Silver Bow and Gallatin County residents are suing the Montana Department of Revenue for a recalculation of Treasure State residential property taxes, alleging that the Gianforte administration violated the law and the state constitution by allowing the tax to be imposed on homeowners. They are asking a state district court judge to force them to do so. There was a sharp increase while most business classes were declining.
In the lawsuit filed Tuesday in Butte-Silver Bow County District Court, attorneys for Thomas Powers, Cinder Lord Powers, Ryan Swenson and Elizabeth Swenson also seek class action certification for the case. They are asking the district court judge to stop it. Until they say they can equalize the tax rates, we should stop collecting housing property taxes.
The housing property tax issue may not have been a defining issue in the 2023 legislative session, but it quickly became a hot topic after the legislative session adjourned as the deadline for filing housing property tax bills approached. Part of the increase in residential property taxes is due to the COVID-19 pandemic, which has brought a large influx of immigrants to Montana and caused real estate values to soar.
In Montana, Gov. Greg Gianforte proposed and the Legislature passed a rebate program that would give some homeowners up to $675 a year in rebates, but the system is technically cumbersome and would not offset price increases. Many people have criticized that it could not have been done.
The Republican-controlled Legislature also came under criticism for not adjusting residential property taxes during the 2023 session, but the Montana Department of Revenue said that without the adjustment, Montana homeowners He warned that sticker shock could and did occur.
Meanwhile, Gianforte, a Republican, has targeted local and county governments in the state, many of which are controlled by Republicans, for what he calls out-of-control spending, a contentious point that many in the governor’s own party have criticized. It pitted people against each other. together with the administration.
The new lawsuit says that regardless of the politics, the Gianforte administration and the Department of Revenue had an obligation to do what Congress did not: flatten property tax rates to make them more fair. claims.
“This failure to ‘equalize’ and ‘adjust’ between these taxpayers and asset types and ‘do all necessary to ensure fair, just and equitable tax assessments’ ‘This is a complete dereliction of their constitutional and statutory duty to do so,” the complaint states. Said.
Lawyers for the residents, led by John M. Morrison of Helena, say the tax burden has “unfairly and unjustly” shifted hundreds of millions of dollars to resident taxpayers.
The lawsuit claims that Montana has accurate and up-to-date market price data for homes because of the large number of homes built and sold each year. But because so many businesses are unchanged or do not have comparable characteristics, states underestimate them. They argue that the assessment process will be different, leading to a system where businesses can negotiate a way to avoid taxes using a different system while homeowners are stuck.
“[For example]the valuation of centrally assessed assets by the state excludes intangible value. This intangible value is neither precisely defined nor precisely measured. It varies widely. Companies and tax authorities are negotiating the value of the intangible and tangible parts of assets that are centrally valued, and that value is subject to other tax consequences. not equal to the appraised value of the subject property,” the lawsuit states. “Furthermore, at the administrative option of the Department of Revenue, the parties negotiate these values in secret. Any intangible or tangible value that is thereby excluded from taxation is subject to a It will be passed directly to taxpayers, primarily resident taxpayers.”
The attorneys also argue that the Montana Department of Revenue’s own calculations of the taxable housing tax rate should have been revised downward from 1.35% to 0.94%.
“Similarly, this memorandum made clear that failure to make such adjustments would result in a significant tax burden to resident tax payers,” the complaint states.
Lawyers said it’s ultimately the Department of Revenue’s job and the Gianforte administration’s responsibility to do what the Legislature won’t do to comply with state law and the state Constitution.
They point to specific parts of state law that they say the current law requires the Department of Revenue to make adjustments to.
“Montana’s core property tax equalization requires the department to ‘adjust and equalize assessed values’ and ‘ensure fair, just, and unbiased valuations of all taxable properties. “We are required to take all necessary measures to ensure that.”
The lawsuit includes tables and references to tax differences for some of the state’s largest taxpayers.
For example, of the nine business classes that make up property taxes, six saw their share of the state budget decrease, with business equipment increasing slightly (from 4.03% to 4.30%). Commercial real estate increased slightly from 13.1% to 13.4%.
However, the share of resident taxes jumped from 51% to 59% of the state budget in 2023. Using state data, revenue from residential real estate jumped from $1.8 billion to more than $2.7 billion, generating nearly $900 million more for the state.
Lawyers, meanwhile, point out that the state’s largest businesses are centrally assessed and that these businesses typically span multiple locations and counties, meaning their taxes are determined in Helena. There is. In 2023, centrally assessed real estate contributed more than $864 million to the national treasury, accounting for 23.8% of the budget. In 2023, that number decreased to $809 million, a percentage decrease from 23.8% to 17.3%.
For example, Northwestern Energy, Montana’s single largest taxpayer, will pay about $36 million less in 2023, a 20% decrease. Other large companies, such as Montana Rail Link and Spectrum, also paid significantly less taxes.
In addition to asking for the lawsuit to be certified as a class action so that it would apply to a larger group, perhaps an entire group of Montana resident taxpayers, the lawsuit also seeks to use a “private attorney” to pursue the lawsuit. I’m also looking for General doctrine. ” In other words, if the plaintiff’s attorney wins in court, the state will pay the attorney’s fees because the property owner and attorney are simply “justifying their constitutional and statutory right to tax equalization.” It will be.
They said the state overcharged residents by more than $100 million.
The Daily Montana did not receive comment from the governor’s office or the Montana Department of Revenue prior to publication.
The residents will be represented by John M. Morrison of Deora in Morrison, Sherwood, Wilson and Helena, and Alan McGarvey and Dustin Leftridge of McGarvey Law in Kalispell.
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