Montana farmers have lost their class action lawsuit accusing the state of jumping the gun on tax increases.
District Court Judge Randal Spaulding ruled late last week that Montana’s Department of Revenue was in the right in 2009 when it imposed the maximum tax allowed on some Montana farms, while choosing to phase-in taxes on other farms over six years. Roughly 2,000 farmers who have paid their taxes in protest since 2009 will be affected by the ruling, though several thousand more had hoped to benefit from the class action.
At issue was the 2009 reappraisal cycle, which brought dramatic changes to the way Department of Revenue officials were determining taxable value of farm property. For the first time, the Department of Revenue using satellite Global Positioning System technology, soil sampling, and other methods to get a more precise assessment. What the department found was that in some cases previous assessments were inaccurate. Acres had gone unaccounted, or had been put to a different use, which had not been noted on previous tax rolls.
Those acres, unearthed by new assessment, changed the nature of a farm’s property so much that the entire farm no longer qualified for the standard six-year phase in of property taxes. In essence, farm plaintiff’s said, the Revenue Department treated the land change like it might treat an addition onto a house. The addition reset the entire property’s taxable assessment and made the property ineligible for a tax phase in.
“We are obviously disappointed by the decision,” said Mike Green, Montana Farm Bureau Federation attorney. “The Court appears to have accepted the Department’s arguments that ag land changes must be treated the same as new construction of a home.”
The plaintiffs argued that homes and farm property were in different tax classifications and should be treated differently. At the least, they argued, land that hadn’t been altered should get the phase in. The court disagreed.
Dan Whyte, deputy chief legal council for the Department of Revenue, said the reason so many farmers were affected was because it had been years, in some cases decades, since changes had been made to what property information was being submitted to DOR. Farmers simply resubmitted the same information year after year, even though some of their acres had changed, either because they had been put into production, or they had been put to a different, more profitable use.
“I think it happened in many, many cases because there are tens of thousands of farms across the state and no one had done an assessment for anyone probably in 40 years,” Whyte said.
Spaulding concluded that Department of Revenue had correctly carried out the tax law prescribed by the state Legislature, Whyte said.
But Bob Story, of the Montana Taxpayer’s Association, was a member of the Legislature when the Department of Revenue presented its interpretation of the law to legislators. It wasn’t clear how the phase-in issue would be handled, Story said. He said he doubts many lawmakers shared DOR’s interpretation.
Plaintiffs in the case now have 60 days to decide whether to appeal to the state Supreme Court.