Articles Posted in Montana Supreme Court

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Richland Aviation filed this proceeding to determine whether it was a “scheduled airline” and therefore subject to central tax assessment by the Montana Department of Revenue (DOR). The district court concluded that Richland Aviation was not a scheduled airline because it “does not hold out to the public that it operates between certain places at certain times[.]” Therefore, the district court concluded that Richland Aviation was not subject to central assessment. Applying the definitions found in Montana Department of Revenue v. Alpine Aviation, Inc., 384 P.3d 1035, the Supreme Court affirmed, holding that Richland Aviation does not engage in “regularly scheduled flights” required for central assessment. View "Richland Aviation, Inc. v. State, Department of Revenue" on Justia Law

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The Montana Supreme Court reversed the district court's order of a refund to Mountain Water and assessment of property taxes against the City of Missoula. The court held that section 70-30-315, MCA, selects a different date for purposes of designating the person who shall be assessed the property taxes in condemnation situations, requiring the condemnor to be assessed earlier in time than the general tax statutes would normally require, thus effectuating a unique proration of taxes as between condemnation parties. The statute simply established a tax proration date that is more favorable to condemnees than under general law, and provided no additional or alternate process to accompany this simple adjustment. In this case, Mountain Water retains responsibility for actual payment of the property taxes for the period it possesses the property, until the taking occurs. View "Mountain Water v. Department of Revenue" on Justia Law

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The Montana Department of Revenue (DOR) informed Alpine Aviation, Inc. that it would be centrally assessed pursuant to Mont. Code Ann. 15-23-101 and 15-6-145. The DOR denied Alpine’s request for reclassification. After Alpine appealed to the State Tax Appeal Board, DOR brought an interlocutory appeal to the district court seeking an adjudication of the meaning of “scheduled airline” and “scheduled air commerce” for property tax purposes. Those terms are further informed by the statutory phrase “regularly scheduled flights.” After the district court interpreted the phrases as requested, Alpine appealed, arguing that the court incorrectly interpreted the phrase “regularly scheduled flights.” The Supreme Court affirmed in part and reversed in part, holding that the district court’s definition of “regularly scheduled flight” was satisfactory with the exception of its use of the phrase “patterned but not necessarily uniform.” View "Department of Revenue v. Alpine Aviation, Inc" on Justia Law

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Property owners (Petitioners) appealed the Department of Revenue’s valuation of their residential lot for the tax year 2012. The Flathead County Tax Appeal Board (County Board) reduced the value of the land and the value of the improvements. Petitioners appealed, arguing that the appraised value was still too high. The State Tax Appeal Board (STAB) upheld the County Board’s determination of the value of the property. The district court reversed, concluding that the County Board property value upheld by STAB was clearly erroneous. The Supreme Court reversed the district court and reinstated the STAB decision, holding that the district court erred in reversing STAB’s order concerning the valuation of the property. View "Peretti v. State, Dep’t of Revenue" on Justia Law

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When Mary Stewart failed to pay real property taxes on her property, the Flathead County Treasurer held a tax lien sale for the delinquent taxes. The County was listed as the purchaser of the tax lien. In 2013, RN & DB, LLC paid the delinquent taxes, penalties, interests, and costs for the property and applied for a tax deed. The County issued a tax deed to RN & DB, after which RN & DB filed an action to quiet title in the property. The district court granted RN & DB’s motion for summary judgment and entered a decree quieting title in favor of RN & DB. The Supreme Court affirmed, holding (1) the district court did not err in not applying the statutory homestead exemption to the tax lien sale on Stewart’s property; (2) Stewart’s claim that the district court should have considered the tax assessor’s failure to investigate Stewart’s complaints regarding irregular tax assessments on Stewart’s property was barred; and (3) the district court did not abuse its discretion in granting summary judgment without holding a hearing. View "RN & DB, LLC v. Stewart" on Justia Law

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Plaintiff, a Delaware LLC operating in Montana, purchased a cable television network infrastructure in Montana in 2003. In 2010, Plaintiff filed a declaratory judgment action in response to certain actions taken by the State of Montana Department of Revenue. Specifically, Plaintiff sought (1) to prevent the Department from issuing revised assessments of Plaintiff for tax years 2007 through 2009 and to prevent the Department from issuing any other revised assessments, and (2) a declaration that the Department had illegally assessed all of Plaintiff's property as class thirteen property. The district court granted summary judgment for Plaintiff on the Department's ability to issue retroactive assessments and directed the Department to refund with interest the payments that Plaintiff had made under protest. The Supreme Court reversed, holding that the district court erred in concluding (1) Plaintiff owned exclusively class eight property because, under Montana law, Plaintiff was subject to assessment under class thirteen; and (2) the Department lacked authority to issue revised assessments for Plaintiff's property for tax years 2007 through 2009 where the Department's discovery and subsequent reclassification arose from the audit's revelation of inaccuracies in Plaintiff's self-classification. View "Bresnan Commc'ns, LLC v. Mont. Dep't of Revenue" on Justia Law

