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

) ) ) ) ) ) )

NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO:  All Concerned Persons

 

1.  On November 4, 2010, at 2:30 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the amendment of the above-stated rules.

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

 

2.  The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice.  If you require an accommodation, contact the Department of Revenue no later than 5:00 p.m., October 25, 2010, to advise us of the nature of the accommodation that you need.  Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail [email protected].

 

3.  The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

42.21.113  LEASED AND RENTAL EQUIPMENT  (1)  Leased or rental equipment that is leased or rented on an hourly, daily, weekly, semimonthly, or monthly basis, but is not exempt under 15-6-219(5) or 15-6-202(4), MCA, will be valued in the following manner:

(a)  For equipment that has an acquired cost of $0 to $500, the department shall use a four-year trended depreciation schedule.  The trended schedule will be the same as ARM 42.21.155, category 1.

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	70%
2008	42%
2007	16%
2006 and older	8%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2010	70%
2009	43%
2008	18%
2007 and older	8%

 

(b)  For equipment that has an acquired cost of $501 to $1,500, the department shall use a five-year trended depreciation schedule. The trended schedule will be the same as ARM 42.21.155, category 2.

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	85%
2008	75%
2007	58%
2006	38%
2005 and older	22%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2010	85%
2009	66%
2008	54%
2007	36%
2006 and older	21%

 

(c)  For equipment that has an acquired cost of $1,501 to $5,000, the department shall use a ten-year trended depreciation schedule. The trended schedule will be the same as ARM 42.21.155, category 8.

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	92%
2008	89%
2007	83%
2006	75%
2005	67%
2004	59%
2003	47%
2002	37%
2001	29%
2000 and older	25%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2010	92%
2009	84%
2008	81%
2007	73%
2006	65%
2005	57%
2004	47%
2003	36%
2002	29%
2001 and older	25%

 

(d)  For equipment that has an acquired cost of $5,001 to $15,000, the department shall use the trended depreciation schedule for heavy equipment.  The schedule will be the same as ARM 42.21.131.

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2010	80%
2009	65%
2008	58%
2007	56%
2006	50%
2005	44%
2004	41%
2003	38%
2002	36%
2001	36%
2000	29%
1999	25%
1998	24%
1997	24%
1996	25%
1995	22%
1994	21%
1993	22%
1992	21%
1991 and older	21%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2011	80%
2010	58%
2009	52%
2008	43%
2007	41%
2006	34%
2005	31%
2004	30%
2003	30%
2002	26%
2001	25%
2000	22%
1999	18%
1998	20%
1997	19%
1996	19%
1995	15%
1994	16%
1993	17%
1992	16%

 

(e)  For rental video tapes and digital video disks the following schedule will be used:

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2009	25%
2008	15%
2007 and older	10%

 

YEAR NEW/ACQUIRED	TRENDED % GOOD
2010	25%
2009	15%
2008 and older	10%

 

(2) through (4) remain the same.

5)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 41.21.113 to demonstrate through the trend tables how the department arrives at market value as required by 15-8-111, MCA.  Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property.  To determine the market value of personal property, the department has historically used and adopted the concept of trending and depreciation.  The method by which trended depreciation schedules are derived is described in the existing rule, and that method is not being changed.  The First Judicial District Court indicated in 1986 that the department must publish these trend tables annually and these amendments are in compliance with that order.

 

42.21.123 FARM MACHINERY AND EQUIPMENT  (1) and (2) remain the same.

(3)  For all farm machinery and equipment which cannot be valued under (1) and (2), the department shall try to ascertain the original FOB (free on board value) through old farm machinery and equipment valuation guidebooks. If an original FOB cannot be ascertained, the department may use trending to determine the FOB. The FOB or "trended" FOB will be used in conjunction with the depreciation schedule in (5) to arrive at a value that approximates average wholesale value.

(4)  If the methods mentioned in (1) through (3) 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).

