67th Legislature SB 399 - 1 - Authorized Print Version

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AN ACT GENERALLY REVISING TAXATION OF INCOME, INCLUDING THE CORPORATE INCOME TAX;

REQUIRING THE TAXATION OF INDIVIDUALS, PARTNERSHIPS, AND SUBCHAPTER S.

CORPORATIONS, INCLUDING TRUSTS AND ESTATES, TO RELATE THE STATE INDIVIDUAL INCOME

TAX TO FEDERAL TAXABLE INCOME; PROVIDING ADJUSTMENTS TO FEDERAL TAXABLE INCOME TO

INCLUDE CERTAIN INCOME; PROVIDING ADJUSTMENTS TO FEDERAL TAXABLE INCOME TO

EXCLUDE CERTAIN INCOME; ELIMINATING MOST INDIVIDUAL INCOME TAX DEDUCTIONS;

ELIMINATING CERTAIN INDIVIDUAL INCOME TAX CREDITS; REVISING CERTAIN INDIVIDUAL INCOME

TAX CREDITS; ELIMINATING CERTAIN CORPORATE INCOME TAX DEDUCTIONS AND CREDITS;

REVISING INDIVIDUAL INCOME TAX RATES; PROVIDING A TRANSITION FOR CREDITS THAT ARE

SUBJECT TO A CARRYFORWARD; PROVIDING A TRANSITION FOR DIFFERENCES IN FEDERAL AND

MONTANA INCOME TAX LAWS; PROVIDING RULEMAKING AUTHORITY; AMENDING SECTIONS 2-18-

1312, 7-14-1133, 7-14-1636, 7-34-2416, 15-1-222, 15-30-2101, 15-30-2102, 15-30-2103, 15-30-2104, 15-30-

2113, 15-30-2151, 15-30-2153, 15-30-2303, 15-30-2328, 15-30-2329, 15-30-2393, 15-30-2501, 15-30-2512,

15-30-2602, 15-30-2605, 15-30-2606, 15-30-2618, 15-30-3003, 15-30-3004, 15-30-3005, 15-30-3312, 15-31-

162, 15-31-163, 15-31-1007, 15-32-104, 15-32-106, 15-32-610, 15-61-202, 15-61-203, 15-62-103, 15-62-201,

15-62-206, 15-62-207, 15-62-208, 15-63-202, 19-2-1004, 19-17-407, 19-18-612, 19-19-504, 19-20-706, 19-21-

212, 20-4-503, 20-25-902, 33-27-101, 33-27-102, 33-27-103, 37-4-104, 50-51-114, 53-2-211, 53-25-117, 53-

25-118, 67-11-303, 70-9-803, 75-2-103, 75-5-103, 87-2-102, AND 87-2-105, MCA; REPEALING SECTIONS 7-

21-3701, 7-21-3702, 7-21-3703, 7-21-3704, 7-21-3710, 7-21-3715, 15-30-2110, 15-30-2111, 15-30-2114, 15-

30-2115, 15-30-2116, 15-30-2117, 15-30-2119, 15-30-2131, 15-30-2132, 15-30-2133, 15-30-2141, 15-30-2142,

15-30-2143, 15-30-2144, 15-30-2152, 15-30-2301, 15-30-2319, 15-30-2320, 15-30-2326, 15-30-2356, 15-30-

2364, 15-30-2366, 15-30-2367, 15-30-2373, 15-30-2381, 15-31-131, 15-31-132, 15-31-134, 15-31-135, 15-31-

136, 15-31-137, 15-31-171, 15-32-109, 15-32-115, 15-32-201, 15-32-202, 15-32-203, 15-32-401, 15-32-402,

15-32-404, 15-32-405, 15-32-406, 15-32-407, 15-32-501, 15-32-502, 15-32-503, 15-32-504, 15-32-505, 15-32-

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506, 15-32-507, 15-32-508, 15-32-509, 15-32-510, 15-32-701, 15-32-702, 15-32-703, AND 33-2-724, MCA;

AND PROVIDING DELAYED EFFECTIVE DATES AND APPLICABILITY DATES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

Section 1. Adjustments to federal taxable income to determine Montana taxable income. (1)

The items in subsection (2) are added to and the items in subsection (3) are subtracted from federal taxable

income to determine Montana taxable income.

(2) The following are added to federal taxable income:

(a) to the extent that it is not exempt from taxation by Montana under federal law, interest from

obligations of a territory or another state or any political subdivision of a territory or another state and exempt-

interest dividends attributable to that interest except to the extent already included in federal taxable income;

(b) that portion of a shareholder's income under subchapter S. of Chapter 1 of the Internal Revenue

Code that has been reduced by any federal taxes paid by the subchapter S. corporation on the income;

(d) the recovery during the tax year of an amount deducted in any prior tax year to the extent that the

amount recovered reduced the taxpayer's Montana income tax in the year deducted;

(e) an item of income, deduction, or expense to the extent that it was used to calculate federal taxable

income if the item was also used to calculate a credit against a Montana income tax liability;

(f) a deduction for an income distribution from an estate or trust to a beneficiary that was included in

the federal taxable income of an estate or trust in accordance with sections 651 and 661 of the Internal

Revenue Code, 26 U.S.C. 651 and 661;

(g) a withdrawal from a medical care savings account provided for in Title 15, chapter 61, used for a

purpose other than an eligible medical expense or long-term care of the employee or account holder or a

dependent of the employee or account holder;

(h) a withdrawal from a first-time home buyer savings account provided for in Title 15, chapter 63,

used for a purpose other than for eligible costs for the purchase of a single-family residence;

(i) for a taxpayer that deducts the qualified business income deduction pursuant to section 199A of

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the Internal Revenue Code, 26 U.S.C. 199A, an amount equal to the qualified business income deduction

claimed; and

(j) for a taxpayer that deducts state income taxes pursuant to section 164(a)(3) of the Internal

Revenue Code, 26 U.S.C. 164(a)(3), an additional amount equal to the state income tax deduction claimed, not

to exceed the amount required to reduce the federal itemized amount computed under section 161 of the

Internal Revenue Code, 26 U.S.C. 161, to the amount of the federal standard deduction allowable under

section 63(c) of the Internal Revenue Code, 26 U.S.C. 63(c).

(3) To the extent they are included as income or gain or not already excluded as a deduction or

expense in determining federal taxable income, the following are subtracted from federal taxable income:

(a) a deduction for an income distribution from an estate or trust to a beneficiary in accordance with

sections 651 and 661 of the Internal Revenue Code, 26 U.S.C. 651 and 661, recalculated according to the

additions and subtractions in subsections (2) and (3)(b) through (3)(m);

(b) if exempt from taxation by Montana under federal law:

(i) interest from obligations of the United States government and exempt-interest dividends

attributable to that interest; and

(ii) railroad retirement benefits;

in the regular armed forces and who entered into active duty from Montana;

(ii) the salary received by residents of Montana for active duty in the national guard. For the purposes

of this subsection (3)(c)(ii), "active duty" means duty performed under an order issued to a national guard

member pursuant to:

(A) Title 10, U.S.C.; or

(B) Title 32, U.S.C., for a homeland defense activity, as defined in 32 U.S.C. 901, or a contingency

operation, as defined in 10 U.S.C. 101, and the person was a member of a unit engaged in a homeland

defense activity or contingency operation.

(iii) the amount received pursuant to 10-1-1114 or from the federal government by a service member,

as defined in 10-1-1112, as reimbursement for group life insurance premiums paid;

(iv) the amount received by a beneficiary pursuant to 10-1-1201; and

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(v) all payments made under the World War I bonus law, the Korean bonus law, and the veterans'

bonus law. Any income tax that has been or may be paid on income received from the World War I bonus law,

Korean bonus law, and the veterans' bonus law is considered an overpayment and must be refunded upon the

filing of an amended return and a verified claim for refund on forms prescribed by the department in the same

manner as other income tax refund claims are paid.

