Mont. Admin. r. 42.2.304 - DEFINITIONS
The terms used by the department are, in great part, defined in Titles 15, 16, 39, and 72, MCA. In addition to these statutory definitions, the following definitions apply to ARM Title 42, unless context of a particular chapter or rule provides otherwise:
(1) "Amended return" is a return that amends
the original return defined in (36).
(2) "Ancestor" means a lineal ancestor and a
collateral ancestor if related by blood. Sections
72-11-102,
72-11-103, and
72-11-104, MCA, describe how
kinship and degrees of kinship are determined.
(3) "Annual accounting period" means the
accounting period used for federal income tax purposes.
(4) "Association" means an organization of
people having a common interest.
(5) "Business activity" refers to the
transactions and activity occurring in the regular course of a particular trade
or business of a taxpayer.
(6)
"Calendar year" means a 12-month period beginning January 1 and ending December
31.
(7) "Compensation" means wages,
salaries, commissions, and any other form of remuneration paid to employees for
personal services. Payments made to an independent contractor or any other
person not properly classifiable as an employee are excluded. Only amounts paid
directly to employees are included in the payroll factor. Amounts considered
paid directly include the value of board, rent, housing, lodging, and other
benefits or services furnished to employees by the taxpayer in return for
personal services; provided, that such amounts constitute income to the
recipient under the federal IRC. In the case of employees not subject to the
federal IRC, e.g., those employed in foreign countries, the determination of
whether such benefits or services would constitute income to the employees
shall be made as though such employees were subject to the federal
IRC.
(8) "Contiguous parcels of
land" means separate land acreage in the same ownership that are
adjacent.
(9) "Corporation" or "C
corporation" means a corporation, limited liability company, or other entity
treated as an association for federal income tax purposes. The term does not
include an S corporation or a disregarded entity. The term includes a regulated
investment company (RIC) as defined in IRC 851, a real estate investment trust
(REIT) as defined in IRC 856, and a corporation that has elected to be treated
as a real estate mortgage investment conduit (REMIC) as provided in IRC
860D.
(10) "Deficiency assessment"
means an amount greater than the amount disclosed on a return or report filed
with the department.
(11)
"Department" means the Department of Revenue as defined in
2-15-1301, MCA.
(12) "Dependent" means any individual listed
in 15-30-2115, MCA, as amended, over
one-half of whose support for the calendar year in which the taxable year of
the taxpayer begins was received from the taxpayer. In determining whether or
not an individual received for a given calendar year over one-half of his
support from the taxpayer, there shall be taken into account the amount of
support received from the taxpayer as compared to the entire amount of support
the individual received from all sources, including support which the
individual himself supplied.
(13)
"Descendant" means a lineal descendant and a collateral descendant related by
blood. Sections
72-11-102,
72-11-103, and
72-11-104, MCA, describe how
kinship and degrees of kinship are determined.
(14) "Discretion" means the power to do or to
refrain from doing a certain thing.
(15) "Disregarded entity" means a business
entity that is disregarded as an entity separate from its owner(s) for federal
income tax purposes. The term includes a limited liability company with one
owner, a qualified subchapter S subsidiary not treated as a separate
corporation, and a partnership, syndicate, group, pool, joint venture, or other
unincorporated organization electing under IRC 761 to be excluded from
application of partnership tax rules. A corporation is not a disregarded entity
by virtue of being included in a federal consolidated return.
(16) "Domiciled" means having a residence in
the state of Montana as stated in
1-1-215, MCA.
(17) "Earned income" means:
(a) wages, salaries, or professional fees,
and other amounts received as compensation for personal services actually
rendered; and
(b) the amount of the
taxpayer's net earnings from a trade or business which is wholly or partially
subject to the federal self-employment tax.
(18) "Economic hardship" means the financial
inability of the taxpayer to pay a tax when the tax is due as determined by the
department through a review of various financial documents and
inquiries.
(19) "Employee" means:
(a) Any individual who performs services for
another individual or organization having the right to control the employee as
to the services to be performed and as to the manner of performance. The power
to control, rather than the actual exercise of control, is the important
factor. Designation of an individual as, or determination by an appropriate
authority that an individual is an employee for purposes of industrial accident
insurance (workers' compensation), unemployment compensation, federal Social
Security, or federal withholding tax will establish that person as an
employee.
(b) All classes or grades
of employees are included within the relationship of employer and employee.
Thus, superintendents, managers, other supervisory personnel, and corporate
officers are employees.
(20) "Employer" means any person or
organization for whom an individual performs any service as an employee.
However, if the person or organization for whom an individual performs services
does not have control of the compensation payments, the term employer means the
person or organization having control of the payment of such compensation.
State income tax withheld, or that should have been withheld, and will be
collected from the person or organization having control of the payment of such
compensation.