(5) The trended depreciation schedule referred to in (2) through (4) is listed below and shall be used for tax year 2010 2011.  The schedule is derived by using the guidebook listed in (1) 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
2010	80%
2009	75%
2008	71%
2007	68%
2006	64%
2005	58%
2004	54%
2003	47%
2002	42%
2001	38%
2000	36%
1999	33%
1998	33%
1997	30%
1996	28%
1995	28%
1994 and older	23%

 

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)  remains the same.

(7)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113. The department seeks to amend this rule to determine a more accurate value in situations where an FOB or trended FOB value is greater than the most recent quick sale.

 

42.21.131 HEAVY EQUIPMENT  (1) The wholesale market value of heavy equipment shall be the most current quick sale as shown in the "Green Guide" and "Green Guide for Older Equipment" or the on-line version of the Green Guide known as Equipment Watch, for as of January 1 of the current year of assessment.  This guide may be reviewed in the department or purchased from the publisher and is incorporated by reference: Dataquest, 1290 Ridder Park Drive, San Jose, California 95131.

(2)  For all heavy equipment which cannot be valued under (1), the department shall try to ascertain the original FOB (free on board value) through old heavy equipment valuation guidebooks.  If an original FOB cannot be ascertained, the department may use trending to determine the FOB.  The FOB or "trended" FOB will be used in conjunction with the depreciation schedule in (5) to arrive at a value which approximates wholesale value.  The trend factors are calculated using the most recent Contractor's Equipment factors available in the Marshall Valuation Service Manual for the year of assessment.  The Marshall Valuation Service Manual published by Marshall and Swift Publication Company, 915 Wilshire Boulevard, 8th Floor, P.O. Box 26307, Los Angeles, California 90026-0307, is adopted by reference.

(3)  For equipment that cannot be valued under (1) and (2), the value for heavy equipment shall be ascertained by trending the quick sale as found in the guide in (1), for the same make and model. The trend factors are the same as those mentioned in (2).  A trended quick sale value shall be applied to equipment if:

(a)  the equipment cannot be valued under (1) but a quick sale value is available for the same make and model with a different year new; and

(b)  the equipment cannot be valued under (2) or the value as calculated under (2) is higher than the most recently published previous year quick sale for the same make, model and year new. The trended quick sale value for heavy equipment shall be ascertained by trending the quick sale as found in the guide in (1), for the same make and model with a different year new.  The trend factors are the same as those mentioned in (2).

(4) remains the same.

(5)  The trended depreciation schedule referred to in (2), (3), and (4) is listed below and shall be used for tax year 2010 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
2010	80%
2009	65%
2008	58%
2007	56%
2006	50%
2005	44%
2004	41%
2003	38%
2002	36%
2001	36%
2000	29%
1999	25%
1998	24%
1997	24%
1996	25%
1995	22%
1994	21%
1993	22%
1992	21%
1991 and older	21%

 

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

 

(6)  This rule is effective for tax years beginning after December 31, 2009 2010, and applies to all heavy equipment.

 

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

 

REASONABLE NECESSITY:  See the reasonable necessity for ARM 42.21.113.  Through the amendment in (3) the department is seeking a means to determine a more accurate value in situations where an FOB or trended FOB value is greater than the most recent quick sale.  Through the addition of (5) the department is seeking to establish a means of fairly valuing equipment that is temporarily nonoperational.

 

42.21.137 SEISMOGRAPH UNITS AND ALLIED EQUIPMENT  (1) through (3) remain the same.

(4)  The trended depreciation schedules referred to in (1) through (3) are listed below and shall be used for tax year 2010 2011.

 

SEISMOGRAPH UNIT
YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD	WHOLESALE FACTOR	WHOLESALE % GOOD
2010	100%	1.000	100%	80%	80%
2009	85%	1.000	85%	80%	68%
2008	69%	1.041	72%	80%	57%
2007	52%	1.088	57%	80%	45%
2006	34%	1.153	39%	80%	31%
2005	20%	1.211	24%	80%	19%
2004 and older	5%	1.314	7%	80%	5%

 

