SENATE BILL NO. 401
INTRODUCED BY R. HOLDEN, T. BECK, M. COLE, G. DEVLIN, P. EKEGREN, B. GLASER, G. JERGESON, W. MCNUTT, B. STORY, J. TESTER, D. TOEWS, T. ZOOK
AN ACT REVISING THE DEFINITION OF "AGRICULTURAL USE" FOR GASOLINE AND SPECIAL FUEL TAX REFUND PURPOSES; ALLOWING A PERSON WHO EARNS INCOME WHILE ENGAGING IN THE BUSINESS OF FARMING OR RANCHING TO RECEIVE GASOLINE AND SPECIAL FUEL TAX REFUNDS ACCORDING TO THE RATIO OF THE PERSON'S GROSS EARNED FARM INCOME TO TOTAL GROSS EARNED INCOME; ALLOWING THE DEPARTMENT OF TRANSPORTATION TO VERIFY THAT A PERSON QUALIFIES AS AN AGRICULTURAL USER OF GASOLINE AND SPECIAL FUEL; AMENDING SECTIONS 15-30-303, 15-70-201, 15-70-223, 15-70-301, AND 15-70-362, MCA; AND PROVIDING AN EFFECTIVE DATE AND A TERMINATION DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-30-303, MCA, is amended to read:
"15-30-303. Confidentiality of tax records. (1) Except as provided in subsections (7) and (8) or in accordance with a proper judicial order or as otherwise provided by law, it is unlawful to divulge or make known in any manner:
(a) the amount of income or any particulars set forth or disclosed in any individual report or individual return required under this chapter or any other information secured in the administration of this chapter; or
(b) any federal return or federal return information disclosed on any return or report required by rule of the department or under this chapter.
(2) (a) The officers charged with the custody of the reports and returns may not be required to produce them or evidence of anything contained in them in an action or proceeding in a court, except in an action or proceeding:
(i) to which the department is a party under the provisions of this chapter or any other taxing act; or
(ii) on behalf of a party to any action or proceedings under the provisions of this chapter or other taxes when the reports or facts shown by the reports are directly involved in the action or proceedings.
(b) The court may require the production of and may admit in evidence only as much of the reports or of the facts shown by the reports as are pertinent to the action or proceedings.
(3) This section does not prohibit:
(a) the delivery to a taxpayer or the taxpayer's authorized representative of a certified copy of any return or report filed in connection with the taxpayer's tax;
(b) the publication of statistics classified to prevent the identification of particular reports or returns and the items of particular reports or returns; or
(c) the inspection by the attorney general or other legal representative of the state of the report or return of any taxpayer who brings an action to set aside or review the tax based on the report or return or against whom an action or proceeding has been instituted in accordance with the provisions of 15-30-311.
(4) Reports and returns must be preserved for at least 3 years and may be preserved until the department orders them to be destroyed.
(5) Any offense against subsections (1) through (4) is punishable by a fine not exceeding $1,000 or by imprisonment in the county jail for a term not exceeding 1 year, or both. If the offender is an officer or employee of the state, the offender must be dismissed from office and may not hold any public office in this state for a period of 1 year after dismissal.
(6) This section may not be construed to prohibit the department from providing taxpayer return information and information from employers' payroll withholding reports to:
(a) the department of labor and industry to be used for the purpose of investigation and prevention of noncompliance, tax evasion, fraud, and abuse under the unemployment insurance laws; or
(b) the state fund to be used for the purpose of investigation and prevention of noncompliance, fraud, and abuse under the workers' compensation program.
(7) The department may permit the commissioner of internal revenue of the United States or the proper officer of any state imposing a tax upon the incomes of individuals or the authorized representative of either officer to inspect the return of income of any individual or may furnish to the officer or an authorized representative an abstract of the return of income of any individual or supply the officer with information concerning an item of income contained in a return or disclosed by the report of an investigation of the income or return of income of an individual, but the permission may be granted or information furnished only if the statutes of the United States or of the other state grant substantially similar privileges to the proper officer of this state charged with the administration of this chapter.
(8) The department shall furnish:
(a) to the department of justice all information necessary to identify those persons qualifying for the additional exemption for blindness pursuant to 15-30-112(4), for the purpose of enabling the department of justice to administer the provisions of 61-5-105;
(b) to the department of public health and human services information acquired under 15-30-301, pertaining to an applicant for public assistance, reasonably necessary for the prevention and detection of public assistance fraud and abuse, provided notice to the applicant has been given;
(c) to the department of labor and industry for the purpose of prevention and detection of fraud and abuse in and eligibility for benefits under the unemployment compensation and workers' compensation programs information on whether a taxpayer who is the subject of an ongoing investigation by the department of labor and industry is an employee, an independent contractor, or self-employed;
(d) to the department of fish, wildlife, and parks specific information that is available from income tax returns and required under 87-2-102 to establish the residency requirements of an applicant for hunting and fishing licenses;
(e) to the board of regents information required under 20-26-1111;
(f) to the legislative fiscal analyst and the office of budget and program planning individual income tax information as provided in 5-12-303. The information provided to the office of budget and program planning must be the same as the information provided to the legislative fiscal analyst.
