Cynthia E. Taylor v. Department of Revenue

BEFORE THE STATE TAX APPEAL BOARD
OF THE STATE OF MONTANA
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CYNTHIA E. TAYLOR, )
) DOCKET NO.: SPT-2001-2
Appellant, )
)
-vs- ) FACTUAL BACKGROUND,
) CONCLUSIONS OF LAW,
THE DEPARTMENT OF REVENUE ) ORDER and OPPORTUNITY
OF THE STATE OF MONTANA, ) FOR JUDICIAL REVIEW
)
Respondent. )
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The above-entitled appeal was heard on February 8, 2002,
in the City of Hamilton, in accordance with an order of the
State Tax Appeal Board of the State of Montana (the Board).
The notice of the hearing was duly given as required by law.
Cynthia E. Taylor (the Taxpayer) presented testimony in
support of her appeal. The Department of Revenue (DOR),
represented by Jim Fairbanks, Regional Lead, Debbie Reesman,
Unit Manager and Dennis Vick, Customer Assistance, presented
testimony in opposition to the appeal. In addition to
testimony, exhibits were received in evidence. Ms. Taylor is
the appellant in this proceeding and, therefore, has the burden
of proof. Based on the evidence, this Board finds as follows:

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STATEMENT OF THE ISSUES
There are two issues before the Board. The first is
whether the Taxpayer actually filed an application for property
tax assistance for 2001. Secondly, was the DOR correct in
denying the Taxpayer’s filed form of application for such
assistance based on the failure of the Taxpayer to timely
supply year 2000 income information and failure of the
residential occupancy requirements pursuant to Sections 15-6-
134 (1)(c) and 15-6-191, MCA.
FACTUAL BACKGROUND
1. Due, proper and sufficient notice was given of this
matter, the hearing hereon, and of the time and place of the
hearing. All parties were afforded the opportunity to present
evidence, oral and documentary.
2. The Taxpayer signed and dated her application titled
“Application For Property Tax Assistance Program” on March 7,
2001.
3. The application is stamped “Received” on what appears to
be March 13.
4. The DOR denied the Taxpayer’s request in writing stating,
“No income provided as of 6/15. Does not appear to meet
occupancy req. for this year”.
5. The Taxpayer appealed that decision to this Board on July
7, 2001 which was received by the Board on July 16, 2001.

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TAXPAYER'S CONTENTIONS
The Taxpayer contends that she filed the application for
property tax assistance, timely supplied the financial
information required and complied with the statutory occupancy
requirements. In support of her contentions the Taxpayer
offered the following testimony and evidence.
As stated in the MONTANA DEPARTMENT OF REVENUE APPLICATION
FOR PROPERTY TAX ASSISTANCE PROGRAM form PPB-8 (Rev 11/00) it
must be returned to the local DOR field office by March 15th or
no reduction could be allowed. The Taxpayer signed and dated
her application on March 7, 2001. She included her social
security number, phone number and other information but did not
include total annual income information as outlined on the
form. She returned the signed application to the local DOR
field office and it was date stamped as “Received” on what
appears to be March 13, 2001. A yellow sticky note was
attached to the income information section of this form stating
“Need Income.” Also attached was another yellow note from Ms.
Taylor stating “Income information to be given upon completion
of tax return (self-employed).”
The Taxpayer testified that this application had been
filed as she had done since first requesting property tax
assistance in 1992 and each year thereafter. Each year she
filed the signed form writing on the form that financial

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information would be supplied as soon as her accountant
completed her tax return. For those years her tax return was
not completed until sometime after April 15 and at least in one
year not until August. Each year she or her accountant would
send or take a copy of her tax return to the local DOR office
where DOR personnel would take the information from Schedule C
and write the required information on her application and each
year until 2001 this procedure had been approved and property
tax assistance provided.
The Taxpayer stated DOR employees told her she must be
careful to return the signed application by March 15 of each
year but she could supply the financial information when it was
available, i.e. when her tax return was prepared. The Taxpayer
presented testimony of a witness who said she had used the same
procedure for the past several years. The Taxpayer was also
called by DOR personnel reminding her to supply this
information. She intended to follow the same procedure in
2001, however, she received a letter dated May 2, 2001 from the
DOR saying the financial information must be received within 10
days (or other arrangements made) or it would be “necessary” to
deny the application. She replied that she would have her
taxes done by the end of June but DOR did not state it agreed
to this. The Taxpayer’s application was denied by the DOR on
June 15, 2001 in writing as stated above.