SEISMOGRAPH UNIT
YEAR NEW/ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD	WHOLESALE FACTOR	WHOLESALE % GOOD
2011	100%	1.000	100%	80%	80%
2010	85%	1.000	85%	80%	68%
2009	69%	0.983	68%	80%	54%
2008	52%	1.017	53%	80%	42%
2007	34%	1.064	36%	80%	29%
2006	20%	1.126	23%	80%	18%
2005 and older	5%	1.183	6%	80%	5%

 

SEISMOGRAPH ALLIED EQUIPMENT
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	100%	1.000	100%
2009	85%	1.000	85%
2008	69%	1.041	72%
2007	52%	1.088	57%
2006	34%	1.153	39%
2005	20%	1.211	24%
2004 and older	5%	1.314	7%

 

SEISMOGRAPH ALLIED EQUIPMENT
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2011	100%	1.000	100%
2010	85%	1.000	85%
2009	69%	0.983	68%
2008	52%	1.017	53%
2007	34%	1.064	36%
2006	20%	1.126	23%
2005 and older	5%	1.183	6%

 

(5)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.138  OIL AND GAS FIELD MACHINERY AND EQUIPMENT

(1) and (2) remain the same.

(3)  The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2010 2011.

 

OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	100%	1.000	100%
2009	95%	1.000	95%
2008	90%	1.041	94%
2007	85%	1.088	93%
2006	79%	1.153	91%
2005	73%	1.211	88%
2004	68%	1.314	89%
2003	62%	1.362	84%
2002	55%	1.387	76%
2001	49%	1.394	68%
2000	43%	1.408	61%
1999	37%	1.431	53%
1998	31%	1.438	45%
1997	26%	1.452	38%
1996	23%	1.471	34%
1995 and older	20%	1.500	30%

 

OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2011	100%	1.000	100%
2010	95%	1.000	95%
2009	90%	0.983	88%
2008	85%	1.017	86%
2007	79%	1.064	84%
2006	73%	1.126	82%
2005	68%	1.183	80%
2004	62%	1.284	80%
2003	55%	1.328	73%
2002	49%	1.355	66%
2001	43%	1.363	59%
2000	37%	1.376	51%
1999	31%	1.398	43%
1998	26%	1.405	37%
1997	23%	1.419	33%
1996 or older	20%	1.437	29%

 

(4) and (5) remain the same.

(6)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

AUTH: 15-1-201, MCA

IMP: 15-6-135, 15-6-138, 15-6-207, 15-6-213, 15-6-219, 15-24-921, 15-24-922, 15-24-925, MCA

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.139  WORK-OVER AND SERVICE RIGS  (1) through (4) remain the same.

(5)  The trended depreciation schedule referred to in (2) and (4) is listed below and shall be used for tax year 2010 2011.

 

SERVICE AND WORKOVER RIG TRENDED DEPRECIATION SCHEDULE
YEAR/NEW ACQUIRED	% GOOD	TREND FACTOR	WHOLESALE FACTOR	TRENDED WHOLESALE % GOOD
2010	100%	1.000	80%	80%
2009	92%	1.000	80%	74%
2008	84%	1.041	80%	70%
2007	76%	1.088	80%	66%
2006	67%	1.153	80%	62%
2005	58%	1.211	80%	56%
2004	49%	1.314	80%	51%
2003	39%	1.362	80%	42%
2002	30%	1.387	80%	33%
2001	24%	1.394	80%	27%
2000 and older	20%	1.408	80%	23%

 

SERVICE AND WORKOVER RIG TRENDED DEPRECIATION SCHEDULE
YEAR/NEW ACQUIRED	% GOOD	TREND FACTOR	WHOLESALE FACTOR	TRENDED WHOLESALE % GOOD
2011	100%	1.000	80%	80%
2010	92%	1.000	80%	74%
2009	84%	0.983	80%	66%
2008	76%	1.017	80%	62%
2007	67%	1.064	80%	57%
2006	58%	1.126	80%	52%
2005	49%	1.183	80%	46%
2004	39%	1.284	80%	40%
2003	30%	1.328	80%	32%
2002	24%	1.355	80%	26%
2001 and older	20%	1.363	80%	22%

 

(6)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

AUTH: 15-1-201, MCA

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.140  OIL DRILLING RIGS  (1) remains the same.

