MDOR v Scott and Dawn Hagedorn

BEFORE THE MONTANA TAX APPEAL BOARD
LED
STATE OF MONTANA,
DEPARTMENT OF REVENUE,
Appellant,
V.
SCOTT AND DAWN HAGEDORN,
Respondents.
AUG 13 2026
CASE : PT-2026-5 :^^ ^ Appea! Board
FINDINGS OF FACT,
CONCLUSIONS OF LAW, ORDER,
AND OPPORTUNITY FOR
JUDICIAL REVIEW
STATEMENT OF THE CASE
This is an appeal of a final decision by the Madison County Tax Appeal Board
(CTAB) granting Scott and Dawn Hagedorn (Taxpayers) a reduction in value on the
subject property with an assigned geocode of 25-0784-29-1-02-01-0000 near Twin
Bridges, Montana (Subject Property). The Department of Revenue (Department)
appealed that outcome to the Montana Tax Appeal Board (MTAB) on Febmary 6,
2026. Appeals PT-2026-5, PT-2026-10, and PT-2026-11 involve the same Taxpayers
and were heard on the same record. This decision only addresses PT-2026-5.
However, the Board took judicial notice of foundational information related to all
three cases for judicial efficiency. The Board reverses the CTAB's determination.
ISSUE TO BE DECIDED
Whether CTAB erred in granting Taxpayers a reduction in value on the Subject
Property.
EXHIBIT LIST
The following evidence was submitted at the hearing:
Taxpayers' Exhibits:
1. Withdrawn;
2. Withdrawn;
3. Structure Photographs;
4. CTAB Attachments - PT-2026-5;
5. Exceqits of Department Teams Chats, dated January 21, 2026;
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BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
6. CTAB Hearing Recording Transcript Summary;
7. Department Supplemental Discovery Responses Summary;
8. Photograph of Department Document Production Box;
9. Withheld Communications and Privilege Logs;
10. Bob Finstad - Undisclosed Department Participant;
11. Mark Wood -Department Appraiser;
12.Hagedom Supplemental Discovery Requests, dated May 1, 2026;
13. Department Discovery Response Email Communication, dated May 7,
2026;
14. Department Responses to Taxpayers' Discovery Requests, dated April
24,2026;
15. Department AB-26 On-site Review Cancellation Letter and AB-26
Determination Letter;
16-Mont. Admin. R. 42.18.127;
17. Property On-site Review Authorization Form, dated September 25,
2025;
18. Screenshot of Rental Listing Removal, dated February 27, 2026; and
19. House Trailer Title, Registration, and License Plate Photo.
Department's Exhibits:
A. Land Model;
B. AB-26 Determination Letter;
C. Property Record Card; and
D. Property Photos.
PROCEDURAL HISTORY
The Department initially valued the Subject Property at $4,085 for tax years
2025 and 2026. Ex. B. The Taxpayers filed an AB-26, Request for Informal
Classification and Appraisal Review, with the Department which issued an AB-26
Determination Letter on November 26, 2025, adjusting the value from $4,085 to
$64,336. Ex. 15. After discovering an error in the land value, the Department
corrected the value from $64,336 to $39,450 in a subsequent Detennination Letter on
2

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
January 6, 2026. Ex. B, 15. The Taxpayers appealed the Department's determination
to the CTAB on December 23, 2025. MTAB Dkt. 3. The CTAB hearing was held on
January 16, 2026, and the CTAB's decision granting the Taxpayers' requested value
of $1,255 was sent to the parties on January 16, 2026. MTAB Dkt. 1. The Department
appealed to 1S4TAB on February 6, 2026, per Mont. Code Ann. § 15-2-301, requesting
a land value of $18,780 and an improvements value of $20,670, for a total value of
$39,450. MTAB Hr 'g Tr. 1:22-2:5. The MTAB hearing was conducted in Helena on
May 21, 2026, at which the following were present:
a. Dawn Hagedom, Taxpayer; and
b. Dave Burleigh, Department Counsel; Michele Peterson-Cook,
Department Counsel; Tina Oliver, Area Manager; and Katelyn
Thomton, Modeler.
The record includes all materials submitted to CTAB, a recording of the CTAB
hearing, all materials submitted to MTAB with the appeal, additional exhibits
submitted by the parties prior to and at the MTAB hearing, and a transcript of the
MTAB hearing.
FINDINGS OF FACT
1. To whatever extent the following findings of fact may be constmed as
conclusions of law, they are incorporated accordingly.
2. The Subject Property is an improved property owned by Scott and Dawn
Hagedom. Ex. C. The Subject Property has no situs address and is located in
Township 02 South, Range 07 West, Section 29. Id. The Subject Property is
also identified by its assigned geocode 25-0784-29-1-02-01-0000. Id. The
Subject Property is 20.66 acres in total size. Id.
3. The Department originally valued the Subject Property at $4,085 for the 2025
and 2026 tax cycle. Ex. B. The Taxpayers filed an AB-26 Request for Informal
Review with the Department but chose not to allow an on-site internal review
of the personal property or photos to be taken of the Subject Property. Id. The
3

