HELENA – Statewide, 418 properties worth about $124 million were granted or partially granted tax exempt status in 2011, prompting members of a legislative committee Friday to ask what measures the state was taking to make sure the applicants deserved the designation.
Alan Peura, deputy director of the Department of Revenue, told the Revenue and Transportation Interim Committee that 464 applications were received and 46 were denied.
He also said $6.6 million in business equipment property was also exempt.
Peura’s comments came during a discussion on tax exemptions for Montana’s nonprofit organizations.
Rep. Brian Hoven, R-Great Falls, asked Peura if the Department of Revenue was “tenaciously going after people” to make sure they were following the law regarding tax exempt status for nonprofits.
Peura said staff does a “thorough analysis” and said agencies denied status rarely reapply for tax exempt status.
“It’s pretty cut and dry,” he said.
Some of the lawmakers said they knew of examples in their own communities in which questions have surfaced on the tax exempt status of some businesses. They were encouraged to report potential violations to staff. The panel also discussed the possibility of having a panel of people with a vested interest in the issue come in to discuss profits vs. nonprofits.
In September, the committee reviewed a report that stated 99 properties with a combined market value of $86 million in Montana’s seven most populous counties did not appear on tax rolls.
Under Senate Joint Resolution 23 (SJ23), passed in April by the Legislature, the committee was directed to review nonprofits. The resolution states nonprofit corporations and organizations are largely exempt from paying income and property taxes but receive the same services as those who pay taxes. It also states nonprofit corporations more and more are buying office buildings, agriculture lands and other real estate investments and removing them from property tax rolls. This shifts the property tax burden to small businesses and homeowners who remain on tax rolls. It also forces governments to get the same dollars from fewer taxpayers.
In the most recent legislative session House Bill 305 died in standing committee. But had it passed it would have reportedly eliminated property tax exemptions for most nonprofits.
In 1972, the Montana Constitution gave legislators more authority to exempt properties from taxation. In 2005, lawmakers removed some categories and left exemptions for governmental, charitable, religious and educational categories.