BEFORE THE DEPARTMENT OF REVENUE
OF THE STATE OF MONTANA
| In the matter of the amendment of ARM 42.14.101, 42.14.106, 42.14.113, 42.14.202, 42.14.203, 42.14.205, 42.14.303, 42.14.1002, 42.14.1003, 42.14.1102, 42.14.1105, 42.14.1201, and 42.14.1202 and the repeal of ARM 42.14.206, 42.14.207, 42.14.302, 42.14.304, 42.14.1001, and 42.14.1101 pertaining to lodging facility sales and use taxes and rental vehicle sales and use taxes | ) ) ) ) ) ) ) ) ) ) ) | NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT AND REPEAL |
TO: All Concerned Persons
1. On December 13, 2021, at 1:30 p.m., the Department of Revenue will hold a public hearing in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana, to consider the proposed amendment and repeal of the above-stated rules. The conference room is most readily accessed by entering through the east doors of the building.
2. The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, please advise the department of the nature of the accommodation needed, no later than 5 p.m. on November 26, 2021. Please contact Todd Olson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or todd.olson@mt.gov.
3. GENERAL STATEMENT OF REASONABLE NECESSITY. The 66th and 67th Montana Legislatures enacted legislation that impacts how the department administers the state's lodging facility use tax and the sales and use tax on rental cars. House Bill 175 (2019) removed "allowable state reimbursement" language from 2-18-501, MCA, which affects how combined charge for services are calculated in the subchapter. Senate Bill 338 (2019) amended 15-68-102, MCA, to increase the tax rate on accommodations and campgrounds from three percent to four percent. Senate Bill 52 (2021) provides substantial revisions to the state's lodging facility use tax under 15-65-101, et. seq., MCA, and the sales use tax on rental cars in 15-68-101, et .seq., MCA, to provide greater synchronicity and clarity of the two tax types. Based on this legislation, it is necessary for the department to amend the rules proposed in this rulemaking.
The department proposes other amendments to ARM 42.14.101, 42.14.202, and 42.14.303, the basis for which arise from judicial decisions regarding taxpayer lodging facility use tax and the sales use tax disputes with the department. (See, e.g. Mont. Dep't of Revenue v. Priceline.com, Inc., 2015 MT 241, and Boyne USA, Inc. v. DOR, 2021 MT 155).
The department also proposes several amendments which: update language usage and style of the rules; improve accuracy and consistency of rule requirements with statute and the recent legislation; transfer content between rules better suited to the subject matter; update cross references and removes form names which are subject to change; and increase overall clarity of the rules. Based on these changes, the department proposes to repeal the rules listed in number 5 which will become obsolete or inconsistent with current law or department processes.
4. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
42.14.101 DEFINITIONS The following definitions apply to this subchapter:
(1) "Allowable state reimbursement" means the dollar amount stated in 2-18-501, MCA.
(2) "Average daily accommodation charge" (ADAC) is the average daily room rate for single occupancy for all units rented in a facility.
(3) "Facility" as defined in 15-65-101, MCA and "Accommodations" as defined in 15-68-101, MCA are synonymous and includes a building, group of buildings, or an area recognized as a single entity.
(1) "Accommodations" means accommodations, as defined in 15-68-101, MCA.
(4) (2) "Gross receipts" means the total gross sales received by a seller for use of a lodging unit accommodations, whether the charges were received in money or otherwise, including all receipts, cash, credits, and property or services of any kind or nature.
(5) "Lodging" means accommodation intended for the purpose of sleeping or resting.
(6) (3) "Lodging facility sales and use tax," for the purpose of these rules, means the 4 percent lodging facility use tax, as it applies to Title 15, chapter 65, MCA, and the 3 percent sales tax, as it applies to Title 15, chapter 68, MCA.
(7) "Lodging unit" means an individual sleeping room or suite used within a facility. This also includes, but is not limited to a single area within a campground, dormitory, hostel, guest ranch, or vacation rental.
(8) (4) "Nontaxable receipts" means exempt sales, as defined in ARM 42.14.303. Also included are sales deemed by the seller as uncollectible and which are written off during a specific quarterly period calendar quarter, and any discounts which may have been included in gross receipts but are not part of the taxable sales charge price to the user purchaser.