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
Department conducted an off-site record review of the Subject Property and
made several adjustments to the property information which resulted in an
increased reappraisal value of $64,336, which the Department corrected to
$39,450 in a subsequent letter after an error was discovered in the land value.
Ex. B, 15. The adjustments made by the Department during the AB-26 review
were to add a one-acre building site on the non-qualified agricultural land,
remove the house trailer, and move the 145 square-foot dry cabin, deck, and
shed that were incorrectly listed as belonging to another parcel to the Subject
Property. Ex. B; MTAB Hr'g Tr. 54:22-55:20.
4. The Taxpayers appealed the Department's AB-26 determination to the CTAB
on December 23, 2025, requesting that the Subject Property be reclassified as
Class Eight property on the basis that the improvements constitute personal
property and that the value be reduced accordingly. MTAB Dkt. 3. The CTAB
granted the Taxpayers' request stating that the improvements should be
considered personal property and that the land should be reclassified and
valued at $1,255. Id. The Department appealed the CTAB's decision to MTAB
on February 6, 2026, asserting that the classification of the Subject Property as
residential property was accurate and requested that the land be assigned a
value of $18,780, and the improvements assigned a value of $20,670, for a total
value of $39,450. MTAB Dkt. 1.
5. The Taxpayers allege that the Department's appeal is primarily motivated by
its concern that the CTAB's ruling would disrupt what the Taxpayers describe
as "the Department's broader practice of taxing portable personal property."
MTAB Hr'g Tr. 4:20-5:11. Ms. Hagedom pointed to a portion of the CTAB
hearing recording in which Department personnel indicated their intent to
appeal the decision to MTAB and their rationale. Ex. 6; MTAB Hr'g Tr. 4:20-
5:11. Ms. Hagedorn also presented an internal Microsoft Teams conversation
between Department personnel and claimed that the conversation demonstrates
the Department appealed not because of any specific concerns with the Subject
Property, but the appeal was instead motivated by concern over how the
4

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
CTAB's decision would impact the Department's broader appraisal practices.
Ex. 5; MTAB Hr'g Tr. 5:12-6:7.
6. Ms. Hagedom asserts that the Department has withheld large amounts ofnon-
privileged communications. MTAB Hr'g Tr. 24:8-25:6. Ms. Hagedom argues
that the withheld communications cannot all be privileged stating, "So are we
supposed to believe that that's the only time they ever talked about our
property between two staff members that weren't legal counsel?" MTAB Hr'g
Tr. 24:8-14. Ms. Hagedom also stated, "It seems to me like there's a lot of
withheld staff to staff communications, but how would I know?" Id.
7. Taxpayers argue that two Department employees. Bob Finstad and Mark
Wood, were undisclosed participants in the review process and notice of their
participation was improperly withheld during the discovery process. Ex. .10, 11,
12; MTAB Hr 'g Tr. 25:7-27:2.
8. Taxpayers contend that while the Department correctly removed the house
trailer itself from the property assessment due to it being a properly licensed
motor vehicle, the Department continues to incorrectly dispute the
classification of four structures located on the Subject Property. MTAB Hr'g
Tr. 6:8-13. Ms. Hagedom argued that these structures fall into two categories,
but all four structures should qualify as Class Eight personal property. MTAB
Hr'g Tr. 6:13-7:7. According to Ms. Hagedorn, the first category includes the
lean-to, U-shaped deck, and electrical shed, which are all appurtenant to the
house trailer. Id. Ms. Hagedom testified that all three structures are movable
and must be removed with the house trailer if they are to remain usable. Id. Ms.
Hagedorn stated that the second category consists of an old shed which is a
standalone, uninhabitable structure that is not attached to the land. Id. Ms.
Hagedom argued that the Class Four residential building site carve-out applied
by the Department requires a residential structure on the land and appurtenant
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BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
improvements and contends that neither is present on the Subject Property.
MTABHr'gTr. 7:8-15.
9. Ms. Hagedom stated that a thing is deemed to be incidental or appurtenant to
the land "when it is by right used with the land, for the land's benefit. .." MTAB
Hr'g Tr. 14:11-13. Ms. Hagedom argued that the improvements present on the
Subject Property are appurtenant to, and for the benefit of the house trailer, not
theland.MTABHr'gTr. 7:8-20, 11:20-22.
10. Ms. Hagedom argued that the $1,255 value assigned by the CTAB is correct
because there are no legally defined permanent or appurtenant improvements
on the Subject Property, only temporary, portable structures, and that the
Subject Property should be classified as non-qualifled agricultural land rather
than residential. AfT^5 Hr'g Tr. 7:15-20. Ms. Hagedom argued that if the
portable structures are properly removed, the Subject Property should revert
entirely to vacant non-qualified agricultural land, and the one-acre carve-out
shou\dbe removed. MTAB Hr'gTr. 7:15-20, 13:11-18.
11. Ms. Hagedom presented photographs depicting the wheels and trailer hitch
attached to the house trailer, as well as the cinder blocks underneath the trailer
supporting it. Ex. 3. Ms. Hagedom testified that removal of the house ti-ailer
would be simple and would require smoothing out the gravel, raising the trailer
from the cinder blocks, hooking the trailer up to a truck, and removing the
torque screws that connect the trailer to the deck. Ex. 3; MTAB Hr'g Tr. 11:1-9.
12. Ms. Hagedom testified that the lean-to portion of the house trailer is removable
and that neither the house trailer nor the lean-to is habitable without the other.
Ex. 3; MTAB Hr'g Tr. 11:11-18. Ms. Hagedorn also stated that the deck posts
rest on blocks and are not embedded in the ground. Ex. 3; MTAB Hr 'g Tr.
11:7-9. Ms. Hagedorn testified that the electricity shed rests on railroad ties and
is not permanently attached to the land. Ex. 3; MTAB Hr 'g Tr. 11:22-12:4.
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BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
Additionally, Ms. Hagedom stated that the wire running from the electricity
shed to the house trailer is under six inches of gravel to prevent tripping but is
easily removable. Ex. 3; MTAB Hr'g Tr. 11:22-25.
13. Ms. Hagedom testified that the improvements have intentionally not been
permanently attached to the land because the Taxpayers own only a portion of
the Subject Property and are concerned about relinquishing their ownership
rights to any improvements if they were permanently affixed. MTAB Hr 'g Tr.
15:1-7.
14. The Taxpayers have never filed a formal mining claim or agricultural
application related to the Subject Property. MTAB Hr'g Tr. 36:1-8.
15. Ms. Hagedom testified that the Subject was previously listed on Vrbo as a
short-term rental and an individual rented the house trailer from July of 2025
through February of 2026. Ex. 18; MTAB Hr'g Tr. 33:21-34:15, 40:1-6. The
house trailer is no longer available for rent. MTAB Hr'g Tr. 33:21-34:15, 40:1-
6.
16. Most of the structures present on the Subject Property were pre-built and
moved onto the property at a later time. MTAB Hr'g Tr. 44:19-45:2. The only
improvement that was constructed on the Subject Property was the lean-to, but
Ms. Hagedom maintains that it was built with portability in mind and can be
easily removed. Id.
17. Ms. Hagedom testified that the electricity supplied to the house trailer is
produced by solar panels located on top of the electrical shed, rather than being
supplied by a county utility provider. MTAB Hr'g Tr. 45:3-22. Additionally,
the Subject Property does not have running water. Id.
7