(g) to the department of transportation the ratio of gross farm income information to total gross income based on the
most recent income tax return filed by an applicant applying for a refund under 15-70-223 or 15-70-362, provided that
notice to the applicant has been given as provided in 15-70-223 and 15-70-362. The information obtained by the department
of transportation is subject to the same restrictions on disclosure as are individual income tax returns."
Section 2. Section 15-70-201, MCA, is amended to read:
"15-70-201. Definitions. As used in this part, unless the context requires otherwise, the following definitions apply:
(1) "Agricultural use" means use of gasoline by a person whose major endeavor and primary source of earned income is
from who earns income while engaging in the business of farming or ranching and who files farm income reports for tax
purposes as required by the United States internal revenue service.
(2) "Aviation dealer" means a person in this state engaged in the business of selling aviation fuel, either from a wholesale or retail outlet, on which the license tax has been paid to a licensed distributor as provided in this section.
(3) "Aviation fuel" means gasoline or any other liquid fuel by whatever name the liquid fuel may be known or sold, compounded for use in and sold for use in aircraft, including but not limited to any and all gasoline or liquid fuel meeting or exceeding the minimum specifications prescribed by the United States for use by its military forces in aircraft.
(4) "Bulk delivery" means placing gasoline in storage or containers. The term does not mean gasoline delivered into the supply tank of a motor vehicle.
(5) (a) Gasoline refined, produced, manufactured, or compounded in this state and placed in tanks, gasoline transferred from a refinery or pipeline terminal in this state and placed in tanks, or gasoline imported into this state and placed in storage at refineries or pipeline terminals is considered to be "distributed", for the purpose of this part, at the time the gasoline is withdrawn from the tanks, refinery, or terminal storage for sale or use in this state or for the transportation to destinations in this state other than by pipeline to another refinery or pipeline terminal in this state. When withdrawn from the tanks, refinery, or terminal, the gasoline may be distributed only by a person who is the holder of a valid distributor's license.
(b) Gasoline imported into this state, other than that gasoline placed in storage at refineries or pipeline terminals, is considered to be "distributed" after it has arrived in and is brought to rest in this state.
(6) "Distributor" means:
(a) a person who engages in the business in this state of producing, refining, manufacturing, or compounding gasoline for sale, use, or distribution;
(b) a person who imports gasoline for sale, use, or distribution;
(c) a person who engages in the wholesale distribution of gasoline in this state and chooses to become licensed to assume the Montana state gasoline tax liability;
(d) an exporter as defined in subsection (8);
(e) a dealer licensed as of January 1, 1969, except a dealer at an established airport; or
(f) a person in Montana who blends alcohol with gasoline.
(7) "Export" means to transport out of Montana, by any means other than in the fuel supply tank of a motor vehicle, gasoline received from a refinery or pipeline terminal within Montana.
(8) "Exporter" means any person who transports, other than in the fuel supply tank of a motor vehicle, gasoline received from a refinery or pipeline terminal in Montana to a destination outside Montana for sale, use, or consumption beyond the boundaries of this state.
(9) (a) "Gasoline" includes:
(i) all products commonly or commercially known or sold as gasolines, including casinghead gasoline, natural gasoline, aviation fuel, and all flammable liquids composed of a mixture of selected hydrocarbons expressly manufactured and blended for the purpose of effectively and efficiently operating internal combustion engines; and
(ii) any other type of additive when the additive is mixed or blended into gasoline, regardless of the additive's classifications or uses.
(b) Gasoline does not include special fuels as defined in 15-70-301.
(10) "Import" means to receive into a person's possession or custody first after its arrival and coming to rest at destination within the state of gasoline shipped or transported into this state from a point of origin outside of this state other than in the fuel supply tank of a motor vehicle.
(11) "Importer" means a person who transports or arranges for the transportation of gasoline into Montana for sale, use, or distribution in this state.
(12) "Improperly imported fuel" means aviation or gasoline fuel as defined in subsections (3) and (9) that:
(a) is consigned to a Montana destination and imported into the state without the distributor first having obtained a Montana gasoline distributor license as required in 15-70-202; or
(b) is delivered, possessed, sold, or transferred in the state in any manner not authorized under Title 15, chapter 70.
(13) "Motor vehicle" means all vehicles operated or propelled upon the public highways or streets of this state in whole or in part by the combustion of gasoline.