(9) (5) "Outfitting facility" means a facility that may:
(a) use one or more permanent structures to furnishes sleeping accommodations or bathhouse facilities to guests; and
(b) offers hunting, fishing, or recreational services in conjunction with the services of an outfitter.
(10) "Owner or operator of a facility" means any person or organization that rents a lodging facility to the public and is ultimately responsible for the financial affairs of the facility. Such person may be an individual, corporation, partnership, estate, trust, association, joint venture, vacation rental property manager, or other unincorporated group or entity. Owner or operator also includes all religious, education, charitable, and social organizations or societies which are not excluded by the provisions of Title 15, chapter 65, MCA, or Title 15, chapter 68, MCA, and all governmental entities at the federal, state, and local levels.
(11) "Permanent structure" means any structure that has an impermeable floor and is completely roofed and walled. This includes but is not limited to:
(a) cabins;
(b) bunkhouses;
(c) shacks;
(d) mobile homes;
(e) yurts; and
(f) luxury tents.
(12) "Public" or "general public" are synonymous and means a facility that charges for a lodging unit and other services, and is presumed to serve the general public unless proven otherwise.
(13) (6) "Purchaser" means a purchaser, as defined in 15-68-101, MCA is synonymous with the word "user".
(14) (7) "Rental agreement" is means an agreement between a seller and a user purchaser. Such an agreement provides lodging accommodations to the user purchaser for a specified period of time in exchange for a specified payment amount or other form of compensation consideration.
(8) "Rental vehicle sales and use tax," for the purpose of these rules, means the sales tax on the base rental charge for rental vehicles as it applies in Title 15, chapter 68, MCA.
(15) (9) "Sales price" means sales price, as defined in 15-68-101, MCA is synonymous with the term "accommodation charge" as defined in 15-65-101, MCA.
(16) (10) "Seller" means a seller, as defined in 15-68-101, MCA and includes an owner or operator of a facility.
(17) "User" means the person(s) renting and paying for the lodging facilities.
AUTH: 15-1-201, 15-65-102, 15-68-801, MCA
IMP: 15-65-101, 15-68-101, MCA
42.14.106 REGISTRATION AND PERMIT (1) Every seller required to collect the lodging facility sales and use tax must register and file Form GenReg, provided by the department or with the department by filing a general business registration form available on the department's web site at http://www.mt.gov/revenue and apply for a state mtrevenue.gov or through the department's online transaction portal, from which the department will create a lodging facility sales and use tax account identification number for each facility owned or operated in Montana.
(2) A seller who is registering multiple accommodations locations and who has elected to file a combined lodging facility sales and use tax return may file one application registration listing separately each accommodations location. The combined return can only include facilities accommodations that are located:
(a) and (b) remain the same.
(3) An application registering A seller who is registering multiple accommodations locations must include the following information on each accommodations location:
(a) and (b) remain the same.
(4) A seller who is registering multiple accommodations locations in more than one county or CVB is required to complete a separate application for each county or CVB and include only those accommodations locations within the county or recognized CVB.
(5) A seller who has acquired an existing facility accommodation from a previous seller shall not use the predecessor's state lodging facility sales and use tax account identification number. The seller must register and file Form GenReg the registration described in (1) to obtain a new state lodging facility sales and use tax account identification number upon acquiring the existing business.
(6) A seller who establishes a new facility accommodations separate from an existing facility accommodations shall not use the existing lodging facility sales and use tax account identification number, except for those owners or operators sellers listed in (2). The owner or operator seller must register each facility accommodations separately and file Form GenReg the registration required in (1) to obtain a new state lodging facility sales and use tax account identification number before operating the new facility accommodations.
(7) When completing Form GenReg the registration required in (1), each a seller must provide the federal employer identification number assigned to them by the Internal Revenue Service. For a sole proprietorship, this number may be a social security number if the sole proprietor is not required to apply for a federal employer identification number. Any entity change for a seller that requiring requires a new federal employer identification or social security number requires a new facility registration.
(8) No A registration is not considered complete unless it contains the seller's federal employer identification or social security number appears on the application.
(9) A seller who fails to register with the department for reporting and remitting the lodging facility sales and use tax is not relieved from the collection and reporting requirements.