(d) interest and other income related to contributions that were made prior to January 1, 2024, that

are retained in a medical care savings account provided for in Title 15, chapter 61, and any withdrawal for

payment of eligible medical expenses or for the long-term care of the employee or account holder or a

dependent of the employee or account holder;

(e) contributions or earnings withdrawn from a family education savings account provided for in Title

15, chapter 62, or from a qualified tuition program established and maintained by another state as provided in

section 529(b)(1)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 529(b)(1)(A)(ii), for qualified education

expenses, as defined in 15-62-103, of a designated beneficiary;

(f) interest and other income related to contributions that were made prior to January 1, 2024, that are

retained in a first-time home buyer savings account provided for in Title 15, chapter 63, and any withdrawal for

payment of eligible costs for the first-time purchase of a single-family residence;

(g) for each taxpayer that has attained the age of 65, an additional subtraction of $5,500;

(h) the amount of a scholarship to an eligible student by a student scholarship organization pursuant

to 15-30-3104;

(i) a payment received by a private landowner for providing public access to public land pursuant to

Title 76, chapter 17, part 1;

(j) the amount of any refund or credit for overpayment of income taxes imposed by this state or any

other taxing jurisdiction to the extent included in gross income for federal income tax purposes but not

previously allowed as a deduction for Montana income tax purposes;

(k) the recovery during the tax year of any amount deducted in any prior tax year to the extent that the

recovered amount did not reduce the taxpayer's Montana income tax in the year deducted;

(l) an amount equal to 30% of net-long term capital gains, as defined in section 1222 of the Internal

Revenue Code, 26 U.S.C. 1222, if and to the extent such gain is taken into account in computing federal

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taxable income; and

(m) the amount of the gain recognized from the sale or exchange of a mobile home park as provided

in 15-31-163.

(4) (a) A taxpayer who, in determining federal taxable income, has reduced the taxpayer's business

deductions:

(i) by an amount for wages and salaries for which a federal tax credit was elected under sections 38

and 51(a) of the Internal Revenue Code, 26 U.S.C. 38 and 51(a), is allowed to deduct the amount of the wages

and salaries paid regardless of the credit taken; or

(ii) for which a federal tax credit was elected under the Internal Revenue Code is allowed to deduct the

amount of the business expense paid when there is no corresponding state income tax credit or deduction,

regardless of the credit taken.

(b) The deductions in subsection (4)(a) must be made in the year that the wages, salaries, or

business expenses were used to compute the credit. In the case of a partnership or small business corporation,

the deductions in subsection (4)(a) must be made to determine the amount of income or loss of the partnership

or small business corporation.

(5) (a) An individual who contributes to one or more accounts established under the Montana family

education savings program or to a qualified tuition program established and maintained by another state as

provided in section 529(b)(1)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 529(b)(1)(A)(ii), may reduce

taxable income by the lesser of $3,000 or the amount of the contribution. In the case of married taxpayers, each

spouse is entitled to a reduction, not in excess of $3,000, for the spouses' contributions to the accounts.

Spouses may jointly elect to treat half of the total contributions made by the spouses as being made by each

spouse. The reduction in taxable income under this subsection (5)(a) applies only with respect to contributions

to an account of which the account owner is the taxpayer, the taxpayer's spouse, or the taxpayer's child or

stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of subsection (2)(d) do not

apply with respect to withdrawals of contributions that reduced federal taxable income.

(b) Contributions made pursuant to this subsection (5) are subject to the recapture tax provided for in

15-62-208.

(6) (a) An individual who contributes to one or more accounts established under the Montana

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achieving a better life experience program or to a qualified program established and maintained by another

state may reduce taxable income by the lesser of $3,000 or the amount of the contribution. In the case of

married taxpayers, each spouse is entitled to a reduction, not to exceed $3,000, for the spouses' contributions

to the accounts. Spouses may jointly elect to treat one-half of the total contributions made by the spouses as

being made by each spouse. The reduction in taxable income under this subsection (6)(a) applies only with

respect to contributions to an account for which the account owner is the taxpayer, the taxpayer's spouse, or

the taxpayer's child or stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of

subsection (2)(d) do not apply with respect to withdrawals of contributions that reduced taxable income.

(b) Contributions made pursuant to this subsection (6) are subject to the recapture tax provided in 53-

25-118.

(7) By November 1 of each year, the department shall multiply the subtraction from federal taxable

income for a taxpayer that has attained the age of 65 contained in subsection (3)(g) by the inflation factor for

that tax year, rounding the result to the nearest $10. The resulting amount is effective for that tax year and must

be used as the basis for the subtraction from federal taxable income determined under subsection (3)(g).

Section 2. Section 2-18-1312, MCA, is amended to read:

"2-18-1312. Tax exemption. Employer contributions into an account, the accumulation of interest or

other earnings in an account, and payments from an account for qualified health care expenses are tax-exempt,

as provided in 15-30-2110 and under applicable federal laws and regulations to the extent that the plan is

qualified under applicable sections of the Internal Revenue Code."

Section 3. Section 7-14-1133, MCA, is amended to read:

"7-14-1133. Bonds and obligations. (1) Except for providing financial support to a private

development organization, including a corporation organized under Title 32, chapter 4, whose purpose is to

advance the economic development of its jurisdiction and of the state and its citizens, an authority may borrow

money for any of its corporate purposes and issue bonds, including refunding bonds, for any of its corporate

purposes. The bonds may be in the form and upon terms as it determines, payable out of any revenue of the

authority, including revenue derived from:

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(a) any port or transportation and storage facility;

(b) taxes levied pursuant to 7-14-1131 or 67-10-402;

(d) other sources.

(2) The bonds may be issued by resolution of the authority, without an election and without any

limitation of amount, except that bonds may not be issued at any time if the total amount of principal and

interest to become due in any year on the bonds and on any then outstanding then-outstanding bonds for which

revenue from the same source is pledged exceeds the amount of revenue to be received in that year, as

estimated in the resolution authorizing the issuance of the bonds. The authority shall take all action necessary

and possible to impose, maintain, and collect rates, charges, and rentals and to request taxes, if any are

pledged, sufficient to make the revenue from the pledged source in such that year at least equal to the amount

of principal and interest due in that year.

(3) The bonds may be sold at public or private sale and may bear interest as provided in 17-5-102.

Except as otherwise provided in this part, any bonds issued pursuant to this part by an authority may be

payable as to principal and interest solely from revenue of the authority or from particular port, transportation,

storage, or other facilities of the authority. The bonds must state on their face the applicable limitations or

restrictions regarding the source from which principal and interest are payable.

(4) Bonds issued by an authority, county, or municipality pursuant to the provisions of this part are

declared to be issued for an essential public and governmental purpose by a political subdivision within the

meaning of 15-30-2110(2)(a).

(5) (a) For the security of bonds, the authority, county, or municipality may by resolution make and

enter into any covenant, agreement, or indenture and may exercise any additional powers authorized to be

exercised by a municipality under Title 7, chapter 7, parts 44 and 45. The sums required from time to time to

pay principal and interest and to create and maintain a reserve for the bonds may be paid from any revenue

referred to in this part, prior to the payment of current costs of operation and maintenance of the facilities.

(b) As further security for the bonds, the authority, with the approval of the governing body of the

county or municipality that created the authority, may pledge, lease, sell, mortgage, or grant a security interest

in all or any portion of its port, transportation, storage, or other facilities, whether or not the facilities are

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financed by the bonds. The instrument effecting the pledge, lease, sale, mortgage, or security interest may

contain any agreements and provisions customarily contained in instruments securing bonds, as the

commissioners of the authority consider advisable. The provisions must be consistent with this part and are

subject to and must be in accordance with the laws of this state governing mortgages, trust indentures, security

agreements, or instruments. The instrument may provide that in the event of a default in the payment of

principal or interest on the bonds or in the performance of any agreement contained in the proceedings

authorizing the bonds or instrument, the payment or performance may be enforced by mandamus or by the

appointment of a receiver in equity. The receiver may collect charges, rental, or fees and may apply the

revenue from the mortgaged property or collateral in accordance with the proceedings or the provisions of the

instrument.

(6) Nothing in this section or 7-14-1134 or this section may be construed to limit the use of port

authority revenue, including federal and state money as described in 7-14-1136, to make grants and loans or to

otherwise provide financial and other support to private development organizations, including corporations

organized under the provisions of the development corporation act in Title 32, chapter 4. The credit of the state,

county, or municipal governments government or their agencies or authorities may not be pledged to provide

financial support to the development organizations."

Section 4. Section 7-14-1636, MCA, is amended to read:

"7-14-1636. Bonds and obligations. (1) An authority may borrow money for any of its corporate

purposes and issue bonds for its purposes, including refunding bonds, in a form and upon terms as it

determines, payable out of any revenue of the authority, including revenue derived from:

(a) a railroad;

(b) taxes levied pursuant to 7-14-1632;

(d) other sources.

