Montana Tax Relief: Payment Plans & Distraint Options

Montana Tax Relief Overview

Owing Montana state taxes is different from owing the IRS. The Montana Department of Revenue (MT DOR) has its own rules, deadlines, and collection tools. Federal tax relief options like Offers in Compromise do not apply to Montana state tax debt.

Two Key Facts About Montana

Montana does not have an Offer in Compromise (OIC) program
Unlike the IRS, MT DOR does not allow taxpayers to settle tax debt for less than the full amount through an OIC program. Your resolution options are generally limited to payment plans, penalty relief, interest waiver, paying in full, or filing an appeal if you dispute the assessment.

Montana does not have a general sales tax
Montana is one of only 5 U.S. states without a general statewide sales tax. However, Montana does impose selective sales taxes on lodging (4%) and rental vehicles (4%).

Depending on your situation, you may need one or more of the following:

• A payment plan to pay over time (typically 6–12 months; extended plans may be available)
• An appeal if you received an assessment you disagree with (5-step process)
• Penalty relief or interest waiver if penalties make the balance impossible to pay
• Warrant for Distraint resolution if a lien has been filed
• Levy or garnishment help if collection action has started
• Filing help if you have unfiled Montana tax returns

If you run a business in Montana and owe withholding tax, the stakes are higher. Withholding taxes are trust fund taxes treated very seriously by MT DOR, and responsible persons can be held personally liable under MCA 15-30-2540.

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Montana Tax Relief Options at a Glance

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Offer in Compromise: Not available in Montana.
MT DOR does not have an OIC program. Payment plans, penalty relief, and interest waiver are the primary alternatives.

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What Montana Tax Notice Did You Receive?

Select your notice type for a quick explanation of what it means and your options.

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What the Montana Department of Revenue Can Do to Collect

If you owe Montana state taxes and do not address the balance, MT DOR has a range of collection tools. Not every case reaches the most serious actions, but the longer a balance goes unpaid, the more options the state may use.

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Montana Tax Payment Plans

If you cannot pay your Montana state tax balance in full, a payment plan (installment agreement) may be an option. Montana's payment plans are available to taxpayers who are unable to pay within 30 days and can be set up online through the TransAction Portal (TAP).

Good News: Montana Payment Plans Are Flexible
Unlike many states, Montana allows you to set up a payment plan online without extensive financial documentation for the basic standard plan. A down payment is helpful but not necessary.

Key Conditions for Montana Payment Plans

Source: MCA 15-1-206; MT DOR Collections Services Bureau

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Which Montana Tax Relief Option Fits Your Situation?

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Does Montana Have an Offer in Compromise Program?

No. Montana does not have an Offer in Compromise (OIC) program. Unlike the IRS and many other states, the Montana Department of Revenue does not have a formal program to settle tax debt for less than the full amount owed. This is one of the most important differences between Montana state tax relief and federal tax relief.

If you owe Montana state taxes, your resolution options are generally limited to:

• Paying in full — The simplest option if you have the funds
• Payment plan — MT DOR publishes 6–12 month payment-plan options and may allow extended plans. Longer terms and minimum monthly payments should be confirmed directly with the Department of Revenue.
• Penalty abatement — If you have reasonable cause under MCA 15-1-206, or an automatic waiver if you pay in full within 30 days of the first notice
• Interest waiver — Up to $500 per tax period when penalty is waived, plus a $100 bonus at plan completion
• Appeal — If you dispute the assessment through the 5-step process (deadlines apply)
• Uncollectible debt determination — After reasonable collection efforts, MT DOR may determine the debt uncollectible and transfer it to the Department of Administration

Do not assume federal OIC strategies apply to Montana state tax debt. Montana law does not provide for settlement of tax liabilities for less than the full amount through an OIC-type program.

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Montana Penalty Relief

Penalty relief is different from a payment plan. A payment plan lets you pay over time. Penalty relief asks Montana to reduce or remove penalties when allowed under state rules.

