BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the adoption of New Rules I and II; amendment of ARM 42.14.101, 42.14.106; amendment and transfer of 42.14.102, 42.14.103, 42.14.104, 42.14.105, 42.14.107, 42.14.108, 42.14.109, and 42.14.110; and repeal of 42.4.111 relating to  lodging facility use taxes and sales taxes

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION, AMENDMENT, AMENDMENT AND TRANSFER, AND REPEAL

 

TO:  All Concerned Persons

 

1.  On October 26, 2010, at 1:00 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the adoption, amendment, amendment and transfer, and repeal of the above-stated rules.

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

 

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, contact the Department of Revenue no later than 5:00 p.m., October 12, 2010, to advise us of the nature of the accommodation that you need.  Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail canderson@mt.gov.

 

3.  The proposed new rules do not replace or modify any section currently found in the Administrative Rules of Montana.  The proposed new rules provide as follows:

 

NEW RULE I  SEASONAL REGISTRATION AND PERMIT  (1)  A person 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 that the business is seasonal and listing the calendar months the business operates.

(3)  If a seller operates at any time within the four, three-month quarters of January through March; April through June; July through September; and October through December, they cannot apply for a seasonal seller's permit.

(a)  Example:  A seller is operating and is open for business April 15 through October 11 of each year.  This seller can apply for a seasonal seller's permit as they operate and are open for business within only three, three-month quarters (April through June; July through September, and the partial month of October.)

(b)  Example:  A seller is operating and is open for business March 15 through October 11 of each year.  This seller cannot apply for a seasonal seller's permit as they operate and are open for business within each of the four, three-month quarters (March 15 through March 31; April through June; July through September; and October through October 11).

 

AUTH:  15-65-102, 15-68-401, 15-68-801, MCA

IMP:  15-65-112, 15-68-401, MCA

 

REASONABLE NECESSITY:  The department is proposing to adopt New Rule I to assist the sellers in further understanding the requirements and procedures when applying for a seller's seasonal permit.  The rule illustrates the eligibility requirements in (2) and (3) and also provides two examples to provide further direction to possible eligible sellers.

The department is proposing to place New Rule I in subchapter 1.  This subchapter will be renamed "Registration and Permits".

 

NEW RULE II  APPLICATION OF TAX PAYMENT  (1)  All payments of the four percent lodging facility use tax and the three percent lodging facility sales tax are applied in the following manner:

(a)  When the seller remits full payment of the taxes, 4/7 of the amount is applied to the four percent lodging facility use tax in Title 15, chapter 65, MCA, and 3/7 of the amount is applied to the three 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 four percent lodging facility use tax in Title 15, chapter 65, MCA, with any remaining balance being applied to the three percent lodging facility sales tax.

            (2)  When a partial payment is made, the five 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 four percent tax due.  If there are no funds available to apply to the three 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 four percent lodging facility use tax, with any remaining balance to the three percent lodging facility sales tax.

            (4)  When reapplying a payment the vendor allowance will be adjusted to five percent of the timely paid amount that is applied to the three percent lodging facility sales tax.

 

AUTH:  15-65-102, 15-68-801, MCA

IMP:  15-65-112, 15-68-502, 15-68-510, MCA

 

REASONABLE NECESSITY:  The department is proposing to adopt New Rule II to clarify for the seller how the payment will be applied between the lodging facility use tax and the lodging facility sales tax.

The rule states that the lodging facility tax will receive payment first and if there is any payment left, those funds will go to satisfy the three percent lodging facility sales tax.  The rule also clarifies how much vendor allowance will be rewarded when partial payments are made.

The department is proposing to place New Rule II in a new subchapter 2 that references the Collection, Reporting, and Payment Requirements for the seller.

 

4.  The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

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 for single occupancy in a facility.

For example:             40 unit facility

10 units are never rented for single occupancy

           30 units rented for single and other occupancy

 

of the 30 rented for single and other occupancy:

 

    10 units rent for $15.00/night           = $150.00

    20 units rent for $12.00/night           =  240.00

    Total rate charged for all rooms   = $390.00 = $13.00 ADAC

    divided by number of units                          30

(2)(3)  "Facility" means a as defined in 15-65-101, MCA and "Accommodations"  as defined in 15-68-101, MCA are synonymous  and includes a building, or a group of buildings, or an area recognized as a single entity.

