No sales tax in Montana: resort and public-contract taxes

Montana has no general sales tax, so there’s no sales tax line on your invoice and no Montana sales tax exemption certificate. Two narrower taxes can touch a trade business instead: local resort taxes on a short list of sales in designated resort communities and areas, and a 1% gross receipts tax that contractors pay on public construction contracts over $80,000.

Resort taxes: local, and only on listed sales

Montana’s resort tax is a local sales tax. Before one can be collected, the Montana Department of Commerce must designate the community (incorporated) or area (unincorporated) as a resort community or area, and the local electorate must approve the tax. It applies to the retail value of goods and services sold within the resort community or area, except for resale, by:

• hotels, motels and other lodging or camping facilities;
• restaurants, fast food stores and other food service establishments;
• taverns, bars, night clubs, lounges and other establishments serving alcohol by the drink;
• destination ski resorts and other destination recreational facilities.

Establishments that sell luxuries in the resort area collect the tax on those luxuries too. Montana law defines luxuries as gift items, luxury items and other items normally sold to the public or to transient visitors or tourists, and leaves out appliances, hardware supplies and tools, among other things.

The election petition or resolution sets the rate, up to 3%, and may add up to 1% more whose revenue must fund infrastructure. A resort community above the statute’s population limit may levy that extra 1% only if it was established before January 1, 2025. The Montana Department of Revenue doesn’t administer resort taxes and warns that its page may be inconsistent with local law, so confirm the rules with the resort community.

Contractor’s gross receipts tax: 1% on public contracts

Contractors and subcontractors pay, or have withheld from their earnings, 1% on construction work for a public agency with a total contract value over $80,000. Under MCA 15-50-205, the 1% is computed on the entire contract, for each separate contract, and a contractor working on a federal research facility is excepted.

• Who registers the contract: usually the awarding public entity, within 10 days of the award; it then files withholding returns and pays within 30 days after each payment to the contractor. A prime contractor that hires a subcontractor registers within 10 days of the subcontract, and files withholding returns and requests allocations within 30 days after each payment to the subcontractor.
• Federal contracts: the federal government doesn’t register, withhold or remit, so the prime contractor registers and remits the withholding when required.
• A contract that grows: if a public contract’s cost, value or price rises above $80,000 at any time, you must pay, or have withheld, 1% of the gross contract price. The 1% on payments made before the increase can be caught up on the next payments or allocations.
• Getting it back: with the 1% you’ve remitted, you can get a refund of the business personal property taxes and certain registration fees you paid on vehicles used in your contracting business (Form CGR-3, through the TransAction Portal), or claim a credit on your Montana individual or corporate income tax return. It’s available for the year paid plus 5 succeeding tax years, and it can’t offset a pass-through entity’s tax from a composite, pass-through entity tax or pass-through withholding election.

Your invoice: no Montana sales tax

With no general sales tax in Montana, there’s none to charge your customer or show on your invoice. The resort tax reaches only the sales listed above, and only where a resort community or area levies it.