(2)  The department shall prepare a ten-year trended depreciation schedule for oil drilling rigs.  The trended depreciation schedule shall be derived from depreciation factors published by Marshall and Swift Publication Company.  The "% good" for all drill rigs less than one year old shall be 100%.  The trended depreciation schedule for tax year 2010 2011 is listed below.

 

DRILL RIG TRENDED DEPRECIATION SCHEDULE
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	100%	1.000	100%
2009	92%	1.000	92%
2008	84%	1.041	87%
2007	76%	1.088	83%
2006	67%	1.153	77%
2005	58%	1.211	70%
2004	49%	1.314	64%
2003	35%	1.362	48%
2002	30%	1.387	42%
2001	24%	1.394	33%
2000 and older	20%	1.408	28%

 

DRILL RIG TRENDED DEPRECIATION SCHEDULE
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2011	100%	1.000	100%
2010	92%	1.000	92%
2009	84%	0.983	83%
2008	76%	1.017	77%
2007	67%	1.064	71%
2006	58%	1.126	65%
2005	49%	1.183	58%
2004	39%	1.284	50%
2003	30%	1.328	40%
2002	24%	1.355	33%
2001 and older	20%	1.363	27%

 

(3)  remains the same.

(4)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.151  TELEVISION CABLE SYSTEMS (1)  through (3) remain the same.

(4)  The trended depreciation schedules referred to in (2) and (3) are listed below and shall be in effect for tax year 2010 2011.

 

TABLE 1: FIVE-YEAR "DISHES"
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.034	71%
2007	52%	1.075	56%
2006	34%	1.133	39%
2005 and older	20%	1.186	24%

 

TABLE 1: FIVE-YEAR "DISHES"
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	85	1.000	85%
2009	69	0.989	68%
2008	52	1.017	53%
2007	34	1.057	36%
2006 and older	20	1.115	22%

 

TABLE 2: TEN-YEAR "TOWERS"
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.034	87%
2007	76%	1.075	82%
2006	67%	1.133	76%
2005	58%	1.186	69%
2004	49%	1.275	62%
2003	39%	1.319	51%
2002	30%	1.342	40%
2001	24%	1.350	32%
2000 and older	20%	1.361	27%

 

TABLE 2: TEN-YEAR "TOWERS"
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	92%	1.000	92%
2009	84%	0.989	83%
2008	76%	1.017	77%
2007	67%	1.057	71%
2006	58%	1.115	65%
2005	49%	1.167	57%
2004	39%	1.255	49%
2003	30%	1.298	39%
2002	24%	1.320	32%
2001 and older	20%	1.328	27%

 

(5)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.153  SKI LIFT EQUIPMENT  (1) and (2) remain the same.

(3)  The depreciation schedules shall be determined by the life expectancy of the equipment and will normally compensate for the loss in value due to ordinary wear and tear, offset by reasonable maintenance, and ordinary functional obsolescence due to the technological changes during the life expectancy period.

 

DEPRECIATION TABLE FOR SKI LIFT EQUIPMENT
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.034	87%
2007	76%	1.075	82%
2006	67%	1.133	76%
2005	58%	1.186	69%
2004	49%	1.275	62%
2003	39%	1.319	51%
2002	30%	1.342	40%
2001	24%	1.350	32%
2000 and older	20%	1.361	27%

 

DEPRECIATION TABLE FOR SKI LIFT EQUIPMENT
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	92%	1.000	92%
2009	84%	0.989	83%
2008	76%	1.017	77%
2007	67%	1.057	71%
2006	58%	1.115	65%
2005	49%	1.167	57%
2004	39%	1.255	49%
2003	30%	1.298	39%
2002	24%	1.320	32%
2001 and older	20%	1.328	27%

 

(a)  The taxpayer must initially list with the department:

(i)  all equipment by year of installation; and

(ii)  installed costs of that equipment.

(b)  Each year thereafter, the taxpayer must list with the department:

(i)  all additions or deletions from the previous year's list, with installed cost.

(4)  This methodology is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.155  DEPRECIATION SCHEDULES  (1) remains the same.