(2) The bonds may be issued by resolution of the authority, without an election and without any

limitation of amount, except that bonds may not be issued at any time if the total amount of principal and

interest to become due in a year on the bonds and on any then-outstanding bonds for which revenue from the

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same source is pledged exceeds the amount of the revenue to be received in that year, as estimated in the

resolution authorizing the issuance of the bonds. The authority shall take all action necessary and possible to

impose, maintain, and collect rates, charges, and rentals and to request taxes, if any are pledged, sufficient to

make the revenue from the pledged source in the year at least equal to the amount of principal and interest due

in that year.

(3) The bonds may be sold at public or private sale and may bear interest as provided in 17-5-102.

Bonds issued by an authority pursuant to this part may be payable as to principal and interest solely from

revenue of the authority and must state on their face the applicable limitations or restrictions regarding the

source from which the principal and interest are payable.

(4) Bonds issued by an authority pursuant to the provisions of this part are declared to be issued for

an essential public and governmental purpose by a political subdivision within the meaning of 15-30-2110(2)(a).

(5) For the security of the bonds, the authority may by resolution make and enter into any covenant,

agreement, or indenture and may exercise any additional powers authorized to be exercised by a municipality

under Title 7, chapter 7, parts 44 and 45. The sums required from time to time to pay principal and interest and

to create and maintain a reserve for the bonds may be paid from the revenue referred to in this part, prior to the

payment of current costs of operation and maintenance of the facilities."

Section 5. Section 7-34-2416, MCA, is amended to read:

"7-34-2416. Tax-exempt status of bonds. Bonds issued by a county pursuant to the provisions of 7-

34-2411 and 7-34-2413 through 7-34-2418 are declared to be issued for an essential public and governmental

purpose by a political subdivision within the meaning of 15-30-2110(2)(a)."

Section 6. Section 15-1-222, MCA, is amended to read:

"15-1-222. Taxpayer bill of rights. The department of revenue shall in the course of performing its

duties in the administration and collection of the state's taxes ensure that:

(1) the taxpayer has the right to record any interview, meeting, or conference with auditors or any

other representatives of the department;

(2) the taxpayer has the right to hire a representative of the taxpayer's choice to represent the

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taxpayer's interests before the department, or any a county tax appeal board, or the Montana tax appeal board.

The representative is not considered to be practicing law pursuant to 37-61-201 and is not required to be an

attorney or a certified public accountant. The taxpayer has a right to obtain a representative at any time, except

that the selection of a representative may not be used to unreasonably delay a field audit that is in progress.

The representative must have written authorization from the taxpayer to receive from the department

confidential information concerning the taxpayer. The department shall provide copies to the authorized

representative of all information sent to the taxpayer and shall notify the authorized representative concerning

contacts with the taxpayer.

(3) except as provided in subsection (5), the taxpayer has the right to be treated by the department in

a similar manner as all similarly situated taxpayers regarding the administration and collection of taxes,

imposition of penalties and interest, and available taxpayer remedies unless there is a rational basis for the

department to distinguish them;

(4) the taxpayer has the right to obtain tax advice from the department. The taxpayer has a right to

the waiver of penalties and interest, but not taxes, when the taxpayer has relied on written advice provided to

the taxpayer by an employee of the department.

(5) at the discretion of the department, upon consideration of all facts relevant to the specific

taxpayer, the taxpayer has the right to pay delinquent taxes, interest, and penalties on an installment basis.

This subsection applies only to taxes collected by the department, provided the taxpayer meets reasonable

criteria.

(6) the taxpayer has the right to a complete and accurate written description of the basis for any

additional tax assessed by the department;

(7) the taxpayer has the right to a review by management level employees of the department for any

additional taxes assessed by the department;

(8) the taxpayer has the right to a full explanation of the available procedures for review and appeal of

additional tax assessments;

(9) the taxpayer, after the exhaustion of all appropriate administrative remedies, has the right to have

the state tax appeal board or a court, or both, review any final decision of the department assessing an

additional tax. The taxpayer shall seek a review in a timely manner. A taxpayer is entitled to collect court costs

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and attorney fees from the department for frivolous or bad faith lawsuits as provided in 25-10-711.

(10) the taxpayer has the right to expect that the department will adhere to the same tax appeal

deadlines as are required of the taxpayer unless otherwise provided by law;

(11) the taxpayer has the right to a full explanation of the department's authority to collect delinquent

taxes, including the procedures and notices that are required to protect the taxpayer;

(12) the taxpayer has the right to have certain property exempt from levy and seizure as provided in

Title 25, chapter 13, part 6, and any other applicable provisions in Montana law;

(13) the taxpayer has the right to the immediate release of any lien the department has placed on

property when the tax is paid or when the lien is the result of an error by the department;

(14) the taxpayer has the right to assistance from the department in complying with state and local tax

laws that the department administers; and

(15) the taxpayer has the right to be guaranteed that an employee of the department is not paid,

promoted, or in any way rewarded on the basis of assessments or collections from taxpayers."

Section 7. Section 15-30-2101, MCA, is amended to read:

"15-30-2101. Definitions. For the purpose of this chapter, unless otherwise required by the context,

the following definitions apply:

(1) "Base year structure" means the following elements of the income tax structure:

(a) the tax brackets established in 15-30-2103, but unadjusted by 15-30-2103(2), in effect on June 30

of the taxable year;

(b) the exemptions contained in15-30-2114, but unadjusted by 15-30-2114(6), in effect on June 30 of

the taxable year;

effect on June 30 of the taxable year.

(2)(1) "Consumer price index" means the consumer price index, United States city average, for all

items, for all urban consumers (CPI-U), using the 1982-84 base of 100, as published by the bureau of labor

statistics of the U.S. department of labor.

(3)(2) "Corporation" or "C. corporation" means a corporation, limited liability company, or other entity:

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(a) that is treated as an association for federal income tax purposes;

(b) for which a valid election under section 1362 of the Internal Revenue Code (26 U.S.C. 1362) is not

in effect; and

(4)(3) "Department" means the department of revenue.

(5)(4) "Disregarded entity" means a business entity:

(a) that is disregarded as an entity separate from its owner for federal tax purposes, as provided in

United States treasury regulations 301.7701-2 or 301.7701-3, 26 CFR 301.7701-2 or 26 CFR 301.7701-3, or as

those regulations may be labeled or amended; or

(b) that is a qualified subchapter S. subsidiary that is not treated as a separate corporation, as

provided in section 1361(b)(3) of the Internal Revenue Code (26 U.S.C. 1361(b)(3)).

(6)(5) "Dividend" means:

(a) any distribution made by a C. corporation out of its earnings and profits to its shareholders or

members, whether in cash or in other property or in stock of the corporation, other than stock dividends; and

(b) any distribution made by an S. corporation treated as a dividend for federal income tax purposes.

(6) "Federal adjusted gross income" means adjusted gross income as defined in section 62 of the

Internal Revenue Code, 26 U.S.C. 62.

(7) "Federal taxable income", when referring to an individual, means taxable income as defined and

described in section 63 of the Internal Revenue Code, 26 U.S.C. 63, and, when referring to a trust or estate,

means taxable income as defined and described in sections 641 through 692 of the Internal Revenue Code, 26

U.S.C. 641 through 692.

(7)(8) "Fiduciary" means a guardian, trustee, executor, administrator, receiver, conservator, or any

person, whether individual or corporate, acting in any fiduciary capacity for any person, trust, or estate.

(8)(9) "Foreign C. corporation" means a corporation that is not engaged in or doing business in

Montana, as provided in 15-31-101.

(9)(10) "Foreign government" means any jurisdiction other than the one embraced within the United

States, its territories, and its possessions.

(10) "Gross income" means the taxpayer's gross income for federal income tax purposes as defined in

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section 61 of the Internal Revenue Code (26 U.S.C. 61) or as that section may be labeled or amended,

excluding unemployment compensation included in federal gross income under the provisions of section 85 of

the Internal Revenue Code (26 U.S.C. 85) as amended.

(11) "Head of household" means a head of household as defined and described in section 2(b) of the

Internal Revenue Code, 26 U.S.C. 2(b).

(11)(12) "Inflation factor" means a number determined for each tax year by dividing the consumer price

index for June of the previous tax year by the consumer price index for June 2015 2023.

(12)(13) "Information agents" includes all individuals and entities acting in whatever capacity, including

lessees or mortgagors of real or personal property, fiduciaries, brokers, real estate brokers, employers, and all

officers and employees of the state or of any municipal corporation or political subdivision of the state, having

the control, receipt, custody, disposal, or payment of interest, rent, salaries, wages, premiums, annuities,

compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits,

and income with respect to which any person or fiduciary is taxable under this chapter.