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
18. Department Area Manager, Tina Oliver, testified that the Department classifies
properties based on the type of property and the owners' use of the property.
MTABHr'gTr. 49:10-17.
19. Ms. Oliver testified that Mark Wood was the appraiser who reviewed the
Subject Property and perfonned the AB-26 informal review, but he no longer
works for the Department. MTAB Hr'g Tr. 49:18-50:2.
20. Ms. Oliver stated that when Mr. Wood was still employed by the Department
in September of 2024, he noticed additional structures on the Subject Property
while on his work route that had not been previously listed and added them for
the 2025 reappraisal cycle. MTAB Hr'g Tr. 50:13-25. Ms. Oliver stated that it
is sometimes difficult to determine which property a structure is located on,
particularly in the Rochester Road area. MTAB Hr'g Tr. 55:15-20. Mr. Wood
also removed the house trailer from the Subject Property's value after being
presented with a copy of the trailer's license plate showing it to be personal
property. A^AB Hr'g Tr. 51:5-10, 55:4-14. This change was described in the
AB-26 Determination Letter as adjusting the dry cabin from 309 to 145 square
feet. Ex. B; MTAB Hr'g Tr. 55:4-11. The remaining 145 square feet accounts
for the lean-to structure attached to the house trailer. Ex. B; MTAB Hr 'g Tr.
55:4-11. Ms. Oliver stated that the term "dry cabin" refers to a structure that is
situated on land, is under 900 square feet, is livable, and does not have
plumbing or electricity. MTAB Hr'g Tr. 55:21-56:9.
21. Ms. Oliver testified that Bob Finstad is employed by the Montana State
Information Technology Services Division, and his only involvement with the
informal review was to verify when pictures would be removed from the
Department's internal systems pursuant to the Taxpayers'request. MTAB Hr'g
Tr. 51:11-16.
8

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
22. Ms. Oliver testified that the Department used a multiplicative land model to
value the Subject Property. Ex. A; MTAB Hr'g Tr. 53:6-15. The Subject
Property is included in Department neighborhood 225.001 and was assigned
the Category 1 land type, which encompasses the Rochester Road area. Ex. A;
MTAB Hr'g Tr. 53:6-15. The model assigns the Category 1 land type a 41%
influence factor, which, when applied to the land model's base rate of $42,471,
results in a one-acre base value of $17,585. Ex. A; MTAB Hr'g Tr. 53:6-15.
The base value determines what one acre would be valued at according to the
multiplicative land model. Ex. A; MTAB Hr'g Tr. 53:6-20. For the Subject
Property, the one-acre residential carve-out matches the one-acre base size of
the land model exactly, so no additional calculations or adjustments were
needed to determine the value of the one-acre residential carve-out. Ex. A;
MTAB Hr'g Tr. 53:16-54:4. The Subject Property's remaining 19.66 acres
were valued at the lowest grazing rate for non-qualified agricultural land in the
2025-2026 tax cycle, which is $60.76 an acre, resulting in a value of $1,195.
Ex. A; MTAB Hr'g Tr. 53:21-24, 60:1-8. Combining the land value of the one-
acre residential carve-out and the land value of the remaining 19.66 acres of
non-qualified agricultural land resulted in a total land value of $18,780. Ex. A,
c.
23. Ms. Oliver testified that the structures on the Subject Property other than the
house trailer are classified as other buildings and yard improvements (OBYs)
and valued using the cost approach. MTAB Hr'g Tr. 58:5-1 7, 60:16-61:4. The
cost approach establishes the replacement cost new less depreciation (RCNLD)
of a structure. Ex. C; MTAB Hr'g Tr. 61:14-17. Ms. Oliver explained that the
cost approach involves determining a structure's square footage, characteristics
of the structure, and using Marshall and Swift's cost manual to determine the
replacement cost new of the structure. MTAB Hr'g Tr. 61:5-13. Once the
Department determines the replacement cost new of a structure, it then applies
the county index and percent good to obtain the RCNLD value. Id. The old
shed was assigned an RCNLD of $2,830; the lean-to, $8,190; the U-shaped
9