Montana civil penalties may be waived upon a determination of "reasonable cause" under MCA 15-1-206 and ARM 42.3.115.

Automatic Penalty Waiver (30-Day Rule)

Montana offers an automatic late-payment penalty waiver if you meet both of these conditions:

• Pay all tax and interest due
• Do so within 30 days of the first notice from the department of the amount due

This is one of Montana's most taxpayer-friendly provisions. If you can pay the tax and interest relatively quickly, you can avoid the late-payment penalty entirely by acting within this 30-day window.

Reasonable Cause Penalty Waiver

Qualifying reasonable cause circumstances include:

• Death, serious illness, or incapacity
• Natural disaster or casualty loss
• Inability to obtain necessary records
• Reliance on written advice from MT DOR personnel (MCA 15-1-222(4))
• Other circumstances demonstrating the taxpayer exercised ordinary business care and prudence

Important Requirements

• The waiver is at MT DOR's discretion
• You must submit a written request outlining your reasonable cause basis
• When a penalty is waived, interest may also be waived up to $500 per tax period

Source: MCA 15-1-206; ARM 42.3.115

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Montana Interest Waiver

Whenever MT DOR waives a penalty for reasonable cause, it may also waive interest not to exceed $500 per tax period.

Payment Plan Completion Bonus

An additional $100 interest waiver may be granted at the conclusion of a payment plan if the taxpayer complied with all provisions of the agreement (MCA 15-1-206). This is a strong incentive to stay current on your plan.

How to Request an Interest Waiver

• Interest waiver must be requested in conjunction with a penalty waiver request
• Submit a written request to MT DOR Collections Services Bureau explaining your reasonable cause
• Include all supporting documentation (medical records, disaster reports, etc.)
• The $500 limit applies per tax period, not per taxpayer

Montana Uniform Penalties (for reference)

Source: MCA 15-1-216

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Montana Tax Appeals: The 5-Step Process

Montana has a comprehensive 5-step administrative and judicial appeal process for disputing tax assessments. Each step has strict deadlines. Missing a deadline can severely limit your ability to challenge the assessment.

Step 1: Informal Review (45 days) ➔ Step 2: ODR (45 days) ➔ Step 3: MTAB (30 days) ➔ Step 4: District Court (60 days) ➔ Step 5: Supreme Court

Step 1: Informal Review

• Deadline: 45 days from the date on the notice of assessment
• File with: MT DOR Business and Income Taxes Division — email: DORObjections@mt.gov, or mail to PO Box 7149, Helena, MT 59604-7149
• Form: Form APLS101F (optional)
• Process: The Division reviews and issues a notice of determination within 45 days. Interest and penalties continue to accrue during the appeal.

Step 2: Office of Dispute Resolution (ODR)

• Deadline: 45 days from the date on the notice of determination from the Informal Review
• File with: ODR (contact details pending confirmation — see internal QA note; do not publish this line until Labelle confirms current mailing address/email)
• Form: Form APLS102F (optional)
• Process: An Administrative Law Judge (ALJ) conducts an initial conference by Zoom, may hold hearings or mediate disputes. Hearings are recorded and transcribed. The decision is the final agency decision.

Step 3: Montana Tax Appeal Board (MTAB)

• Deadline: 30 days from receipt of the final department decision from ODR
• File with: MTAB, P.O. Box 200138, Helena, MT 59620-0138 (physical: 560 N. Park Ave., Suite 201)
• How to file: Submit appeal with a copy of the final Determination and ODR Decision/Order; appeal can be in the form of a letter
• Process: Independent three-member board. Holds de novo hearings in most cases. Corporations must be represented by an attorney.
• Website: mtab.mt.gov

Step 4: Montana District Court

• Deadline: 60 days from the date of the MTAB decision
• Note: Judicial review is not an evidentiary hearing; it is based on findings of fact and legal conclusions from the MTAB record.