(2)  The trended depreciation schedules for tax year 2010 2011 are listed below.  The categories are explained in ARM 42.21.156.  The trend factors are derived according to ARM 42.21.156 and 42.21.157.

 

CATEGORY 1

 

 

YEAR NEW/ ACQUIRED	%GOOD	TREND FACTOR	TRENDED % GOOD
2010	70%	1.000	70%
2009	45%	0.963	43%
2008	20%	0.897	18%
2007 and older	10%	0.763	8%

 

CATEGORY 2

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.089	75%
2007	52%	1.112	58%
2006	34%	1.106	38%
2005 and older	20%	1.113	22%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	85%	1.000	85%
2009	69%	0.957	66%
2008	52%	1.035	54%
2007	34%	1.058	36%
2006 and older	20%	1.052	21%

 

CATEGORY 3

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	0.966	67%
2007	52%	0.873	45%
2006	34%	0.876	30%
2005 and older	20%	0.865	17%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	85%	1.000	85%
2009	69%	0.982	68%
2008	52%	0.949	49%
2007	34%	0.857	29%
2006 and older	20%	0.860	17%

 

CATEGORY 4

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	0.988	68%
2007	52%	0.966	50%
2006	34%	0.955	32%
2005 and older	20%	0.943	19%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	85%	1.000	85%
2009	69%	0.990	68%
2008	52%	0.977	51%
2007	34%	0.956	33%
2006 and older	20%	0.945	19%

 

CATEGORY 5

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.043	72%
2007	52%	1.057	55%
2006	34%	1.078	37%
2005 and older	20%	1.108	22%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	85%	1.000	85%
2009	69%	1.006	69%
2008	52%	1.049	55%
2007	34%	1.064	36%
2006 and older	20%	1.084	22%

 

CATEGORY 6

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	85%	1.000	85%
2008	69%	1.026	71%
2007	52%	1.048	54%
2006	34%	1.085	37%
2005 and older	20%	1.159	23%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	85%	1.000	85%
2009	69%	1.013	70%
2008	52%	1.017	53%
2007	34%	1.048	36%
2006 and older	20%	1.072	21%

 

CATEGORY 7

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.031	87%
2007	76%	1.050	80%
2006	67%	1.072	72%
2005	58%	1.105	64%
2004	49%	1.134	56%
2003	39%	1.139	44%
2002	30%	1.138	34%
2001	24%	1.138	27%
2000 and older	20%	1.150	23%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	92%	1.000	92%
2009	84%	0.995	84%
2008	76%	1.026	78%
2007	67%	1.045	70%
2006	58%	1.067	62%
2005	49%	1.100	54%
2004	39%	1.129	44%
2003	30%	1.133	34%
2002	24%	1.132	27%
2001 and older	20%	1.132	23%

 

CATEGORY 8

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2009	92%	1.000	92%
2008	84%	1.063	89%
2007	76%	1.086	83%
2006	67%	1.116	75%
2005	58%	1.152	67%
2004	49%	1.197	59%
2003	39%	1.206	47%
2002	30%	1.217	37%
2001	24%	1.225	29%
2000 and older	20%	1.239	25%

 

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	92%	1.000	92%
2009	84%	1.005	84%
2008	76%	1.069	81%
2007	67%	1.092	73%
2006	58%	1.123	65%
2005	49%	1.159	57%
2004	39%	1.203	47%
2003	30%	1.213	36%
2002	24%	1.224	29%
2001	20%	1.232	25%

 

(3)  This rule is effective for tax years beginning after December 31, 2009 2010.

 

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

 

REASONABLE NECESSITY: See the reasonable necessity for ARM 42.21.113.

 

42.21.156 CATEGORIES  (1) remains the same.

(2)  Category 1 consists of computer systems, data processing equipment, computerized medical equipment, and video games.  The index used will be the "Producer Price Index for the 1972 Standard Industrial Classification Manual Industry Data," Code #3674 Series Id PCU334413334413,  "Semiconductors and Related Devices," published by the United States Department of Labor, Bureau of Labor Statistics.  A four-year depreciation table will be used.