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
deck, $7,270; and the electrical shed, $2,380, for a total combined
improvements value of $20,670. Ex. C; MTAB Hr'g Tr. 58:5-17, 61:14-23.
24. Ms. Oliver testified that the Department treats the OBYs as improvements on
real property rather than personal property because they are situated on the
property and are used as improvements to the land. MTAB Hr'g Tr. 62:12-17.
Ms. Oliver stated that Montana law considers improvements situated on a
property to be improvements to the land. Id.
25. Ms. Oliver testified that, in order for the Department to carve out a one-acre
homesite, there must be an improvement used for a residential purpose. MTAB
Hr 'g Tr. 69:3-10. Improvements such as a shed or deck being located on a
property would not automatically require the designation of a one-acre
homesite. MTAB Hr 'g Tr. 73:7-12. Ms. Oliver testified that the structures
located on the Subject Property, other than the house trailer, qualify as
improvements because improvements include all buildings, structures, fences,
and improvements situated upon, erected upon, or affixed to the land. MTAB
Hr'gTr. 79:13-23.
26. Ms. Oliver acknowledged that part of the Department's motivation to appeal
the CTAB decision to MTAB was due to concerns regarding the broader
practice of assessing portable sheds. MTAB Hr'g Tr. 72:14-19.
27. Ms. Oliver stated that the Department produced copies of every non-privileged
communication between herself and Mr. Wood regarding the Subject Property
during discovery. MTAB Hr'g Tr. 75:19-76:16.
28. Ms. Oliver testified that the words "permanent" and "appurtenant" are not
contained in the statutory definition of improvements. MTAB Hr 'g Tr. 80:17-
19.
10

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
29. Ms. Oliver testified that as long as a structure is an improvement to a property
the Department determines its value, even if it is moveable. MTAB Hr 'g Tr.
81:19-24.
30. Department Modeler, Katelyn Thomton, testified that the land model used to
value the Subject Property contains vacant sales that occurred prior to the lien
date of January 1, 2024. Ex. A; MTAB Hr'g Tr. 90:13-23. The sales contained
in the Subject Property's land model occurred as far back as 2020. Ex. A;
MTAB Hr'g Tr. 90:13-23. Ms. Thomton stated that the Department will
exclude certain types of sales such as sales that are too old, duplicate sales, and
parcels exceeding the model's applicable size parameters. Ex. A; MTAB Hr'g
Tr. 90:13-23.
31. Ms. Thomton testified that the Department utilizes multiple statistical checks to
ensure the accuracy of its land models including the coefficient of dispersion
(COD), coefficient of variation (COV), R-squared value, and t-stat. Ex. A;
MTAB Hr'g Tr. 91:6-12. The COD is based on the average absolute deviation
of the data and a COD between 5% and 15% indicates good appraisal
uniformity, meaning that there are no major outliers skewing the data. Ex. A;
MTAB Hr'g Tr. 91:18-24. The CO V is based on the ratio of the standard
deviation from the mean and a COV of less than twenty is preferred. Ex. A;
MTAB Hr'g Tr. 92:1-17. The R-squared value indicates how well a regression
model fits the data and a value closer to 1.00 is preferred. Ex. A; MTAB Hr'g
Tr. 92:1-17. The t-stat is a ratio that conveys whether the difference between
two sample means occurred by chance and a t-stat higher than two or lower
than negative two is preferred. Ex. A; MTAB Hr 'g Tr. 92:1-17. For the Subject
Property's land model, the COD is 9.27, the COV is 12.81, the R-squared value
is 0.96, and the t-stat is -7.33, all of which are within the desired range and
indicate a reliable and accurate land model. Ex. A; MTAB Hr'g Tr. 91:20-93:3.
Ms. Thomton stated that the t-stat of-7.33 indicates that the Subject Property's
11

