BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.21.113, 42.21.123, 42.21.131, 42.21.137, 42.21.138, 42.21.139, 42.21.140, 42.21.151, 42.21.153, 42.21.155, 42.21.156, 42.21.157, and 42.22.1311 relating to property taxes and the trend tables for valuing property

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NOTICE OF AMENDMENT

 

TO: All Concerned Persons

 

1. On October 14, 2010, the department published MAR Notice No. 42-2-853 regarding the proposed amendment of the above-stated rules at page 2314 of the 2010 Montana Administrative Register, issue no. 19.

 

2. A public hearing was held on November 4, 2010, to consider the proposed amendment. No one appeared at the hearing to testify and no written comments were received.

 

3. No comments were received at or subsequent to the hearing; however, the department further amends ARM 42.21.123 as shown below. The amendments are necessary upon further review of the department's alternative valuation methods.  When the current guide does not provide a value for a piece of farm equipment, the department applies alternative valuation methods to derive the value.  The alternative methods sometimes result in an increase in the assessed value above the value provided for in the current guide. In an effort to ensure equalization and not disadvantage the taxpayer, the department will lower the value to more closely align with the current guide. The department is also amending ARM 42.12.131(5) to remove the reference to "salvage," as that language was inadvertently included in the revised depreciation schedule, and to correct the percentages.

 

42.21.123  FARM MACHINERY AND EQUIPMENT (1) The department applies the valuation methods in sequential order as shown in (2) through (8).

(1) and (2) remain as proposed but are renumbered (2) and (3).

(3)(4)  For all farm machinery and equipment which cannot be valued under (1)(2) and (2)(3),:

(a) the department shall try to ascertain the original FOB (free on board value) through old farm machinery and equipment valuation guidebooks.; and

(b)  If if an original FOB cannot be ascertained, the department may use trending to determine the FOB.

(5) The FOB or "trended" FOB will be used in conjunction with the depreciation schedule in (5)(8) to arrive at a value that approximates average wholesale value.

(6) A trended average wholesale value shall be applied to equipment if:

(a) the equipment cannot be valued under (2) but an average wholesale value is available for the same make and model with a different year new; and

(b) the equipment cannot be valued under (4) or the value as calculated under (4) results in a higher value being placed on a piece of farm equipment than the last year listed in the current Official Guide mentioned in (2) for the same make and model. The trended average wholesale value for farm equipment shall be ascertained by trending the average wholesale as found in the guide in (2), for the same make and model with a different year new. The trend factors are the same as those mentioned in (4).

(4)(7) If the methods mentioned in (1)(2) through (3)(5) cannot be used to ascertain average wholesale value for farm machinery and equipment, or the value as calculated under (3) is higher than the most recent average wholesale value from the guide in (1), the owner or applicant must certify to the department the year acquired and the acquired price before that value can be applied to the schedule in (5)(8).

(5)(8) The trended depreciation schedule referred to in (2) through (4)(6) is listed below and shall be used for tax year 2011. The schedule is derived by using the guidebook listed in (1)(2) as the data base.  The values derived through use of the trended depreciation schedule will approximate average wholesale value.

 

YEAR NEW/ACQUIRED	TRENDED % GOOD AVERAGE WHOLESALE
2011	80%
2010	75%
2009	67%
2008	67%
2007	64%
2006	59%
2005	53%
2004	50%
2003	44%
2002	40%
2001	36%
2000	35%
1999	32%
1998	31%
1997	29%
1996	27%
1995 and older	24%

 

(6) and (7) remain as proposed but are renumbered (9) and (10).

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

42.21.131 HEAVY EQUIPMENT (1) through (4) remain as proposed.

(5)  The trended depreciation schedule referred to in (2), (3), and (4) is listed below and shall be used for tax year 2011.  The values derived through the use of these percentages approximate the "quick sale" values as calculated in the guidebooks listed in (1).

 

HEAVY EQUIPMENT TRENDED DEPRECIATION SCHEDULE
YEAR NEW/ACQUIRED	TRENDED % GOOD WHOLESALE
2011	80%
2010	65% 58%
2009	58% 52%
2008	56% 43%
2007	50% 41%
2006	44% 34%
2005	41% 31%
2004	38% 30%
2003	36% 30%
2002	36% 26%
2001	29% 25%
2000	25% 22%
1999	24% 18%
1998	24% 20%
1997	25% 19%
1996	22% 19%
1995	21% 15%
1994	22% 16%
1993	21% 17%
1992	21% 16%
Salvage	14%

 

(6) remains as proposed.

 

AUTH: 15-1-201, 15-23-108, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

4. Therefore, the department amends ARM 42.21.123, and 42.21.131 with the amendments listed above and amends ARM 42.21.113, 42.21.137, 42.21.138, 42.21.139, 42.21.140, 42.21.151, 42.21.153, 42.21.155, 42.21.156, 42.21.157, and 42.22.1311 as proposed.

 

5. An electronic copy of this adoption notice is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes." The department strives to make the electronic copy of this adoption notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

 

 

/s/ Cleo Anderson                                       /s/ Alan G. Peura

CLEO ANDERSON                                     DAN R. BUCKS

Rule Reviewer                                             Director of Revenue

 

Certified to Secretary of State December 13, 2010