(13)(14) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or as it

may be labeled or further amended. References to specific provisions of the Internal Revenue Code mean

those provisions as they may be otherwise labeled or further amended.

(15) "Joint return" means one return made jointly by a married individual with that individual's spouse.

(14)(16) "Knowingly" is as defined in 45-2-101.

(15)(17) "Limited liability company" means a limited liability company, domestic limited liability

company, or a foreign limited liability company as defined in 35-8-102.

(16)(18) "Limited liability partnership" means a limited liability partnership as defined in 35-10-102.

(17)(19) "Lottery winnings" means income paid either in lump sum or in periodic payments to:

(a) a resident taxpayer on a lottery ticket; or

(b) a nonresident taxpayer on a lottery ticket purchased in Montana.

(20) "Married individual" means a married individual as defined and described in section 7703 of the

Internal Revenue Code, 26 U.S.C. 7703.

(18)(21) (a) "Montana source income" means:

(i) wages, salary, tips, and other compensation for services performed in the state or while a resident

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of the state;

(ii) gain attributable to the sale or other transfer of tangible property located in the state, sold or

otherwise transferred while a resident of the state, or used or held in connection with a trade, business, or

occupation carried on in the state;

(iii) gain attributable to the sale or other transfer of intangible property received or accrued while a

resident of the state;

(iv) interest received or accrued while a resident of the state or from an installment sale of real property

or tangible commercial or business personal property located in the state;

(v) dividends received or accrued while a resident of the state;

(vi) net income or loss derived from a trade, business, profession, or occupation carried on in the state

or while a resident of the state;

(vii) net income or loss derived from farming activities carried on in the state or while a resident of the

state;

(viii) net rents from real property and tangible personal property located in the state or received or

accrued while a resident of the state;

(ix) net royalties from real property and from tangible real property to the extent the property is used in

the state or the net royalties are received or accrued while a resident of the state. The extent of use in the state

is determined by multiplying the royalties by a fraction, the numerator of which is the number of days of physical

location of the property in the state during the royalty period in the tax year and the denominator of which is the

number of days of physical location of the property everywhere during all royalty periods in the tax year. If the

physical location is unknown or unascertainable by the taxpayer, the property is considered used in the state in

which it was located at the time the person paying the royalty obtained possession.

(x) patent royalties to the extent the person paying them employs the patent in production, fabrication,

manufacturing, or other processing in the state, a patented product is produced in the state, or the royalties are

received or accrued while a resident of the state;

(xi) net copyright royalties to the extent printing or other publication originates in the state or the

royalties are received or accrued while a resident of the state;

(xii) partnership income, gain, loss, deduction, or credit or item of income, gain, loss, deduction, or

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credit:

(A) derived from a trade, business, occupation, or profession carried on in the state;

(B) derived from the sale or other transfer or the rental, lease, or other commercial exploitation of

property located in the state; or

(xiii) an S. corporation's separately and nonseparately stated income, gain, loss, deduction, or credit or

item of income, gain, loss, deduction, or credit:

(A) derived from a trade, business, occupation, or profession carried on in the state;

(B) derived from the sale or other transfer or the rental, lease, or other commercial exploitation of

property located in the state; or

(xiv) social security benefits received or accrued while a resident of the state;

(xv) taxable individual retirement account distributions, annuities, pensions, and other retirement

benefits received while a resident of the state;

(xvi) any other income attributable to the state, including but not limited to lottery winnings, state and

federal tax refunds, nonemployee compensation, recapture of tax benefits, and capital loss addbacks; and

(xvii) in the case of a nonresident who sells the nonresident's interest in a publicly traded partnership

doing business in Montana, the gain described in section 751 of the Internal Revenue Code, 26 U.S.C. 751,

multiplied by the Montana apportionment factor. If the net gain or loss resulting from the use of the

apportionment factor as provided in this subsection (18)(a)(xvii) (21)(a)(xvii) does not fairly and equitably

represent the nonresident taxpayer's business activity interest, then the nonresident taxpayer may petition for,

or the department may require with respect to any and all of the partnership interest, the employment of another

method to effectuate an equitable allocation or apportionment of the nonresident's income. This subsection

(18)(a)(xvii) (21)(a)(xvii) is intended to preserve the rights and privileges of a nonresident taxpayer and align

those rights with taxpayers who are afforded the same rights under 15-1-601 and 15-31-312.

(b) The term does not include:

(i) compensation for military service of members of the armed services of the United States who are

not Montana residents and who are residing in Montana solely by reason of compliance with military orders and

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does not include income derived from their personal property located in the state except with respect to

personal property used in or arising from a trade or business carried on in Montana; or

(ii) interest paid on loans held by out-of-state financial institutions recognized as such in the state of

their domicile, secured by mortgages, trust indentures, or other security interests on real or personal property

located in the state, if the loan is originated by a lender doing business in Montana and assigned out-of-state

and there is no activity conducted by the out-of-state lender in Montana except periodic inspection of the

security.

(22) "Montana taxable income" means federal taxable income as determined for federal income tax

purposes and adjusted as provided in [section 1].

(19) "Net income" means the adjusted gross income of a taxpayer less the deductions allowed by this

chapter.

(20)(23) "Nonresident" means a natural person who is not a resident.

(21)(24) "Paid", for the purposes of the deductions and credits under this chapter, means paid or

accrued or paid or incurred, and the terms "paid or accrued" and "paid or incurred" must be construed

according to the method of accounting upon the basis of which the used to compute federal taxable income is

computed under this chapter.

(22)(25) "Partner" means a member of a partnership or a manager or member of any other entity, if

treated as a partner for federal income tax purposes.

(23)(26) "Partnership" means a general or limited partnership, limited liability partnership, limited

liability company, or other entity, if treated as a partnership for federal income tax purposes.

(24)(27) "Pass-through entity" means a partnership, an S. corporation, or a disregarded entity.

(25)(28) "Pension and annuity income" means:

(a) systematic payments of a definitely determinable amount from a qualified pension plan, as that

term is used in section 401 of the Internal Revenue Code (26 U.S.C. 401), or systematic payments received as

the result of contributions made to a qualified pension plan that are paid to the recipient or recipient's

beneficiary upon the cessation of employment;

(b) payments received as the result of past service and cessation of employment in the uniformed

services of the United States;

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included in federal adjusted gross income;

(d) distributions from individual retirement, deferred compensation, and self-employed retirement

plans recognized under sections 401 through 408 of the Internal Revenue Code (26 U.S.C. 401 through 408) to

the extent that the distributions are not considered to be premature distributions for federal income tax

purposes; or

(e) amounts received from fully matured, privately purchased annuity contracts after cessation of

regular employment.

(26)(29) "Purposely" is as defined in 45-2-101.

(27)(30) "Received", for the purpose of computation of taxable income under this chapter, means

received or accrued, and the term "received or accrued" must be construed according to the method of

accounting upon the basis of which the used to compute federal taxable income is computed under this

chapter.

(28)(31) "Resident" applies only to natural persons and includes, for the purpose of determining liability

to the tax imposed by this chapter with reference to the income of any taxable year, any person domiciled in the

state of Montana and any other person who maintains a permanent place of abode within the state even though

temporarily absent from the state and who has not established a residence elsewhere.

(29)(32) "S. corporation" means an incorporated entity for which a valid election under section 1362 of

the Internal Revenue Code, (26 U.S.C. 1362), is in effect.

(30)(33) "Stock dividends" means new stock issued, for surplus or profits capitalized, to shareholders

in proportion to their previous holdings.

(34) "Surviving spouse" means a surviving spouse as defined and described in section 2(a) of the

Internal Revenue Code, 26 U.S.C. 2(a).

(31)(35) "Tax year" means the taxpayer's taxable year for federal income tax purposes.

(32) "Taxable income" means the adjusted gross income of a taxpayer less the deductions and

exemptions provided for in this chapter.

(33)(36) "Taxpayer" includes any person, entity, or fiduciary, resident or nonresident, subject to a tax or

other obligation imposed by this chapter and unless otherwise specifically provided does not include a C.

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corporation."

Section 8. Section 15-30-2102, MCA, is amended to read:

"15-30-2102. Construction of net income. For the purpose of raising revenue, the net income

required to be shown on returns under this chapter and taken as the basis for determining the tax hereunder

shall may not be classified or held or construed to be property. All income except what has been expressly

exempted under the provisions of the Internal Revenue Code or this chapter and income not permitted to be

taxed under the constitution of this state or the constitution or laws of the United States shall must be included

and considered in determining the net income of taxpayers subject to tax within the provision provisions of this

chapter."