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
Rochester Road area differs from the model's baseline statistically, and that the
difference is unlikely to have occurred by chance. MTAB Hr'g Tr. 196:1-5.
JURISDICTION AND STANDARD OF REVIEW
32. The Montana Tax Appeal Board is an independent agency not affiliated with
the Montana Department of Revenue. Mont. Const., Art. VIII § 7; Mont. Code
Ann. § 15-2-101. The Department filed a timely appeal of the CTAB's decision
to the MTAB. Therefore, this Board maintains jurisdiction to hear and decide
this matter. Mont. Code Ann. § 15-2-301.
33. When reviewing a county tax appeal board decision under Mont. Code Ann. §
15-2-301, MTAB acts as a quasi-appellate body with authority to supplement
the record and is limited to issues properly preserved for appellate review.
O'Brien v. Mont. Dep't of Revenue, 2026 MT 132, ^ 72.
34. The Board's order is final and binding upon all parties unless changed by
judicial review. Mont. Code Ann. § 15-2-301(6).
CONCLUSIONS OF LAW
35. To whatever extent the following conclusions of law may be constmed as
findings of fact, they are incorporated accordingly.
36. "All taxable property must be appraised at 100% of its market value.. .." Mont.
Code Ann. § 15-8-111.
37. "[1]n connection with any appeal under [Mont. Code Ann. § 15-2-301], the
Montana board is not bound by common law and statutory rules of evidence or
rules of discovery and may affirm, reverse, or modify any decision. To the
extent that this section is in conflict with the Montana Administrative
Procedure Act, thissection supersedes that act." Mont. Code Ann. § 15-2-
301(5).
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BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
38. "The term "improvements" includes all buildings, structures, fences, and
improvements situated upon, erected upon, or affixed to land. When the
department detennines that the permanency of location of a mobile home,
manufactured home, or housetrailer has been established, the mobile home,
manufactured home, or housetrailer is presumed to be an improvement to real
property. A mobile home, manufactured home, or housetrailer may be
detennined to be pennanently located only when it is attached to a foundation
that cannot feasibly be relocated and only when the wheels are removed."
Mont. Code Ann. § 15-1-101(1)0).
39. "All lands must be classified according to their use or uses." Mont. Code Ann.
§ 15-7-103(2).
40. Class four property includes, "1 acre of real property beneath residential
improvements on land described in 15-6-133(1 )(c) and 1 acre of real property
beneath an improvement used as a residence on land eligible for valuation,
assessment, and taxation as forest land under 15-6-143. The 1 acre must be
valued at market value." Mont. Code Ann. § 15-6-134(l)(d).
41. Class three property includes, "parcels of land of 20 acres or more but less than
160 acres under one ownership that are not eligible for valuation, assessment,
and taxation as agricultural land under 15-7-202(1), which are considered to be
nonqualified agricultural land. Nonqualified agricultural land may not be
devoted to a commercial or industrial purpose. Nonqualified agricultural land is
valued at the average productive capacity value of grazing land." Mont. Code
Ann. § 15-6-133(l)(c).
42. "The term 'personal property' includes everything that is the subject of
ownership but that is not included within the meaning of the terms 'real estate'
and 'improvements' and 'intangible personal property' as that term is defined
in 15-6-218." Mont. Code Ann. § 15-l-101(l)(q).
13

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
43. DOR is entitled to a "presumption of correctness if its decisions are pursuant to
an administrative rule or regulation, and the rule or regulation is not arbitrary,
capricious or otherwise unlawful." Burlington N., 169 Mont. at 214, 545 P.2d
at 1090. However, DOR cannot rely entirely on the presumption in its favor
and must present a modicum of evidence showing the propriety of their action.
Western Air Lines v. Michunovich, 149 Mont. 347, 353, 428 P.2d 3, 7 (1967).
44. The Taxpayer bears the burden of proving the error of DOR'S decision.
Farmers Union Cent. Exch. v. Dep't of Revenue, 272 Mont. 471, 476, 901 P.2d
561, 564 (1995); Western Air Lines, 149 Mont. at 353, 428 P.2d at 7.
45. '"Assessment formulations' by [the Montana Tax Appeal Board] should be
upheld unless there is a clear showing of an abuse of discretion." Peretti v.
Dep't of Revenue, 2016 MT 105, ^ 15, 383 Mont. 340, 344, 372 P.3d 447, 450
(citing OWe?7/ v. Dep't of Revenue, 2002 MT 130, ^ 23, 310 Mont. 148, 155,
49 P.3d 43, 47); see Northwest Land & Dev. v. State Tax Appeal Bd., 203
Mont. 313, 317, 661 P.2d 44, 47 (1983).
46. "When faced with a problem of statutory construction great deference must be
shown to the interpretation given the statute by the officers or agency charged
with its administration." Dep 't of Revenue v. Puget Sound Power & Light Co.,
179 Mont. 255, 262, 587 P.2d 1282, 1286 (1978) (citing Udall v. Tollman, 380
U.S. 1,16(1965)).
47. "[T] ax statutes are to be strictly constmed against the taxing authority and in
favor of the taxpayer." Western Energy Co. v. Dep't of Revenue, 1999 MT 289,
IT 10, 297 Mont. 55, 58, 990 P.2d 767, 769.
48. "Administrative agencies enjoy only those powers specifically conferred upon
them by the legislature. Administrative rules must be strictly confined within
the applicable legislative guidelines. Indeed, it is axiomatic in Montana law
14