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For a number of months of the year 2001 the taxpayer was
out of state but she occupied her residence for all of 2000.
Subsequent to the denial the Taxpayer testified she called the
DOR and inquired about sending in the information on Schedule C
on her tax return but was told it was unnecessary, as her
application had been denied. This appeal followed.
DOR'S CONTENTIONS
The DOR contends the taxpayer did not file an application
and that it properly denied what was filed as an application
for property tax assistance based on the failure of the
Taxpayer to timely supply year 2000 income information and
failure of the Taxpayer to meet the statutory occupancy
requirement. In support of its contentions the DOR offered the
following testimony and evidence. The DOR testified that the
application at issue was filed on March 13 but that it was
“blank” and that …a blank filed form is tantamount to a form
not filed.” DOR conceded that the application was signed and
completed as the Taxpayer so testified but that the application
lacked information and “an application lacking information is
not an application.” The remainder of DOR’s testimony
generally agreed with that of the Taxpayer. The information
regarding the income of the Taxpayer must be included, however,
on the application to be returned on March 15 of the year in
question. This is because of the requirements of ¶ 42.19.401

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ARM. Approximately thirty people received DOR’s May 2, 2001
letter stating that requested financial information must be
received by DOR within ten days or it would be necessary to
deny their applications. One other person’s application was
denied for failure to submit the information within this time
period. Approximately seven hundred applications are filed
with the local DOR office. The DOR acknowledged that its May
2, 2001 letter itself did not comply with the statutory and ARM
deadline of March 15, 2001 and that it had acted contrary to
its own statute and ARM in past years. The DOR also said an
April 15 deadline would serve its purpose of providing tax
collection information to counties in a timely fashion and that
the first Monday in June would be a desirable date to supply
such information. If a few taxpayers went beyond this date, it
would not create a problem. This year the DOR intends to have
a procedure whereby the applicant would submit “something by
April 15” providing “some income” and that the application will
be figured on that income. Finally, it appears to be DOR’s
position that the statutory occupancy requirement is to be met
in the year the application is made. This requirement states
that the taxpayer must have “occupied that same residence for
at least 7 months a year.”

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BOARD'S DISCUSSION
For the past seven years at least the Taxpayer has filed
her application in a manner approved and apparently as directed
by the DOR and in each year her application has been approved.
Her signed and completed application, except for requisite
financial information, was returned to the DOR local office by
March 15 of each year or before that date including her
application filed for 2001. The DOR admitted it had not
followed its own statute or ARM during this lengthy time
period. The Taxpayer is self-employed and since her accountant
had not completed her tax return by April 15 she asked for and
received time extensions to file her returns, including
Schedule C, which contained the required financial information
for the DOR. Only if the Taxpayer was an employee and not
self-employed would she have likely received a W-2 form before
March 15. This form would have allowed her to file a completed
form with required income information by March 15. The DOR
offered no reason for the selection of the date of March 15 as
the due date for filing the application and appears to intend
changing that date to at least April 15 this year for the
submission of at least some financial figures. The position of
the DOR that the seven-month occupancy test must be met the
year the application is filed cannot be complied with and
therefore cannot be sustained. March 15 of course occurs in

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the third month of the year and so the taxpayer cannot have
occupied the property for seven months prior to that date for
an application filed for a given year. The Taxpayer’s income
is tested for the preceding taxable year and if the occupancy
test is to be measured on a yearly basis this too must be
measured for the preceding tax year. The Taxpayer occupied her
residence for all of the tax year 2000 and thus satisfied this
requirement. It is the conclusion of the Board that the DOR’s
adopted procedures for 2001 relative to the issues presented
amounted to the arbitrary, capricious or otherwise unlawful
adoption of a new ARM rule while at the same time abrogating
their own ARM rule in effect for such time period. This
renders such adopted new rule arbitrary, capricious or
otherwise unlawful. The DOR admitted that it didn’t follow its
own rule during this lengthy time period and that it also did
not comply with its own rule again in granting a ten-day
extension of time to file the information in its May 2, 2001
letter to the Taxpayer. Therefore the Taxpayer did file a
timely application for property tax assistance in 2001 and met
the requirements of Sections 15-6-134(1)(c) and 15-6-191, MCA,
with regard to supplying year 2000 income information and the
occupancy requirement.
CONCLUSIONS OF LAW
1. The Board has jurisdiction over this matter in accordance

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with Section 15-2-302, MCA.
2. The Board shall give an administrative rule full effect
unless the Board finds a rule arbitrary, capricious or
otherwise unlawful. Section 15-2-301(4), MCA.
3. The appeal of the Taxpayer is hereby granted and the
decision of the DOR is reversed.
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ORDER
IT IS THEREFORE ORDERED by the State Tax Appeal Board of
the State of Montana that the Taxpayer’s Application For
Property Tax Assistance for 2001 shall be approved.
DATED this 12th day of March, 2002.
BY ORDER OF THE
STATE TAX APPEAL BOARD
( S E A L )
_______________________________________
GREGORY A. THORNQUIST, Chairman
________________________________
JEREANN NELSON, Member
MICHAEL J. MULRONEY, Member
NOTICE: You are entitled to judicial review of this Order in
accordance with Section 15-2-303(2), MCA. Judicial review may
be obtained by filing a petition in district court within 60
days following the service of this Order.

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CERTIFICATE OF SERVICE
The undersigned hereby certifies that on this 12th day of
March, 2002, the foregoing Order of the Board was served on the
parties hereto by depositing a copy thereof in the U.S. Mails,
postage prepaid, addressed to the parties as follows:
Cynthia Taylor
524 Golf Course Rd.
Hamilton, MT 59840-3237
Office of Legal Affairs
Department of Revenue
Mitchell Building
Helena, MT 59620
Jim Fairbanks
Regional Lead
Department of Revenue
2681 Palmer, Suite I
Missoula, MT 59808
______________________________
DONNA EUBANK
Paralegal