Section 9. Section 15-30-2103, MCA, is amended to read:

"15-30-2103. Rate of tax. (1) There Except as provided in subsection (2), there must be levied,

collected, and paid for each tax year upon the Montana taxable income of each taxpayer subject to this tax,

after making allowance for exemptions and deductions as provided in this chapter, a tax on the brackets of

taxable income as follows:

(a) on the first $2,900 of taxable income or any part of that income, 1%;

(b) on the next $2,200 of taxable income or any part of that income, 2%;

(d) on the next $2,700 of taxable income or any part of that income, 4%;

(e) on the next $3,000 of taxable income or any part of that income, 5%;

(f) on the next $3,900 of taxable income or any part of that income, 6%;

(g) on any taxable income in excess of $17,400 or any part of that income, 6.9%.

(a) for every married individual who files a joint return and for every surviving spouse:

(i) on the first $41,000 of Montana taxable income or any part of that income, 4.7%;

(ii) on any Montana taxable income in excess of $41,000 or any part of that income, 6.5%;

(b) for every head of household:

(i) on the first $30,750 of Montana taxable income or any part of that income, 4.7%;

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(ii) on any Montana taxable income in excess of $30,750 or any part of that income, 6.5%;

individual:

(i) on the first $20,500 of Montana taxable income or any part of that income, 4.7%;

(ii) on any Montana taxable income in excess of $20,500 or any part of that income, 6.5%;

(d) for every married individual who does not make a joint return and for every estate or trust not

exempt from taxation under the Internal Revenue Code:

(i) on the first $20,500 of Montana taxable income or any part of that income, 4.7%;

(ii) on any Montana taxable income in excess of $20,500 or any part of that income, 6.5%.

(2) By November 1 of each year, the department shall multiply the bracket amount amounts contained

in subsection (1) by the inflation factor for the following tax year and round the cumulative brackets to the

nearest $100. The resulting adjusted brackets are effective for that following tax year and must be used as the

basis for imposition of the tax in subsection (1) of this section."

Section 10. Section 15-30-2104, MCA, is amended to read:

"15-30-2104. Tax on nonresident. (1) (a) A tax is imposed upon each nonresident individual, estate,

or trust equal to the tax computed under 15-30-2103 as if the nonresident individual, estate, or trust were a

resident during the entire tax year, multiplied by the ratio of Montana source income to total income from all

sources.

(b) This subsection (1) does not permit any items of income, gain, loss, deduction, expense, or credit

to be counted more than once in determining the amount of Montana source income, and the department may

adopt rules that are reasonably necessary to prevent duplication or to provide for allocation of particular items

of income, gain, loss, deduction, expense, or credit.

(2) Pursuant to the provisions of Article III, section 2, of the Multistate Tax Compact, each nonresident

taxpayer required to file a return and whose only activity in Montana consists of making sales and who does not

own or rent real estate or tangible personal property within Montana and whose annual gross volume of sales

made in Montana during the taxable year does not exceed $100,000 may elect to pay an income tax of 1/2 of

1% of the dollar volume of gross sales made in Montana during the taxable year. The tax is in lieu of the tax

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imposed under 15-30-2103 and subsection (1)(a) of this section. The gross volume of sales made in Montana

during the tax year must be determined according to the provisions of Article IV, sections 16 and 17, of the

Multistate Tax Compact."

Section 11. Section 15-30-2113, MCA, is amended to read:

"15-30-2113. Determination of status -- effect of marital status elections. For purposes of this

chapter:

(1) the determination of whether an individual is married must be made as of the close of the

individual's tax year, except that if the individual's spouse dies during the individual's tax year, the determination

must be made as of the time of death marital status, dependent status, status as an association, partnership, or

individual, and any other status must be made as provided in the Internal Revenue Code; and

(2) an individual legally separated from the individual's spouse under a decree of divorce or of

separate maintenance may not be considered as married.

(2) the status that a taxpayer claims or elects in a federal income tax return with respect to the

taxpayer or another individual or that the taxpayer or other individual is determined to have for federal income

tax purposes conclusively determines the status of that individual; and

(3) a joint Montana individual income tax return must be filed for any tax year for which a joint federal

income tax return is filed unless one of the individuals is a nonresident for any part of the tax year."

Section 12. Section 15-30-2151, MCA, is amended to read:

"15-30-2151. Tax on beneficiaries or fiduciaries of estates or trusts. (1) A tax must be is imposed

upon either on the fiduciaries or the beneficiaries of estates and trusts as provided in this section, except to the

extent that estates and trusts must be held for educational, charitable, or religious purposes. The tax must be

levied, collected, and paid annually with respect to the income of estates or of any kind of property held in trust,

including:

(a) income received by estates of deceased persons during the period of administration or settlement

of the estate;

(b) income accumulated in trust for the benefit of unborn or unascertained persons or persons with

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contingent interests;

(d) income that is to be distributed to the beneficiaries periodically, whether or not at regular intervals,

and the income collected by a guardian of a minor, to be held or distributed as the court may direct in the same

manner and to the same extent as federal income tax is imposed on them under the Internal Revenue Code.

(2) The fiduciary is responsible for making the return of income for the estate or trust for which the

fiduciary acts, whether the fiduciary or the beneficiaries are taxable responsible for the payment of the tax with

reference to the income of the estate or trust. In cases under subsections (1)(a) and (1)(d), the The fiduciary

shall include in the return a statement of each beneficiary's distributive share of net income, whether or not

distributed before the close of the tax year for which the return is made, and at the request of the department

shall furnish a copy of the federal income tax return for the estate or trust as provided in 15-30-2619. The

department may require a fiduciary of an estate or trust to provide a copy of the federal schedule of the

beneficiary's share of income, deductions, and credits when filing the Montana individual income tax return.

(3) In cases under subsections (1)(a), (1)(b), and (1)(c), the The tax must be imposed upon on the

fiduciary of the estate or trust with respect to the net income of the estate or trust and must be paid by the

fiduciary. If the taxpayer's net income for the tax year of the estate or trust is computed upon the basis of a

period different from that upon the basis of which the net income of the estate or trust is computed, then the

taxpayer's distributive share of the net income of the estate or trust for any accounting period of the estate or

trust ending within the fiscal or calendar year must be computed upon the basis on which the beneficiary's net

income is computed. In those cases, a beneficiary who is not a resident must be taxable with respect to the

beneficiary's income derived through the estate or trust only to the extent provided in15-30-2111for individuals

other than residents.

(4) The fiduciary of a trust created by an employer as a part of a stock bonus, pension, or profit-

sharing plan for the exclusive benefit of some or all of the employer's employees, to which contributions are

made by the employer or employees, or both, for the purpose of distributing to the employees the earnings and

principal of the fund accumulated by the trust in accordance with the plan, are not taxable under this section,

but any amount contributed to the fund by the employer and all earnings of the fund must be included in

computing the income of the distributee in the year in which distributed or made available to the distributee.

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(5) Where any part of the income of a trust other than a testamentary trust is or may be applied to the

payment of premiums upon policies of insurance on the life of the grantor, except policies of insurance

irrevocably payable for the purposes and in the manner specified relating to the so-called "charitable

contribution" deduction, or to the payment of premiums upon policies of life insurance under which the grantor

is the beneficiary, the part of the income of the trust must be included in computing the net income of the

grantor."

Section 13. Section 15-30-2153, MCA, is amended to read:

"15-30-2153. Determination of tax of estates and trusts. The amount of tax must be is determined

from Montana taxable income of an estate or trust in the same manner as the tax on taxable income of

individuals, as adjusted in [section 1] by applying the rates contained in 15-30-2103. Credits allowed to

individuals under Title 15, chapter 30, also apply to estates and trusts when applicable."

Section 14. Section 15-30-2303, MCA, is amended to read:

"15-30-2303. Tax credits subject to review by interim committee. (1) The following tax credits

must be reviewed during the biennium commencing July 1, 2019:

(a) the credit for income taxes imposed by foreign states or countries provided for in 15-30-2302;

(b) the credit for contractor's gross receipts provided for in 15-50-207;

(d) the credit for installing an alternative energy system provided for in 15-32-201 through 15-32-203;

(e) the credit for energy-conserving expenditures provided for in 15-30-2319 and 15-32-109; and

(f)(d) the credit for elderly homeowners and renters provided for in 15-30-2337 through 15-30-2341.