(3)(4)  "Gross receipts" means total gross accommodation charges sales received for use of a lodging facilities unit, whether the charges were received in money or otherwise, including all receipts, cash, credits, and property or services of any kind or nature.

(4) "Intended for ... resident dwelling purposes" means a home, some permanent abode or residence, in which one has the intention of remaining, as further defined in 15-65-101, MCA.

(5)  "Lodging" means accommodation intended for the purpose of sleeping or resting.

(6)  "Lodging facility sales and use tax" means the four percent lodging facility use tax, as it applies to Title 15, chapter 65, MCA, and the three percent sales tax, as it applies to Title 15, chapter 68, MCA.

(6)(7)  "Lodging facilities unit" means a unit or units an individual sleeping room or suite used within a facility.  This is also includes, but is not limited to a single area within a campground, dormitory, hostel, guest ranch, or vacation rental.

(7)(8)  "Nontaxable receipts" means exempt accommodation charges sales as defined in ARM 42.14.103.  Also included are accommodation charges sales deemed uncollectible and written off the records of the facility during a specific quarterly period, and any discounts which may have been included in gross receipts but not part of the net accommodation taxable sales charge to the user.

(8)(9)  "Outfitting facility" means a facility that may:

(a)  use one or more permanent structures to furnish sleeping accommodations or bathhouse facilities to guests; and

(b)  offer hunting, fishing, or recreational services in conjunction with the services of an outfitter.

(9)(10)  "Owner or operator of a facility" means any person or organization who 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.

(10)(12)  "Public" or "general public" are synonymous.  If and means a facility is charging that charges for a lodging facilities unit and other services, it and is presumed to serve the general public unless proven otherwise.

(13)  "Purchaser" as defined in 15-68-101, MCA is synonymous with the word "user".

(11)(14)  "Rental agreement" is an agreement between an owner or operator a seller and a user.  Such an agreement provides lodging to the user for a specified period of time in exchange for a specified payment amount or other form of compensation.

(15)  "Sales price" as defined in 15-68-101, MCA is synonymous with the term "accommodation charge" as defined in 15-65-101, MCA.

(16)  "Seller" means a seller as defined in 15-68-101, MCA and includes an owner or operator of a facility.

(12) (17) "User" means the person(s) renting and paying for the lodging facilities.

 

AUTH: 15-65-102, 15-68-801, MCA

IMP:  15-65-101, 15-68-101, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.101 to include new definitions used within these rules and statute and to incorporate into existing definitions references to Title 15, chapter 68, MCA, which is the three percent lodging facility sales tax.

            Specifically, the rule does the following:

            (a)  Provides the appropriate rule reference to identify the allowable state reimbursement, which is important in calculating whether a facility is exempt from collecting the lodging facility sales and use tax.

            (b)  Links the definition of a facility in both Title 15, chapter 65 and 68, MCA.

            (c)  Establishes that gross receipts are total sales receipts.

            (d)  Eliminates an unneeded definition of a resident dwelling.

            (e)  Defines lodging facility sale and use tax.

            (f)  Provides a definition of a permanent structure which is key in the decision of whether a facility is subject to the lodging facility sales and use tax.

            (g)  Links the definitions of purchaser, sales price, and seller to Title 15, chapters 65 and 68, MCA.

The department is proposing to retain ARM 42.14.101 in subchapter 1 and rename that subchapter "Registration and Permits".

 

42.14.106  FACILITY REGISTRATION AND PERMIT  (1)  Every owner or operator  seller required to impose collect the lodging facility sales and use tax must register and file an application Form GenReg, provided by the department or available on the department's web site at http://www.mt.gov/revenue and apply for a state account identification number on the form provided by the department for each facility owned or operated in Montana.

(2)  A seller who is registering multiple locations and who has elected to file a combined return may file one application listing separately each location.  The combined return can only include facilities that are located:

(a)  within the same county; or

(b)  within a recognized Convention and Vistors Bureau (CVB).

(3)  An application registering multiple locations must include the following information on each location:

(a)  business name and address of each location; and

(b)  the federal employer identification number or social security number assigned to the owner of each location.