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDOKN
that a statute cannot be changed by administrative regulation. We look to the
statutes to determine whether there is a legislative grant of authority." Bick v.
State Dep 't of Justice, Div. of Motor Vehicles, 224 Mont. 455, 457, 730 P.2d
418,420(1986).
49. "[A]dministrative regulations interpreting the statute made by agencies charged
with the execution of the statute are entitled to respectful consideration." Puget
Sound Power & Light Co., 179 Mont. 255, 266, 587 P.2d 1282,1288 (1978).
50. The Legislature intended the Department to utilize a number of different
approaches or combination of approaches, including the income approach,
sales comparison approach, and cost less depreciation approach, depending on
the market where the appraisals take place, when it assesses property and
estimates market value. Albright v. State, 281 Mont. 196, 208-09, 933 P.2d
815, 823 (1997).
DISCUSSION
51. As a preliminary matter, the Taxpayers allege that the Department's appeal is
primarily motivated by its concern that the CTAB's ruling would disrupt what
the Taxpayers refer to as "the Department's broader practice of taxing portable
personal property." The Taxpayers point to a portion of the CTAB hearing
recording and an internal Microsoft Teams conversation between Department
personnel as evidence that the Department did not appeal due to any specific
concerns with the Subject Property.
52. Ms. Oliver acknowledged that concerns over how the CTAB ruling would
affect the Department's appraisal practice regarding sheds influenced the
Department's decision. Department Counsel stated that the primary motivation
for the appeal, however, is to correct what it believes is an incorrect decision.
Department Counsel emphasized that the Department has a statutory obligation
15

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
to defend tax appeals and has the right to appeal CTAB decisions, which they
exercised in this case.
53. We find that the Department exercised its appeal rights as allowed by law. Just
like taxpayers, the Department must weigh a number of factors when deciding
whether to appeal a CTAB decision. These factors may include the cost and
time associated with appealing, the likelihood of success, and how the decision
might affect its appraisal practice going forward. In this case, the Department
acknowledged that questions regarding how the CTAB's decision would affect
future appraisals did play a role in its decision to appeal but stated that its
contention that the CTAB's decision is incorrect was the primary motivation.
The Taxpayers' evidence does not establish that the Department appealed for
an improper purpose. Therefore, we find no issue with the Department's
appeal.
54. The primary issue before the Board is whether the CTAB erred in granting
Taxpayers a reduction in value on the Subject Property. The CTAB determined
that the structures on the Subject Property are personal property, are not affixed
to or improvements of the land, and therefore did not support the one-acre
residential carve-out. On that basis, the CTAB reclassified the Subject Property
as entirely non-qualified agricultural land and reduced its value to $1,255.
55. The Department argues that the one-acre residential carve-out was appropriate
because the Department must classify property according to its use. The
Department contends that while the house trailer itself is personal property and
has been removed from the Subject Property's improvements value, the
property is still being used for a residential purpose. Furthermore, the structures
located on the property constitute residential improvements and require a one-
acre carve-out.
56. Taxpayers argue that the one-acre residential carve-out is improper because the
house trailer and other structures located on the Subject Property constitute
16

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
personal property. Taxpayers contend that all of the structures are personal
property because they are not permanently affixed to the land and can be
removed. Taxpayers argue that the Subject Property should be classified
entirely as non-qualified agricultural land and valued accordingly.
57. Mont. Code Ann. § 15-7-103(2) states, "All lands must be classified according
to their use or uses." The relevant portions of Mont. Code Ann. § 15-6-
134(l)(d) state, "Class four property includes: (d) 1 acre of real property
beneath residential improvements on land described in 15-6-133(1 )(c)... The 1
acre must be valued at market value." Mont. Code Ann. § 15-6-133(l)(c)
provides, in relevant part, "Class Three property includes: (c) parcels of land of
20 acres or more but less than 160 acres under one ownership that are not
eligible for valuation, assessment, and taxation as agricultural land under 15-7-
202(1), which are considered to be non-qualified agricultural land."
58. Mont. Code Ann. § 15-1-101(1 )(j) states, "The term 'improvements' includes
all buildings, structures, fences, and improvements situated upon, erected upon,
or affixed to the land." The subsection also clarifies when a house trailer is
presumed to be an improvement stating, "When the department determines that
the permanency of location of a mobile home, manufactured home, or
housetrailer has been established, the mobile home, manufactured home, or
housetrailer is presumed to be an improvement to real property. A mobile
home, manufactured home, or housetrailer may be determined to be
permanently located only when it is attached to a foundation that cannot
feasibly be relocated and only when the wheels are removed." Lastly, Mont.
Code Ann. § 15-l-101(l)(q) states, "The term 'personal property' includes
everything that is the subject of ownership but is not included within the
meaning of the terms 'real estate' and 'improvements' and 'intangible personal
property' as that term is defined in 15-6-218."5?
17

