Bill to narrow intangible personal property exemption draws split testimony; sponsors say it will ease homeowner tax burden

Sen. Mary Ann Dunwell, a Helena Democrat, told the Senate Taxation Committee that Senate Bill 169 would curtail an exemption for certain intangible personal property now applied to centrally assessed companies such as utilities, pipelines and telecoms.

"This exemption that this will revise, formerly known as the intangible personal property exemption ... is property that really can't be touched or felt, physically, but it has lots. It's packed with lots of value," Sen. Dunwell said as she opened the hearing, describing the bill as a way to "even out the pieces of the pie" so homeowners and small businesses do not shoulder a disproportionate share of property tax burdens.

Why it matters

Proponents argued the exemption redirects hundreds of millions of dollars in taxable value away from residential property to centrally assessed entities and that repealing or narrowing the exemption would relieve homeowners and Main Street businesses. Evan Barrett, a retired economic development official and homeowner, told the committee the Department of Revenue’s reports show more than $1 billion in tax expenditure from the exemption over roughly a dozen years and that the value shift has fallen largely on homeowners.

"In comparison to my home and the home of every other Montana citizen, it's not fair that our intangibles are being taxed and the centrally assessed are not," Barrett said, urging the committee to vote yes on SB 169.

County officials and rural residents also testified in support. Tyler Gernant (Missoula County clerk and treasurer) told the committee that consumer and business taxes already reflect market goodwill and that treating centrally assessed companies differently reduces fairness in the tax code.

Opponents — including large utilities and telecoms, trade groups and bankers — said the bill would bring subjective valuation questions into property tax practice, increase litigation and raise the state’s cost of attracting capital. Bob Story of the Montana Taxpayers Association questioned whether the bill was correcting current law or comparing hypothetical values that are not current statute. Margaret Morgan, testifying for T‑Mobile, said taxing intangible assets such as intellectual property and software could deter network investment.

Administration and fiscal points

Department of Revenue staff explained existing practice: the department uses an administrative rule that assigns a default intangible personal property percentage by industry — typically a range of about 5 percent to 15 percent — and companies may petition or provide data if they disagree. Derek Bell, the Department’s business and income tax administrator, said the default percentages vary by industry and companies can demonstrate a different intangible share if they disagree with the default.

The sponsor and proponents pointed to Department of Revenue modeling showing the bill could reallocate roughly $155 million in exemption value from centrally assessed companies and shift tax burden back toward residential taxpayers in the first year of effect; proponents also cited longer‑term totals presented in the department’s biennial report.

Opponents pushed back on methodology and legal uncertainty. Testimony from business groups emphasized that current law and negotiated administrative rules were established after a 1999 statutory change and that restoring taxation of intangibles across the board would raise compliance, valuation and competitiveness concerns.

Questions from committee members addressed the statutory title and amendment limits, valuation mechanics, and whether the bill’s language would allow lengthy administrative disputes. Department witnesses and opponents warned that narrow statutory language could invite litigation over which intangible assets are "integral to the operation" of a business and that accurate valuation of intangibles is technically difficult.

Ending

Sen. Dunwell closed by restating the bill’s purpose: to reverse a long‑term tax shift that proponents say has placed a greater share of property tax burdens on homeowners. The committee closed the hearing; no committee vote was recorded that day.