The following definitions apply to terms used in this subchapter:

(1) "Days" means calendar days. In computing any period of time prescribed or allowed by these rules, the day of the event after which the designated period of time begins to run is not to be included, but the last day of the period so computed is to be included, unless it is a Saturday, Sunday, or a legal holiday, in which event the period runs until the end of the next business day, except as otherwise provided by statute.

(2) "Discretion" means the power to do or to refrain from doing a certain thing.

(3) "Economic hardship" is defined in ARM 42.2.304.

(4) "Good cause" and "sufficient cause" shall be considered synonymous with "reasonable cause", except where otherwise provided by statute or these rules.

(5) "Reasonable cause" is defined in ARM 42.2.304.

(1) At the discretion of the department, interest and/or penalties for taxes enforced by the department may be waived. These rules are guidelines for the uniform, fair, and equitable exercise of that discretion. It is the intent of the department to treat all similarly situated taxpayers in a similar manner. In evaluating each request for waiver of interest and/or penalty, the taxpayer's request will be considered on a case-by-case basis. Waiver of a penalty and/or interest will be considered the exception rather than the rule.

(2) The purpose of a penalty is to secure the proper and timely filing of a tax return or statement and the prompt payment of the tax by penalizing the delinquent taxpayer. The purpose of interest on a tax is, in part, to compensate the state of Montana for the loss of interest incurred by the state while the tax is delinquent.

(3) The rules in this subchapter are to be read, interpreted, and enforced as a whole in order to give full effect to each provision. A specific clause is not to be read or interpreted separately from the entire set of rules as a whole.

(4) Except as specifically provided by statute, the waiver of penalty and interest is a discretionary act by the department. These rules do not make the exercise of the department's discretion to waive penalty and interest mandatory or compulsory.

(5) These rules apply only to penalty and interest on a tax which are due because the taxpayer failed to file a tax return or statement or failed to pay any tax on time, including tax assessed as a result of a deficiency assessment.

(6) These rules do not apply to any penalty or interest on a tax, due to any other failure to comply with the tax laws or rules. Specifically, these rules do not apply to penalty and interest on a tax assessed because of fraud or other violation of the law.

(7) In addition, these rules do not apply to any of the following:

(a) to any criminal sanction associated with the laws enforced by the department;

(b) to any debt owed by the department by way of contract, tort, or other nontax related activity of the department; or

(c) to any claim or proceeding before bankruptcy court.

(8) Except as provided in 15-1-206, MCA, these rules do not apply to a tax that has no provision for waiver of a penalty and/or interest.

(1) Except as otherwise provided by statute or rule, interest may be waived by the department for the same reasons or causes as provided in these rules for the waiver of penalties.

(2) Except as provided in (3), 15-1-206, MCA, forbids the waiver of more than $500 in interest on the tax per applicable tax period. Therefore, under no circumstances will interest on a tax in excess of $500 per applicable taxing period be waived by the department.

(3) A taxpayer that has entered into a payment plan with the department to make installment payments of delinquent taxes, interest, and penalties may receive, upon written request, an additional waiver of $100 of interest for each tax period if the taxpayer has complied with all of the conditions of the payment plan.

(1) Except as specifically provided for by rule or statute, penalty and interest may be waived for the same reason or cause as provided for in these rules in legal actions prior to a final decision by the Department of Revenue, another agency, or a court or tribunal of competent jurisdiction. However, when a final decision has been rendered by the State Tax Appeal Board or a state court that found a tax, penalty, and interest to be due, the department may not waive the penalty and interest.

This rule has been transferred.

(1) Unless otherwise specified by statute or these rules, hardship means economic hardship as defined in ARM 42.2.304.

(2) Examples of economic hardship that may constitute reasonable cause for waiver of penalties and/or interest include:

(a) inability to pay the tax because of an act of God, natural disaster, or emergency as declared by the governor or president;

(b) inability to pay the tax because property and assets were seized by a foreign government;

(c) inability to pay because of seizure of property and assets by a court of law when the court action was not due to acts by the taxpayer;

(d) inability to pay because the taxpayer's assets are temporarily impounded or frozen because of a bank failure;

(e) catastrophic medical expenses.

(3) The examples given in (2) are illustrations only. Other circumstances may exist which constitute economic hardship sufficient to waive penalty and/or interest.

(4) Examples of economic hardship that do not constitute reasonable cause for waiver of penalty and/or interest include:

(a) inability to pay because of a divorce settlement or maintenance action;

(b) inability to pay because of fire or other loss which the taxpayer could have insured against; or

(c) lack of funds because of insufficient planning or foresight.

(5) The examples given in (4) are for illustration only. Other circumstances may exist that do not constitute economic hardship sufficient to waive penalty or interest.

(6) Economic hardship will be considered as reasonable cause for waiver of penalties and/or interest on the penalty only when the taxpayer has tendered full payment of the tax and interest on the tax.

(7) If the taxpayer pays the tax on a time-payment-plan, the decision on whether or not the penalty and/or interest on the penalty will be waived will not be made until after the taxpayer has completed full payment of the tax and accrued interest on the tax.