(4)  A seller who is registering multiple locations in more than one county or CVB is required to complete a separate application for each county or CVB and include only those locations within the county or recognized CVB.

(5)  Any A seller owner or operator who has acquired the business of another an existing facility from a previous seller shall not use the predecessor's state account identification number.  The owner or operator seller must register and file Form GenReg to obtain a new state account identification number before the due date of the first report upon acquiring the existing business.  This applies to both new businesses and businesses which have been purchased.

(6)  A seller who establishes a new facility separate from an existing facility shall not use the existing account identification number, except for those owners or operators listed in (2).  The owner or operator must register each facility separately and file Form GenReg to obtain a new state account identification number before operating the new facility.

(3)(7)  Each registration application When completing Form GenReg, each seller must contain provide the federal entity employer identification number assigned to them by the Internal Revenue Service.  For a sole proprietorships, this number is may be a social security number if the sole proprietor is not required to apply for a federal employer identification number.  Any entity change requiring a new federal employer identification or social security number requires a new facility registration.

(4)(8)  No registration is considered complete unless the federal employer identification or social security number appears on the application.

(5)(9)  Not being registered does not relieve an A seller owner or operator 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

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.106 to include in the existing rules reference to Title 15, chapter 68, MCA, and to provide guidance to sellers who are registering a new location or are registering multiple locations on one application.

Specifically the rule does the following:

(a)  Lists the name of the registration application that needs to be filed and where the applicant can be found.

(b)  Lists the requirements for filing a combined return.

(c)  States that if a seller has multiple locations in various Convention and Visitors Bureau (CVB) areas or counties, the seller is required to complete a separate application for each CVB or county.

(d)  States that a new facility must receive a new state account number.

(e)  States that a seller is not relieved of their withholding responsibilities when they are not registered with the department.

The department is proposing to retain ARM 42.14.106 in subchapter 1 and rename that subchapter "Registration and Permits".

 

5.  The rules proposed to be amended and transferred provide as follows, stricken matter interlined, new matter underlined:

 

42.14.102  WHO MUST PAY COLLECT THE TAX AND FILE RETURNS

(1)  Every owner or operator of a facility operating in Montana must collect the lodging facility use tax, rounded to the nearest penny, from the users of facilities and file returns with the department as required in ARM 42.14.107.

(2)  To determine taxability of a facility, the owner or operator should consider the type of operation.

 

If the operation is a:                                                              Use Step:

 

Hotel, motel, hostel, public lodginghouse                           (a) and (b)

   or bed and breakfast facility

Resort, condominium inn, dude ranch,                               (c)

   guest ranch facility, outfitting facility

Campground                                                                         (d)

Dormitory                                                                               (e)

 

(a)  Compute the average daily accommodation charge (ADAC).  If the ADAC is less than 60% of the allowable state reimbursement for the standard cost of in-state lodging, and the facility is a hotel, motel, hostel, public lodginghouse, or bed and breakfast facility, no further step is required.  The owner or operator of the facility is not required to collect the tax.  The exemption applies only to a hotel, motel, hostel, public lodginghouse, or bed and breakfast facility.

(b)  If the ADAC is more than 60% of the allowable state reimbursement for the standard cost of in-state lodging, and the facility is a hotel, motel, hostel, public lodginghouse or bed and breakfast facility, the second step is to look to the length of the rental period of the lodging facilities.

(i)  If it is rented for 30 days or more the lodging facilities are not taxable.

(ii)  If it is rented for less than 30 days the lodging facilities are taxable unless specifically exempted by ARM 42.14.103.

(c)  If the facility is a resort, condominium inn, dude ranch, guest ranch, or outfitting facility, look at the length of the rental period of the lodging facilities as stated in (2)(b)(i) and (ii).

(d)  If the facility is owned or operated by a non-profit or religious organization and the lodging facilities are rented primarily to youth under 18 years of ages for camping, no further step is needed.  The facility is exempt from the tax.  If not, look at the length of the rental period as stated in (2)(b)(i) and (ii).

(e) If the facility is a dormitory and the lodging facilities are rented to users enrolled in a regular academic program or a program of continuing education, no further step is needed.  Charges for the lodging facilities are exempt.  See ARM 42.14.103.  If not, the tax must be collected on the accommodations charges.

