Interest and Penalties

Montana charges a penalty for filing after the due date.

• A $50 minimum, or
• 5% of the outstanding tax per month
• Up to a maximum of 25% of the tax due

Montana charges a penalty if a taxpayer fails to pay 100% of the tax liability by the original due date.

• 0.5% per month, up to 12% of the tax due, or
• 1.5% per month, up to 15% of the tax due for:
  
  • Estimated and Withholding Taxes
  • TDD Telephone Communications Service Fee
  • Retail Telecommunications Excise Tax
  • Lodging Facilities Sales and Use Taxes
  • Rental Vehicle Tax

Montana charges a penalty for purposely or knowingly (as defined in 45-2-101, MCA) failing to file a return or report by the due date or within 60 days of receiving a notice from the department.

• Pass-through Entities: $1,000
• All Others: 15% per month, up to 75%

Montana charges a $2,500 penalty for taxpayers who file a return:

• Without the information needed to determine tax
• Showing substantially incorrect tax
• Based on a frivolous tax position (26 USC 6702)
• Based on actions meant to impede tax collection

Montana charges a penalty if a taxpayer files a fraudulent return and:

• Tax is due: 75% of the tax due that is related to the fraudulent amount reported
• The taxpayer has no tax liability and filed a fraudulent claim for a credit: 75% of the credit claimed

Montana charges a penalty when a taxpayer understates their tax liability:

• Individuals, Estates and Trusts: May be subject to the penalty if their understatement is more than 10% of the amount of tax or $3,000.
• All Other Taxpayers: Subject to the penalty if their understatement is at least $10,000 and the understatement is at least 10% of the amount determined by the department.

The penalty is equal to 20% of the understatement.

An understatement equals the amount determined by the department minus the amount originally reported by the taxpayer.

Montana charges interest on outstanding taxes and underpaid estimated taxes.

Interest is computed daily, beginning on the original due date of the tax return.

• The 2025 annual interest rate on individual income tax, estate and trust, and pass-through entity taxes and the underpayment of estimated taxes is 8%, computed daily at 0.021918%
• The 2025 interest rate on all other taxes is 11%, computed daily at 0.030055%

To figure out your interest rate, use this formula:

In case you owe tax from a prior year or years, please refer to the following table of Montana's historical interest rates:

Automatic Waivers

If you have paid the entire amount of tax and interest assessed on your account within 30 days of receiving a notice, you will receive an automatic waiver of the late payment penalty.

Request a Waiver

You may request a waiver of penalty if you have reasonable cause. Reasonable cause means that you exercised ordinary business care but were still unable to meet a department deadline. You must submit your waiver in writing. You may either file the Request for Informal Review (Form APLS101F) or send us a written request.  Your waiver request must establish reasonable cause for the late payment.

Please send your request to the department by:

Mail

Email

DORObjections@mt.gov