This rule has been transferred.

(1) The department does not have authority to waive any penalty or interest which accrues to the benefit of a county or counties.

(1) The final decision to waive penalty and/or interest will not be made until the taxpayer tenders full payment of the tax together with interest on the tax.

(1) Payment tendered to pay any tax due under Title 15, MCA, which is returned by the bank because of insufficient funds in the taxpayer's account or otherwise dishonored by an operating bank or payor shall be considered void. The taxpayer will be treated as if no payment had been received by the department. Collection of penalty in this case will be discretionary.

(1) Except as otherwise provided by statute or these rules, any claim, statement, remittance, or other document which is transmitted to the department through the United States mail shall be deemed filed and received by this state on the date shown by the post office cancellation mark upon the envelope or other appropriate wrapper containing it. Any claim, statement, remittance, or other document which is mailed but not received by the department or where received with a cancellation mark that is illegible, erroneous, or omitted shall be deemed filed and received on the date mailed if the sender establishes by competent evidence that the claim, statement, remittance, or other document was deposited in the United States mail on or before the date due for filing. In cases of such nonreceipt of a claim, statement, remittance, or other document, the sender must file with the state a duplicate within 30 calendar days after written notification is given to the sender by the department of its nonreceipt of such claim, statement, remittance, or other document.

(2) If any claim, statement, remittance, or other document is sent by United States registered mail, certified mail, or certificate of mailing, a record authenticated by the United States post office of such registration, certification, or certificate shall be considered competent evidence that the report, claim, tax return, statement, remittance, or other document was mailed to the addressee, and the date of registration, certification, or certificate shall be deemed the postmarked date.

(3) If the date for filing any claim, statement, remittance, or other document falls upon a Saturday, Sunday, or legal holiday, the filing shall be considered timely if done on the next business day. Such reports shall be considered filed or received on the date or as provided by law.

(4) Mail with no legible postmark but received within three days after the date for filing may be deemed received on the filing date.

This rule has been repealed.

(1) Except as otherwise provided by statute, the director or the director's designee may, in their discretion waive a penalty and interest when the taxpayer demonstrates extraordinary circumstances which justify the waiver of the penalty and interest for the just and efficient enforcement of the law.

This rule has been repealed.

(1) An automatic waiver of the late payment penalty if the taxpayer pays tax and interest due when notified by the department within 30 days of the date of the department's first Notice of Assessment (NOA). This automatic waiver provision only applies to the first NOA sent to the taxpayer for the tax period. For example, the department mails monthly statements to taxpayers notifying them of total tax, penalty, and interest due for all tax periods. The department will only apply an automatic waiver of the late payment penalty for the first NOA mailed to the taxpayer for that tax period.

(2) An automatic waiver of the late payment penalty is permitted if the taxpayer, subject to the conditions outlined in 15-30-2512, MCA, files an individual income tax return and pays at least 90 percent of the tax, when due, for the current year.

(3) Subject to (5), waiver of the late payment penalty is allowed if the taxpayer:

(a) files an amended tax return and pays the tax and interest due with the amended return;

(b) pays tax and interest due, as a result of a deficiency, within 30 days of the date of the first deficiency notice; or

(c) establishes reasonable cause pursuant to ARM 42.3.105.

(4) Unless otherwise defined in these rules, under no circumstance will interest be waived for tax due.

(5) In order to receive consideration for the waiver of the late payment penalty, the taxpayer will need to request the waiver on a form provided by the department or in writing.

(6) This rule only applies to late payment penalty and does not prohibit the taxpayer from seeking waiver or write-off of interest or additional penalties provided for in other department rules.

(1) The department may write-off any tax, penalty, or interest, when it is determined that it is no longer cost effective to attempt further collection. The reason for such write-off must be documented either in the system notes or the hard file.

(2) The decision of the department to write-off collection of accounts is based upon the following:

(a) the inability of the department to locate delinquent taxpayers in order to properly provide notification of assessments or their right to a hearing, within a reasonable time;

(b) the inability of the department to properly reduce the assessment to a judgment lien by filing a warrant for distraint within a reasonable time;

(c) the anticipated cost of collection significantly exceeds the projected amount of recovery in accordance with existing department collection policies;

(d) the time period for collection provided by law has expired; or

(e) the taxpayer is deceased and the department is unable to locate either an estate or pending probate, or any property or other assets vested in the taxpayers' name.

(3) Unpaid tax obligations, the collection of which is written off by the department are not forgiven and are still payable, but the department will not actively incur further expense to attempt collection on these obligations. However, the department may resume active collection of an account if:

(a) the time period for collection of the assessment or a filed warrant for distraint has not expired; and

(b) the department receives information which significantly changes the original basis for write-off as set forth in (2).

(4) The financial condition of a delinquent taxpayer is not an area of consideration for write-off of collection unless one or more of the elements set forth in (2) is present, or unless a properly completed closing agreement has been authorized.

(5) Upon the final decision of a United States bankruptcy court, barring further collection of a debt, the department shall write-off collection of any tax, penalty, or interest.