(a) An employer may be an
individual, corporation, limited liability company, partnership, estate, trust,
association, joint venture, or other unincorporated group or entity. The term
employer also includes all religious, educational, charitable, and social
organizations or societies and all governmental agencies at the federal, state,
and local level, including school districts, towns, counties, and other
political subdivisions.
(21) "Final order" means an order entered by
the department or a court of review which either has not been appealed on a
timely basis or to which no appeal is available.
(22) "Fiscal year" means any 12-month period
ending on the last day of any month other than December.
(23) "Household" means a family living
together.
(24) "Immediate family
member" means any individual who is a lineal descendant of the taxpayer and
also includes their spouse. Stepchildren are considered lineal descendents if
that relationship was created before the child's eighteenth birthday.
(25) "Incorporated city or town" means any
municipality or county area in which the government body has complied with all
incorporation provisions outlined in Title 7, MCA.
(26) "Information return" means a
pass-through entity information return described in ARM
42.9.301,
42.9.401,
42.9.501,
42.9.510,
42.9.520,
42.9.530, and
42.9.540.
(27) "Internal Revenue Code" (IRC) means the
Internal Revenue Code of 1986, as amended.
(28) "Internal Revenue Service" (IRS), means
the federal bureau of the Department of the Treasury of the United States of
America with the duties set forth in 26 USCA 8022.
(29) "Limited liability company" has the same
meaning given it in the Montana Limited Liability Company Act, Title 35,
chapter 8, MCA, and includes limited liability companies formed under the laws
of Montana and the laws of other states and foreign countries.
(30) "Lookback period," for purposes of the
voluntary disclosure program, means the filing periods agreed upon for which
returns must be filed and all taxes and statutory interest must be paid under a
voluntary disclosure agreement.
(31) "Manufacturer" means any person who
produces a product for the purpose of resale.
(32) "Montana source income" is defined in
15-30-2101, MCA, and the statute
should be consulted to determine whether particular income is "Montana source
income" obligating a nonresident to file a Montana individual income tax
return, and a pass-through entity to file a Montana information return. In
general, all income from work performed in the state, real or personal property
located in the state, and business conducted in the state is Montana source
income. Gain realized from transfer of real or personal property located in the
state remains Montana source income notwithstanding that recognition of the
gain is deferred and regardless of the deferral mechanism.
(a) Gain realized from an installment sale of
Montana property retains its Montana source income character and must be
reported as the payments are received.
(b) Gain realized on the transfer of Montana
property in a like-kind exchange retains its Montana source income character
and must be reported when the gain is recognized in a subsequent taxable
transaction.
(33)
"Noncontiguous parcels of land" means land acreage in the same ownership that
meets one of the two following standards:
(a)
acreages that do not touch, but are each an integral part of the operation of a
bona fide agricultural operation; or
(b) acreages that would meet the definition
of contiguous contained in (8) were the acreages not separated by one or more
of the following features only:
(i) roads and
highways;
(ii) navigable rivers and
streams;
(iii) local taxing
authority boundaries;
(iv) railroad
lines; or
(v) federal or state land
that is leased from the federal or state government by a taxpayer whose land
ownership is contiguous to the federal or state land.
(34) "Neglect" means the failure
to exercise ordinary business care and prudence.
(35) "Nonresident" means any individual,
estate, trust, partnership, or other organization, excluding corporations, not
a resident of Montana.
(36) "Notice
of Assessment (NOA)" means the first notice provided to the taxpayer of an
amount owed to the department or of a violation. It may include, but is not
limited to, a notice of refund reduction, net operating loss adjustment, tax
debt, fine, or notice of a violation of the laws administered by the
department. It does not include notices pertaining to inheritance taxes, estate
taxes, or liquor licensing matters.
(37) "Original return" means the return
required to be filed on or before the due date.
(38) "Ownership interest" means the
involvement in the business operated by someone who owns some or all of the
assets of the business, shares in the financial risks, is entitled to any
portion of the profits, or any portion of the liabilities and losses of the
business. Ownership interest includes the right to control the location or
ownership of a business. Examples of ownership interests include the authority
to participate in such business decisions as sale of the business, relocation
of the business, change or creation of any financial arrangements for loan
repayment or funding sources, or any other responsibilities regarding the
management of the business. This definition applies to an ownership interest
for purposes of rules contained in the ARM Title 42, unless otherwise specified
by law.
(39) "Paid" and "received"
are construed in the context of an acceptable accounting method used to compute
taxable income.
(40) "Partnership"
means any partnership, including a general partnership, a limited partnership,
a limited liability partnership, a professional partnership, or any other
entity, treated as a partnership for federal income tax purposes. The term
includes an unincorporated entity that has elected to be treated as a real
estate mortgage investment conduit (REMIC) as provided in IRC 860D.
(41) "Pass-through entity" means a
partnership, an S corporation, and a disregarded entity.
(42) "Pass-through entity information return"
means the same as (26).
(43)
"Payee" means a person to whom or to whose order a bill, note, check, or money
order is made payable.
