MATT GOURAS Associated Press Writer
HELENA An effort by the administration of Gov. Brian Schweitzer to crack down on out-of-state tax cheats looks like it could be in trouble again. A trio of bills aimed at getting nonresidents to pay their income taxes by closing loopholes and improving enforcement efforts were tabled by House Republicans on Friday. The governor said the proposals are needed to make sure wealthy nonresidents, oil and gas companies, and distant corporations that profit in the state are paying the same taxes that residents pay. He said the House Taxation Committee shouldn’t have tabled the bill. “I think it’s a mistake,” Schweitzer said. “I want Montana businesses to be successful. If we’ve created a tax code that gives non-Montanans a competitive advantage, what kind of signal does that send?” Critics said the Department of Revenue is only speculating that some of the legislation would work. They also argue they don’t trust the tax collection agency to use the new powers like its administrators say it will. It is Schweitzer’s second effort at ramping up tax enforcement efforts against nonresidents. In 2005, the administration backed one comprehensive bill that critics said was too complicated. This year, the administration is trying a number of separate bills on the topic. Partisanship could kill the measures this time, supporters said. “Not a single Montanan would have their taxes go up because of these loophole closures,” the governor said. Schweitzer has said that Montana could collect as much as $60 million from nonresidents if the loopholes are closed. Rep. Ed Butcher, R-Winifred, called one of the measures “reprehensible” for making corporations withhold state income tax on mineral royalties being sent out of state. He called another one “a fishing expedition” for Taxpayers that may or may not be using a potential loophole. Republicans opposed the measures, which were tabled on a series of votes along party lines. “It was pretty obvious that it was a script that they followed,” said House Minority Whip Bob Bergren, D-Havre. Bergren carried one of the bills, which were all requested by the Department of Revenue. “This is not a partisan issue,” Bergren said. “I hope they don’t make it a partisan issue.” Bergren said he believes Republicans might take another look at the measures if the agency is removed from the portion of the bill taking credit for the legislation. The bills:
One seeks to tighten up tax law dealing with “grantor trusts,” which are currently not defined in law.
The Department of Revenue would be allowed to hire out-ofstate debt collectors to chase after nonresidents who don’t pay tax bills. The agency says it currently has limited ability to pursue debts in other states.
Bergren’s measure would make sure nonresidents have to pay withholding taxes because that group is most likely not to pay the taxes, making collection difficult.
The measures are House Bill 74, House Bill 109 and House Bill 100.