Update: Below is an article on the Internet sales tax rules for this state prior to the Supreme Court's decision in South Dakota v. Wayfair Inc. on June 21, 2018. The Wayfair decision overturned the prior rule established in Quill Corporation v. North Dakota which prohibited states from requiring a business to collect sales tax unless the business had a physical presence in the state. Some states already had laws prior to the Wayfair decision (commonly referred to as Amazon Laws) that require larger Internet sellers without a physical presence in the state to collect and pay sales tax under certain circumstances. It is expected that states will now pass new laws requiring online retailers to collect sales tax for sales within their state. We will update this article as the laws change. For more information, see Internet Sales Tax: A 50-State Guide to State Laws.
Montana, along with Alaska, Delaware, New Hampshire, and Oregon, is one of five states with no state sales tax. Generally speaking, if you are selling goods or products over the Internet to customers located in Montana, sales tax for those customers should be a non-issue.
However, at the federal level, Congress has repeatedly considered legislation that would affect large Internet retailers and how online sales taxes are collected in all states. The most recent form of a proposed federal law is the Marketplace Fairness Act of 2015. As in previous versions, the 2015 Act would allow states to require sellers not physically located in their state to collect taxes on online and catalog sales made to people in their state. Sellers that make $1 million or less in annual sales and have no physical presence in the state would be exempt from this requirement. States would have to meet certain criteria to simplify their sales tax laws and make sales tax collection easier before they could require sellers to collect the tax.
Sales Tax Statements from the Montana DOR
The Montana Department of Revenue (DOR) has a well-written, informative webpage specifically covering sales tax. Among other things, the webpage gives a helpful explanation of the tax situation when a Montana resident buys from an out-of-state Internet seller. In short, with some unlikely exceptions, there is no sales tax involved for sales from out-of-state Internet retailers to Montana consumers.
For States That Do Have Sales Tax
The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a physical presence—assuming, of course, that the state involved has a sales tax. The physical presence rule is based on a 1992 United States Supreme Court decision, Quill Corp. v. North Dakota, that addressed the obligations of mail order businesses to collect sales tax on out-of-state sales; the decision has been extended to include online retailers. Generally speaking, a physical presence means:
As you might expect, the corollary to the physical-presence rule is that, if you do not have a physical presence in the state, you generally are not required to collect sales tax for an Internet-based sale to someone in that state.
Because Montana has no state sales tax, these rules are not relevant to sales you make to Montana customers.
If you find yourself wondering if anything has changed regarding Montana sales tax, you can always check the Montana Department of Revenue’s website. And, for information on the rules about collecting sales tax for Internet sales in any other state, see Nolo’s article, 50-State Guide to Internet Sales Tax Laws.
Updated: April 14, 2016
Updated: April 14, 2016