(2) The following tax credits must be reviewed during the biennium commencing July 1, 2021:

(a) the credit for commercial or net metering system investment provided for in Title 15, chapter 32,

part 4;

(b) the credit for qualified elderly care expenses provided for in15-30-2366;

31-131;

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(d) the credit for contributions to a university or college foundation or endowment provided for in15-

30-2326, 15-31-135, and 15-31-136;

(e)(a) the credit for donations to an educational improvement account provided for in 15-30-2334, 15-

30-3110, and 15-31-158; and

(f)(b) the credit for donations to a student scholarship organization provided for in 15-30-2335, 15-30-

3111, and 15-31-159.

(3) The following tax credits must be reviewed during the biennium commencing July 1, 2023:

(a) the credit for providing disability insurance for employees provided for in15-30-2367and 15-31-

132;

(b) the credit for installation of a geothermal system provided for in15-32-115;

chapter 32, part 6;

(d) the credit for converting a motor vehicle to alternative fuel provided for in15-30-2320and 15-31-

137;

(e)(a) the credit for infrastructure use fees provided for in 17-6-316; and

(f)(b) the credit for contributions to a qualified endowment provided for in 15-30-2327 through 15-30-

2329, 15-31-161, and 15-31-162; and

chapter 32, part 6.

(4) The following tax credits following tax credits must be reviewed during the biennium commencing

July 1, 2025::

(a) the credit for preservation of historic buildings provided for in15-30-2342 and 15-31-151;

(b) the credit for mineral or coal exploration provided for in Title 15, chapter 32, part 5;

(d) the credit for a new employee in an empowerment zone provided for in15-30-2356 and 15-31-134;

(e) the credit for an oilseed crush facility provided for in15-32-701; and

(f) the credit for unlocking state lands provided for in15-30-2380

(a) the credit for preservation of historic buildings provided for in 15-30-2342 and 15-31-151; and

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(b) the credit for unlocking state lands provided for in 15-30-2380.

(5) The following tax credits must be reviewed during the biennium commencing July 1, 2027:

(a) the biodiesel or biolubricant production facility credit provided for in15-32-702;

(b) the biodiesel blending and storage credit provided for in15-32-703;

(d) the credit for providing temporary emergency lodging provided for in15-30-2381and 15-31-171;

(e)(a) the credit for hiring a registered apprentice or veteran apprentice provided for in 15-30-2357

and 15-31-173;

(f)(b) the earned income tax credit provided for in 15-30-2318; and

(g)(c) the media production and postproduction credits provided for in 15-31-1007 and 15-31-1009.

(6) The revenue interim committee shall review the tax credits scheduled for review in the biennium of

the next regular legislative session, including any individual or corporate income tax credits with an expiration or

termination date that are not listed in this section, and make recommendations to the legislature about whether

to eliminate or revise the credits. The legislature may extend the review dates by amending this section. The

revenue interim committee shall review the credits using the following criteria:

(a) whether the credit changes taxpayer decisions, including whether the credit rewards decisions that

may have been made regardless of the existence of the tax credit;

(b) to what extent the credit benefits some taxpayers at the expense of other taxpayers;

(d) the timing of costs and benefits of the credit and how long the credit is effective;

(e) any adverse impacts of the credit or its elimination and whether the benefits of continuance or

elimination outweigh adverse impacts; and

(f) the extent to which benefits of the credit affect the larger economy."

Section 15. Section 15-30-2328, MCA, is amended to read:

"15-30-2328. (Temporary) Credit for contributions to qualified endowment -- recapture of credit

-- deduction included as income. (1) A taxpayer is allowed a tax credit against the taxes imposed by 15-30-

2103 or 15-31-101 in an amount equal to 40% of the present value of the aggregate amount of the charitable

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gift portion of a planned gift made by the taxpayer during the year to any qualified endowment. The maximum

credit that may be claimed by a taxpayer for contributions made from all sources in a year is $10,000. The

credit allowed under this section may not exceed the taxpayer's income tax liability.

(2) The credit allowed under this section may not be claimed by an individual taxpayer if the taxpayer

has included the full amount of the contribution upon which the amount of the credit was computed as a

deduction under15-30-2131(1) or 15-30-2152(2).

(3)(2) There is no carryback or carryforward of the credit permitted under this section, and the credit

must be applied to the tax year in which the contribution is made.

(4)(3) If during any tax year a charitable gift is recovered by the taxpayer, the taxpayer shall:

(a) include as income the amount deducted in any prior year that is attributable to the charitable gift to

the extent that the deduction reduced the taxpayer's individual income tax or corporate income tax; and

(b) increase the amount of tax due under 15-30-2103 or 15-31-101 by the amount of the credit

allowed in the tax year in which the credit was taken. (Terminates December 31, 2025--secs. 1 through 15, Ch.

254, L. 2019.)"

Section 16. Section 15-30-2329, MCA, is amended to read:

"15-30-2329. (Temporary) Beneficiaries of estates -- credit for contribution to qualified

endowment. A contribution to a qualified endowment, as defined in 15-30-2327, by an estate qualifies for the

credit provided in 15-30-2328 if the contribution is a planned gift or in 15-31-161 if the contribution is an outright

gift to a qualified endowment. Any credit not used by the estate may be attributed to each beneficiary of the

estate in the same proportion used to report the beneficiary's income from the estate for Montana income tax

purposes. The maximum amount of credit that a beneficiary may claim is $10,000, subject to the limitation in

15-30-2328(2), and the credit must be claimed in the year in which the contribution is made. The credit may not

be carried forward or carried back. (Terminates December 31, 2025--secs. 1 through 15, Ch. 254, L. 2019.)"

Section 17. Section 15-30-2393, MCA, is amended to read:

"15-30-2393. Election to deposit refund to education savings or ABLE account. Each individual

taxpayer who is required to file an income tax return under Title 15, chapter 30, may elect to directly deposit a

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refund from the return to a Montana family education savings program account provided for in Title 15, chapter

62, part 1, a Montana achieving a better life experience program account provided for in Title 53, chapter 25,

part 1, or an account for similar programs established and maintained by another state. In order to make the

election the taxpayer must be eligible to claim an exclusion from adjusted gross Montana taxable income for the

contribution as provided in 15-30-2110 [section 1]. The department may prescribe additional forms and require

the taxpayer to provide sufficient information for the proper administration of the deposit requirement."

Section 18. Section 15-30-2501, MCA, is amended to read:

"15-30-2501. Definitions. When used in 15-30-2501 through 15-30-2509, the following definitions

apply:

(1) "Agricultural labor" means all services performed on a farm or ranch in connection with cultivating

the soil or in connection with raising or harvesting any agricultural or horticultural commodity, including the

raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing

animals and wildlife.

(2) (a) "Employee" means:

(i) an individual who performs services for another individual or an organization having the right to

control the employee as to the services to be performed and as to the manner of performance;

(ii) an officer, employee, or elected public official of the United States, the state of Montana, or any

political subdivision of the United States or Montana or any agency or instrumentality of the United States, the

state of Montana, or a political subdivision of the United States or Montana;

(iii) an officer of a corporation;

(iv) all classes, grades, or types of employees, including minors and aliens, superintendents,

managers, and other supervisory personnel.

(b) The term does not include a sole proprietor performing services for the sole proprietorship.

(3) "Employer" means:

(a) the person for whom an individual performs or performed any service, of whatever nature, as an

employee of the person or, if the person for whom the individual performs or performed the services does not

have control of the payment of wages for the services, the person having control of the payment of wages;

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(b) any individual or organization that has or had in its employ one or more individuals performing

services for it within this state, including:

(i) a state government and any of its political subdivisions or instrumentalities;

(ii) a partnership, association, trust, estate, joint-stock company, insurance company, limited liability

company, or domestic or foreign corporation;

(iii) a receiver, a trustee, including a trustee in bankruptcy, or the trustee's successor; or

(iv) a legal representative of a deceased person; or

purposes, or under Title 39, chapter 71, for workers' compensation purposes.

(4) "Lookback period" means the 12-month period ending the preceding June 30.

(5) "Sole proprietor" means an individual doing business in a noncorporate form and includes the

member of a single-member limited liability company that is a disregarded entity if the member is an individual.

(6) (a) Except as provided in subsection (6)(b), "wages" has the meaning provided in section 3401 of

the Internal Revenue Code, 26 U.S.C. 3401.

(b) The term does not include:

(i) tips and gratuities exempt from taxation under15-30-2110;

(ii) health insurance premiums attributed as income to an employee under federal law that are exempt

from taxation under15-30-2110;

(iii) unemployment compensation, including supplemental unemployment compensation treated as

wages under section 3402 of the Internal Revenue Code, 26 U.S.C. 3402, that is excluded from gross income

as provided in15-30-2101;

(iv)(i) any amount paid a sole proprietor; or

(v)(ii) any amount paid for agricultural labor."

