Senate Bill 253, signed into law by Gov. Greg Gianforte on May 22, 2023, revises the 1% Contractor's Gross Receipts tax on public construction contracts. The bill changes are effective immediately and apply to public contracts exceeding $80,000 in value.
Effectively, at any time, a contract cost, value, or price increase to greater than $80,000, the contractor or subcontractor is required to pay or have withheld a licensing fee equal to 1% of the gross contract price. The 1% licensing fee for payments made prior to the increase can be caught up on the next subsequent payments or allocations.
All contractors and subcontractors must pay a 1% tax on all public construction contracts over $80,000.
Contractors and subcontractors shall pay or have withheld from their earnings a 1% tax on all construction work for a public agency with a total contract value greater than $80,000.
Usually, the awarding public entity will register the contract within 10 days after the contract is awarded, and file withholding returns and remit payment within 30 days after the date of a payment to a contractor.
If the project requires a prime contractor to hire a subcontractor, the prime contractor shall register within 10 days of the sub-contract and file withholding returns and request allocations within 30 days after the date of a payment to a subcontractor. The prime contractor should allocate funds from payments made to the prime contractor’s account instead of remitting payments for the subcontractor.
If a federal government contract has been awarded, the federal government will not register, withhold, remit, or submit withholding returns. In this case, the prime contractor is responsible for registering and remitting withholding when required.
Contractors can use their previously remitted 1% gross receipts tax in two different ways. They can request a refund for business personal property taxes and certain registration fees for vehicles used in their contracting business by submitting Contractor's Gross Receipts Application for Refund of Personal Property Taxes and Motor Vehicle Fees Paid (Form CGR-3) The tax may not be used to offset a pass-through entity's tax liability resulting from a composite tax election, pass-through entity tax election, or pass-through withholding. Contractors may also claim a credit on their Montana Individual Income or Corporate Income Tax return.
The 1% gross receipts taxes previously remitted are only available for credit and refund for the year they are paid, plus 5 succeeding tax years.
Montana charges a 1% tax on the gross receipts from all public contracts over $80,000. See the Public Contractor's 1% Gross Receipts Tax Guide for more information.
To request access for a third party for filing, please see our TAP Tutorials and Guides
| Registration | 10 days after the date the contract was awarded. |
|---|---|
| Withholding Returns and Payments | 30 days after the date of the payment to the contractor. |
You can find more information in the Public Contractor's 1% Gross Receipts Tax Guide.
This webinar was originally hosted for Contractor's Gross Receipts filers and other interested parties on September 15, 2022. The video can be viewed at Contractor's Gross Receipts Webinar - September 2022
PLEASE NOTE: Video content has changed due to Senate Bill 253, signed into law by Gov. Greg Gianforte on May 22, 2023, revising Contractor Gross Receipts 1% Tax. The bill changes were effective immediately and apply to public contracts exceeding $80,000 in value.
The Contractor's 1% Gross Receipts Tax (CGR) is subject to uniform penalties and interest. (15-1-216, MCA per 15-50-308, MCA).
A late filed Contractor's Gross Receipts Gross Receipts Withholding Return (Form CGR-2) is subject to a penalty of 10% of the 1% license fee and only applies to CGR-2 allocations. (15-50-206, MCA)
CGR revenue goes to the state general fund.
You can find more information in the Montana Business Tax Guide for the Public Contractor's 1% Gross Receipts Tax.