(3)  Category 2 consists of calculating and accounting machines, cash registers, copiers, typewriters, vending machines, jukeboxes, fax machines, addressing machines, time recording machines, check endorsing machines, postage machines, electronic games, transcribing equipment, and other office and store machines.  The index used will be the "Producer Price Index for Commodity Commodities Grouping," No. 1193 Series Id WPU1193, "Office and Store Machines and Equipment," published by the United States Department of Labor, Bureau of Labor Statistics.  A five-year depreciation table will be used.

(4)  Category 3 consists of citizens band radios, mobile telephones, PBX type systems, radio and television broadcasting and transmitting equipment, locally assessed phones and phone systems, all cable T.V. equipment not assessed by ARM 42.21.151, intercom equipment, mics, and sound systems.  The index used will be the "Producer Price Index for Commodity Commodities Grouping," No. 1178 Series Id WPU1178, "Electronic Components and Accessories," published by the United States Department of Labor, Bureau of Labor Statistics.  A five-year depreciation table will be used.

(5)  Category 4 consists of specialized medical and dental equipment. The index used will be the "Producer Price Index for Commodity Commodities," No. 11790533.18 Series Id WPU117905, "Medical X-Ray Unit X-ray and Electromedical Equipment," published by the United States Department of Labor, Bureau of Labor Statistics.  A five-year depreciation table will be used.

(6)  Category 5 consists of hotel and motel furniture and equipment and also includes apartment, home rental and nursing home furniture and fixtures.  The index used will be the "Producer Price Index for Commodity Commodities Grouping," No. 12 Series Id WPU12, "Furniture and Household Durables," published by the United States Department of Labor, Bureau of Labor Statistics.  A five-year depreciation table will be used.

(7)  Category 6 consists of janitorial equipment, electronic testing equipment, coin-operated washers and dryers, video equipment and tapes (other than class six property), cameras, equipment used for beauty and barber shops (except beauty and barber chairs), exercise equipment, tanning beds, toning tables, and carpet and shampooing equipment, and ceramic molds. The index used will be the "Producer Price Index for Commodity Commodities Grouping," No. 15 Series Id WPU15, "Miscellaneous Products," published by the United States Department of Labor, Bureau of Labor Statistics.  A five-year depreciation table will be used.

(8)  Category 7 consists of repair shop tools.  The index used will be the "Producer Price Index for Commodity Commodities Grouping," No. 113 Series Id WPU113, "Metalworking Machinery and Equipment," published by the United States Department of Labor, Bureau of Labor Statistics.  A ten-year depreciation table will be used.

(9)  Category 8 consists of all other commercial furniture and fixtures and includes but is not limited to medical and dental chairs and tables, theater equipment, stereo equipment, survey equipment, billboards, garbage bins, coin-op car wash equipment, coin-op pool tables, gas pumps, bar equipment, restaurant equipment and furniture and fixtures, bowling alleys and equipment (auto scorers should be valued using category 1), photo and developing equipment, mortuary equipment, safes, security alarm systems and port-a-potties. The index used will be the "Producer Price Index for Commodity Commodities Grouping," No. 122 Series Id WPU122, "Commercial Furniture," published by the United States Department of Labor, Bureau of Labor Statistics.  A ten-year depreciation table will be used.

 

AUTH: 15-1-201, MCA

IMP: 15-6-138, MCA

 

REASONABLE NECESSITY: The department is proposing to amend ARM 41.21.156 in order to explain the source the department uses for calculating the trend tables for valuing personal property as required by 15-8-111, MCA.  To determine the market value of personal property, the department has historically used and adopted the concept of trending and depreciation.  The method by which trended depreciation schedules are derived is described in this rule.  The method and source of information are not being changed.  The United States Department of Labor, Bureau of Labor Statistics has made changes to their indexing system and now makes the information available on the internet which is where the department acquires the Producer Price Indexes used for these calculations.

 

42.21.157 PREPARATION OF TREND FACTOR SCHEDULES  (1) remains the same.

(2)  The data used to compute the trend factors are the monthly values of the "Producer Price Indexes" (PPI) specified in ARM 42.21.156.  The values shall be taken from the most recent on-line publications of the United States Department of Labor, Bureau of Labor Statistics received by the Montana State Library as of July 15.