Step 5: Montana Supreme Court

The final appellate review. Website: courts.mt.gov/courts/supreme

Appeal Deadlines Are Strict
Each step in Montana's 5-step appeal process has a hard deadline: 45 days (Informal Review), 45 days (ODR), 30 days (MTAB), 60 days (District Court). Missing any deadline can end your appeal rights. Interest and penalties continue to accrue during the entire appeal process until the tax is paid in full.

Property Tax Appeals

Property tax appeals follow a different first step: the County Tax Appeal Board (CTAB). You have 30 days from the notice of classification/appraisal or informal review decision. CTAB sessions run July 1 through December 31. Appeals from CTAB to MTAB must be filed within 30 days of the CTAB decision.

Source: MT DOR Tax Appeal Reference Guide (Nov 2024); MTAB Appeal Process; MCA 15-1-211, MCA 15-2-301, MCA 15-2-302

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Montana Warrant for Distraint (Tax Lien)

In Montana, a tax lien is called a "Warrant for Distraint." It is filed in district court and has the same force and effect as a civil judgment. It is one of the most powerful collection tools available to MT DOR.

How a Warrant for Distraint Works

• Filing: Filed with the Clerk of District Court and entered in the judgment docket
• Effect: Acts as a lien against all real and personal property of the delinquent taxpayer in the county where filed — treated as a properly docketed judgment lien
• Property affected: Real estate, personal property, funds in bank accounts (demand, savings, time deposits), wages and compensation, stock, equity interests, and investment accounts
• Duration: 10 years from creation or effective date, whichever is later (MCA 15-1-701(3))
• Priority: Priority date is the date the tax was due as indicated on the warrant (MCA 15-1-701(4))
• Responsible parties: Warrant may be filed against businesses, officers, and other responsible parties

When MT DOR Can File a Warrant

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Warrant Release

• Full release: Upon payment in full of unpaid tax plus penalty and interest (MCA 15-1-708(1))
• Partial release: MT DOR may release or partially release if it facilitates collection or if the lien is unenforceable (MCA 15-1-708(2))
• Immediate release right: Taxpayer has the right to immediate release when the tax is paid, or the lien is the result of a department error (MCA 15-1-222(13))
• Uncollectible debt: After reasonable collection efforts, MT DOR may determine debt uncollectible and transfer it to the Department of Administration (MCA 15-1-708(3))

Source: MT DOR Collections Services Bureau; MCA 15-1-701 through 15-1-708

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Montana Bank Levy

A bank levy allows Montana to freeze and take funds from your bank account to satisfy a tax debt. Under MCA 15-1-706, MT DOR prepares a notice of levy specifying the amount and delivers it to your bank. The bank freezes the account, and after a hold period, funds are transferred to the state.

Key Facts About Montana Bank Levies

• Full amount: MT DOR may take the full amount in the account, up to the tax liability
• No advance notice: Once a levy is served on your financial institution, funds may be frozen without advance warning
• Exemptions: Certain property is exempt from levy under Title 25, Chapter 13, Part 6, MCA. Taxpayer must claim exemptions promptly with documentation
• Return deadline: Sheriff or agent must return the warrant with funds within 90 days of the warrant date (pending independent confirmation — see QA note)
• Review rights: Taxpayer has the right to review of tax liability prior to execution on the warrant (MCA 15-1-705)
• Post-execution hearing: In emergency levy cases, the taxpayer must be notified and may request a post-execution hearing within 30 days (MCA 15-1-707)

If your account has been levied, you need to act quickly. A levy may be lifted or modified in certain situations, but the timeline is tight. No guarantee of release.

Source: MT DOR Collections Services Bureau; MCA 15-1-706; MCA 15-1-707

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Montana Wage Garnishment for Tax Debt

Wage garnishment means Montana can take money directly from your paycheck to pay your state tax debt. Under MCA 15-1-706 and MCA 25-13-614, MT DOR may garnish wages, salaries, and other compensation.

How Much Can Montana Take?

