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42.4.603    RURAL PHYSICIAN'S CREDIT - REPAYMENT

(1) If a physician ceases to practice in a rural area within four years following a tax year for which a credit was allowed, the physician is required to repay the credit.

(2) A physician required to repay the credit:

(a) shall file a Montana individual income tax return for the tax year during which the physician ceased to practice in the rural area; and

(b) shall increase total tax by the sum of the credits required to be repaid.

(3) Interest and penalty accrue as provided in 15-1-216 , MCA, from the due date of the individual income tax return.

(4) The following are examples of the credit recapture:

(a) Example 1 - A physician commences a qualifying rural practice in 1996 and continues the qualifying practice until May 2003, claiming a credit of up to $5,000 against the physician's individual income tax liability for tax years 1996, 1997, 1998, and 1999. Because the physician ceased the qualifying practice within four years following the 1999 tax year, the physician must repay the credit allowed against the physician's tax year 1999 liability. The result does not change if the physician continued the qualifying practice until December 31, 2003. The physician must file a 2003 Montana individual income tax return and must report the credit recapture as additional tax on the return. In order to avoid recapture, the physician must continue the qualifying practice through December 31, 2003.

(b) Example 2 - A physician commences a qualifying rural practice in May 1998 and continues the qualifying practice until October 2004, having claimed a credit of up to $5,000 against the physician's individual income tax liability for tax years 1999, 2000, and 2001. The physician was not entitled to claim a credit for tax year 1998, the year the qualifying practice commenced, because the practice was not maintained for nine months of the tax year. The physician must repay the credits allowed for tax years 2000 and 2001 (the physician ceased to practice within four years following the tax year in which the credits were allowed) . The physician must file an individual income tax return for tax year 2004 and must increase total tax by the sum of the credits allowed in 2000 and 2001.

(c) Example 3 - A physician commences a qualifying rural practice in February 2000 and continues the qualifying practice until February 2, 2004, having claimed a credit of up to $5,000 against the physician's individual income tax liability for tax years 2000, 2001, and 2002. While the physician is eligible for the credit for tax year 2003, if the credit is claimed it must be repaid, along with the credits allowed for tax years 2000, 2001, and 2002 when the physician files the tax year 2004 individual income tax return.

History: Sec. 15-30-191, MCA; IMP, Sec. 15-30-190, MCA; NEW, 2004 MAR p. 1965, Eff. 8/20/04.

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