AUTH: 15-65-102, 15-68-801, MCA
IMP: 15-65-114, 15-68-401, 15-68-402, MCA
42.14.113 SEASONAL REGISTRATION AND PERMIT (1) A person seller who is engaged in the business of selling lodging accommodations to the general public and is not open for business all 12 months of a calendar year may apply for a seasonal seller's permit.
(2) A person may apply for a seasonal seller's permit by completing Form GenReg indicating seller seeking a seasonal seller's permit must also provide in its registration, as required in ARM 42.14.106, that the business is seasonal and listing the calendar months the business operates.
(3) remains the same.
AUTH: 15-65-102, 15-68-401, 15-68-801, MCA
IMP: 15-65-112, 15-68-401, MCA
42.14.202 COMBINED CHARGE FOR SERVICES; DEPARTMENT INSPECTION OF RECORDS (1) When lodging sales of accommodations are combined with food, beverage, recreation, or other charges which are a substantial portion of the charge, the seller shall collect the lodging facility sales and use tax by establishing an accommodation charge a sales price using one of the following methods options:
(a) the allowable state reimbursement for the standard cost of in-state lodging each day for each person;
(b) and (c) remain the same but are renumbered (a) and (b).
(2) As required by 15-65-113, MCA, and 15-68-502, MCA, a seller must maintain and have available for inspection, records to substantiate the items referred to in (1)(a) through (c) or (b) for the preceding 5 years. The department may request the seller to substantiate the method used and itemize each charge to verify the correct amount of tax was collected and paid to the department.
(3) A seller must notify a purchaser of the lodging facility use tax and the lodging facility sales tax at the time of purchase. A seller shall separately state the taxes on the receipt, invoice, or other document provided to a purchaser to ensure there is a record of the amount of tax charged.
(3) (4) Lodging facility sales and use taxes do not apply to separately stated charges which are not an integral part of the use or occupancy of the room or campground space, or fees unless a purchaser must pay the separately stated charge or fee to facilitate the sale or rental of the accommodations, including a fee or a service, commission, or other charge by any online hosting platform. Examples of separately stated charges not subject to the lodging facility sales and use tax such as include but are not limited to:
(a) through (h) remain the same.
(4) (5) The department may disallow a seller's method of allocating the lodging facility sales and use tax under (1) if:
(a) the department has reasonable cause to believe that the method of allocation was chosen solely to qualify the facility for a tax exemption as provided in ARM 42.14.103 42.14.303; or
(b) a charge allocated under (1)(c) (b) is not supported by reasonable documentation or itemization.
(5) (6) Lodging facility sales and use taxes include amounts charged for bathhouse facilities or temporary use of tangible personal property used in conjunction with the room, such as a charge for an extra bed.
(6) remains the same but is renumbered (7).
(7) (8) If the facility seller charges for electricity or cleaning charges as a separate or additional charge, this charge must be included in the amount that is subject to the tax.
(9) Each seller shall maintain records necessary to document gross receipts for the lodging facility sales and use tax. A seller may be required to substantiate gross receipts reported for a particular quarter. For audit purposes, the seller may be required to reconstruct the reported gross receipts from the original lodging facility sales and use tax receipts.
(10) Such records shall include specific documentation of exempt charges, including but not limited to sales generated through online hosting platforms and short-term rental marketplace. Documentation for centrally billed federal exemptions shall include the first six digits on each credit card used to pay for the accommodations. Documentation for long-term exempt accommodations may include the folio or similar documentation.
(11) The seller shall maintain the records for a period of five years and shall be subject to audit by the department for that period.
AUTH: 15-1-201,15-65-102, 15-68-801, MCA
IMP: 2-18-501, 15-65-111, 15-65-113, 15-68-102, 15-68-502, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity, the department proposes to amend ARM 42.14.202 to clarify the rule's requirements, in particular to recordkeeping and department inspection. Cleaning charges are also proposed for addition in proposed (8) as a separate charge that is subject to the tax because separately stated, but mandatory, cleaning charges are often a part of the sales price. The department also proposes (9) through (11), which are relocated provisions from the current requirements in ARM 42.14.206.
42.14.203 COLLECTING, REPORTING, AND PAYING THE TAX (1) A seller of a lodging unit located in Montana must collect the lodging facility sales and use tax from the user and file a return with the department as required in this rule, except for a seller exempt under ARM 42.14.303 and for sales exempt under ARM 42.14.304.