(14) "Person" means any person, firm, association, joint-stock company, syndicate, or corporation.
(15) "Use" means the operation of motor vehicles upon the public roads or highways of the state or of any political subdivision of the state."
Section 3. Section 15-70-223, MCA, is amended to read:
"15-70-223. Estimate allowed for agricultural use -- seller's signed statement acceptable on keylock or cardtrol
purchases. (1) An applicant whose use qualifies as agricultural use may apply for a refund of 60% of the applicable tax on
the gallons of gasoline as indicated by bulk delivery invoices or by evidence of keylock or cardtrol purchases as an estimate
of off-roadway use. To ensure that the applicant's use qualifies as agricultural use, the department of transportation may
request from the department of revenue information on the ratio of the applicant's gross earned farm income to total gross
earned income, excluding unearned income, provided that the department of transportation gives notice to the applicant.
(2) For purposes of application for a refund under subsection (1), the department shall accept, as evidence of keylock or cardtrol purchases, a statement of the sale of gasoline with applicable tax that identifies the purchaser and that is signed by a licensed distributor or a person licensed under 15-70-203 from whom the gasoline was purchased.
(3) An applicant may apply for a refund of the applicable tax on gallons of gasoline as evidenced by bulk delivery invoices or by evidence of keylock or cardtrol purchases according to the applicant's ratio of gross earned farm income to total gross earned income, excluding unearned income, as follows:
(a) if the ratio is 50% or more, the applicant may apply for a refund of 60% of the gasoline tax;
(b) if the ratio is between 40% and 49%, the applicant may apply for a refund of 50% of the gasoline tax;
(c) if the ratio is between 30% and 39%, the applicant may apply for a refund of 40% of the gasoline tax;
(d) if the ratio is less than 30%, the applicant is not eligible for a refund of the gasoline tax under this section.
(4) If the applicant's ratio in any of the 3 previous years on record is higher than the present year, the highest ratio must be used to calculate the eligible refund.
(3)(5) If any invoice or evidence is either lost or destroyed, the purchaser may support his the purchaser's claim for
refund by submitting an affidavit relating the circumstances of such the loss or destruction and by producing such other
evidence as that may be required by the department of transportation.
(4)(6) An applicant whose use does not qualify as agricultural use may not estimate and must shall maintain records as
required by 15-70-222."
Section 4. Section 15-70-301, MCA, is amended to read:
"15-70-301. Definitions. As used in this part, the following definitions apply:
(1) "Agricultural use" means use of special fuel by a person whose major endeavor is who earns income while engaging
in the business of farming or ranching and whose primary source of earned income is from the business of farming or
ranching and who files farm income reports for tax purposes as required by the United States internal revenue service.
(2) "Bond" means:
(a) a bond executed by a special fuel user as principal with a corporate surety qualified under the laws of Montana, payable to the state of Montana, and conditioned upon faithful performance of all requirements of this part, including the payment of all taxes, penalties, and other obligations of the special fuel user arising out of this part; or
(b) a deposit with the department by the special fuel user, under terms and conditions that the department may prescribe, of certificates of deposit or irrevocable letters of credit issued by a bank and insured by the federal deposit insurance corporation.
(3) "Bulk delivery" means placing special fuel not intended for resale in storage or containers. The term does not mean special fuel delivered into the supply tank of a motor vehicle.
(4) "Cardtrol" or "keylock" means a unique device intended to allow access to a special fuel dealer's unattended pump or dispensing unit for the purpose of delivery of special fuel to an authorized user of the unique device.
(5) "Department" means the department of transportation.
(6) (a) "Distributed" means, at the time that special fuel is withdrawn, the withdrawal from a storage tank, a refinery, or a terminal storage in this state for sale or use in this state or for the transportation other than by pipeline to another refinery in this state or a pipeline terminal in this state of the following:
(i) special fuel refined, produced, manufactured, or compounded in this state and placed in storage tanks in this state;
(ii) special fuel transferred from a refinery or pipeline terminal in this state and placed in tanks at the refinery or terminal; or
(iii) special fuel imported into this state and placed in storage at a refinery or pipeline terminal.
(b) When withdrawn from the storage tanks, refinery, or terminal, the special fuel may be distributed only by a person who is the holder of a valid distributor's license.
(c) Special fuel imported into this state, other than that special fuel placed in storage at a refinery or pipeline terminal, is considered to be distributed after it has arrived in and is brought to rest in this state.
(7) "Distributor" means:
(a) a person who engages in the business in this state of producing, refining, manufacturing, or compounding special fuel for sale, use, or distribution;
(b) an importer who imports special fuel for sale, use, or distribution;
(c) a person who engages in the wholesale distribution of special fuel in this state and chooses to become licensed to assume the Montana state special fuel tax liability; and
(d) an exporter.
