(1) For purposes of determining the employee's withholding allowances, the amount claimed for Montana may be different than the amount claimed on the federal form W-4, Withholding Allowance Certificate, reported on the line stating "total number of allowances you are claiming", furnished by the employee to the employer for federal withholding tax purposes. The department may determine whether the amount claimed on the federal form W-4 should be adjusted. The department does not provide forms for this purpose. The department has determined that the federal child tax credit that allows extra allowances for federal withholding is not allowed for Montana purposes when determining the number of allowances for Montana withholding.

(2) Exempt status claimed for federal purposes does not exempt an employee's wages from withholding requirements for Montana purposes.

(3) If an employee fails or refuses to provide the number of allowances on federal form W-4 reported on the line stating "total number of allowances you are claiming", the employer shall withhold, for Montana purposes, on the basis of zero withholding allowances.

(4) Any change to the "total number of allowances you are claiming", on federal form W-4 for federal purposes, including federal re-determinations of allowances, automatically changes the number of allowances for Montana purposes unless the allowances have been set at a fixed number by the department under (5). If a re-determination allows extra allowances for the federal child tax credit for federal purposes, these extra allowances will not be allowed for state purposes.

(5) An employer is required to provide a copy of any federal form W-4 on which an employee has claimed more than ten withholding allowances to:

Department of Revenue

P.O. Box 5835

Helena, Montana 59604-5835

(a) Each such certificate is to be provided at the same time and in the same manner as such certificate is required to be provided to the IRS under 26 CFR 37.3402-1.

(b) If, upon review of any such certificates, the department determines that the certificate is defective, it may require in writing that the employer disregard the allowances claimed and advise the employer of a maximum number of withholding allowances permitted the employee for state purposes.

(c) The filing of a new certificate by an employee whose withholding allowances have been set at a fixed maximum number by the department shall be disregarded by the employer unless a number equal to or less than the set maximum is claimed or written notice by the department is given authorizing a different maximum.

(6) When adjusting claimed withholding allowances for an employee under (5), the department shall consider:

(a) exemptions provided under 15-30-2114, 15-30-2115, and 15-30-2116, MCA;

(b) marital status and number of employers;

(c) estimated wages and salaries;

(d) estimated allowable deductions under 15-30-2111, 15-30-2131, 15-30-2132, and 15-30-2133, MCA, to the extent that such deductions exceed the average itemized deductions taken into account in the withholding tables;

(e) business losses;

(f) annuity plan contributions; and

(g) residency.

(7) If an employee fails to provide the department with sufficient information to make the determination in (6), the department shall use its best estimate of the employee's eligible exemptions when determining the withholding allowances.