Section 19. Section 15-30-2512, MCA, is amended to read:

"15-30-2512. Estimated tax -- payment -- exceptions -- interest. (1) (a) Each individual subject to

tax under this chapter, except farmers or ranchers as defined in subsection (6), shall pay for the tax year,

through employer withholding, as provided in 15-30-2502, through payment of estimated tax in four

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installments, as provided in subsection (2) of this section, or through a combination of employer withholding and

estimated tax payments, at least:

(i) 90% of the tax for the current tax year, less tax credits and withholding allowed the taxpayer; or

(ii) an amount equal to 100% of the individual's tax liability for the preceding tax year, if the preceding

tax year was a period of 12 months and if the individual filed a return for the tax year.

(b) Payment of estimated taxes under this section is not required if:

(i) the combined tax liability of employer withholding and estimated tax for the current year is less than

$500 after reductions for credits and withholding;

(ii) the individual did not have any tax liability for the preceding tax year, which was a tax year of 12

months, and if the individual was a citizen or resident of the United States throughout that tax year;

(iii) the underpayment was caused by reason of casualty, disaster, or other unusual circumstances that

the department determines to constitute good cause; or

(iv) the individual retired in the tax year after having attained the age of 62 or if the individual became

disabled in the tax year. In addition, payment of estimated taxes under this section is not required in the tax

year following the tax year in which the individual retired or became disabled.

(2) Estimated taxes must be paid in four installments according to one of the following schedules:

(a) Subject to the due date provision in 15-30-2604(1)(b), for each taxpayer whose tax year begins on

January 1, estimated tax payments are due on the following dates:

Installment

Date

First

April 15

Second

June 15

Third

September 15

Fourth

January 15 of the following tax year

(b) Subject to the due date provision in 15-30-2604(1)(b), for each taxpayer whose tax year begins on

a date other than January 1, estimated tax payments are due on the following dates:

Installment

Date

First

15th day of the 4th month following the beginning of the tax year

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Second

15th day of the 6th month following the beginning of the tax year

Third

15th day of the 9th month following the beginning of the tax year

Fourth

15th day of the month following the close of the tax year

(3) (a) Except as provided in subsection (4), each installment must be 25% of the required annual

payment determined pursuant to subsection (1). If the taxpayer's tax situation changes, each succeeding

installment must be proportionally changed so that the balance of the required annual payment is paid in equal

installments over the remaining period of time.

(b) If the taxpayer's tax situation changes after the date for the first installment or any subsequent

installment, as specified in subsection (2)(a) or (2)(b), so that the taxpayer is required to pay estimated taxes,

the taxpayer shall pay 25% for each succeeding installment except for the first one in which a payment is

required. For estimated taxes required to be paid beginning with the second installment provided for in

subsection (2)(a) or (2)(b), the taxpayer shall pay 50% for that installment and 25% for the third and fourth

installments, respectively. For estimated taxes required to be paid beginning with the third installment provided

for in subsection (2)(a) or (2)(b), the taxpayer shall pay 75% for that installment and 25% for the fourth

installment.

(4) (a) If for any required installment the taxpayer determines that the installment payment is less

than the amount determined under subsection (3)(a), the lower amount may be paid as an annualized income

installment.

(b) For any required installment, the annualized income installment is the applicable percentage

described in subsection (4)(c) applied to the tax computed on the basis of annualized Montana taxable income

in the tax year for the months ending before the due date for the installment less the total amount of any prior

required installments for the tax year.

following schedule:

Required Installment

Applicable Percentage

First

22.5%

Second

45%

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Third

67.5%

Fourth

90%

(d) A reduction in a required installment resulting from the application of an annualized income

installment must be recaptured by increasing the amount of the next required installment, determined under

subsection (3)(a), by the amount of the reduction. Any subsequent installment must be increased by the

amount of the reduction until the amount has been recaptured.

(5) (a) Subject to subsection (5)(f) (5)(e), if an estimated tax, an employer withholding tax, or a

combination of estimated tax and employer withholding tax is underpaid, there must be added to the amount

due under this chapter interest on the amount of the underpayment as provided in 15-1-216. The interest is

computed on the amount of the underpayment, as determined in subsection (5)(b), for the period from the time

the payment was due to the date payment was made or to the 15th day of the 4th month of the year following

the tax year in which the payment was to be made, whichever is earlier.

(b) For the purpose of determining the amount of interest due in subsection (5)(a), the amount of the

underpayment is the required installment amount less the installment amount paid, if any, on or before the due

date for the installment.

payment must be credited against unpaid required installments in the order in which those installments are

required to be paid.

(d) For a married taxpayer filing separately on the same form, the interest provided for in subsection

(5)(a) must be computed on the combined tax liability after reductions for credits and withholding, as shown on

the taxpayer's return.

(e)(d) Interest may not be charged with respect to any underpayment of the fourth installment of

estimated taxes if:

(i) the taxpayer pays in full the amount computed on the return as payable; and

(ii) the taxpayer files a return on or before the last day of the month following the close of the tax year

referred to in subsection (2)(a) or (2)(b).

(f)(e) Interest on the underpayment of estimated tax may not be assessed against a taxpayer if the

tax paid by the taxpayer from employer withholding and estimated tax payments satisfies the requirements of

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subsection (1)(a)(i) or (1)(a)(ii) and the taxpayer has paid approximately equal quarterly installments of

estimated taxes.

(6) For the purposes of this section, "farmer or rancher" means a taxpayer who derives at least 66

2/3% of the taxpayer's gross income, as defined in 15-30-2101 determined for federal income tax purposes,

from farming or ranching operations, or both.

(7) The department shall promulgate rules governing reasonable extensions of time for paying the

estimated tax. An extension may not be for more than 6 months."

Section 20. Section 15-30-2602, MCA, is amended to read:

"15-30-2602. Returns and payment of tax -- penalty and interest -- refunds -- credits -- inflation

adjustment. (1) (a) For both resident and nonresident taxpayers, each If required to file a federal income tax

return pursuant to the Internal Revenue Code, each individual, including each nonresident with Montana source

income, or each estate or trust shall file a return married couple not filing a joint return and having a gross

income for the tax year of more than the maximum standard deduction for that filing status, as determined in

15-30-2132, is liable for a return to be filed on forms and according to rules that the department may prescribe.

The gross income amounts referred to in this subsection (1) must be increased by the personal exemption

allowance determined in 15-30-2114for each additional personal exemption allowance that the taxpayer is

entitled to claim for the taxpayer and the taxpayer's spouse under 15-30-2114(3) and (4).

(b) A taxpayer that is not required to file a federal income tax return shall file a Montana return if the

taxpayer has Montana taxable income after taking into consideration the additions and subtractions to federal

taxable income in [section 1].

(2) In accordance with instructions set forth by the department, each taxpayer who is married and

living with a husband or wife and is required to file a return may, at the taxpayer's option, file a joint return with

the husband or wife even though one of the spouses has neither gross income nor deductions. If a joint return

is made, the tax must be computed on the aggregate taxable income and, subject to15-30-2646, the liability

with respect to the tax is joint and several. If a joint return has been filed for a tax year, the spouses may not file

separate returns after the time for filing the return of either has expired unless the department consents.

(3)(2) If a taxpayer is unable to make the taxpayer's own return, the return must be made by an

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authorized agent or by a guardian or other person charged with the care of the person or property of the

taxpayer.

(4)(3) All taxpayers, including but not limited to those subject to the provisions of 15-30-2502 and 15-

30-2512, shall compute the amount of income tax payable and shall, on or before the date required by this

chapter for filing a return, pay to the department any balance of income tax remaining unpaid after crediting the

amount withheld, as provided by 15-30-2502, and any payment made by reason of an estimated tax return

provided for in 15-30-2512. However, the tax computed must be greater by $1 than the amount withheld and

paid by estimated return as provided in this chapter. If the amount of tax withheld and the payment of estimated

tax exceed by more than $1 the amount of income tax as computed, the taxpayer is entitled to a refund of the

excess.

(5)(4) If the department determines that the amount of tax due is greater than the amount of tax

computed by the taxpayer on the return, the department shall mail a notice to the taxpayer as provided in 15-

30-2642 of the additional tax proposed to be assessed, including penalty and interest as provided in 15-1-216.

(6)(5) Individual income tax forms distributed by the department for each tax year must contain

instructions and tables based on the adjusted base year Montana income tax structure for that tax year."