The amount withheld is the lesser of:

• 25% of disposable income per pay period, or
• The amount of disposable earnings exceeding 30 times the federal minimum hourly wage ($7.25/hr)

Wage Garnishment Duration: 120 Days Maximum

A Montana wage levy lasts 120 days or until the judgment is satisfied, whichever occurs first (MCA 15-1-706(3)). This is a significant protection for taxpayers — unlike some states where garnishment continues indefinitely, Montana's wage levy has a defined endpoint.

Exempt Amounts (Protected Wages)

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Disposable income = earnings remaining after mandatory deductions (federal/state taxes, FICA, Medicare).

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Wage Garnishment vs. Bank Levy

Source: MT DOR Collections Services Bureau; MCA 15-1-706; MCA 25-13-614

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Montana Unfiled Tax Returns

If you have not filed Montana tax returns for one or more years, that can block most resolution options. MT DOR may estimate your tax and issue assessments based on those estimates — sometimes higher than what you actually owe.

Filing accurate returns can sometimes reduce an incorrect balance. But do not rush or file bad returns. It's better to get the returns prepared correctly with the right income, deductions, and Montana credits.

Why Filing Matters

• Unfiled returns block payment plan eligibility
• MT DOR may issue substitute returns with a higher tax than you actually owe
• Penalty relief and interest waiver generally require all returns to be filed
• The statute of limitations on collections may not start until a return is filed

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Montana Business Tax and Withholding Tax Debt

Business tax debt involving withholding tax is treated very seriously by MT DOR. Withholding taxes are trust fund taxes — money you withheld from employee wages that belongs to the state.

Responsible Person Warning: Personal Liability Under MCA 15-30-2540

Corporate officers, partners, LLC members/managers, and other responsible individuals can be held personally liable for unpaid withholding taxes.

Who can be held liable?

• Corporate officers who had responsibility to file and pay taxes, and directed or exercised responsibility over filing/payment
• Partnership partners (jointly and severally liable with the partnership)
• LLC members (jointly and severally liable for LLCs treated as a partnership or corporation; single-member LLC members are jointly liable)
• LLC managers of manager-managed LLCs (jointly and severally liable)

Key points:

• MT DOR must first apply enforcement against the corporation; if the corporation fails to remedy, then proceed against responsible officers (MCA 15-30-2540(3)(b))
• Individual liability survives corporate bankruptcy discharge (MCA 15-30-2540(4))
• Liability may be released if withheld amounts are deposited in a separate Montana bank account designated as a special fund in trust for the state (MCA 15-30-2540(6))

Mitigation Strategy: Separate Trust Account

Under MCA 15-30-2540(6), responsible person liability can be avoided if withheld amounts are deposited in a separate Montana bank account designated as a special fund in trust for the state, payable to the Department of Revenue. This is a powerful proactive strategy for businesses.

Montana Withholding Tax Debt: Unpaid withholding tax can trigger personal liability for responsible persons under MCA 15-30-2540 and aggressive collection by MT DOR. Individual liability survives corporate bankruptcy.

Montana Business Income Tax Debt: Unpaid corporate or pass-through entity taxes can lead to a Warrant for Distraint filing, bank levies, and wage garnishment. Business officers may face personal liability in certain circumstances.

Source: MCA 15-30-2540

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Does Montana Have a Sales Tax?

No. Montana does not have a general statewide sales tax. It is one of only 5 U.S. states without one, alongside Oregon, New Hampshire, Delaware, and Alaska.

However, Montana does impose selective sales taxes on specific industries:

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Exemptions from lodging tax include: health care facilities, facilities owned by non-profits for youth camping, facilities with an average daily charge of less than 60% of the state reimbursement rate, facilities rented for 30+ days, and U.S. government sales. Rental vehicle exemptions include: farm vehicles/machinery, off-highway vehicles rented 30+ days, vehicles rented with driver, and vehicles designed to carry 16+ passengers.

