(1) A four-month extension of time to file an individual income tax return is automatically allowed a taxpayer if the following conditions are met on or before the due date of the return:

(a) the taxpayer has applied for a corresponding extension of time to file their federal income tax return; and

(b) the taxpayer has paid either through withholding, estimated tax payments, or a combination of withholding and estimated payments, either of the following:

(i) 90% of their current year's income tax liability; or

(ii) 100% of their prior year's income tax liability.

(2) A taxpayer's tax liability and percent level of payment are determined as provided in ARM Title 42, chapter 17, subchapter 3.

(3) If a taxpayer does not meet either of the required payment thresholds as required by 15-30-144, MCA, late pay and late file penalties will be applied as provided in 15-1-216, MCA.

(4) Underpayment interest, as provided in 15-30-241, MCA, accrues to the original due date of the return. Interest from and after the original due date of the return accrues as provided in 15-1-216, MCA, whether or not the time for filing the return has been extended.

(5) The underpayment is calculated as provided in ARM Title 42, chapter 17, subchapter 3.

(6) An additional two month extension is automatically allowed if the taxpayer has applied for a corresponding extension of time to file their federal income tax return and made the payments required for the initial extension described in (1).

(7) Taxpayers who are either first time filers, or have a zero or negative taxable income for the previous year, are considered to have paid 100% of the previous year's tax for purposes of meeting the threshold requirements in 15-30-144, MCA.