(2) (1) Every seller, except for a seller identified in (4) who has obtained a seasonal permit, is required to complete and file Form LFT a lodging facility sales and use tax report with the Ddepartment of Revenue, P.O. Box 5835, Helena, MT 59604-5835, for each calendar quarter or portion of a calendar quarter in operation they are open for business. The lodging facility sales and use tax report is available through the department's website at mtrevenue.gov or via the department's online transaction portal.
(3) (2) The A seller shall remit the amount of the tax due concurrently with Form LFT filing the lodging facility sales and use tax report described in (1). The report will cover quarterly periods ending March 31, June 30, September 30, and December 31, and is due on or before the last day of the month following the close of the quarter. When filing electronically, the report and payment are considered filed on the confirmation date provided by the online transaction portal.
(4) (3) A seller who has obtained a seasonal permit is required to only complete and file Form LFT a lodging facility sales and use tax report for the calendar quarters they are opened for business.
(5) (4) If a seller has no revenue to report for a calendar quarter, and the seller does not have a seasonal permit, the seller must file a quarter return lodging facility sales and use tax report but reporting zero revenue and zero tax due for the calendar quarter.
(6) A seller who is required to file Form LFT may file and pay electronically their quarterly return through the department's web site at https://tap.dor.mt.gov. When filing electronically the return and payment is considered filed on the confirmation date provided upon submitting the return.
AUTH: 15-1-201, 15-65-502, 15-68-801, MCA
IMP: 15-1-208, 15-65-112, 15-65-115, 15-68-502, 15-68-513, MCA
42.14.205 APPLICATION OF TAX PAYMENT (1) All payments of the 4 percent lodging facility sales and use tax and the 3 percent lodging facility sales tax are applied by the department in the following manner:
(a) When the seller remits full payment of the taxes, 4/7 one-half of the amount is applied to the 4 percent lodging facility use tax in Title 15, chapter 65, MCA, and 3/7 one-half of the amount is applied to the 3 percent lodging facility sales tax in Title 15, chapter 68, MCA.
(b) When the seller remits less than full payment of the tax, the tax payment is first applied to the 4 percent lodging facility use tax in Title 15, chapter 65, MCA, with any remaining balance being applied to the 3 percent lodging facility sales tax.
(2) When a partial payment is made, the 5 percent vendor allowance only applies to the paid tax balance of the lodging facility sales tax, after the payment is applied to the full amount of the 4 percent lodging facility use tax due. If there are no funds available to apply to the 3 percent lodging facility sales tax, the seller is not entitled to a vendor allowance.
(3) If the seller amends a prior period, or the department adjusts a prior period and the seller now owes additional tax, the original payment will be adjusted to first apply all tax to the 4 percent lodging facility use tax, with any remaining balance to the 3 percent lodging facility sales tax.
(4) When reapplying the department reapplies a payment, the vendor allowance will be adjusted to 5 percent of the timely paid amount that is applied to the 3 percent lodging facility sales tax.
AUTH: 15-1-201, 15-65-102, 15-68-801, MCA
IMP: 15-65-112, 15-68-502, 15-68-510, MCA
42.14.303 EXEMPT LODGING FACILITIES ACCOMMODATIONS AND ACCOMMODATIONS SALES (1) The following accommodations are exempt from the lodging facility sales and use tax:
(a) An occupant at a health care facility as that term is defined in 50-5-101, MCA is not required to pay the lodging facility sales and use tax.
(2) (b) A user of a lodging unit A purchaser of accommodations at a dormitory is not required to pay the lodging facility sales and use tax when the:
(a) (i) Pperson is enrolled in a regular academic program or a program of continuing education; or
(b) (ii) Pparticipant is in an education program to improve the work of the educational institution by developing the professional knowledge and skills of the employees of the institution hosting the program; or
(c) (iii) Pparticipant is in an educational program reserved exclusively for students of accredited educational institutions.
(3) A user of a lodging unit at a hotel, motel, hostel, public lodginghouse, or bed and breakfast facility whose average daily accommodation charge (ADAC) is less than or equal to 60 percent of the allowable state reimbursement per day is not required to pay the lodging facility sales and use tax.
