Summary of Legislation Affecting the Department of Revenue
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Summary of Legislation Affecting the Department of Revenue 63th Legislative Assembly 2013 Regular Legislative Session June 2013 Summary of Legislation Affecting the Department of Revenue 63th Legislative Assembly – 2013 Legislative Session Table of Contents Property Tax .......................................................................... 1 Individual and Corporate Income Taxes ............................... 9 Natural Resource Taxes ..................................................... 15 Liquor and Tobacco Taxes .................................................. 16 Miscellaneous Taxes and Fees ........................................... 20 Revenue Administration and Unclaimed Property .............. 23 Revenue-related Research ................................................. 27 DOR-sponsored Legislation ................................................ 28 Property Tax HB 35 Short Title: Clarifying the laws related to property tax adjustments Primary Sponsor: Mike Miller Bill Description: HB 35 fixes a drafting error that occurred in SB 372 during the 2011 Legislative Session. In 15-6-138, MCA, a trigger to adjust the Class 8 property tax rate was incorrectly based on the Corporate Income Tax. The trigger should have been based on the Corporate License Tax. This bill fixes the error. With the passage of SB 96 (changing the Class 8 tax rate) and SB361 (renaming the Corporate License Tax to Corporate Income Tax), the need for this bill is eliminated. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 $0 $0 $0 $0 Effective Date: February 13, 2013 Applicability Date(s): n.a. HB 111 Short Title: Repeal Business Equipment Tax Reduction for Value Added Manufacturing Equipment Primary Sponsor: Mike Miller Bill Description: This bill repeals the Value-Added Manufacturing tax rate reduction in current statute. This program provides a reduction of the tax rate on qualifying class 8 property to a minimum of 3%. Currently, the maximum tax rate on class 8 property is 3%. Therefore, this program no longer has any benefit. Currently, there are no properties that use the program. The bill has no fiscal impact. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 $0 $0 $0 $0 1 Effective Date: None given, so October 1, 2013. Applicability Date(s): n.a. HB 152 Short Title: Provide deadlines for governing bodies to review tax exemption applications Primary Sponsor: Steve Fitzpatrick Bill Description: HB 152 establishes new processes and timelines for local government approval or denial of a property tax abatement or property tax exemption relating to: new or expanding industry; remodeling, reconstruction, or expansion of buildings or structures; remodeling, reconstruction, or expansion of certain commercial properties; historic properties; business incubators; industrial parks; and buildings and land owned by a local economic development organization. The governing body has 120 days of receiving the application to make a decision. Failure to meet deadlines results in the applicant’s right to seek from the district court a writ of mandamus to compel the governing body to make a decision. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 $0 $0 $0 $0 Effective Date: Effective on passage and approval Applicability Date(s): Applies to applications for tax benefits submitted to a governing body on or after the effective date HB 195 Short Title: Revise laws related to taxation of certain forest lands Primary Sponsor: Pat Ingraham Bill Description: This bill allows for certain parcels of forest land that have been reduced to less than 15 acres to remain classified as forest land. This exception to the current law 15-acre requirement applies when a parcel has been reduced in size due to a portion of the parcel being given without compensation or sold for a public use to the federal government, the state, or a municipality. 2 Impact on State General Fund: DOR could not determine the number of parcels of forest land that have been reduced from 15 acres or more to less than 15 acres, so a reliable estimate of the fiscal impact could not be provided. An enhancement to the property tax computer system would be required to implement this bill and so the department will incur a one-time cost of $6,600 for contract services in FY 2014. Even though a complete estimate was not possible, DOR is confident that the overall fiscal impact of this bill will be negligible. FY2014 FY2015 FY2016 FY2017 unknown unknown unknown Unknown Effective Date: There is no effective date in HB 195, so the effective date is October 1, 2013. Applicability Date(s): n.a. HB 593 Short Title: Revise DOR laws for Calculating Soil Type and Productivity Values Primary Sponsor: Kirk Wagoner Bill Description: This bill requires the department to consider site- specific information as well as information provided by the taxpayer when determining the classification and appraisal of agricultural and forest land and requires the agricultural advisory committee to provide methods for adjusting productivity values. Because this requirement is similar to the general and uniform classification and appraisal methods already in use by the department, it has no additional cost to the department or other state fiscal impact. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 $0 $0 $0 $0 Effective Date: None given, so October 1, 2013. Applicability Date(s): Tax Year 2014. 3 SB 16 Short Title: Revise tax increment financing laws related to distribution Primary Sponsor: Dick Barrett Bill Description: SB 16 fixes a drafting error that occurred in SB372 during the 2011 Legislative Session. In 15-1-121, MCA, reimbursements to TIF districts were reduced by 10%. In compiling the final MCA for 2011, the 10% reduction for the Missoula 1-1C TIF district was omitted. SB 16 fixes this error by reducing the Missoula 1-1C TIF district payment by $25,028. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 $25,028 $25,028 $25,028 $25,028 Effective Date: October 1, 2013 Applicability Date(s): n.a. SB 18 Short Title: An act providing for the ownership of a channel and former channel of a navigable river or stream following an avulsion Primary Sponsor: Bradley Hamlett Bill Description: This bill defines the ownership of an abandoned navigable river channel that was abandoned due to an avulsion. The ownership of the land making up the abandoned channel shall be granted to the owner of the shores through which the original stream flowed. When the two shores are owned by different owners, ownership of the abandoned river channel shall be granted half to each owner, with the property line being the center point of the original stream. DNRC will verify the request for ownership of an abandoned river channel and recommend to the board of land commissioners that the state and affected owners exchange quitclaim deeds for the affected properties. Once the board approves the deed exchange, the affected property owners shall notify DOR of the ownership change. 4 Impact on State General Fund: This bill did not make any changes to DOR assessment operation or procedures and therefore has no fiscal impact. FY2014 FY2015 FY2016 FY2017 $0 $0 $0 $0 Effective Date: Passage and approval. Applicability Date(s): This bill applies to avulsions occurring on or after the effective date of the bill (4/15/2013). SB 96 Short Title: Lower Business Equipment Tax Primary Sponsor: Bruce Tutvedt Bill Description: Beginning in tax year 2014, this bill exempts the first $100,000 in market value owned by a taxpayer. It then increases the threshold receiving the lower tax rate of 1.5% from $3 million to $6 million of taxable market value. This bill retains the reimbursement structure developed in SB 372 (62nd Legislature), but removes the “trigger” language. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 -$5,216,583 -$12,915,096 -$11,276,121 -$11,398,929 Effective Date: Immediate Applicability Date(s): Tax Year 2014 and subsequent property tax years. SB 231 Short Title: Revise tax exemption laws regarding tribal recreational property Primary Sponsor: Shannon Augare Bill Description: This bill increases the amount of park and recreation area land that may be exempted from property tax by a federally 5 recognized Indian tribe. The acreage limit for the exemption was increased from 15 acres to 640 acres. Impact on State General Fund: This bill reduces revenue to the general fund and 6 mill university state special revenue fund by about $3,000 per year. FY2014 FY2015 FY2016 FY2017 -$2,960 -$2,962 -$2,966 -$2,971 Effective Date: There is no effective date in SB 231, so the effective date is October 1st, 2013. Applicability Date(s): This bill applies to tax years beginning after December 31, 2013. SB 239 Short Title: Generally revise tax increment financing districts Primary Sponsor: Edward Buttrey Bill Description: SB 239 simplifies creation of a Tax Increment Financing (TIF) district. Prior to SB 239, TIF districts were restricted to four exclusive purposes: Urban Renewal, Technology, Aerospace, and Industrial. Three of the four types of TIF districts (Technology, Aerospace, and Industrial) are replaced by a single district called a Targeted Economic Development (TED) district. The TED district allows for multiple types of economic development within a TIF district. Impact on State General Fund: FY2014 FY2015 FY2016 FY2017 $0 $0 $0 $0 Effective Date: July 1, 2013 Applicability Date(s): n.a. SB 280 Short Title: Allow mediation for dispute of property valuation Primary Sponsor: Fred Thomas 6 Bill Description: This bill allows for property owners who are protesting valuation to enter into a mediation hearing with DOR. A $100 fee is imposed on the protesting taxpayer, and the cost of mediation must be split evenly between the protesting taxpayer and DOR. The mediation hearing is non-binding. Mediation hearings involving centrally assessed property and annually assessed industrial property must be conducted no less than 60 days prior to the STAB hearing on the valuation protest. Properties not centrally assessed or industrial property may request a mediation hearing after a CTAB hearing. Impact on State General Fund: This bill impacts the state general fund in two ways.