42.17.111    MONTANA INCOME TAX WITHHOLDING; FORM MW-4 FILING REQUIREMENTS

(1) Every employer transacting business in Montana is required to withhold Montana state income tax from wages paid to an employee for services rendered within Montana, unless the compensation is specifically exempted under Montana law.

(2) Compensation which may be excludable from adjusted gross income under a United States tax treaty remains subject to Montana withholding as the determination whether a nonresident alien qualifies for tax treaty exclusion cannot be made until the individual's Montana income tax return is filed.

(3) Temporary employment or employment of short duration within Montana does not relieve the employer of the obligation to withhold employee wages.

(4) The Amtrak Reauthorization and Improvement Act of 1990 exempts from state income tax and withholding the compensation of certain railroad, trucking, and air and water carrier employees unless they are Montana residents. The exemption from withholding applies only to nonresident interstate carrier employees and the employer applies the exemption based on the residency status claimed by the employee. No Form MW-4 is required for this exemption.

(5) Wages paid to an enrolled member of a Native American tribe are subject to withholding, except as provided in ARM 42.15.220.

(a) When the employee is an enrolled tribal member of the governing tribe of the reservation on which the enrolled tribal member works and resides:

(i) the wages earned by the employee are derived from reservation sources; and

(ii) the employee submits a Form MW-4 to the employer attesting that the employee resides on his or her reservation, together with a certificate of enrollment.

(b) When wages are derived from both reservation sources and nonreservation sources, only wages derived from reservation sources are exempt from withholding, provided the employee meets all the criteria in (5)(a).

(c) When an employee does not reside on his or her reservation for an entire pay period, only wages earned while the employee was residing on the reservation are exempt from taxation, provided the employee meets all the criteria in (5)(a).

(6) Wages paid to a resident of North Dakota for personal services rendered within Montana are not subject to withholding provided the employee has filed a Form MW-4, in accordance with ARM 42.17.134.

(7) Wages paid to the nonmilitary spouse of a military serviceperson for personal services rendered in Montana which meet the criteria in ARM 42.15.112, are not subject to withholding provided the employee has completed a Form MW-4.

(8) A withholding exemption claimed on Form MW-4 must be renewed annually. When an employee no longer needs or qualifies for an exemption, the employee must notify the employer by providing a new Form MW-4 without the previously claimed exemption. If an employee fails or refuses to provide the updated Form MW-4, the employer must withhold on the basis of zero withholding allowances, in compliance with ARM 42.17.131.

 

History: 15-30-2620, MCA; IMP, 15-30-2502, MCA; Eff. 12/31/72; AMD, Eff. 10/5/74; AMD, 1982 MAR p. 296, Eff. 2/12/82; AMD, 1991 MAR p. 1146, Eff. 7/12/91; AMD, 1993 MAR p. 1674, Eff. 7/30/93; AMD, 1993 MAR p. 2426, Eff. 10/15/93; AMD, 1993 MAR p. 3045, Eff. 12/24/93; AMD, 2004 MAR p. 2754, Eff. 11/5/04; AMD, 2010 MAR p. 177, Eff. 1/15/10; AMD, 2012 MAR p. 2640, Eff. 12/21/12; AMD, 2015 MAR p. 27, Eff. 1/16/15; AMD, 2019 MAR p. 2384, Eff. 12/28/19.