Montana Department of Revenue

Late Fees, Interest, and Penalties

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Taxpayers may be subject to penalties and interest for failing to file or pay taxes and fees by the due date.

The information on this page reflects penalty and interest rates in effect for tax years beginning January 1, 2017.

For rules that apply to a prior tax year, please refer to the form instructions for that year.

Late File Penalty

Montana charges a penalty for filing after the due date.
The penalty is:

  • A $50 minimum, or
  • 5% of the outstanding tax per month
  • Up to a maximum of 25% of the tax due
\text{Months Late (Rounded up)} \times 0.05 \times \text{Outstanding Balance} = \text{Penalty}

Late Payment Penalty

Montana charges a penalty if a taxpayer fails to pay 100% of the tax liability by the original due date.

Interest

Montana charges interest on outstanding taxes and underpaid estimated taxes.

Interest is compounded daily, beginning on the original due date:

  • 5% annual (0.01370% daily) interest on Individual Income Tax and Underpayment of 2018 Estimated Taxes
  • Other Taxes:
    • January 1, 2019 – June 30, 2019: 12% annual (0.03288% daily)
    • July 1, 2019 – December 31, 2019: 8.25% annual (0.0226% daily)
\text{Daily Interest Rate} \times \text{Outstanding Balance} \times \text{Days Late} = \text{Interest}

Example
For an individual with $300 outstanding balance and 133 days late:

0.000137 \times \$300 \times 133 = \$5.47

Failure to File Penalty

Montana charges a penalty for purposely or knowingly (as defined in 45-2-101, MCA) failing to file a return or report by the due date or within 60 days of receiving a notice from the department.

Pass-through Entities
$1,000
All Other Filers
15% per month, up to 75% of the tax due

Frivolous Return Penalty

Montana charges a $2,500 penalty for taxpayers who file a return:

  • Without the information needed to determine tax
  • Showing substantially incorrect tax
  • Based on a frivolous tax position (26 USC 6702)
  • Based on actions meant to impede tax collection

Fraudulent Return Penalty

Montana charges a penalty if a taxpayer files a fraudulent return and:

  • Tax is due: 75% of the tax due that is related to the fraudulent amount reported
  • The taxpayer has no tax liability and filed a fraudulent claim for a credit: 75% of the credit claimed

Understatement Penalty

Montana charges a penalty when a taxpayer understates their tax liability:

Individuals, Estates and Trusts
Individuals, estates and trusts may be subject to the penalty if their understatement is more than $3,000.
All Other Taxpayers
All other taxpayers are subject to the penalty if their understatement is at least $10,000 and the understatement is at least 10% of the amount determined by the department.

The penalty is equal to 20% of the understatement.

An understatement equals the amount determined by the department minus the amount originally reported by the taxpayer.

Requesting a Waiver

If you have paid the entire amount of tax and interest assessed on your account within 30 days of receiving a notice, you will receive an automatic waiver of the late payment penalty.

If you do not pay your tax and interest within 30 days of receiving a notice, you must submit a request for waiver in writing, or mark the Request for Waiver of Late Payment Penalty Only box on our Request for Informal Review (Form APSL101F). Your written request must establish reasonable cause for the late payment.

Please send your request to the department by:

Mail
Montana Department of Revenue
PO Box 7149
Helena, MT 59604-7149
Email
DORObjections@mt.gov