(44)
"Person" means an individual, estate, trust, receiver, firm, partnership,
corporation, cooperative association, limited liability company, joint venture,
syndicate, or other business entity, however formed.
(a) A person may not include:
(i) federal government entities or their
subdivisions; or
(ii) enrolled
Native American entities, including tribal offices or businesses owned by the
tribe and operating on the tribal reservation.
(45) "Qualified entity," for purposes of the
voluntary disclosure program, is a corporation, trust, limited liability
company, or partnership that meets the conditions in ARM
42.2.310.
(46) "Qualified individual," for purposes of
the voluntary disclosure program, is an individual who meets the conditions in
ARM 42.2.310, or is a beneficiary of a trust that meets the conditions in
42.2.310.
(47) "Qualified partner,"
for purposes of the voluntary disclosure program, is an individual or entity
who is treated as a partner of a qualified entity for federal income tax
purposes and who themselves meets the conditions of ARM 42.2.310.
(48) "Qualified shareholder," for purposes of
the voluntary disclosure program, is a shareholder in an S corporation that is
a qualified entity as defined in (44), and who themselves meets the conditions
of ARM 42.2.310.
(49) "Quarter"
means quarters that end:
(a) March
31;
(b) June 30;
(c) September 30; and
(d) December 31.
(50) "Reasonable cause" means the taxpayer
exercised ordinary business care and prudence and was nevertheless unable to
file the return, pay the tax within the prescribed time, or object to a
department action as provided for in ARM
42.2.510. Examples of what does or
does not constitute reasonable cause may be found in ARM
42.2.506.
(51) "Reasonable time" means within five
years or the normal statute of limitations, whichever is later.
(52) "Residence" means the same as
(16).
(53) "Resident" means natural
persons and includes, for the purpose of determining liability to the tax
imposed by the state, 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.
(54) "Retail
business" means individuals, firms, fiduciaries, partnerships, corporations,
trusts, organizations, or associations engaged in the business of selling
products to the consumer.
(55)
"Return information" includes a taxpayer's identity, the nature, source, or
amount of the taxpayer's income, payments, receipts, deductions, exemptions,
credits, assets, liabilities, net worth, tax liability, tax withheld,
deficiencies, over-assessments or tax payments, or any other data received by,
recorded by, prepared by, furnished to, or collected by the department with
respect to a return or with respect to the determination of the existence or
possible existence of liability or the amount of liability of any person under
Title 15, MCA, for any tax, penalty, interest, fine, forfeiture, or other
imposition of any offense. The term does not include data in a form that cannot
be associated with or otherwise identify, directly or indirectly, a particular
taxpayer.
(56) "S corporation"
means an incorporated entity for which a valid federal S corporation election
is in effect. "S corporation" and "subchapter S corporation" are synonymous.
The term "small business corporation" is also synonymous with "S corporation,"
except that certain S corporations are allowed to continue to file Montana
corporation license tax returns as provided in
15-30-3301, MCA.
(57) "Settlement" means a compromise,
agreement, or arrangement between parties which, in consideration of mutual
concessions, terminates a dispute.
(58) "Situs" means location.
(59) "Statement of Account (SOA)" means a
notice provided to the taxpayer summarizing amounts owed to the department .
(60) "Support" includes food,
shelter, clothing, medical and dental care, education, and the like. Generally,
the amount of an item of support will be the amount of expense incurred by the
one furnishing such item. However, if the item of support furnished is in the
form of property or lodging, it will be necessary to measure the amount of such
item in terms of its fair market value.
(61) "Taxable year," as stated in section
441(b) of the IRC, means:
(a) the taxpayer's
annual accounting period, if it is a calendar year or a fiscal year;
(b) the calendar year if the taxpayer does
not keep books or does not have an annual accounting period that qualifies as a
fiscal year; or
(c) the period for
which the return is made, if a return is made for a period of less than 12
months, the so-called "short period" defined under section 443 of the IRC.
Generally, a taxable year cannot cover more than 12 calendar months.
(62) "Taxpayer" means any person
(which may include any corporation, partnership, firm, association, or person
acting as a business entity) or fiduciary, resident or nonresident, subject but
not limited to, a tax, license fee, royalty, or permit imposed by the state of
Montana or a liability for payment of a debt collected by the
department.
(63) "Write-off of
collection" means removal of an assessment from active department enforcement
and monitoring procedures, and does not mean a tax assessment is
forgiven.
Notes
AUTH: 15-1-201, 15-30-2620, 15-31-501, 16-1-303, 16-10-104, 16-11-103, MCA; IMP: 1-1-215, 15-1-102, 15-1-206, 15-1-601, 15-30-2101, 15-30-2104, 15-30-2111, 15-30-2602, 15-30-3301, 15-30-3302, 15-30-3311, 15-30-3312, 15-30-3313, 15-30-3321, 15-31-101, 15-31-111, MCA
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