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Defendants, an attorney and a law firm, structured a tax-deferred exchange for Plaintiffs, a husband and wife and the cattle ranch they owned. It was later determined that the exchange did not qualify for deferred tax treatment under 26 U.S.C. 1031, resulting in significant tax liability for Plaintiffs. Defendants filed an action against Defendants for professional negligence, breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, and misrepresentation. The district court granted summary judgment to Defendants on all claims on grounds that Plaintiffs' claims were time barred. The Supreme Court reversed, holding (1) Plaintiffs' tort claims were timely filed, and the issue of whether Plaintiffs' timely filed their misrepresentation claim was a question of material fact to be resolved by a jury; (2) Plaintiffs properly stated a claim for breach of contract and the claim was not time barred; and (3) the district court erred in granting Defendants a protection order to prevent discovery of alleged work product and attorney-client communications, as further analysis and fact finding were necessary to determine which documents were discoverable and which qualified for work product or attorney-client protection. Remanded. View "Draggin' Y Cattle Co., Inc. v. Addink" on Justia Law

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Mont. Code Ann. 15-6-218 grants tax exemption to intangible personal property and defines intangible personal property. The statute lists "goodwill" as the one non-exhaustive example of intangible property that lacks physical existence. The Department of Revenue implements the statute with Mont. Admin. R. 42.22.110. In 2010, the Department amended its definitions of intangible personal property and goodwill. The district court found that the new definitions of intangibles and goodwill imposed additional and contradictory requirements on state law and that the valuation manuals adopted by the Department were invalid to the extent they supported the Department's new rules. The Supreme Court affirmed, holding that the district court correctly concluded (1) the Department's regulation defining goodwill was invalid because it conflicted with section 15-6-218(2)(b); (2) the Department's regulation defining intangible personal property was invalid because it conflicted with section 15-6-218(2)(a); and (3) the valuation manuals adopted by the Department were invalid to the extent they supported its new rules. View "Gold Creek Cellular of Mont. Ltd. P'ship v. Dep't of Revenue " on Justia Law

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Mont. Code Ann. 15-7-211 requires the Department of Revenue (Department) to reappraise all residential property in the state every six years. The Department assessed the value of Plaintiff's property in 2008 and used the 2008 appraisal to establish Plaintiff's tax liability for the six-year tax cycle ending in 2014. Plaintiff argued that section 15-7-111, as applied, violated its right to equal protection. The State Tax Appeal Board rejected the claim. The district court, however, concluded that section 15-7-111 violated Plaintiff's right to equal protection because the six-year tax cycle caused some taxpayers to pay a disproportionate share of taxes due to their over-assessed property value and other taxpayers to pay less than their fair share of taxes due to their under-assessed property value. The Supreme Court reversed, holding that similarly situated taxpayers, for a short time, may pay divergent taxes, and such a divergence in taxes does not violate equal protection privileges. View "Covenant Invs., Inc. v. Dep't of Revenue" on Justia Law

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Paula Ehrmantraut-Kiosee sought tax deductions for educational expenses incurred in pursuit of a doctoral degree in psychology. The Montana Department of Revenue disallowed the deductions sought by Paula individually in 2007, and jointly with Randy Myrup in 2008 and 2009. The Office of Dispute Resolution affirmed the disallowance, and the State Tax Appeal Board (STAB) upheld the disallowance. The district court denied Taxpayers' petition for judicial review. After noting that educational expenses will be deemed nondeductible as qualification for a new trade or business if the education is a step towards obtaining a certification that, once obtained, would qualify the taxpayer to perform tasks significantly different from those the taxpayer performed before receiving the education, the Supreme Court affirmed, holding (1) the findings of STAB and the district court that Paula pursued her education in an effort to become a clinical psychologist, rather than simply to improve her skills as a counselor, were supported by substantial evidence; and (2) therefore, Taxpayers failed to demonstrate that the educational expenses were deductible under either 26 C.F.R. 1.162-5(a)(1) or (2). View "Myrup v. State, Dep't of Revenue" on Justia Law