BOZEMAN -- The Montana Farm Bureau Federation (MFBF) and the Montana Taxpayers Association (Montax) have filed a class action lawsuit against the Montana Department of Revenue. The lead plaintiff in the case is Bernie Lucas, a rancher from Meagher County, and Lucas Ranch, Inc., also of Meagher County.

Farm Bureau believes the Montana Department of Revenue failed to correctly calculate phase-in amounts for agricultural properties statewide. The phase-in was supposed to be done over a six-year period but instead almost the full amount was taxed in the first year.

“This is devastating to a lot of folks,” said Bob Hanson, president of Montana Farm Bureau Federation. “Some of our members who are already operating on a thin margin will have to take a serious look at their operation to determine if they can still stay in business.”

2009 was the first year of the current six-year appraisal cycle. Increases in value as a result of reappraisal must be phased in over the appraisal cycle at the rate of 16.66% per year. The Department is required by statute to calculate the phase-in amounts by comparing the current appraised value to the value established for 2002, which was the base year for the prior reappraisal cycle.

“What’s really disturbing is the Director of the Department of Revenue has publicly admitted the error but won’t correct it unless the taxpayer asks for a review,” said Hanson.

The Department has publicly indicated that its erroneous phase-in calculations have impacted at least 27,000 agricultural producers, and that only approximately 2,000 of those affected producers timely filed an AB-26 request for informal review.

Unless corrected, the Department’s error will result in the perpetuation of erroneous phase-in values through the remainder of the reappraisal cycle.

"We believe this filing provides the right for all agriculture producers to protest their disputed taxes," concluded Hanson. "We urge our members and all agriculture producers in Montana to pay a portion of their second half taxes under protest."

A copy of the petition can be downloaded by clicking here.

Update:

Agricultural Land Property Tax Lawsuit Continues

BOZEMAN -- The Montana Farm Bureau Federation (MFBF) and the Montana Taxpayers Association (MONTAX) remain committed to move forward with their class action lawsuit against the Montana Department of Revenue (DOR) regarding improper implementation of the assessment of agricultural land. Monday was the deadline for the DOR to respond to the lawsuit filed in the Montana Fourteenth Judicial District Court in Meagher County. The lawsuit was filed as a result of the MFBF and MONTAX asserting that the DOR incorrectly calculated phase-in amounts for agricultural properties statewide and then failed to take action to fix the problem. Valuation changes due to the reappraisal are required to be phased-in over a six-year period under Montana statute. However, under this new cycle nearly the entire change in valuation was assessed to taxpayers in the first year.

In its answer, the Montana DOR denies many of the specific allegations of the petition, but admitted it is correcting errors for some taxpayers in 2009, and will correct some of its errors for “all other affected taxpayers in tax year 2010.”

“How can the Department of Revenue in one instance deny wrong doing and then in the same document admit that it needs to be fixed?” asked MFBF Executive Vice President Jake Cummins. “We feel we have a very strong case going forward. We still don’t feel this issue has been properly dealt with and plan to see it through until every piece of agricultural property in the state has been properly phased-in according to law and legislative intent.”

The DOR has publicly indicated that its erroneous phase-in calculations impacted at least 27,000 agricultural producers, and that only approximately 2,000 of those affected producers timely filed an AB-26 request for informal review. Unless corrected, the DOR’s error will result in the perpetuation of erroneous phase-in values through the remainder of the reappraisal cycle.

“It’s extremely frustrating to hear different solutions from the DOR in front of various venues over the past few months and still not have a viable and equitable resolution for these taxpayers,” added Mary Whittinghill, president, MONTAX. “The failure of the DOR to initiate discussions with stakeholders or establish definitive timelines played an important part in our decision to file this petition.”

MFBF held Eastern Montana producer meetings March 29 and 30 in Sidney and Glendive on the tax lawsuit. Both meetings were well attended by farmers and ranchers concerned about being treated unfairly on their property taxes.

“The Montana Farm Bureau is still urging landowners to pay a portion of their second half property taxes under protest through the AB-26 process until this is resolved,” said Cummins.

Whittinghill added, “Both our associations will continue to work closely with local governments to minimize confusion for all parties.”

A copy of the original petition can be found by clicking here. The petition was filed on Feb. 12.

The MONTAX has posted a new calculator on their website www.montax.org that taxpayers and county treasurers can use to help determine the amount to protest. Click here to view the calculator.