 

Examples:                                                                                             Taxable

 

Health facility                                                                                            No

Religious camps - primarily for youth                                                     No

                  - occasionally for youth                                             Yes

Youth hostel                                                                                             Yes

Federal campground                                                                              Yes

Campground - overnight trade                                                              Yes

 - permanent space                                                          No

Rooms rented to government employees                                Yes

Dormitory - lodging facilities rental

  to non-enrolled students                                               Yes

- lodging facilities rental

  to enrolled students                                            No

 

A user of a lodging unit in a hotel, motel, hostel, public lodging house, or bed and breakfast facility, whose ADAC is greater than 60% of the allowable state reimbursement is required to pay the lodging facility sales and use tax for the use of a lodging unit rented for a period of less than 30 consecutive days.  In calculating the ADAC you cannot consider double occupancy rates, coupon discount rates, or other promotional rates.

(a)  For example - A facility that has 40 units advertises the following rates:

(i)  10 units with one king bed rents for:

$45.00 per night for single occupancy (one person);

(ii)  30 units with two queen beds rents for:

$39.00 a night for single occupancy (one person);

(iii)  ADAC calculation:

10 units rent for $45.00/night                           = $   450.00

30 units rent for $39.00/night                = $1,170.00

Total rate charged for all rooms           = $1,162.00

divided by number of unit             40  = $     40.50 ADAC

            (iv)  Allowable state reimbursement                                    $ 35.00

                        7% Lodging Facility Sales and Use Tax                            $   2.45

                        Total                                                                                        $ 37.45

                        60% of allowable state reimbursement                              $ 22.45

(b)  The ADAC rate of $40.50 is more than $22.45 (60% of the allowable state reimbursement), therefore the user is not exempt from paying the lodging facility sales and use tax.

(2)  A user of a lodging unit in a resort, condominium, inn, dude ranch, guest ranch, and vacation rental is required to pay the lodging facility sales and use tax for the use of a lodging unit rented for a period of less than 30 consecutive days.

(3)  Every owner or operator of a facility shall be liable for all amounts required to be collected as a tax under the provisions of Title 15, chapter 65, MCA.

A user of a lodging unit in the outfitting industry is required to pay the lodging facility sales and use tax for the use of a lodging unit in a permanent structure rented for a period of less than 30 consecutive days.

(4)  An owner or operator of a facility has the right to request a hearing on a tax liability as provided in 15-1-705, MCA.  A user of a lodging unit in a campground is required to pay the lodging facility sales and use tax for the use of a lodging unit rented for a period of less than 30 consecutive days.

(5)  If the tax or any portion of the tax is not paid when due, the department may issue a warrant for distraint as provided in Title 15, chapter 1, part 7, MCA.  A user of a lodging unit in a nonprofit or religious organization's facility that is not primarily used for camping by youth under 18 years of age, is required to pay the lodging sales and use tax for the use of a lodging unit rented for a period less than 30 consecutive days.

            (6)  A user of a lodging unit in a dormitory is required to pay the lodging facility sales and use tax for the use of a lodging unit rented  for a period of less than 30 consecutive days when the user is not enrolled in a regular academic program or a program of continuing education.

 

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

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.102 to include in the existing rules reference to Title 15, chapter 68, MCA, and to provide clear guidance to sellers as to what facilities a user is required to pay the lodging facility sales and use tax. 

The amendment to the rule provides the following:

(a)  Eliminates redundant language.

(b)  Provides examples on how to calculate the average daily accommodation charge.

(c)  States that the rental of a lodging unit under 30 consecutive days is subject to the lodging facility sales and use tax.

The department is proposing to transfer ARM 42.14.102 to a new subchapter 3 that references Taxable and Nontaxable Transactions for the User.

 

42.14.103  EXEMPT FACILITIES/ACCOMMODATION CHARGES LODGING FACILITIES  (1)  An owner or operator of a facility or campground shall not collect the tax for lodging if the lodging facilities are rented to the user for a period of 30 consecutive days or more. 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. 

(2)  An owner or operator of 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 shall not collect the tax.

(3)(2)  A user of a Lodging facility use tax for lodging facilities unit at dormitories a dormitory is not required to pay the lodging facility sales and use tax when the furnished to the following are exempt:

(a)  Persons is enrolled in a regular academic program or a program of continuing education; or

(b)  Participants 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)   Participants is in an educational program reserved exclusively for students of accredited educational institutions.

