SENATE BILL NO. 106
INTRODUCED BY EKEGREN P
BY REQUEST OF THE DEPARTMENT OF REVENUE
AN ACT CLARIFYING THE TAXATION OF LOTTERY WINNINGS; AND AMENDING SECTIONS 15-30-101 AND 15-30-105, MCA.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-30-101, MCA, is amended to read:
"15-30-101. Definitions. For the purpose of this chapter, unless otherwise required by the context, the following definitions apply:
(1) "Base year structure" means the following elements of the income tax structure:
(a) the tax brackets established in 15-30-103, but unadjusted by 15-30-103(2), in effect on June 30 of the taxable year;
(b) the exemptions contained in 15-30-112, but unadjusted by 15-30-112(6), in effect on June 30 of the taxable year;
(c) the maximum standard deduction provided in 15-30-122, but unadjusted by 15-30-122(2), in effect on June 30 of the taxable year.
(2) "Consumer price index" means the consumer price index, United States city average, for all items, using the 1967 base of 100 as published by the bureau of labor statistics of the U.S. department of labor.
(3) "Department" means the department of revenue.
(4) "Dividend" means any distribution made by a corporation out of its earnings or profits to its shareholders or members, whether in cash or in other property or in stock of the corporation, other than stock dividends.
(5) "Fiduciary" means a guardian, trustee, executor, administrator, receiver, conservator, or any person, whether individual or corporate, acting in any fiduciary capacity for any person, trust, or estate.
(6) "Foreign government" means any jurisdiction other than the one embraced within the United States, its territories, and its possessions.
(7) "Gross income" means the taxpayer's gross income for federal income tax purposes as defined in section 61 of the Internal Revenue Code of 1954 (26 U.S.C. 61) or as that section may be labeled or amended, excluding unemployment compensation included in federal gross income under the provisions of section 85 of the Internal Revenue Code of 1954 (26 U.S.C. 85) as amended.
(8) "Inflation factor" means a number determined for each taxable year by dividing the consumer price index for June of the taxable year by the consumer price index for June 1980.
(9) "Information agents" includes all individuals, corporations, associations, and partnerships, acting in whatever capacity, including lessees or mortgagors of real or personal property, fiduciaries, brokers, real estate brokers, employers, and all officers and employees of the state or of any municipal corporation or political subdivision of the state, having the control, receipt, custody, disposal, or payment of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income with respect to which any person or fiduciary is taxable under this chapter.
(10) "Knowingly" is as defined in 45-2-101.
(11) "Montana lottery winnings" means income paid either in lump sum or in annual payments to:
(i) a resident taxpayer on a lottery ticket; or
(ii) a nonresident taxpayer on a lottery ticket purchased in Montana.
(11)(12) "Net income" means the adjusted gross income of a taxpayer less the deductions allowed by this chapter.
(12)(13) "Paid", for the purposes of the deductions and credits under this chapter, means paid or accrued or paid or
incurred, and the terms "paid or accrued" and "paid or incurred" must be construed according to the method of accounting
upon the basis of which the taxable income is computed under this chapter.
(13)(14) "Pension and annuity income" means:
(a) systematic payments of a definitely determinable amount from a qualified pension plan, as that term is used in section 401 of the Internal Revenue Code (26 U.S.C. 401), or systematic payments received as the result of contributions made to a qualified pension plan that are paid to the recipient or recipient's beneficiary upon the cessation of employment;
(b) payments received as the result of past service and cessation of employment in the uniformed services of the United States;
(c) lump-sum distributions from pension or profit-sharing plans to the extent that the distributions are included in federal adjusted gross income;
(d) distributions from individual retirement, deferred compensation, and self-employed retirement plans recognized under sections 401 through 408 of the Internal Revenue Code (26 U.S.C. 401 through 408) to the extent that the distributions are not considered to be premature distributions for federal income tax purposes; or
(e) amounts received from fully matured, privately purchased annuity contracts after cessation of regular employment.
(14)(15) "Purposely" is as defined in 45-2-101.
(15)(16) "Received", for the purpose of computation of taxable income under this chapter, means received or accrued,
and the term "received or accrued" must be construed according to the method of accounting upon the basis of which the
taxable income is computed under this chapter.
(16)(17) "Resident" applies only to natural persons and includes, for the purpose of determining liability to the tax
imposed by this chapter with reference to the income of any taxable year, any person domiciled in the state of Montana and
any other person who maintains a permanent place of abode within the state even though temporarily absent from the state
and who has not established a residence elsewhere.
(17)(18) "Stock dividends" means new stock issued, for surplus or profits capitalized, to shareholders in proportion to
their previous holdings.
(18)(19) "Taxable income" means the adjusted gross income of a taxpayer less the deductions and exemptions provided
for in this chapter.
(19)(20) "Taxable year" or "tax year" means the taxpayer's taxable year for federal income tax purposes.
(20)(21) "Taxpayer" includes any person or fiduciary, resident or nonresident, subject to a tax imposed by this chapter
and does not include corporations."
Section 2. Section 15-30-105, MCA, is amended to read:
"15-30-105. Tax on nonresident -- alternative tax based on gross sales. (1) A like tax on income earned in Montana
is imposed upon every each person not a resident of this state, which. The tax shall must be levied, collected, and paid
annually at the rates specified in 15-30-103 with respect to his the nonresident's entire net income. After calculating the tax
imposed, the tax due and payable must be determined based upon the ratio of income earned in Montana to total income.
Interest income from installment sales of real or tangible commercial or business property located in Montana is considered
income earned in Montana. Income derived from Montana lottery winnings is considered income earned in Montana.
(2) Pursuant to the provisions of Article III, section 2, of the Multistate Tax Compact, every each nonresident taxpayer
required to file a return and whose only activity in Montana consists of making sales and who does not own or rent real
estate or tangible personal property within Montana and whose annual gross volume of sales made in Montana during the
taxable year does not exceed $100,000 may elect to pay an income tax of 1/2 of 1% of the dollar volume of gross sales
made in Montana during the taxable year. Such The tax shall be is in lieu of the tax imposed under 15-30-103. The gross
volume of sales made in Montana during the taxable tax year shall must be determined according to the provisions of
Article IV, sections 16 and 17, of the Multistate Tax Compact."
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