Source: MCA 15-68-102; MCA 15-65-111

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Montana Taxpayer Bill of Rights

Montana law provides significant taxpayer protections under MCA 15-1-222. Key rights include:

• Right to record any interview, meeting, or conference with auditors (15-1-222(1))
• Right to hire a representative of choice (not required to be an attorney or CPA) (15-1-222(2))
• Right to similar treatment as all similarly situated taxpayers (15-1-222(3))
• Right to obtain tax advice from the department; right to penalty/interest waiver when relying on written advice (15-1-222(4))
• Right to pay delinquent taxes on an installment basis if reasonable criteria are met (15-1-222(5))
• Right to a complete written description of the basis for any additional tax (15-1-222(6))
• Right to review by management for additional taxes assessed (15-1-222(7))
• Right to a full explanation of review and appeal procedures (15-1-222(8))
• Right to MTAB or court review after exhausting administrative remedies (15-1-222(9))
• Right to expect the department to adhere to the same appeal deadlines as taxpayers (15-1-222(10))
• Right to a full explanation of collection authority and required notices (15-1-222(11))
• Right to have certain property exempt from levy and seizure (15-1-222(12))
• Right to immediate release of lien when tax is paid or lien is the result of department error (15-1-222(13))
• Right to assistance from the department in complying with tax laws (15-1-222(14))
• Right to a guarantee that employees are not rewarded based on assessments or collections (15-1-222(15))

Source: MCA 15-1-222

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Montana Tax Relief Tools & Resources

Use these official Montana resources to access your account, make payments, and find tax forms. Then request a review if the numbers show the balance is growing or collection is already active.

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Montana Government Resources

These are the official Montana sources for tax information, payment plans, appeals, and rules. Always check the official source for the most current information.

• Montana Department of Revenue (MT DOR) ↗ — Official tax agency portal
• TransAction Portal (TAP) ↗ — Online account portal for taxpayers
• MT DOR Collections Services Bureau ↗ — Official collection guidance
• Montana Tax Appeal Board (MTAB) ↗ — Independent tax appeals body
• Montana Supreme Court ↗ — Final appellate review
• Montana Code Annotated ↗ — Full tax statutes (Title 15)
• MT DOR Tax Forms ↗

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Not Sure What to Do With Your Montana Tax Situation?

Select the card that matches your situation to jump to the relevant section.

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Frequently Asked Questions About Montana Tax Relief

Does Montana have an offer-in-compromise program? 

No. Montana does not have an Offer in Compromise (OIC) program. Unlike the IRS and many other states, the Montana Department of Revenue does not have a formal program to settle tax debt for less than the full amount owed. Your primary resolution options are payment plans (MT DOR publishes 6–12 month options and may allow extended plans; confirm terms directly with DOR), penalty abatement for reasonable cause, interest waiver (up to $500 per tax period), and appeals if you dispute the assessment.

Does Montana have a sales tax? 

No, Montana does not have a general statewide sales tax. It is one of only 5 U.S. states without one (along with Oregon, New Hampshire, Delaware, and Alaska). However, Montana does impose selective sales taxes: a 4% lodging/accommodations tax, a 4% lodging facility use tax, and a 4% rental vehicle tax.

How long are Montana payment plans? 

Montana offers payment plans through the Department of Revenue. MT DOR publishes 6–12 month payment-plan options and may allow extended plans. Longer terms and minimum monthly payment requirements should be confirmed directly with the Department of Revenue. Payment plans can be set up online through the TransAction Portal (TAP) at tap.dor.mt.gov.

What is a Montana Warrant for Distraint? 

A Warrant for Distraint is Montana's term for a tax lien. It is filed in district court and has the same force and effect as a civil judgment. It attaches to all real and personal property of the delinquent taxpayer in the county where filed, including funds in bank accounts, wages, and investment accounts. The warrant remains enforceable for 10 years from creation or effective date, whichever is later. It may be filed immediately without notice if collection is jeopardized or the tax is a trust fund tax.

Can I get a payment plan for Montana state taxes? 