(4)(3)  An owner or operator of a 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% of the allowable state reimbursement for the standard cost of in state lodging per day is not required to pay collect 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% Lodging Facility Sales and Use Tax                            $   2.45

Total                                                                                        $ 37.45

                        60% of allowable state reimbursement                              $ 22.45

 

(b)  The ADAC rate of $21.25 is less than $22.45 (60% of the allowable state reimbursement rate), therefore the facility is exempt from collecting the lodging facility sales and use tax from the user.

(5)(4) An owner or operator of a youth camp A user at a nonprofit or religious organization's facility that is primarily used by youth (under the age of 18) for camping shall not collect is not required to pay the lodging sales and use tax.

(6)  An accommodation charge for lodging furnished federal government entities is exempt from the tax if and only if the accommodation charge is billed and directly paid by the governmental entity.

(7)  Enrolled members of a federally recognized Indian tribe, who stay in a facility located within the exterior boundaries of the enrolled member's Indian reservation, are exempt from the tax.  The owner or operator must record the individual's enrollment number on the record of the accommodation charge.

(8)   Foreign diplomats, entitled under international law or a bilateral treaty, are exempt from the lodging facility tax upon showing of a tax-exempt card issued by the U.S. state department as follows:

(a)  a blue stripe at the bottom indicates the bearer is entitled to full tax exemption; and

(b)  a yellow stripe indicates there is some type of restriction on the full tax exemption, which will be indicated in the yellow stripe area.

(9)(5)  An owner or operator The user 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 collect pay the tax.

 

AUTH:  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:  The department is proposing to amend ARM 42.14.103 to include in the existing rules reference to Title 15, chapter 68, MCA, and to change the content of this rule to only address which facilities are exempt from the lodging facility sales and use tax.  The department proposes to move exempt sales that were previously in this rule to ARM 42.14.104, which is amended to read exempt lodging sales.

The amended rule also provides an example of a facility that is exempt from the lodging facility sales and use tax for comparing the average daily accommodation charge and the allowable state reimbursement rate.

The department is proposing to transfer ARM 42.14.103 to a new subchapter 3 that references Taxable and Nontaxable Transactions for the User.

 

42.14.104 MULTIPURPOSE FACILITIES EXEMPT LODGING SALES  (1)  A user is not required to pay the lodging facility sales and use tax for lodging if the lodging unit is rented 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.

(2)  A user of a lodging unit is not required to pay the lodging facility sales and use tax if the accommodation charge is billed directly to the federal government and paid directly by the federal government.  Users who are individually billed and pay for a lodging unit and who are subsequently reimbursed by the federal government are not exempt from paying the lodging facility sales and use tax.

(3)  An enrolled member of a federally recognized Indian tribe, who stays in a facility located within the exterior boundaries of the enrolled member's Indian reservation, is exempt from paying the lodging facility sales and use tax.  The seller must record the individual's enrollment number on the record.

(4)  A foreign diplomat, entitled under international law or a bilateral treaty, is exempt from the lodging facility tax upon showing of a tax-exempt card issued by the U.S. State Department as follows:

(a)  a blue stripe at the bottom indicates the bearer is entitled to full tax exemption; or

(b)  a yellow stripe indicates there is some type of restriction on the full tax exemption, which will be indicated in the yellow stripe area.

(5)  A lodging facility room used for the purpose other than lodging (such as meeting rooms) is not subject to the tax.

(2)  A lodging facility room used for lodging and another purpose is subject to the tax.

            (3)  Rooms supplied with beds are presumed to be rented for purposes of lodging unless the contrary is conclusively established by the owner or operator.

 

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

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.104 to include in the existing rules reference to Title 15, chapter 68, MCA, and to change the title of the rule to include other forms of lodging sales that are exempt from the lodging facility sales and use tax. Previously the department combined exempt lodging sales with exempt facilities in ARM 42.14.103.  In amending these rules the department is placing all exempt facilities in ARM 42.14.103 and all exempt sales in ARM 42.14.104.

The department is proposing to transfer ARM 42.14.104 to a new subchapter 3 that references Taxable and Nontaxable Transactions for the User.

