Council discusses turning delinquent resort-tax accounts over to Montana Department of Revenue; schedules public hearing on budget amendments

City staff told the Columbia Falls City Council on Jan. 7 that they plan to refer a small number of delinquent resort-tax accounts to the Montana Department of Revenue’s Collection Services Bureau and will notice a public hearing on proposed budget amendments.

Justin, the city attorney, told the council that under city code the city manager and his agents may use “any and all lawful means” to collect resort taxes and that Montana law allows the Department of Revenue to assist local governments with collection. “The department may assist in the collection of a delinquent account owing to an agency or subdivision of the state,” Justin said. He added the department can enter agreements to retain a percentage of collections to cover costs.

Why it matters: the council was briefed that roughly $85,792 in past-due resort-tax revenue was collected after letters went out; staff wants to clean up accounting for those receipts in the current fiscal year. The city also reported year-to-date resort-tax revenue through December of $994,000 compared with $910,000 through December 2023 — a difference staff described as $83,413.

Staff recommended the council publish a notice of public hearing to amend the fiscal-year budgets, including adjustments to the resort-tax fund and related funds. The council was asked to approve a notice of that hearing at its Jan. 21 meeting and to hold the hearing on Monday, Feb. 3. The staff presenter said that the Department of Administration’s Local Government Services had issued a memo recommending a public hearing even when state law does not strictly require one.

Justin described the practical steps the city would take before turning accounts over to the Department of Revenue: the city must send a 30-day notice to delinquent payers advising them the account will be referred for collection if unpaid. “It’s one last opportunity for them to pay before the Department of Revenue goes after them for collection of it,” Justin said. He also noted the Department of Revenue’s Collection Services Bureau can charge the city for assistance and that the department may retain a share of collected proceeds to cover costs.

Council members asked how recurring delinquencies would be handled and whether the Department of Revenue would repeatedly pursue accounts if a business continued to fall behind. Justin said he had left a message with the bureau to clarify the submission process and evidence required; he said the city would likely provide recurring lists on a yearly or quarterly basis as needed and that the problem primarily involves “two or three” habitual nonpayers.

Councilmember Kathy asked whether the city code imposes penalties and interest comparable to the Department of Revenue’s practice. Justin replied that the city code does provide for interest at 10%, penalties, and recovery of collection costs including attorney fees.

The council directed staff and the city attorney to work together to compile the list of delinquent accounts for follow-up and to bring the proposed notice of public hearing to the council on Jan. 21. No formal roll-call vote was recorded in the transcript; the transfer-to-Department-of-Revenue approach and the public-hearing schedule were discussed as the staff recommendation and next steps.

What’s next: staff will assemble the list of habitual delinquent payers, seek clarification from the Department of Revenue on submission requirements, and present the notice of public hearing at the Jan. 21 meeting so the council can set the Feb. 3 budget-amendment hearing.