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
59. We first address the Department's determination that the Subject Property is
being used for residential purposes. Here, neither party disputes that the house
trailer located on the Subject Property is personal property. Accordingly, the
Department has appropriately removed the house trailer's value from the
Subject Property's improvements value. However, because the Department has
determined that the Subject Property contains residential improvements and is
being utilized for a residential puqiose, the Department carved out one acre to
be appraised at market value pursuant to Mont. Code Ann. § 15-6-134(l)(d).
Mont. Code Ann. § 15-7-103(2) states that all lands must be classified
according to their use. While the majority of the Subject Property is classified
as non-qualified agricultural land, this is due to the total acreage being between
20 and 160 acres, rather than any agricultural use occurring on the property.
Instead, the evidence presented to the Board indicates that the actual use of the
Subject Property is residential. Ms. Hagedom testified that the house trailer
located on the Subject Property was listed on Vrbo as a short-term rental and
was occupied from July of 2025 to February of 2026, reflecting its intended
use. The other structures located on the Subject Property also provide
additional residential utility to the house trailer in the form of electricity,
storage, and structural add-ons. Furthermore, no alternative use of the Subject
Property has been presented. The Taxpayers argue that the house trailer cannot
be considered a residence because it is personal property. However, a structure
may be deemed personal property and still be used for residential purposes.
After considering the facts above, it is clear to the Board that the Subject
Property's use is residential.
60. With the residential use of the Subject Property having been established, we
now turn to whether the house trailer or other structures located on the Subject
Property constitute improvements. Mont. Code Ann. § 15-l-101(l)(q) states
that for a thing to be deemed personal property, it cannot fit within the meaning
of real property or improvements. As explained above, the Department does
not dispute that the house trailer is personal property and is not considered an
18

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
improvement. However, the other structures referred to by the Department as
OBYs do fit within the meaning of improvements. The term improvements
includes all buildings, structures, fences, and improvements situated upon,
erected upon, or affixed to the land. The OBYs present on the Subject Property
constitute structures which are situated upon the land. The Taxpayers argue that
the OBYs cannot be improvements because they are not permanently attached
to the land and can be removed. The Taxpayers have provided sufficient
evidence establishing that the OBYs are not permanently attached to the land
and can be removed from the property with relative ease. However, the phrase
'situated upon' does not import a pennanency requirement for the structures to
be considered improvements. The phase 'situated upon' requires only that the
structures be located upon the Subject Property and does not, by itself, impose
a pennanency requirement. Pennanency is only required in Mont. Code Ann. §
15-l-101(l)(j) for a mobile home, manufactured home, or house trailer to be
presumed an improvement to real property. Since the classification of the house
trailer as personal property is not in dispute, this portion of the statute is
irrelevant to the issue at hand. Thus, the four OBYs situated on the Subject
Property constitute improvements, not personal property.
61. Next, Taxpayers argue that the one-acre carve-out applied by the Department is
improper because there are no permanent or appurtenant improvements located
on the Subject Property. The applicable code section differs from the
Taxpayers' interpretation and states that Class Four property includes one acre
of real property beneath residential improvements on non-qualified agricultural
land and requires that the Department carve out one acre and value it at market
value. The statute does not require that the improvements be permanent or
appurtenant, only that they be residential improvements. As we have
established above, the Subject Property is being used for a residential purpose
and the four OBYs situated on the property constitute improvements. The
remaining question is whether the improvements qualify as residential
improvements. The evidence before the Board indicates that the improvements
19

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
are facilitating residential use by providing additional amenities such as
electricity and storage to the Subject Property. Additionally, in the case of the
deck and lean-to, the improvements contribute to the structure of the residence
itself. Therefore, the improvements qualify as residential improvements.
62. Ultimately, the evidence before this Board indicates that the Subject Property is
being used for residential purposes and that the property contains residential
improvements. We again note that the house trailer itself has been deemed
personal property and is not considered one of these residential improvements.
However, this does not prevent the other structures from being considered
residential improvements or the personal property from being put to a
residential use. Due to the Subject Property being classified as non-qualified
agricultural land containing residential improvements, the Department correctly
carved out one acre of residential land beneath the improvements which it
valued at market value.
63. Ms. Oliver and Ms. Thomton both provided credible testimony explaining how
the Department valued the land and improvements. Ms. Thomton described
how the Department utilized the Subject Property's land model and ensured
that it produces accurate results using statistical checks like the COD, COV, t-
stat, and R-squared value. Ms. Oliver described how the Department valued the
four OBYs using the cost approach and applied influence factors such as the
county index and percent good to determine accurate RCNLD values. The
Department established that no error was made in valuing the Subject Property
and the law was applied correctly in using the cost approach to value the
improvements. Therefore, the Board upholds the Department's valuation.
64. The Taxpayers also made two discovery-related claims. First, Taxpayers allege
that the Department improperly withheld portions of non-privileged
communications. Second, Taxpayers argue that the participation of two
Department employees. Bob Finstad and Mark Wood, was not properly
disclosed.
20

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA. DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
65. Regarding the first discovery-related claim, Ms. Hagedorn testified that the
Department only supplied one written internal communication and alleges that
numerous pages of non-privileged communications were withheld. Ms.
Hagedom argued that the withheld communications cannot all be privileged
stating, "So are we supposed to believe that that's the only time they ever
talked about our property between two staff members that weren't legal
counsel?" Ms. Hagedorn also stated, "It seems to me like there's a lot of
withheld staff to staff communications, but how would I know?"
66. The Department maintains that all non-privileged communications were
disclosed. In its supplemental responses, the Department explained that the
privilege log contains 150 pages that were provided but partially redacted, and
652 pages of completely withheld communications. The Department clarified
that all withheld communications were between Department staff and legal
staff, and in all instances the legal staff were communicating in anticipation of
litigation. The Department stated that in each case, the privilege claims
constitute either attomey-client privilege or work-product privilege.
Department Counsel also emphasized that it is extremely inefficient to have
written documentation for every communication and most conversations
happen infonnally face-to-face.
67. The Taxpayers have not provided evidence supporting their contention that the
Department withheld non-privileged communications beyond their belief that
such withholdings occun-ed. In comparison, the Department provided sufficient
explanation for the withheld materials and explained why the communications
constitute attomey-client or work-product privilege. Therefore, the Board does
not believe the Taxpayers have shown that the Department improperly withheld
non-privileged communications.
68. Regarding the second discovery-related claim. Taxpayers argue that Mr.
Finstad's participation was improperly withheld from the Department's initial
discovery responses and was only disclosed in the Department's supplemental
21

