By Alan Sorensen
HELENA - A ballot measure changing vehicle taxes to a fee system does not eliminate the tax exemption required by federal law for tribal governments and tribal members living on Montana Indian reservations, Attorney General Joe Mazurek said Tuesday.
Mazurek announced his decision this morning in a news release after reportedly completing a legal review of the matter. He determined that the fee is still, essentially, a tax, the release said. And both a prior attorney general opinion and a decision from the U.S. District Court for Montana acknowledge that neither the value-based tax nor the sales tax on light vehicles can be applied to tribal members and tribal governments, he said.
Several Rocky Boy's Indian Reservation residents had expressed concern about the flat fees to register their vehicles and get Montana license plates. Mazurek's decision assures them that they won't be charged the fee.
The standard "fees" described in LR 115 do not include county option tax or other fees such as junk vehicle. Reservation residents are exempt from some of those, too.
Mazurek undertook a legal review of how Legislative Referendum 115 - placed on the ballot by the Legislature and approved by voters last month - would affect vehicle taxation on the state's Indian reservations because county treasurers were asking how the new fee would be administered by the Department of Justice's Motor Vehicle Division. The ballot measure goes into effect Jan. 1 and will replace the current sales tax on new vehicles and the depreciated value-based tax for light vehicles.
"The new fee system is very similar to a 1981 motor vehicle license fee that was found to be a tax," Mazurek explained, noting that both an opinion issued in 1981 by Attorney General Greely and a District Court ruling on a similar issue set clear legal direction on the matter.
Mazurek noted that with some exceptions, the money raised by the new "fee" is deposited in the same accounts as the prior taxes. Although he said that a true registration fee could be assessed against anyone registering a car in Montana, the fee created by the referendum is essentially a tax. Mazurek has instructed the Motor Vehicle Division to administer the new fee with the same exemptions that existed under prior law.
In addition to tribal members and governments, counties, cities and several other classes of vehicles will remain exempt from the fee.
Mazurek acknowledged that his decision will be a disappointment to reservation-based counties, which had hoped that a federal court decision in South Dakota paved the way for the fee to be applied to tribal members and tribal government fleets in Montana.
"The law in Montana is clear about when something called a fee must be considered a tax," Mazurek said. "And under the standards adopted by the federal courts and prior attorney general opinion, the new 'fee' is essentially no different from the taxes it replaced and which the federal District Court determined cannot be assessed against tribal members or tribal governments."
The new fees are based on a vehicle's age rather than value.
The fee on cars and small trucks that are 4 years old or newer will be $195. For a vehicle between 5 and 10 years, the fee will be $65. Vehicles 11 years old and older will have a fee of $6 per year.