 

42.14.105  COMBINED CHARGE FOR SERVICES  (1)  When lodging facility use taxes sales are combined with food, beverage, recreation, or other charges which are a substantial portion of the charge, the owner or operator seller may shall allocate the lodging facility use tax collect the lodging facility sales and use tax by establishing an accommodation charge using one of the following methods:

(a)  a flat rate of the allowable state reimbursement for the standard cost of in-state lodging each day for each person;

(b)  25% of all charges each day for each person; or

(c)  a charge justified by reasonable documentation.

(2)  As required by 15-65-113, MCA, and 15-68-502, MCA, an owner or operator a seller must maintain and have available for inspection, records to substantiate the items referred to in (1)(a) through (c).  The department may request the owner or operator of a facility seller to substantiate the method used and itemize each charge to verify the correct amount of tax.

(3)  Lodging facility sales and use taxes do not apply to include separately stated service charges which are not an integral part of the use or occupancy of the room or campground space, such as but not limited to:

(a)  separately stated telephone;

(b)  Wi-Fi access;

(c)  faxes/copies;

(b)(d)  television;

(c)(e)  food;

(d)(f)  beverage; or

(g)  pet charge; or

(e)(h)  personal laundry charges.

(4)  The department may disallow an owner or operator's 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; or

(b)  a charge allocated under (1)(c) is not supported by reasonable documentation or itemization.

(5)  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)  If campgrounds charge for water, electrical or sewer hookups, and bathhouse facilities, those charges are included in the amount that is subject to tax.

(7)  If the facility charges for electricity as a separate or additional charge, this charge must be included in the amount that is subject to the tax.

 

AUTH:   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:  The department is proposing to amend ARM 42.14.105 to include in the existing rules reference to Title 15, chapter 68, MCA.

In addition, the rule lists various charges that are incurred by users of lodging facilities but are not included as part of the taxable balance of the lodging facility sales and use tax.  Some examples are Wi-Fi access and pet charges.

The department is proposing to transfer ARM 42.14.105 to a new subchapter 2 that references the Collection, Reporting, and Payment Requirements for the Seller.

 

42.14.107  QUARTERLY REPORTS PAYMENTS - DUE DATES 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, rounded to the nearest dollar, from the user and file a return with the department as required in ARM 42.14.107, except for a seller exempt under ARM 42.14.103 and for sales exempt under ARM 42.14.104.

(2)  Every owner or operator seller, except for a seller identified in (4), is required to make complete and file Form LFT or LFT-C with the Department of Revenue, P.O. Box 5835, Helena, MT, 59604-5835, for each calendar quarter or portion of a quarter in operation, a report to the Department of Revenue, P.O. Box 5805, Helena, MT, 59604-5805.  The report must include gross lodging facility use taxes.

(2)(3)  The owner or operator seller shall remit the amount of this the tax with the quarterly report Form LFT or LFT-C.  The report will cover quarterly periods ending March 31, June 30, September 30, and December 31, and must be postmarked no later than is due on or before the last day of the month following the close of the quarter.  Reports must be made on forms supplied by the department.

(4)  A seller who has obtained a seasonal permit is required to only complete and file form LFT or LFT-C for the quarters they are opened for business.

(3)(5)  If a seller has no revenue to report for a quarter, and the seller does not have a seasonal permit, the seller must file a quarter return reporting zero revenue and tax for the quarter tax was not collected, the report should so state.

(4)  The department may not grant an extension to remit the tax.

(5)  If the due date for filing falls on a holiday or weekend, the due date for the return shall be the next business day following such holiday or weekend. 

(6)  The owner or operator must file a final quarterly report for the last quarter of operation and state the last date of business.  Failure to do so will result in a liability to the owner or operator for an estimated tax, penalty, and interest.  A seller who is required to file Form LFT or LFT-C 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:  15-65-102, 15-68-502, 15-68-801, MCA

IMP:  15-1-208, 15-65-112, 15-65-114, 15-65-115, 15-68-502, 15-68-513, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.107 to include in the existing rules reference to Title 15, chapter 68, MCA, and to address filing requirements for seasonal permit holders, electronic filing, and for sellers electing to file a combined return.

The amended rule establishes that the seller of a lodging facility needs to round to the nearest dollar on the tax returns.  In addition, the rule provides a new department address for sellers to file the lodging facility sales and use tax.  The amended rule also states the filing requirements for seasonal sellers.