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
discovery responses. Taxpayers also contend that Mr. Wood was improperly
omitted from the Department's initial discovery responses and was only
referred to as a "fonner staff member." The Department maintains that its
discovery responses were properly responsive to the Taxpayers' specific
information requests.
.99
69. The Board does not find any error in the Department's discovery responses. As
the Department noted in its supplemental response email, the Taxpayers' first
interrogatory asked the Department to identify "each person at the Department"
who has knowledge or was involved in the appraisal process. The phrase "at
the Department" makes the request specific to current employees and is
narrower in scope than a request broadly asking for the name of any person
who has knowledge or was involved in the appraisal process, for example. Ms.
Oliver testified that Mr. Wood left the Department on January 16, 2026. As Mr.
Wood was no longer employed by the Department at the time the discovery
request was made, he would not fit the description, and his omission was not
improper.
70. The Board also does not find any error in the disclosure of Mr. Finstad.
Taxpayers take issue with the fact that Mr. Finstad's involvement was not
disclosed in the Department's initial discovery responses and was only
disclosed later in the Department's supplemental responses. The Taxpayers'
initial discovery requests asked for, among other things, the name of each
person at the Department who "had any involvement in, knowledge of, or
responsibility for the assessment, appraisal, valuation, audit, review, appeal
processing, or any other action taken with respect to the Subject Property or the
Taxpayers during the tax years at issue." Ms. Oliver testified that Mr. Finstad is
employed by the Technology Services Division and did not assist with the
appraisal or processing of the Subject Property in any way. Instead, Mr.
Finstad's involvement was limited to verifying whether photographs could be
deleted from the Department's records. Prior to the CTAB hearing, the
22

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
Taxpayers made multiple requests to have "all past photographs of our property
(both real and personal) be completely purged from your systems and
databases." Department Counsel stated that they considered Mr. Finstad's
involvement as fielding a generalized technological question which would not
make him responsive to the discovery request as it was written. Mr. Finstad
was later named in the Department's supplemental responses after the
Taxpayers requested the name of every sender and recipient contained within
the Department's privilege log, which Department Counsel determined
included Mr. Finstad.
71. Based on the testimony before the Board, it appears that Mr. Finstad's
involvement was limited to answering a specific technological question related
to computer systems utilized by the Department. The Board heard credible
testimony that Mr. Finstad did not participate in or influence the Taxpayers'
assessment or appeal, making his exclusion from the initial discovery responses
reasonable. While the technological question answered by Mr. Finstad
stemmed from the Taxpayers' request to have their properties' photographs
removed, it was not specific to the Taxpayers or the Subject Property but was
instead a general question regarding the capabilities of the Department's
systems. Therefore, Mr. Finstad's initial nondisclosure was not improper.
23

BEFORE THE MONTANA TAX APPEAL BOARD
STATE OF MONTANA, DEPARTMENT OF REVENUE v. SCOTT AND DAWN HAGEDORN
ORDER
72. The CTAB's determination is reversed, and the Department's value of $39,450
is upheld.
Dated this 19th day of August 2026.
^J^4 <9
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SEAL	^
^^_^^
^	'^rF- OF
^ .n^
Travis Brown, Chairman
/\\^ MAU^
Adam Millinoff, Member
istopher Murphy, ^teS^ber
Notice: You are entitled to judicial review of this Order by filing a petition in district
court within 60 days of the service of this Order. The Department of Revenue shall
promptly notify this Board of any judicial review to facilitate the timely transmission
of the record to the reviewing court. Mont. Code Ann. §15-2-303(2).
24

BEFORE THE MONTANA TAX APPEAL BOARD
CertiHcate of Service
I certify that I caused a true and correct copy of the foregoing Findings of Fact,
Conclusions of Law, Order, and Opportunity for Judicial Review to be sent by email
and United States Mail via Print & Mail Services Bureau of the State of Montana on
August 19, 2026, to:
Scott and Dawn Hagedorn
P.O. Box 577
Twin Bridges, Montana 59754
sold(%hagedomauction. com
Dave Burleigh
Michele Peterson-Cook
State of Montana, Department of Revenue
Legal Services Office
P.O. Box 7701
Helena, Montana 59604-7701
David.burleigh(%mt.gov
Michele. Cook(%mt. gov
Heather Thurs
Madison County Tax Appeal Board
P.O. Box 278
Virginia City, Montana 59755
Paula Gilbert
State of Montana, Department of Revenue
Property Assessment Division
P.O. Box 8018
Helena, Montana 59604-8108
/
^7 	^7	^7
^ladison Amfer6s^A^l,v/
Legal Administrative Assistant
25