Yes. Montana offers payment plans for taxpayers unable to pay within 30 days. MT DOR publishes 6–12 month payment-plan options and may allow extended plans. Longer terms and minimum monthly payment requirements should be confirmed directly with the Department of Revenue. Plans can be set up online via the TransAction Portal (TAP). A down payment is helpful but not necessary. Interest continues to accrue during the plan. All tax returns must be filed and current taxes paid timely while the plan is in effect.

Can Montana waive penalties? 

Yes. Montana may waive penalties for reasonable cause under MCA 15-1-206. Additionally, Montana offers an automatic late-payment penalty waiver if you pay all tax and interest due in full within 30 days of the first notice. The burden of proof for reasonable cause is on the taxpayer. Whenever a penalty is waived, interest may also be waived up to $500 per tax period.

Can Montana waive interest? 

Yes. Whenever Montana waives a penalty for reasonable cause, it may also waive interest not to exceed $500 per tax period. An additional $100 interest waiver may be granted at the conclusion of a payment plan if the taxpayer complied with all provisions. This is in addition to any penalty waiver granted.

Can I appeal a Montana tax assessment? 

Yes. Montana has a 5-step appeal process: (1) Informal Review (45 days), (2) Office of Dispute Resolution/ODR (45 days), (3) Montana Tax Appeal Board/MTAB (30 days), (4) Montana District Court (60 days), and (5) Montana Supreme Court. Interest and penalties continue to accrue during the entire appeal process. Missing any deadline can end your appeal rights.

Can Montana garnish wages for state taxes? 

Yes. Montana may garnish wages under MCA 15-1-706. A wage levy lasts up to 120 days or until the judgment is satisfied, whichever occurs first. The amount withheld is the lesser of 25% of disposable income per pay period or the amount of disposable earnings exceeding 30 times the federal minimum wage. Exempt amounts are protected: $217.50 weekly, $435.00 bi-weekly, $471.25 semi-monthly, $942.50 monthly, or $2,827.50 quarterly.

Can Montana levy a bank account? 

Yes. Montana can freeze and take funds from your bank account through a levy under MCA 15-1-706. MT DOR may take the full amount in the account up to the tax liability. Certain property may be exempt from levy under Title 25, Chapter 13, Part 6, MCA. Taxpayers must claim exemptions promptly with documentation. Acting quickly may help in certain cases.

What if I have unfiled Montana tax returns? 

Unfiled returns can block most resolution options. Montana may estimate your tax and issue assessments that are higher than what you actually owe. Filing accurate returns can sometimes reduce an incorrect balance. Do not rush or file bad returns — get them prepared correctly with the right income, deductions, and Montana credits.

What if my Montana tax debt is from payroll withholding? 

Withholding tax debt is treated very seriously by Montana because it is a trust fund tax — money withheld from employee wages that belongs to the state. Under MCA 15-30-2540, corporate officers, partners, LLC members/managers, and other responsible persons can be held personally liable for unpaid withholding taxes. Individual liability survives corporate bankruptcy discharge. MT DOR must first enforce against the corporation before pursuing responsible individuals.

Does a Montana payment plan stop collection? 

No. A payment plan does not prevent MT DOR from filing a Warrant for Distraint, and state and federal refunds may still be offset and applied to your balance. If you default on the plan, collection action may resume immediately, including bank levies and wage garnishment. An extended payment plan may also require a Warrant for Distraint filing as a condition.

What is Montana's automatic penalty waiver? 

Montana offers an automatic late-payment penalty waiver if you pay all tax and interest due in full within 30 days of the notice of amount due. This is one of Montana's most taxpayer-friendly provisions. If you can pay the tax and interest relatively quickly, you can avoid the late-payment penalty entirely by acting within this 30-day window.

Does Montana tax hotels and vacation rentals? 

Yes. Although Montana has no general sales tax, it does impose a 4% lodging/accommodations sales tax and a separate 4% lodging facility use tax on hotels, motels, campgrounds, resorts, bed and breakfasts, vacation rentals (including AirBnBs), and similar facilities. These taxes were increased from 3% to 4% effective January 1, 2020 via SB 338 (2019).