(1) Section 16-1-406, MCA, requires each barrel of beer sold in Montana to be taxed.  This tax is based upon the total number of barrels of beer produced by a brewer in a year. For purposes of this tax, "year" means the department's fiscal year which begins on July 1 of each calendar year and ends on June 30 of the following calendar year. "Annual" or "annually" are synonymous with the department's "year."

For purposes of this tax, a tax year begins on July 1, and a "quarter" means a tax reporting period beginning July 1, October 1, January 1, and April 1 of each tax year.

(2) The brewer production increments and graduated per barrel tax rates provided in 16-1-406, MCA, correspond to a brewer's reported annual production regardless of whether the beer is produced nationally or internationally.

(a) For the purposes of production reporting and calculating taxes owed, a brewer who has produced 10,000 barrels of beer or less in the preceding year will begin the next year at the $1.30 per barrel tax rate. The quarter after the brewer exceeds a production increment, the per barrel tax rate will increase to the next production increment amount. For example, if the 5,001st barrel is produced during the first quarter, the tax rate will be $1.30 for all of the first quarter. The per barrel tax rate will increase to $2.30 beginning with the second quarter and will continue at that rate for the remainder of the year or until the quarter after the next production increment is exceeded.

(b) For the purposes of production reporting and calculating taxes owed, a brewer who has produced 10,001 barrels of beer or more in the preceding year will begin the next year at the $4.30 per barrel tax rate. 

(c) For the purposes of production reporting and calculating taxes owed, a new brewer will begin the year at the $1.30 per barrel tax rate. The quarter after the new brewer exceeds a production increment, the per barrel tax rate will increase to the next production increment amount. If a new brewer produces more than 10,000 barrels in the first quarter of the year, all its production will be taxed at the $4.30 per barrel tax rate for the year.

(3) A brewer must notify both the department and its wholesalers, in writing, by the end of the quarter when a production increment is exceeded, resulting in the brewer moving to the next production increment.