(a) For example - A facility that has 40 units advertises the following rates:
(i) 10 units, with one king bed, rent for:
$25.00 per night for single occupancy (one person);
$38.00 per night for double occupancy (two people);
$150.00 weekly rate; and
$400.00 monthly rate;
(ii) 30 units, with two queen beds, rent for:
$20.00 per night for single occupancy (one person);
$28.00 per night for double occupancy (two people);
$150.00 weekly rate; and
$400.00 monthly rate;
(iii) ADAC calculation:
10 units rent for $25.00/night = $ 250.00
30 units rent for $20.00/night = $ 600.00
Total rate charged for all rooms = $ 850.00
divided by number of units 40 = $ 21.25 ADAC
(iv) Allowable state reimbursement $ 35.00
7 percent Lodging Facility Sales and Use Tax $ 2.45
Total $ 37.45
60 percent of allowable state reimbursement $ 22.45
(b) The ADAC rate of $21.25 is less than $22.45 (60 percent of the allowable state reimbursement rate), therefore the facility is exempt from collecting the lodging facility sales and use tax from the user.
(4) (c) A user purchaser of accommodations at a nonprofit or religious organization's facility that is primarily used by youth (under the age of 18) for camping is not required to pay the lodging sales and use tax.
(5) (d) The user purchaser of a camping area which is temporarily located pursuant to a permit issued by an agency of the U.S. government is not required to pay the tax.
(2) The following accommodations sales are exempt from the lodging facility sales and use tax:
(a) accommodations that are rented for a period of 30 consecutive days or more. Nonconsecutive rental agreements may not be combined to calculate a longer rental period. Accommodations rental for a period of 30 or more continuous days must be documented by a lease, contract, or historical evidence of continuous rental.
(b) when the sales price is billed directly to the federal government and paid directly by the federal government. A purchaser who is individually billed and pays for accommodations, and who is subsequently reimbursed by the federal government, is not exempt from paying the lodging facility sales and use tax.
(c) when an enrolled member of a federally recognized Indian tribe stays in accommodations located within the exterior boundaries of the enrolled member's Indian reservation. The seller must record the individual's enrollment number on the record.
(d) when a foreign diplomat, entitled under international law or a bilateral treaty, presents to the seller a tax-exempt card issued by the U.S. State Department as follows:
(i) a blue stripe at the bottom indicates the bearer is entitled to full tax exemption; or
(ii) a yellow stripe indicates there is some type of restriction on the full tax exemption, which will be indicated in the yellow stripe area.
(e) when accommodations are used for a purpose other than lodging, such as a meeting room.
AUTH: 15-1-201, 15-65-102, 15-68-801, MCA
IMP: 2-18-501, 15-65-101, 15-65-111, 15-68-101, 15-68-102, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity, the department proposes to amend ARM 42.14.303 through the consolidation of rule requirements which are proposed for minor revision and transfer from ARM 42.14.304 to proposed (2) of this rule. The result eliminates unnecessary redundancy in the department's rules regarding accommodations sales that are exempt from the lodging facility sales and use tax.
42.14.1002 REGISTRATION AND PERMIT FOR RENTAL VEHICLES SALES AND USE TAX (1) Every seller required to collect the rental vehicle sales and use tax must register and file Form GenReg, the business with the department by filing a general business registration form provided by the department or available on the department's web site at http://www.revenue.mt.gov and apply for a state mtrevenue.gov or through the department's online transaction portal, from which the department will create a rental vehicle account identification number for each location operating in Montana.
(2) A seller who has multiple locations or businesses in Montana may file one application, registration listing each location or business, separately.
(3) A seller who has acquired an existing facility location or business from a previous owner shall not use the predecessor's state rental vehicle sales and use tax account identification number. The seller must register and file Form GenReg to obtain a new state account identification number upon acquiring the existing business.
(4) A seller who establishes a new facility location or business separate from an existing facility location or business shall not use the existing rental vehicle sales and use tax account identification number. The seller must register each facility location or business separately and file Form GenReg, as described in (1) or (2), as applicable, to obtain a new state rental vehicle sales and use tax account identification number before operating the new facility location or business.
