18.15.412    AGRICULTURAL USE FUEL TAX REFUND

(1) The use of gasoline or special fuel by a person who earns income while engaged in the business of farming or ranching, which qualifies as agricultural use, may apply for a refund of the applicable tax on the gallons of gasoline or special fuel used in carrying on a trade or business of farming, ranching, or other agricultural purposes. An applicant may claim a fuel tax refund according to the ratio of the applicant's gross earned agricultural or farm income to the total gross earned income, excluding unearned income.

(2) An application for an agricultural use fuel tax refund shall include the applicant's appropriate state or federal tax return (based on type of entity) with supporting federal forms, schedules, and statements for one of the three previous tax years.

(3) To determine an applicant's eligibility for fuel tax refund under 15-70-430, MCA, the ratio between the gross earned agricultural or farm income to the total gross earned income must be determined as follows:

(a) Gross earned agricultural or farm income is determined using a combination of the following federal Internal Revenue Service (IRS) or state of Montana tax information, including but not limited to:

(i) Schedule F – gross income less custom hire;

(ii) Form 4835 – gross farm rental income and active participation;

(iii) Form 1065(partnerships) – any third-party payments, gross receipts or sales and other income with corresponding statements showing agriculture;

(iv) Form 1120 (corporations) – total of third-party payments and gross receipts or sales and other income with corresponding statements;

(v) Form 1120s (corporations) – total of third-party payments and gross receipts or sales and other income with corresponding statements;

(vi) Federal farm schedule – gross income less custom hire and miscellaneous income;

(vii) 1099-MISC – crop insurance proceeds; or

(viii) Form 4797 – gross sales of agricultural products.

(b) Gross earned income is determined by using the applicant's gross earned agricultural or farm income plus a combination of the following federal IRS or state of Montana tax information, including but not limited to:

(i) Form 1040 –wages, salaries, tips;

(ii) MT Form 2 – wages, salaries, tips;

(iii) Schedule C – total gross receipts;

(iv) 1099-MISC – other income, fishing boat proceeds and nonemployee compensation;

(v) K-1 (1120S) – ordinary business income;

(vi) K-1 (Form 1065) – taxable income from passive activities and taxable income from other activities;

(vii) Schedule F – custom hire;

(viii) Federal farm schedule – custom hire; or

(ix) Form 1065 (partnerships) – any third-party payments, gross receipts or sales and other income not agriculture.

(4) All federal tax forms are available on the IRS web site at www.irs.gov. All state of Montana tax forms are available on the Montana Department of Revenue web site at www.revenue.mt.gov.

 

History: 15-70-104, MCA; IMP, 15-70-430, MCA; NEW, 2012 MAR p. 888, Eff. 4/27/12; TRANS & AMD from ARM 18.9.326, 2016 MAR p. 1849, Eff. 10/15/16.