(1) The following forms are to be completed and filed in accordance with instructions provided by the department:

(a) Form RW-1, Mineral Royalty Withholding Payment Coupon, must be filed quarterly unless the department establishes that the entity is exempt from the withholding requirements of 15-30-261, MCA. A remittor may request to file a form RW-1 on an accelerated basis. The remittor must receive approval from the department before remitting the withholding tax on a more frequent basis than quarterly;

(b) A remittor who has no withholding to remit for a remittance period shall on or before the due date, submit a payment coupon showing that a zero amount is being remitted;

(c) Montana Annual Mineral Royalty Withholding Tax Reconciliation (form RW-3), must be filed on or before February 28 of each year. Form RW-3 must be accompanied by copies of each royalty owner's Withholding Statements on Federal form 1099-MISC;

(d) Form 1099-MISC, Miscellaneous Income, shall be furnished by the remittor to each person who is entitled to a credit for taxes withheld each calendar year before January 31 of each year; and

(e) Each remittor that is exempt from withholding is still required to file with the department a copy of form 1099-MISC for every recipient of royalties. For ease of reporting the department will accept the comparable federal form, or submission of the form in electronic format as defined by the IRS. These reports are due on or before February 28 of each year.

(2) Electronic filing requirements for state purposes are the same as those mandated for federal purposes.

(3) If a remittor does not withhold on a royalty interest owner who in the previous year met the exemption requirement in 15-30-264, MCA, but exceeded that requirement in the current year, the department will not penalize the remittor for the lack of withholding in that current year.