(3) remains the same.

(4)  The trend factors for a specific equipment group are quotients whose numerators are the most recent average annual PPI for the group and whose denominators are, in succession, the most recent average annual PPI, the average annual PPI for the period immediately preceding the most recent one, and so on, until a number of factors equal to the number of years of useful life have been calculated. In general, the trend factor to be applied to equipment in the group which is X years old (where X is less than or equal to the useful life of the equipment) is the quotient of the most recent average annual PPI and the average annual PPI for the (S-1)st period preceding the most recent one. The trend factor to be applied to equipment in the group which is older than the specified useful life L for the group is the quotient of the most recent average annual PPI for the group and the average annual PPI for the (L-1)st period preceding the most recent one. The following example is presented in order to make the mechanics of the calculation clear. Suppose that the trend factors to be used in year Y for an equipment group which has a three-year useful life are to be calculated. The calculation is to be based on the following hypothetical PPI data for the group:

 

Year	J	F	M	A	M	J	J	A	S	O	N	D
Y-1	91.1	90.8	91.3	91.2	90.6	90.1	N/A	N/A	N/A	N/A	N/A	N/A
Y-2	86.8	88.5	89.3	90.4	91.2	92.0	92.1	91.8	92.0	91.8	91.2	91.6
Y-3	84.1	84.2	84.4	84.7	84.7	84.7	84.2	84.3	84.7	85.1	85.6	86.4
Y-4	N/A	N/A	N/A	N/A	N/A	N/A	84.3	84.1	83.8	84.1	84.2	84.4

 

______________________________________________________________

The July-June 12-month average values are:

 

92.1+91.8+92.0+91.8+91.2+91.6+91.1+90.8+91.3+91.2+90.6+90.1 =91.3

                                  12

 

84.2+84.3+84.7+85.1+85.6+86.4+86.8+88.5+89.3+90.4+91.2+92.0 =87.4

                                  12

 

84.3+84.1+83.8+84.1+84.2+84.4+84.1+84.2+84.4+84.7+84.7+84.7 =84.3

                                  12

______________________________________________________________

 

The trend factors are:

               Age of Equip.

               in Years                                                              Trend Factor

                  1                                                              91.3/91.3 = 1.000

                  2                                                              91.3/87.4 = 1.045

                  3 and older                                             91.3/84.3 = 1.083

 

AUTH: 15-1-201, MCA

IMP: 15-6-138, MCA

 

REASONABLE NECESSITY: The department proposes to amend ARM 41.21.157 to explain the source the department uses for calculating the trend tables for valuing personal property as required by 15-8-111, MCA. The United States Department of Labor, Bureau of Labor Statistics now makes the information available on the internet which is where the department acquires the Producer Price Indexes used for these calculations.

 

 

42.22.1311  INDUSTRIAL MACHINERY AND EQUIPMENT TREND FACTORS  (1) through (2)(cj) remain the same.

            (3)  Tables 1 through 32 represent the yearly trend factors for each of the categories.

 

 

 

 

 

 

 

 

 

 

 

YEAR	TABLE 26	TABLE 27	TABLE 28	TABLE 29	TABLE 30
	Refrigeration	Rubber	Steam Power	Textile	Warehousing
2009	1.000	1.000	1.000	1.000	1.000
2008	1.039	1.042	1.040	1.036	1.037
2007	1.084	1.083	1.090	1.072	1.073
2006	1.148	1.141	1.164	1.118	1.113
2005	1.203	1.188	1.226	1.160	1.152
2004	1.297	1.274	1.336	1.242	1.232
2003	1.344	1.319	1.385	1.278	1.276
2002	1.371	1.346	1.413	1.297	1.290
2001	1.382	1.350	1.418	1.302	1.295
2000	1.395	1.361	1.429	1.313	1.303
1999	1.423	1.382	1.452	1.332	1.327
1998	1.428	1.387	1.453	1.334	1.328
1997	1.443	1.402	1.464	1.345	1.333
1996	1.466	1.422	1.479	1.368	1.355
1995	1.492	1.449	1.503	1.387	1.367
1994	1.548	1.500	1.563	1.429	1.405
1993	1.589	1.535	1.596	1.466	1.452
1992	1.620	1.565	1.614	1.495	1.486
1991	1.638	1.581	1.622	1.513	1.507
1990	1.675	1.617	1.649	1.546	1.533

