Montana Resort Tax Communities and Areas
Tax Rate - 2%, Year Enacted - 1996
Tax Rate - 3%, Year Enacted - 1998
Tax Rate - 3%, Year Enacted - 1991
Tax Rate - 3%, Year Enacted - 1986
Tax Rate - 3%, Year Enacted - 1993
Tax Rate - 3%, Year Enacted - 1992
Tax Rate - 3%, Year Enacted - 2006
Tax Rate - 3%, Year Enacted - 2011
* A community is an incorporated city or town with a population less than 5,500. A Resort Area is an unincorporated area with a population less than 2,500.*
Maximum Tax Rate
The maximum resort tax rate is 3% (7-6-1503, MCA), and at least 5% of the resort tax revenues must offset municipal property taxes (7-6-1507, MCA). Before collecting resort tax revenue, a community (incorporated) or area (unincorporated) must first be designated by the Department of Commerce as a resort community/area (7-6-1501, MCA). Then, a resolution outlining the tax must be approved by the local electorate (7-6-1504, MCA).
How to Designate a Town or Area
Under Montana State Law (7-6-1501, MCA), the Montana Department of Commerce is responsible for designating a town or unincorporated area as a resort community or resort area. The process for making this designation includes certifying the population of the community is less than 5,500 for an incorporated town and less than 2,500 for an unincorporated area based on population figures from the most recent federal census. Also, the Montana Department of Commerce must conclude that the major portion of the community or area’s economic well-being is derived from businesses catering to non-business travelers.
After a Community has been Designated
Once a community has been designated a resort community or area, a ballot initiative is required to implement the tax. The local electorate must decide on the rate, the duration of the tax, the effective date, and how the revenue is to be allocated. Section 7-6-1503, MCA explains, (a) The resort tax is a tax on the retail value of all goods and services sold, except for goods and services sold for resale, within the resort community or area by the following establishments: (i) hotels, motels, and other lodging or camping facilities; (ii) restaurants, fast food stores, and other food service establishments; (iii) taverns, bars, night clubs, lounges, and other public establishments that serve beer, wine, liquor, or other alcoholic beverages by the drink; and (iv) destination ski resorts and other destination recreational facilities. (b) Establishments that sell luxuries shall collect a tax on such luxuries. Luxuries are defined as any gift or luxury item normally sold to the public or tourists with the exception of: unprepared food, medicine or medical supplies, appliances, hardware supplies and tools, or any necessities of life (7-6-1501, MCA). Existing resort tax resolutions include sporting good rentals, books, magazines, souvenirs, and even antiques as luxuries. For more information please visit the Montana Department of Transportation - Resort and Local Option Taxes web page.