Lastly, the rule provides the web site for electronic filing of the tax returns.

The department is proposing to transfer ARM 42.14.107 to a new subchapter 2 that references the Collection, Reporting, and Payment Requirements for the Seller.

 

42.14.108  PENALTIES AND INTEREST  (1)  Upon request, the late pay and late file penalty may be waived pursuant to ARM 42.3.101 through 42.3.114, 42.3.102, 42.3.103, 42.3.104, 42.3.105, 42.3.106, 42.3.107, 42.3.108, 42.3.109, 42.3.110, 42.3.111, 42.3.113, 42.3.115, and 42.3.120.

 

AUTH:  15-65-102, 15-68-801, MCA

IMP:  15-65-114, 15-65-115, 15-68-514, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.108 to bring the reference for the administrative rules that address waivers current and to add the reference to Title 15, chapter 68, MCA in the implementing cites.

The department is proposing to transfer ARM 42.14.108 to a new subchapter 2 that references the Collection, Reporting, and Payment Requirements for the Seller.

 

42.14.109  RECORDS REQUIRED - AUDIT  (1)  Each owner or operator of a facility seller shall maintain records necessary to document gross receipts for the lodging facility sales and use tax.  An owner or operator A seller may be required to substantiate gross receipts reported for a particular quarter.  For audit purposes, the owner or operator seller may be required to reconstruct the reported gross receipts from the original lodging facility sales and use tax receipts.

(2)  Such records shall include specific documentation of exempt charges.

(3)  The owner or operator of a facility seller must notify the user of the 4% lodging facility use tax and the 3% lodging facility sales tax.  Beginning June 30, 1988, the  The tax shall be separately stated on the receipt, invoice, or other document provided to the user to iensure there is a record of the amount of tax charged.

(4)  The records shall be maintained by the owner or operator of a facility seller for a period of five years and shall be subject to audit by the department for that period.

 

AUTH:  15-65-102, 15-68-801, MCA

IMP:  15-65-113, 15-68-502, 15-68-513, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.109 to include in the existing rules reference to Title 15, chapter 68, MCA.

The department is proposing to transfer ARM 42.14.109 to a new subchapter 2 that references the Collection, Reporting, and Payment Requirements for the Seller.

 

42.14.110  FAILURE TO FURNISH REQUESTED INFORMATION  (1)  The department, for the purpose of determining the correctness of any return, may request additional information to verify amounts or items on the return.

(2)  If a return is not filed or information is not supplied, the department will estimate the tax from available information.

 

AUTH:  15-65-102, 15-68-801, MCA

IMP:  15-65-113, 15-65-115, 15-68-502, MCA

 

REASONABLE NECESSITY:  The department is proposing to amend ARM 42.14.110 to update the authority and implementing cites  for both Title 15, chapter 65 and 68, MCA.

The department is proposing to transfer ARM 42.14.110 to a new subchapter 2 that references the Collection, Reporting, and Payment Requirements for the Seller.

 

6.  The department proposes to repeal the following rule:

 

42.14.111  SUMMARY REPORT REQUIRED  which can be found on page 42-1412 of the Administrative Rules of Montana.

 

AUTH:  15-65-102, MCA

IMP:  15-65-121, MCA

 

REASONABLE NECESSITY:  The department is proposing to repeal ARM 42.14.111 because it deals with the requirements between two agencies rather than the general public and the direction provided in this rule is better served in a memorandum of understanding with the Department of Commerce.

 

7.  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: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail canderson@mt.gov and must be received no later than November 5, 2010.

 

8.  Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

9.  An electronic copy of this Notice of Public Hearing is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes."  The department strives to make the electronic copy of this Notice of Public Hearing conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

10.  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 notices regarding particular subject matter or matters.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the person in 7 above or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

11.  The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The primary bill sponsor to the legislation, chapter 544, L. 2003, Senator Bob DePratu was contacted on September 10, 2010, by U.S. mail.

 

 

 

/s/  Cleo Anderson                            /s/  Dan R. Bucks

CLEO ANDERSON                          DAN R. BUCKS

Rule Reviewer                                   Director of Revenue

 

Certified to Secretary of State September 13, 2010