(8) "Export" means to transport out of Montana, by any means other than in the fuel supply tank of a motor vehicle, special fuel received from a refinery or pipeline terminal within Montana.
(9) "Exporter" means a person who transports, other than in the fuel supply tank of a motor vehicle, special fuel received from a refinery or pipeline terminal in Montana to a destination outside Montana for sale, use, or consumption outside Montana.
(10) "Import" means to first receive special fuel into possession or custody after its arrival and coming to rest at a destination within the state or to first receive any special fuel shipped or transported into this state from a point of origin outside this state other than in the fuel supply tank of a motor vehicle.
(11) "Importer" means a person who transports or arranges for the transportation of special fuel into Montana for sale, use, or distribution.
(12) "Improperly imported fuel" means special fuel as defined in subsection (16) that is:
(a) consigned to a Montana destination and imported into the state without the distributor first having obtained a Montana special fuel distributor license as required in 15-70-341; or
(b) delivered, possessed, sold, or transferred in the state in any manner not authorized under Title 15, chapter 70.
(13) "Motor vehicle" means all vehicles that are operated upon the public highways or streets of this state and that are operated in whole or in part by the combustion of special fuel.
(14) "Person" includes any person, firm, association, joint-stock company, syndicate, partnership, or corporation. Whenever the term is used in any clause prescribing and imposing a fine or imprisonment, or both, as applied to a firm, association, syndicate, or partnership, it includes the partners or members and, as applied to joint-stock companies and corporations, the officers.
(15) "Public roads and highways of this state" means all streets, roads, highways, and related structures:
(a) built and maintained with appropriated funds of the United States, the state of Montana, or any political subdivision of the state;
(b) dedicated to public use;
(c) acquired by eminent domain; or
(d) acquired by adverse use by the public, jurisdiction having been assumed by the state or any political subdivision of the state.
(16) "Special fuel" means those combustible gases and liquids commonly referred to as diesel fuel or any other volatile liquid of less than 46 degrees A.P.I. (American petroleum institute) gravity test, except liquid petroleum gas, when actually sold for use in motor vehicles operating upon the public roads and highways within the state of Montana. The term special fuel includes all other types of additives when the additive is mixed or blended into special fuel, regardless of the additive's classifications or uses.
(17) "Special fuel dealer" means:
(a) a person in the business of handling special fuel who delivers any part of the fuel into the fuel supply tank or tanks of a motor vehicle not then owned or controlled by the person;
(b) a person who sells special fuel at a location unattended by the dealer through an unattended pump by use of a cardtrol, keylock, or similar device; or
(c) a person who provides a facility, with or without attended services, from which more than one special fuel user obtains special fuel for use in the fuel supply tank of a motor vehicle not then controlled by the dealer.
(18) "Special fuel user" means a person other than the U.S. government, a state, or a county, incorporated city or town, or school district of this state who consumes in this state special fuel for the operation of motor vehicles owned or controlled by the person upon the highways of this state.
(19) "Use", when the term relates to a special fuel user, means the consumption by a special fuel user of special fuels in the operation of a motor vehicle on the highways of this state."
Section 5. Section 15-70-362, MCA, is amended to read:
"15-70-362. Estimate allowed for agricultural use -- seller's signed statement acceptable on keylock or cardtrol
purchases. (1) An applicant whose use qualifies as agricultural use may apply for a refund of 60% of the applicable tax on
the gallons of special fuel as indicated by bulk delivery invoices or by evidence of keylock or cardtrol purchases as an
estimate of off-roadway use.
(2) An applicant may apply for a refund of the applicable tax on gallons of special fuel as evidenced by bulk delivery invoices or by evidence of keylock or cardtrol purchases according to the applicant's ratio of gross earned farm income to total gross earned income, excluding unearned income, as follows:
(a) if the ratio is 50% or more, the applicant may apply for a refund of 60% of the special fuel tax;
(b) if the ratio is between 40% and 49%, the applicant may apply for a refund of 50% of the special fuel tax;
(c) if the ratio is between 30% and 39%, the applicant may apply for a refund of 40% of the special fuel tax;
(d) if the ratio is less than 30%, the applicant is not eligible for a refund of the special fuel tax under this section.
(3) If the applicant's ratio in any of the 3 previous years on record is higher than the present year, the highest ratio must be used to calculate the eligible refund.
(2)(4) If any invoice or evidence is either lost or destroyed, the purchaser may support the purchaser's claim for refund
by submitting an affidavit relating the circumstances of the loss or destruction and by producing other evidence as that may
be required by the department of transportation.
(3)(5) An applicant whose use does not qualify as agricultural use may not estimate and shall maintain records as
required by 15-70-361."
Section 6. Effective date. [This act] is effective July 1, 1999.
Section 7. Termination. [This act] terminates June 30, 2001.
- END -
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