 

YEAR	TABLE 26	TABLE 27	TABLE 28	TABLE 29	TABLE 30
	Refrigeration	Rubber	Steam Power	Textile	Warehousing
2010	1.000	1.000	1.000	1.000	1.000
2009	.989	.982	.986	.983	.991
2008	1.023	1.018	1.020	1.014	1.022
2007	1.067	1.058	1.069	1.049	1.058
2006	1.129	1.115	1.141	1.094	1.097
2005	1.184	1.161	1.202	1.135	1.135
2004	1.277	1.245	1.310	1.215	1.214
2003	1.323	1.289	1.358	1.250	1.257
2002	1.349	1.315	1.385	1.269	1.272
2001	1.360	1.319	1.390	1.274	1.276
2000	1.373	1.330	1.402	1.284	1.284
1999	1.400	1.350	1.423	1.303	1.307
1998	1.406	1.355	1.425	1.305	1.309
1997	1.420	1.370	1.435	1.316	1.313
1996	1.443	1.389	1.450	1.339	1.335
1995	1.468	1.415	1.474	1.357	1.347
1994	1.523	1.465	1.532	1.398	1.385
1993	1.564	1.500	1.565	1.434	1.431
1992	1.594	1.529	1.583	1.462	1.464
1991	1.613	1.545	1.590	1.480	1.485

 

YEAR	TABLE 31	TABLE 32
	Woodworking	Glass Mfg.
2009	1.000	1.000
2008	1.029	1.039
2007	1.062	1.087
2006	1.105	1.152
2005	1.147	1.215
2004	1.225	1.321
2003	1.262	1.374
2002	1.281	1.401
2001	1.293	1.408
2000	1.294	1.422
1999	1.316	1.448
1998	1.318	1.452
1997	1.324	1.464
1996	1.356	1.483
1995	1.370	1.508
1994	1.410	1.570
1993	1.458	1.605
1992	1.508	1.629
1991	1.537	1.638
1990	1.563	1.666

 

YEAR	TABLE 31	TABLE 32
	Woodworking	Glass Mfg.
2009	1.000	1.000
2009	.988	.986
2008	1.011	1.018
2007	1.044	1.065
2006	1.086	1.128
2005	1.127	1.190
2004	1.203	1.294
2003	1.240	1.346
2002	1.259	1.372
2001	1.270	1.379
2000	1.271	1.392
1999	1.293	1.419
1998	1.295	1.422
1997	1.301	1.434
1996	1.333	1.453
1995	1.346	1.477
1994	1.385	1.537
1993	1.432	1.572
1992	1.481	1.595
1991	1.511	1.604

 

AUTH:  15-1-201, MCA

IMP:  15-6-138, 15-8-111, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.22.1311 to demonstrate through the trend tables how the department arrives at market value as required by 15-8-111, MCA.

Annually, the department updates these schedules to inform taxpayers of the current percentages used by the department when valuing and taxing their property.  To determine the market value of industrial property, the department historically uses and adopts the concept of trending and depreciation.  The method by which trended depreciation schedule are derived is described in the existing rule, and that method is not being changed.

The First Judicial District Court indicated in 1986 that the department must published these trend tables annually and these amendments are in compliance with that order.

 

4.  Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing.  Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail [email protected] and must be received no later than November 12, 2010.

 

5.  Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

6.  An electronic copy of this Notice of Public Hearing 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 Notice of Public Hearing 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.

 

7.  The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the person in 4 above or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

8.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

 

 

/s/  Cleo Anderson                            /s/  Dan R. Bucks

CLEO ANDERSON                          DAN R. BUCKS

Rule Reviewer                                   Director of Revenue

 

Certified to Secretary of State October 4, 2010