), any excess amount claimed as a credit may be recovered in the same manner as any other debt owed to the state.

(3) If the credit claimed was fraudulent, an additional 10% may be added to the amount due as a penalty.

(4) The unpaid debt, excluding penalty, bears interest, at the rate of 3/4 of 1% a month or fraction of a month, from the date the credit was claimed until the disallowed credit, plus penalty and interest, is paid.



NEW SECTION. Section 8.  Reappraisal credit -- purpose. (1) As provided in [sections 8 through 14], a person, as defined in 1-1-201, is entitled to a credit against taxes due under this chapter.

(2) The purpose of the credit is to compensate certain property taxpayers for increased property taxes resulting from the effects of the 1996 reappraisal conducted pursuant to 15-7-111 and is available to eligible taxpayers whether or not the taxpayer's tax liability under this chapter exceeds the amount of the credit.



NEW SECTION. Section 9.  Reappraisal credit -- definitions. As used in [sections 8 through 14], the following definitions apply:

(1) "Claimant" means a person who is eligible under [sections 8 through 14] to file a claim for the reappraisal credit.

(2) "Claim period" means the current property tax year that corresponds to the calendar year in which the property is assessed and the first property tax payment is due.

(3) "Commercial property" means land or improvements classified in Title 15, chapter 6, as class three, class four, or class ten property that is used or owned by a business, a trade, or a corporation as defined in 35-2-114 and used for the production of income that is taxable under this chapter or chapter 30 of this title.



NEW SECTION. Section 10.  Reappraisal credit -- eligibility. (1) In order to be eligible to claim a credit under [sections 8 through 14], the claimant must have possessed, as the owner or contractor for deed, the commercial property:

(a) for at least 7 months of the claim period;

(b) that the claimant also owned or was the contractor for deed on January 1, 1996; and

(c) described in subsection (1)(b) that has an assessed value for the current tax year that was greater than the assessed value on January 1 of the 1996 tax year.

(2) In determining the increase in assessed value required by [section 12] and subsection (1)(c) of this section, new construction and any remodeling or additions to existing improvements may not be considered.

(3) If the claimant meets the requirements of subsection (1) on any one commercial property, all other commercial properties owned by the claimant that meet the requirements of subsection (1) are eligible for the credit, provided that the commercial property was possessed by the claimant, as owner or contractor for deed, for the time required in subsection (1).



NEW SECTION. Section 11.  Reappraisal credit -- calculation form. (1) The department shall mail a form for calculating the credit to each person owning commercial property on January 1 of the claim period if the commercial property, exclusive of new construction and remodeling or additions to existing improvements, increased in assessed value from the 1996 tax year to the current tax year. The form:

(a) must be mailed at approximately the same time as property tax notices required by 15-16-101 are mailed;

(b) must include all information necessary for the owner of the commercial property to calculate the reappraisal credit; and

(c) may require information necessary for the department to verify the credit, if claimed.

(2) The department shall also include in the instructions for preparing a return under this chapter, instructions and a generic form that may be used to calculate the reappraisal credit.



NEW SECTION. Section 12.  Reappraisal credit -- amount. (1) The amount of the credit is determined by multiplying:

(a) the amount of assessed value of the commercial property identified in [section 10(1)(b)], including land and improvements, for the current tax year that exceeds the assessed value for the 1996 tax year that is attributable to a reappraisal conducted pursuant to 15-7-111; multiplied by

(b) the tax rate that applied to the commercial property in the current tax year; multiplied by

(c) the mill levy that applied to the commercial property in the current tax year.

(2) The assessed value of improvements that were not part of the assessed value of the commercial property in the 1996 tax year may not be counted for the purposes of the credit provided in [sections 8 through 14].



NEW SECTION. Section 13.  Reappraisal credit -- limitations. (1) The credit allowed under [sections 8 through 14] may be claimed only once in a claim period.

(2) A reappraisal credit is not allowed for commercial property that is not subject to property taxes in Montana during the claim period or that was not subject to property taxes in tax year 1996.

(3) THE REAPPRAISAL CREDIT MAY NOT EXCEED THE ACTUAL INCREASE IN PROPERTY TAXES PAID FOR PROPERTY TAX YEARS BEGINNING AFTER DECEMBER 31, 1996.



NEW SECTION. Section 14.  Reappraisal credit -- fraudulent claim -- penalty -- interest. (1) (a) If the claimant did not pay all of the property taxes due for the claim period on all property for which the claimant was required to pay property taxes in Montana, filed a false or fraudulent claim for the credit, or if a tax appeal rendered the claimant ineligible for the credit, the claimant may not claim the credit for the claim period.

(b) If a tax appeal is pending on property for which the claimant has claimed a credit, the credit may be claimed as if an appeal was not pending. When the appeal is decided, the department shall recalculate the amount of the credit and:

(i) if the amount is greater than the credit claimed, refund the difference; or

(ii) if the amount is less than the credit claimed, notify the claimant of the additional amount due.

(2) If a claim for the credit is disallowed or reduced under subsection (1), any excess amount claimed as a credit may be recovered in the same manner as any other debt owed the state.

(3) If the credit claimed was fraudulent, an additional 10% may be added to the amount due as a penalty.

(4) The unpaid debt, excluding penalty, bears interest, at the rate of 3/4 of 1% a month or fraction of a month, from the date the credit was claimed until the disallowed credit, plus penalty and interest, is paid.



NEW SECTION. Section 15.  Codification instruction. (1) [Sections 1 through 7] are intended to be codified as an integral part of Title 15, chapter 30, and the provisions of Title 15, chapter 30, apply to [sections 1 through 7].

(2) [Sections 8 through 14] are intended to be codified as an integral part of Title 15, chapter 31, and the provisions of Title 15, chapter 31, apply to [sections 8 through 14].



NEW SECTION. Section 16. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 1996.

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