- March 16
- September 15
- Return Forms:
- Payment Vouchers:
- Online Filing Options:
Partnerships, S corporations, and disregarded entities must withhold income tax for owners if the owner’s share of income is at least $1,000 and the owner is a:
- Nonresident individual, estate, or trust,
- Tax-exempt entity administered outside Montana,
- Foreign C corporation, or
- Second-tier pass-through entity.
Pass-Through Withholding Tax Rates
The pass-through entity must withhold a percentage of the owner’s Montana source income. The rate of tax withheld depends on the type of owner:
- Nonresident Individuals, Estates, Trusts, and all Second-Tier Pass-Through Entities
- Foreign C Corporations and Tax-Exempt Entities Administered Outside Montana
The pass-through entity need not withhold taxes for:
- An owner with a valid Montana Pass-Through Owner Tax Agreement (Form PT-AGR) (15-30-3313, MCA)
- An owner included on a composite tax return.
Unique Pass-Through Withholding Situations
Distributing Withholding Taxes in a Tiered Structure
A second-tier pass-through entity receiving a MT Schedule K-1 showing some amount of pass-through mineral royalty withholding may either use these taxes as a credit against the taxes it owes on Form PTE or pass these withholding taxes to its owners.
The pass-through entity must first allocate the amount of withholding taxes attributable to each owner based on their distributive share of Montana source income.
If the owner is a participant in a composite return the entire amount of withholding taxes is applied against the composite tax and the excess may be refunded.
If the pass-through entity must withhold a tax on the owner’s distributive share of Montana source income and the owner does not have a Form PT-AGR on file, the second-tier pass-through entity may use the first-tier withholding against the pass-through withholding it must calculate on its return.
Mineral royalty withholding tax is not creditable if the distributive share of Montana source income attributable to an owner is zero.
If the withholding tax calculated at the second-tier level is less than the first-tier pass-through withholding tax claimed by the second-tier pass-through entity, the second-tier pass-through may claim the refund of the excess.
Publicly Traded Partnerships
A publicly traded partnership (PTP) as defined in § 7704(b) of the IRC is exempt from the withholding requirement if it agrees to file an annual information return that includes the name, address, and taxpayer identification number for each owner that has an interest in the partnership that results in Montana source income.
If the partnership has a direct or indirect majority interest in a lower-tier pass-through entity, the lower-tier pass-through entity may apply to the department in writing for a waiver of withholding tax on the partnerships distributive share of Montana source income or to approve the Form PT-AGR of a second-tier pass-through entity in which the partnership holds interest.
A Form PT-AGR can be approved only if the second-tier pass-through-entity would have qualified as a domestic second-tier pass-through enitity except for the interest held by the partnership.