The 67th Montana legislature enacted House Bill 53, which changes the reporting of federal adjustments made to a partnership’s income and its corresponding Montana source income.

A partnership now must file a federal adjustment report with the Montana Department of Revenue within 90 days of receiving a final federal determination. The federal adjustment report must include a copy of the federal determination and a detailed statement explaining what, if any, changes will be made to the partnership’s Montana source income.

If, as a result of a federal adjustment, the Montana tax attributes of the partnership or its owners must be changed, a partnership must either amend its Montana tax return and Montana Schedules K-1 for the reviewed year or elect to indicate any Montana-specific changes on the federal adjustment report and pay any resulting Montana underpayment of tax.

The payment is due with the next partnership return that must be filed following the filing of the federal adjustment report. Should a partnership elect not to pay the underpayment of tax, it is still responsible for the payment of additional composite and withholding taxes when applicable, and for pushing out the adjustment to its direct partners. Amended returns must be filed and the taxes of direct partners must be paid within 180 days of the final federal determination (see instructions for Form PTE).

In case of an adjustment in favor of the taxpayer, claims for refunds must be made on or before the later of the last day of the regular revision period, or within one year from the date the federal adjustment report was due to the department.

HB 53 also extended the period of time for any taxpayer to file an amended Montana return due to a federal adjustment from 90 to 180 days.