The Montana Tax Appeal Board (“MTAB”) recently ruled against a local board of realtors in finding that the board of realtor’s building used for board of realtor events was not exempt from Montana property taxation.[1] The case is instructive of the burden of proof the property taxpayer faces and how tax statutes for exemptions are construed.
Exemption from Property Tax. Under Montana property taxation law, certain governmental, charitable and educational properties are exempt from Montana property taxation under Mont. Code Ann. § 15-6-201. However, the Bitterroot (Montana) Board of Realtors (the “Board”) was denied a property tax exemption by the Montana Department of Revenue on grounds that the Board’s office did not meet the strict statutory criteria for a property tax emption. The Board argued that its office was used for a combination of events for charity, governmental outreach and education. However, these combined operations did not meet the statutory requirements of the property tax exemption statute.
Failure to satisfy statutory criteria. MTAB ruled in denying the exemption application:
We find the Taxpayer’s activities did not satisfy any of the separate statutory requirements for exemption, and that even if it had in part, the Board finds no authority in the Montana Code Annotated to combine portions of several of the various elements of exemption requirements to create an exemption which could apply to the Taxpayer. We are not allowed to read into the statute what is not explicitly written there by the Legislature.[2]
Practice points. The case did not go into details on whether the taxpayer had previously received a property tax exemption. If the Montana Department of Revenue has previously given a property tax emption in year’s past and only now changed with no corresponding change to law, it may be possible to argue that the Department of Revenue is bound by its past determinations.
However, the taxpayer must typically show full compliance with the statute, especially statutes permitting a tax exemption.
About the Author. Jared M. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal, state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.
[1] Bitterroot Valley Board of Realtors, Inc., v. State of Montana, Department of Revenue, 2021 WL 1588378, at *5.
[2] Bitterroot Valley Board of Realtors, Inc., Appellant v. State of Montana, Department of Revenue, Respondent, 2021 WL 1588378, at *5