(5) When completing Form GenReg the registration described in (1), each a seller must provide the federal employer identification number assigned to them by the Internal Revenue Service. For a sole proprietorship, this number may be a social security number if the sole proprietor is not required to apply for a federal employer identification number. Any entity change for a seller that requiring requires a new federal employer identification or social security number requires a new facility registration.
(6) No A registration described in (1) is not considered complete unless it contains the seller's federal employer identification or social security number appears on the application.
(7) A seller who fails to register with the department for reporting and remitting the rental vehicle sales and use tax is not relieved from the collection and reporting requirements.
AUTH: 15-1-201,15-68-801, MCA
IMP: 15-68-401, 15-68-402, MCA
42.14.1003 SEASONAL REGISTRATION AND PERMIT (1) A person seller who is engaged in the business of renting motor vehicles to the general public and is not opened for business all 12 months of a calendar year may apply for a seasonal seller's permit.
(2) A person may apply for a seasonal seller's permit by completing Form GenReg indicating seller must indicate in its business registration, as required in ARM 42.14.1002, that the business is seasonal and listing the calendar months the business operates.
(3) remains the same.
AUTH: 15-68-401, 15-68-801, MCA
IMP: 15-68-401, MCA
42.14.1102 QUARTERLY RETURNS AND PAYMENTS (1) Every seller, except for a seller identified in (3)(2), is required to complete and file Form RVT or RVT-C with the Ddepartment of Revenue, P.O. Box 5835, Helena, MT 59604-5835, a rental vehicle sales and use tax return for each calendar quarter or portion of a calendar quarter in operations the seller is open for business. The rental vehicle sales and use tax return is available through the department's website at mtrevenue.gov or via the department's online transaction portal.
(2) The A seller shall remit the amount of the tax due concurrently with Form RVT or RVT-C. The report will cover quarterly periods ending March 31, June 30, September 30, and December 31, and is due the rental vehicle sales and use tax return, as required in (1), on or before the last day of the month following the close of the a calendar quarter. When filing electronically, the report and payment are considered filed on the confirmation date provided by the online transaction portal.
(3) (2) A seller who has obtained a seasonal permit under ARM 42.14.1003 is required to only complete and file form RVT or RVT-C comply with the requirements of (1) only for the calendar quarters they are opened for business.
(4) (3) If a seller has no revenue to report for a calendar quarter, and the seller does not have a seasonal permit, the seller must still file a quarter return comply with the requirements of (1) and (2) but reporting zero revenue and zero tax due for the quarter.
(5) A seller who is required to file Form RVT or RVT-C may electronically file and pay their quarterly return through the department's web site at https://tap.dor.mt.gov. When filing electronically the return and payment is considered filed on the confirmation date provided upon submitting the return.
AUTH: 15-1-201, 15-68-502, 15-68-801, MCA
IMP: 15-68-502, 15-68-513, MCA
42.14.1105 RECORDS REQUIRED - AUDIT (1) Each A seller shall maintain records necessary to document gross receipts for the rental vehicle sales and use tax. A seller may be required to substantiate gross receipts reported for a particular quarter. For audit purposes, the a seller may be required to reconstruct the reported gross receipts from the original rental vehicle sales and use tax receipts.
(2) Such The records described in (1) shall must include specific documentation of exempt charges.
(3) The A seller must notify the user a purchaser of the 4 percent rental vehicle sales and use tax at the time of purchase.
(4) The tax shall be separately stated on the receipt, invoice, or other document provided to the user a purchaser to ensure there is a record of the amount of tax charged.
(5) The records described in (1) shall must be maintained by the a seller for a period of five years and shall be subject to audit by the department for that period.
AUTH: 15-68-801, MCA
IMP: 15-68-502, 15-68-513, MCA
42.14.1201 RENTAL VEHICLES SALES SUBJECT TO THE TAX (1) A user purchaser is required to pay the rental vehicle sales and use tax on the sales price for a rental vehicle used rented in Montana. This includes, but is not limited to:
(a) through (f) remain the same.
(g) off-highway vehicles, including motorcycles, modified motorcycles including but not limited to those that attach skis or snowmobile tracks, quadricycles, dune buggies, amphibious vehicles, deriving power from any source other than muscle or wind; or
(h) a truck, trailer, or semi-trailer that has a gross vehicle weight of less than 22,000 pounds, used to transport personal property, such as a flat bed flatbed trailer used to transport machinery.
