Montana Coal Severance Tax — Guidance

# preamble

Coal Severance Tax

Overview

Coal mined in Montana is taxed with the Coal Severance Tax to be reported on the Coal Severance Tax return.

Businesses producing more than 50,000 tons of coal per year pay the tax on all production over 20,000 tons.

Businesses producing less than 50,000 tons per year are exempt from the tax.

Tax Rates

Coal severance tax rates are based on the heat content (BTUs per pound) of the coal and the method of extraction.

Coal Severance Tax Rates by extraction type and BTU level

Coal Severance Tax Rates by extraction type and BTU level

Extraction Type

Under 7,000 BTU

7,000 BTU or Higher

Surface Mined Coal

10% of value

15% of value

Underground Mined Coal

3% of value

4% of value

Determining Coal Value

The severance tax applies to the contract sales price of the coal.

The contract sales price is the sales price of the coal extracted and prepared for shipment FOB Mine, minus the required production taxes.

Formula :

Contract Sales Price = Price FOB Mine - Production Taxes + Royalties

Production Taxes

Production taxes include:

State severance tax

Resource Indemnity Trust and Ground Water Assessment Tax

Local gross proceeds tax

Federal reclamation taxes

Federal Black Lung tax

Royalties

The contract sales price includes up to $0.15 per ton royalties paid to federal, state, and tribal governments and all royalties paid to other mineral rights owners.

Formula :

Royalties = ((Federal Tons + State Tons + Tribal Tons) x $0.15) + Other Royalties

Reporting and Payment Options

File and pay through our TransAction Portal (TAP)

Due Dates

The return is due 30 days after the end of each calendar quarter:

First Quarter: April 30

Second Quarter: July 30

Third Quarter: October 30

Fourth Quarter: January 30

# Penalties and Interest

The Coal Severance Tax is subject to uniform penalties and interest .

Revenue Distribution

We collect the coal severance tax and distribute the revenues according to 15-35-108, MCA .

Related Laws

15-35-102, MCA

15-35-108, MCA

ARM 42.25.1701