Key takeaways
- Montana Form PTE follows the federal Form 1120-S date: March 15, 2027 for a calendar-year 2026 S corporation, with an automatic extension to September 15, 2027.
- The extension covers the return only. Withholding, composite tax and elective tax are due by the original date.
- A nonresident owner with $1,000 or more of income needs one of four treatments: signed Form PT-AGR, composite, PTET election, or withholding.
- The PTET election is made on a timely Form PTE and cannot be revoked, so decide before you file, not after.
What Montana requires from an S corporation
The Montana Department of Revenue names Form PTE, the Annual Montana Pass-Through Entity Tax Return, as the required annual return for an S corporation. It works as an information return for the owners and as the vehicle for composite tax, the elective pass-through entity tax (PTET) and pass-through withholding. The Department's S corporation page also still refers to the original due date of the Form CLT-4S, the old name for the S corporation return.
The Department's S corporation page lists no entity-level income tax or minimum tax for a plain S corporation. I did not find one, but the page is thin, so read the current Form PTE instructions before telling a client that nothing is owed at the entity level. What is owed usually comes from one of three places: nonresident withholding, composite tax or the PTET election.
Due date and extension for tax year 2026
The Montana return is due on the same day as federal Form 1120-S. For a calendar-year S corporation the rule is the 15th day of the third month, so the tax year 2026 return is due March 15, 2027, which is a Monday. A fiscal-year S corporation files by the 15th day of the third month after year end, and Montana gives the example of a March 31 year end with a June 15 due date. When a date lands on a weekend or holiday, the Department moves it to the next business day. For tax year 2025 the federal date was March 16, 2026 because March 15 was a Sunday, and that does not carry over to 2026.
Montana grants every S corporation an automatic six-month extension to file, so a calendar-year return can be filed by September 15, 2027. Federal is separate: Form 7004 gives an automatic six months for the federal return, and the IRS says to file it by the regular due date.
The extension is for the return only. Pass-through entity tax, pass-through withholding and composite tax are due on the original due date, March 15, 2027. Late payments carry penalties and interest. Tell the client in the engagement letter that an extension moves the paperwork and not the money.
Four ways to handle a nonresident owner
Start with the owner list. For each shareholder, record the December 31, 2026 state of residence, the percentage and the share of Montana-source income. Montana requires withholding when an owner's share of income is at least $1,000 and the owner is a nonresident individual, estate or trust, a tax-exempt entity administered outside Montana, a foreign C corporation or a second-tier pass-through entity. Resident individuals are outside the withholding rule and report the income on their own Montana returns.
Then pick the treatment. First, the owner signs Form PT-AGR, the Pass-Through Entity Owner Tax Agreement, and agrees to file in Montana and pay tax personally; no withholding is required. Second, the entity files a composite return and pays for the owner. Third, the entity elects PTET and pays 5.9 percent at the entity level. Fourth, with none of those in place, the entity withholds: 5.9 percent for nonresident individuals, estates, trusts and second-tier entities, 6.75 percent for foreign C corporations and tax-exempt entities administered outside Montana.
Worked example. A Montana S corporation reports $150,000 of Montana-source income. A Washington-resident shareholder owns 40 percent, so the share is $60,000. With no PT-AGR, composite or election, withhold 5.9 percent of that share and pay it by March 15, 2027. If the share were $900, the $1,000 threshold is not met and nothing is withheld, although the owner may still have a filing obligation.
Choose Form PT-AGR when the owner has other Montana income, wants the credits and deductions on a personal return, or already files in Montana. It is due with the entity's return including extensions, it is submitted through the TransAction Portal (TAP) or by mail and it is never attached to either return. A valid agreement stays in effect, so the owner does not sign every year. Both sides keep a copy, and prior agreements for at least four years after revocation.
Composite return details
A composite return lets the entity pay for eligible nonresident owners so they file no Montana individual return. The owner must have no other Montana source income, except Montana income from another pass-through that also files composite for that owner, and must give the entity a written power of attorney. The entity keeps the power of attorney and does not send it with Form PTE. Composite is reported on Form PTE, Schedule IV.
Two disqualifiers matter. A partner receiving guaranteed payments for services sourced to Montana cannot join, and credits cannot offset composite tax. A client with a Montana credit to use fits PT-AGR better.
A return filed after the due date, including the six-month extension, may not make a composite election. Estimated payments are required when the entity expects to owe more than $500 in composite tax. The late filing penalty is $10 per owner for each month or part of a month, up to five months, capped at $2,500.
The PTET election
PTET is optional and made each year by the entity on its timely filed Form PTE. The rate is 5.9 percent of an affected owner's distributive share of Montana source income. The Department states the election is irrevocable and cannot be made after the extended due date, so for a calendar-year 2026 return the last day is September 15, 2027.
Affected owners are individuals, estates, trusts and pass-throughs owned by them. Income allocable to C corporation and tax-exempt owners is not subject to PTET, and those owners fall back to withholding. Owners included in a PTET election need no withholding.
Estimated PTET payments are due on the 15th day of the 4th, 6th and 9th months and the 15th day of the first month after year end, with April 15 as the first installment for a calendar-year filer. Whether PTET saves federal tax depends on the owners' federal deduction limits, which Montana's guidance does not cover, so model the federal side before recommending it.
What to request from the client
Send this in November, not March. The request: a shareholder list with the December 31, 2026 address, ownership percentage and any change in ownership during the year; a Montana payroll and property breakdown if the company operates in more than one state; the prior-year Form PTE and any signed Form PT-AGR or composite power of attorney; the federal Form 2553 acceptance letter on a first filing; and estimated tax payments made to Montana with dates and confirmation numbers.
For each nonresident owner add a decision line: PT-AGR, composite or PTET. Suggested wording: "Are you a Montana resident for all of 2026? If not, do you have any other Montana income, such as rental income, wages or a second business? If yes, please send us the details so we can tell you whether the entity can pay your Montana tax for you." Keep the written answer in the file.
If an owner says they will sign later, record a date and follow up before March 15, since an agreement received after the due date including extension is rejected. Collecting signed agreements and powers of attorney as uploaded files, with a Will send later status on the owner line, is a use for Usual that keeps the follow-up dates on the request instead of in someone's inbox.