AUTH: 15-1-201, 15-68-801, MCA
IMP: 15-68-101, 15-68-102, 15-68-501, MCA
REASONABLE NECESSITY: In addition to the general statement of reasonable necessity, the department proposes to amend ARM 42.14.1201(1)(g) to include modified motorcycles as taxable for the rental vehicles sales and use tax. Based on the department's experiences with seller questions in this area, the proposed amendments are intended to clarify that these vehicles are subject to the rental vehicle sales and use tax.
42.14.1202 EXEMPT RENTAL VEHICLE CHARGES SALES (1) A user purchaser is not required to pay the rental vehicle sales and use tax on the rental of farm vehicles, machinery, equipment, travel trailers, motor homes, airplanes, snowmobiles, golf carts, or sail boards sailboards.
(2) The following rental vehicle sales are exempt from the rental vehicle sales and use tax:
(a) A user is not required to pay the rental vehicle sales and use tax when the a vehicle that is rented to the same user for a period of 30 consecutive days or more. Nonconsecutive rental agreements cannot be combined for the purpose of determining the length of the rental period. Intention to rent for a period of 30 or more continuous days is documented by a lease, contract, or historical evidence of continuous rental.
(3) (b) The federal government is not required to pay the rental vehicle sales and use tax if when the rental charge is billed directly to the federal government and paid directly by the federal government. A charge that is individually billed and paid by the user, who later is reimbursed by the federal government, is not exempt from the rental vehicle sales and use tax.
(4) (c) when Aan enrolled member of a federally recognized Indian tribe, who rents a vehicle within the exterior boundaries of the enrolled member's Indian reservation, does not have to pay rental vehicle tax. The seller must record the individual's enrollment number on the record.
(5) (d) when Aa foreign diplomat, entitled under international law or a bilateral treaty, does not have to pay the rental vehicle tax upon showing of presents to the seller a tax-exempt card issued by the U.S. State Department as follows:
(a) and (b) remain the same but are renumbered (i) and (ii).
(6) The isolated rental of vehicles by a person who is not regularly engaged in the business of renting vehicles is not required to collect the rental vehicle sales and use tax from the user.
AUTH: 15-1-201, 15-68-801, MCA
IMP: 15-68-101, 15-68-102, MCA
5. The department proposes to repeal the following rules:
42.14.206 RECORDS REQUIRED - AUDIT
AUTH: 15-65-102, 15-68-801, MCA
IMP: 15-65-113, 15-68-502, 15-68-513, MCA
42.14.207 FAILURE TO FURNISH REQUESTED INFORMATION
AUTH: 15-65-102, 15-68-801, MCA
IMP: 15-65-113, 15-65-115, 15-68-502, MCA
42.14.302 WHO MUST PAY THE TAX
AUTH: 15-65-102, 15-68-801, MCA
IMP: 2-18-501, 15-65-101, 15-65-111, 15-65-112, 15-68-101, 15-68-102, 15-68-501, MCA
42.14.304 EXEMPT LODGING SALES
AUTH: 15-65-102, 15-68-801, MCA
IMP: 15-65-101, 15-65-111, 15-68-101, 15-68-102, 15-68-206, MCA
42.14.1001 DEFINITIONS
AUTH: 15-68-801, MCA
IMP: 15-68-101, MCA
42.14.1101 WHO MUST COLLECT THE TAX FROM THE USER AND FILE RETURNS
AUTH: 15-68-801, MCA
IMP: 15-68-101, 15-68-102, 15-68-501, MCA
6. Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Todd Olson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail todd.olson@mt.gov and must be received no later than December 20, 2021.
7. Todd Olson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.
8. The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notice regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the person in number 6 above or faxed to the office at (406) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue.
9. An electronic copy of this notice is available on the department's web site at www.mtrevenue.gov, or through the Secretary of State's web site at sosmt.gov/ARM/register.
10. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor of Senate Bill 52, Senator Ellsworth, was contacted by email on October 29, 2021.
11. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment and repeal of the above-referenced rules will not significantly and directly impact small businesses.
/s/ Todd Olson /s/ Brendan Beatty
Todd Olson Brendan Beatty
Rule Reviewer Director of Revenue
Certified to the Secretary of State November 9, 2021.
