Question for All in Montana – Confidentiality of Corporate Tax Records – Montana Taxpayers Association

Senator Jim Elliott filed a lawsuit against the Montana Department of Revenue seeking a ruling that the tax returns and tax return related information filed by certain corporations doing business in Montana are public documents.

The Montana Taxpayers Association intervened in the lawsuit since they firmly believe that tax returns and tax return information are confidential under both federal and state law, regardless of the identity or organization of the taxpayer. Montana administers its state income taxes under cooperative agreements with the Internal Revenue Service which provides the Department of Revenue access to the vast amount of information gathered by that agency. Those cooperative agreements also require Montana to maintain the confidentiality of tax return and tax return related information provided to it.

The District Court ruled in favor of the Department and the Taxpayers Association in April and Senator Elliott appealed to the Montana Supreme Court. The Department and Taxpayers Association filed response briefs on October 14. The plaintiff’s filed their brief on October 28. Copies of the briefs can be found at http://www.lawlibrary.state.mt.us/dscgi/ds.py/View/Collection-11992 (NO. 05-336) or on the Montana Taxpayer’s Association website http://www.montax.org (new website will be available November 2). It is expected there will be oral arguments set for the first part of the year. John Alke, the attorney representing the Taxpayers Association will be making a presentation on the lawsuit at the association’s annual meeting in Helena on December 1.

Senator Elliott’s lawsuit, if successful, would destroy the required confidentiality of income tax returns and tax return related information for any taxpayer or reporting entity that is not a human entity. That would mean that any farm, ranch, or other small business organized as a pass through entity, such as a Subchapter S corporation, a limited liability company, or a partnership, would have to refuse to file a Montana income tax return, or similar income reporting information, if it wanted to maintain the confidentiality of its financial affairs.

The Montana Taxpayers Association is an organization of individuals and businesses formed, among other things, to promote a healthy tax climate for individuals and businesses in Montana. Mary Whittinghill stated: “Senator Elliott’s lawsuit is a hostile act against a broad cross section of companies and people doing business in Montana. He believes, in effect, that a condition of doing business in Montana should be foregoing one’s right to maintain the confidentiality of one’s financial affairs. That is not acceptable in any other state, and should not be acceptable in Montana.”

You can register for the annual meeting by email [email protected] or by phone at (406)442-2130.

Mary Whittinghill

Montana Taxpayers Association

506 N. Lamborn

Helena, MT 59601

406.442.2130- office

406.442.1230 – fax

406.431.6033 – cell

Benefits of Membership with the Montana Taxpayers Association
The Montana Taxpayers Association provides the resource you need for information on tax and public spending issues. We actively participate in all legislative sessions and monitor interim activities such as interim committees, administrative rule hearings, and maintain communication with the agencies and the administration.

We are currently engaged in the following issues:

School funding – the Quality Schools Interim Committee is discussing solutions for the school funding formula and the amount of money necessary to provide an “adequate” education. We have contracted with Curt Nichols, former Assistant Budget Director for the state with over 30 years of experience, to help us continue to provide legislators with information on funding proposals and alternative solutions. We are developing an educational outreach program to provide factual information for legislators, our members, and the public on school funding issues as we prepare for a special legislative session to address this issue. The Montana Taxpayers Association supports efforts to give our children in Montana a quality education. It is essential that students be given the tools for success. However as we hear suggestions to increase spending by upwards of $300 million annually when we already have good student performance and place a premium on schools in our spending we are concerned.

Confidentiality of Corporate Tax Records – Our association intervened in the litigation Senator Elliott brought against the Department of Revenue. We were successful at the District Court this April. Senator Elliott appealed this decision to the Supreme Court. John Alke, the attorney who achieved our District Court win, is defending taxpayer interests at the Supreme Court along with the Department of Revenue. We believe that if the court concludes corporate tax records are not confidential and are not protected under the Montana Constitution as an “individual” this will apply to other business entities such as partnerships, LLC, Sub S, and other pass-through entities.

Tax Compliance and Amnesty Initiatives – During the 2005 session, legislation was introduced that could have added more complexity and uncertainty to Montana’s income tax system. Through a collaborative effort with other business associations, we were able to defeat this legislation and promised to work with the administration in developing a more reasonable approach to address compliance issues. We continue to work with business groups and our members to address concerns the department of revenue with the current tax system. Our goal is a compliant system that is understandable and predictable.

Montana Public Power, Inc. Now that five Montana cities have committed an additional one-half million in taxpayer’s dollars to continue to pursue purchase of the utility assets of Northwestern Energy, we believe it is time to start asking more questions of our public officials. Taxpayers and ratepayers deserve more certainty of the soundness of this proposal before any final decision is made. We are sending a request to the officials of MPPI for additional information and will keep our members posted in this important issue for all Montanans.

Under funded public and teacher retirement systems – It is estimated that the public employee and teacher retirement systems are actuarially under funded by $1.4 billion. Three committees are discussing ways to address this issue. We are monitoring the activity and will testifying toward a reasonable solution as the committee begins to surface ideas.

Other issues include discussions with the department of revenue on determining economic obsolescence for industrial properties, clarification of oil and natural gas properties for property tax purposes, clarification of ag land valuation and potential financial impact to the state of the public retirement systems.

To become a member or for further information contact:
Mary Whittinghill, President
Montana Taxpayers Association
[email protected]
http://www.montax.org (new website will be available on November 2)

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Lawmaker’s request for tax records in front of Supreme Court

Posted on Nov. 1

By MATT GOURAS of the Associated Press

HELENA – A state senator has taken his fight over access to corporate income tax records to the state Supreme Court, arguing that the information should be open to the public under the Montana Constitution.

Sen. Jim Elliott, a Democrat from Trout Creek, has been stymied by the state Revenue Department and lower courts in his quest to get the information. Elliott believes, based on limited information from the legislative auditor, that some large and wealthy corporations are paying almost nothing in state income taxes.

In court documents filed Monday with the Supreme Court, Elliott argues that the state Constitution trumps any laws that might be used to restrict access to the tax information.

Full Story: http://missoulian.com/articles/2005/11/01/breaker/doc4367fd3c5531a152597867.txt