Section 21. Section 15-30-2605, MCA, is amended to read:

"15-30-2605. Revision of return by department -- statute of limitations -- examination of records

and persons. (1) If, in the opinion of the department, any return of a taxpayer is in any essential respect

incorrect, it may revise the return.

(2) If a taxpayer does not file a return as required under this chapter, the department may, at any

time, audit the taxpayer or estimate the Montana taxable income of the taxpayer from any information in its

possession and, based upon the audit or estimate, assess the taxpayer for the taxes, penalties, and interest

due the state.

(3) Except as provided in subsections (2) and (4), the amount of tax due under any return may be

determined by the department within 3 years after the return was filed, regardless of whether the return was

filed on or after the last day prescribed for filing. For the purposes of 15-30-2607 and this section, a tax return

due under this chapter and filed before the last day prescribed by law or rule is considered to be filed on the last

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day prescribed for filing.

(4) If a taxpayer, with intent to evade the tax, purposely or knowingly files a false or fraudulent return

that violates a provision of this chapter, the amount of tax due may be determined at any time after the return is

filed and the tax may be collected at any time after it becomes due.

(5) The department, for the purpose of ascertaining the correctness of any return or for the purpose of

making an estimate of Montana taxable income of any person where information has been obtained, may also

examine or cause to have examined by any agent or representative designated by it for that purpose any

books, papers, or records of memoranda bearing upon the matters required to be included in the return and

may require the attendance of the person rendering the return or any officer or employee of the person or the

attendance of any person having knowledge in the premises and may take testimony and require proof material

for its information, with power to administer oaths to the person or persons."

Section 22. Section 15-30-2606, MCA, is amended to read:

"15-30-2606. Tolling of statute of limitations. The running of the statute of limitations provided for

under 15-30-2605 must be suspended during any period that the federal statute of limitations for collection of

federal income tax has been suspended by written agreement signed by the taxpayer or when the taxpayer has

instituted an action that has the effect of suspending the running of the federal statute of limitations and for 1

additional year. If the taxpayer fails to file an amended Montana return as required by 15-30-2619, the statute of

limitations does not apply until 3 years from the date the federal changes become final or the amended federal

return was filed. If the taxpayer omits from federal gross income, as defined and described in section 61 of the

Internal Revenue Code, 26 U.S.C. 61, an amount properly includable as federal gross income and the amount

is in excess of 25% of the amount of adjusted gross income stated in the return, the statute of limitations does

not apply for 2 additional years from the time specified in 15-30-2605."

Section 23. Section 15-30-2618, MCA, is amended to read:

"15-30-2618. (Temporary) Confidentiality of tax records. (1) Except as provided in 5-12-303, 15-1-

106, 17-7-111, and subsections (7) through (9) (6) through (8) of this section, in accordance with a proper

judicial order, or as otherwise provided by law, it is unlawful to divulge or make known in any manner:

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(a) the amount of income or any particulars set forth or disclosed in any individual report or individual

return required under this chapter or any other information secured in the administration of this chapter; or

(b) any federal return or federal return information disclosed on any return or report required by rule of

the department or under this chapter.

(2) (a) The officers charged with the custody of the reports and returns may not be required to

produce them or evidence of anything contained in them in an action or proceeding in a court, except in an

action or proceeding:

(i) to which the department is a party under the provisions of this chapter or any other taxing act; or

(ii) on behalf of a party to any action or proceedings under the provisions of this chapter or other taxes

when the reports or facts shown by the reports are directly involved in the action or proceedings.

(b) The court may require the production of and may admit in evidence only as much of the reports or

of the facts shown by the reports as are pertinent to the action or proceedings.

(3) This section does not prohibit:

(a) the delivery to a taxpayer or the taxpayer's authorized representative of a certified copy of any

return or report filed in connection with the taxpayer's tax;

(b) the publication of statistics classified to prevent the identification of particular reports or returns

and the items of particular reports or returns; or

return of any taxpayer who brings an action to set aside or review the tax based on the report or return or

against whom an action or proceeding has been instituted in accordance with the provisions of 15-30-2630.

(4) The department may deliver to a taxpayer's spouse the taxpayer's return or information related to

the return for a tax year if the spouse and the taxpayer filed the return with the filing status of married filing

separately on the same return. The information being provided to the spouse or reported on the return,

including subsequent adjustments or amendments to the return, must be treated in the same manner as if the

spouse and the taxpayer filed the return using a joint filing status for that tax year.

(5)(4) Reports and returns must be preserved for at least 3 years and may be preserved until the

department orders them to be destroyed.

(6)(5) Any offense against subsections (1) through (5) (4) is punishable by a fine not exceeding $500.

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If the offender is an officer or employee of the state, the offender must be dismissed from office or employment

and may not hold any public office or public employment in this state for a period of 1 year after dismissal or, in

the case of a former officer or employee, for 1 year after conviction.

(7)(6) This section may not be construed to prohibit the department from providing taxpayer return

information and information from employers' payroll withholding reports to:

(a) the department of labor and industry to be used for the purpose of investigation and prevention of

noncompliance, tax evasion, fraud, and abuse under the unemployment insurance laws;

(b) the state fund to be used for the purpose of investigation and prevention of noncompliance, fraud,

and abuse under the workers' compensation program; or

income reported by applicants for medical assistance.

(8)(7) The department may permit the commissioner of internal revenue of the United States or the

proper officer of any state imposing a tax on the incomes of individuals or the authorized representative of

either officer to inspect the return of income of any individual or may furnish to the officer or an authorized

representative an abstract of the return of income of any individual or supply the officer with information

concerning an item of income contained in a return or disclosed by the report of an investigation of the income

or return of income of an individual, but the permission may be granted or information furnished only if the

statutes of the United States or of the other state grant substantially similar privileges to the proper officer of

this state charged with the administration of this chapter.

(9)(8) On written request to the director or a designee of the director, the department shall furnish:

(a) to the department of justice all information necessary to identify those persons qualifying for the

additional exemption for blindness pursuant to15-30-2114(4), for the purpose of enabling the department of

justice to administer the provisions of 61-5-105;

(b)(a) to the department of public health and human services information acquired under 15-30-2616,

pertaining to an applicant for public assistance, reasonably necessary for the prevention and detection of public

assistance fraud and abuse, provided notice to the applicant has been given;

(c)(b) to the department of labor and industry:

(i) for the purpose of prevention and detection of fraud and abuse in and eligibility for benefits under

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the unemployment compensation and workers' compensation programs, information on whether a taxpayer

who is the subject of an ongoing investigation by the department of labor and industry is an employee, an

independent contractor, or self-employed; and

(ii) for the purpose of administering the apprenticeship tax credit provided for in 39-6-109, employer

and apprentice information necessary to implement 15-30-2357, 15-31-173, and 39-6-109;

(d)(c) to the department of fish, wildlife, and parks specific information that is available from income

tax returns and required under 87-2-102 to establish the residency requirements of an applicant for hunting and

fishing licenses;

(e)(d) to the board of regents information required under 20-26-1111;

(f)(e) to the legislative fiscal analyst and the office of budget and program planning individual income

tax information as provided in 5-12-303, 15-1-106, and 17-7-111. The information provided to the office of

budget and program planning must be the same as the information provided to the legislative fiscal analyst.

(g)(f) to the department of transportation farm income information based on the most recent income

tax return filed by an applicant applying for a refund under 15-70-430, provided that notice to the applicant has

been given as provided in 15-70-430. The information obtained by the department of transportation is subject to

the same restrictions on disclosure as are individual income tax returns.

(h)(g) to the department of commerce tax information about a taxpayer whose debt is assigned to the

department of revenue for offset or collection pursuant to the terms of Title 17, chapter 4, part 1. The

information provided to the department of commerce must be used for the purposes of preventing and detecting

fraud or abuse and determining eligibility for grants or loans.

(i)(h) to the superintendent of public instruction information required under 20-9-905. (Terminates

June 30, 2025, on occurrence of contingency--sec. 48, Ch. 415, L. 2019; subsection (9)(i) (8)(h) terminates

December 31, 2023--sec. 33, Ch. 457, L. 2015.)

15-30-2618. (Effective July 1, 2025, on occurrence of contingency) Confidentiality of tax

records. (1) Except as provided in 5-12-303, 15-1-106, 17-7-111, and subsections (8) and (9) (7) and (8) of this

section, in accordance with a proper judicial order, or as otherwise provided by law, it is unlawful to divulge or

make known in any manner:

(a) the amount of income or any particulars set forth or disclosed in any individual report or individual

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