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Lake County tax exemptions halted for land going into trust

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LAKE COUNTY — Temporary tribal tax exemptions for property being put into trust status is currently suspended in Lake County. The change comes from a new agreement between Lake County and the Montana Department of Revenue.

“The agreement stipulates that the Department of Revenue will grant no more exemptions in Lake County until June 30, 2021,” Lake County Commissioners stated in a media release. The wait gives the county time to look at and submit a list of contested exemptions to the department.  

“The two parties will work together for an additional 30 days to resolve the status of properties on the list,” the commissioners state. “The county is asking for recapture of prior years’ taxes on properties that may have been improperly exempted.”

A press release from the Confederated Salish and Kootenai Tribes’ communications director Robert McDonald stated that the county media release from the commissioners refers to a case between Lake County and the Department of Revenue. “CSKT was not part of the lawsuit,” he states. 

Commissioner Gale Decker said in a phone interview that people will be able to apply for the tax exemption after the June deadline, as stated in the agreement. The department can continue providing tax exceptions, as per the law, with the agreement that administrative rules originally established in the guiding policy will be followed. 

“The administrative rules were not followed by the department,” Decker said. “They accepted applications for the exemption after the deadline and without date stamps and without required signatures. We are now putting together a list of properties we feel shouldn’t have been accepted.”  

The agreement averts court proceedings. “We were headed for a trial,” he said. “The Department of Revenue, prior to the change in administration, believed they were following the intent of the legislature’s protocol for the exemption, but we avoided that.” 

According to commissioners, the tax exemption is issued for a limited period-of-time. “The exemption provides a five-year tax vacation for properties owned in fee by any tribal government in the state while the property moves through the process of being placed in trust status,” commissioners state. “Once the property achieves trust status, ownership of the property is assumed by the United States and property taxes are permanently eliminated.” 

In the fall of 2018, Lake County filed a complaint against the Montana Department of Revenue questioning the process of granting property tax exemptions submitted by the Confederated Salish and Kootenai Tribes in the county. Temporary Tribal Tax Exemptions were issued by the Department of Revenue under policy enacted by the 2011 Montana Legislature.

“Lake County unsuccessfully had legislation introduced in 2018 that sought to repeal the statute and will seek repeal again this session,” commissioners state. Senator Greg Hertz is working to introduce legislation on the issue to repeal the tax exemption. Decker said he is attending a Senate Taxation Committee meeting this week where Hertz will introduce the matter. Decker said lawmakers could have a decision on the issue by April. Decker is hoping to have the exemption repealed before the June deadline.  

Commissioners state that they began an “in-depth investigation into the impacts of the exemption statute in 2017 after discovering that far more properties were being exempted under the new statute than had originally been anticipated.” 

It was originally estimated that about 20 properties would receive the tax exemption across the state, due to a legislative fiscal analysis produced when the bill was being debated in the legislature, which would amount to an annual loss of revenue at about $15,600.

“The county discovered that 29 exemption applications involving 75 properties had been approved by DOR in Lake County the first year,” commissioners state. “In the eight years that the law has been in effect, over 150 CSKT fee properties have been exempted in Lake County. Other counties with CSKT fee land inside the Flathead Reservation also had properties exempted under the statute but far fewer than Lake County.”

“The total revenue loss due to exempted properties in the county was significant. Several special districts, such as irrigation and solid waste, also lost revenue as those fees were removed from many of the properties by the DOR at the same time the property taxes were removed.”

Decker added that he isn’t sure just how much revenue was lost at this time, but the commissioners plan to spend time looking at the exemptions. “Until we go through each property, we won’t know how much was lost,” he said.



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