( read )

North Dakota Sales Tax Guide

By Cristina Garza

⛪🌻North Dakota, the Peace Garden state, is one of the coldest states in the union. Maybe that’s why it has more churches per-capita than any other state? :) The state also produces more sunflowers and honey than any other state, brightening its disposition. Despite an oil rush making North Dakota the second largest producer of oil after Texas, agriculture remains the primary industry in the state. If you’re one of the many small business owners proud to call North Dakota your home, you’ll definitely want to ensure your business complies with North Dakota's sales tax laws. Fear not! We have put together this all-in-one guide for sales tax so that you can meet the sales tax compliance requirements for a small business in North Dakota. 

 

After reading this guide, you will have learned:

  • How to be prepared for your call with the North Dakota State Tax Commissioner.
  • How to contact the North Dakota State Tax Commissioner.
  • When to charge sales tax in North Dakota.
  • What goods, products, and services are taxable in North Dakota.
  • When you establish a sales tax nexus with the state of North Dakota, and the nuances of various thresholds.
  • How to register for a sales tax license in North Dakota.
  • How to collect sales tax in North Dakota.
  • How to file and pay sales tax in North Dakota.

If, after reading, you still have any questions to help you determine your tax sales obligations in North Dakota and how to fulfill them, we are here for your small business bookkeeping needs! 

 

 


North Dakota Sales Tax Contacts

North Dakota Sales Tax Contacts

 

✅  Do you need to get in touch with the North Dakota State Tax Commissioner?

✅  Are you uncertain about whether to visit, call them, or contact them through their website?  

✅ Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The North Dakota State Tax Commissioner is reachable by phone at 701-328-1246. 

You can also visit one of their (not always populated!) remote offices, or send them an email. If you are hoping for the fastest response, our suggestion is that you call rather than visit in person or email. 

When you do call the North Dakota State Tax Commissioner, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you plan on having a third party contact the ND DOT on your behalf, you’ll want to be sure to have completed a power of attorney form (form 500, PDF). If you don’t have a completed form they won’t be able to assist someone else on your behalf.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

 


North Dakota Sales Tax Registration

North Dakota Sales Tax Registration

 

Are you a new business selling tangible property in North Dakota? If yes, you are going to want to register your business with the North Dakota State Tax Commissioner so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

 

Here we go! Remember...

Preparation is key. 

Let’s get started!

 

 

 

How do I register to collect sales tax in North Dakota?

You can apply or register for a North Dakota sales tax permit by visiting the North Dakota Taxpayer Access Point site and following the instructions provided.

North Dakota also has an old school paper based form (PDF) you can print and mail in, but this is going to be a slower setup and with greater possibility for errors. We don’t recommend it, and North Dakota discourages it on their website, but we wanted to make the option available in case it suits the needs of someone out there. 

 

 

What information do I need to register for a North Dakota sales tax permit?

Great question!

Before you sign up for North Dakota sales tax permit you’ll want the following information on hand:

  • Business name
  • Business entity type 
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • Associated business entities 
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)
  • List of business officers, partners, managing members, and/or trustees

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the North Dakota Taxpayer Access Point site. 

 

 

How much does it cost to register for a North Dakota sales tax permit?

Zip! Zero! Zilch! :] North Dakota won’t charge you anything to register a new sales tax permit.

 

 

Do I need a Federal Tax ID Number or EIN to register for a North Dakota sales tax permit?

Absolutely! You will most assuredly need one, but if you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

 

 

Which agencies in North Dakota do I need to additionally register with?

You may need to check with some of the following agencies or resources: 

You’ll want to give this some thought and do a little research or investigating; since every business is unique, and there are such different rules, regulations, and laws that may apply. 

We suggest contacting the North Dakota State Tax Commissioner to verify which additional government agencies you may be required to register with. 

 

*****

 

Huzzah!!!

You are now prepared to register for your North Dakota sales tax permit in North Dakota. 

Let’s summarize what we have covered:  

  • Have all the required information easily accessible before registering online.
  • Acquire a tax ID or EIN before registering for a North Dakota sales tax permit.
  • Register online at the North Dakota Taxpayer Access Point website.
  • Look into what other agencies you may have to additionally register with.

Registering for your North Dakota sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

 

 


North Dakota Sales Tax FAQ

North Dakota Sales Tax FAQ 

By now, you may have already contacted the North Dakota State Tax Commissioner and applied for a North Dakota sales tax permit. 

Once you have a license to collect and remit sales taxes in North Dakota, you will probably be asking yourself two questions: 

  • When do I charge a sales tax in North Dakota?
  • What goods and services are subject to sales taxes in North Dakota? 

We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

 

 

What goods and services are considered taxable in North Dakota?

The following items are all taxable in the state of North Dakota: 

  • Sales of tangible goods at retail.
  • Repairs or alterations of tangible personal property.
  • Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
  • Selling service warranty contracts.
  • Short-term rentals for living accommodations (e.g. motel/hotel, beach houses, condos, timeshares, vacation homes, or RV homes).
  • Rental/lease of personal goods (e.g.: machinery, vehicles, equipment, or other property).
  • Charges for admission to any place of amusement, sport, or recreation.
  • Manufacturing or producing goods for retail sales.
  • Operating vending machines or amusement rides.
  • Services are mostly exempted (i.e. janitorial, transportation)

 

 

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods, and some taxable services.

*****

 

 

Let’s now review some of our clients’ frequently asked questions:

  • Is North Dakota an Origin or Destination sales tax State?
  • What creates a sales tax nexus in North Dakota?
  • What is the economic threshold in North Dakota?
  • Does Amazon have fulfillment centers in North Dakota?
  • Does North Dakota have a Click-Through Nexus?

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions. 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

 

 

Is North Dakota an origin or destination-based sales tax state?

North Dakota is a destination sales tax state. This means you’ll want to charge sales tax based on the location of the purchaser vs. the location of the business. This is usually simply a matter of a configuration in your POS system.  

 

 Protip: Charge the customer tax based on their location.

 

 

What creates tax nexus with the state of North Dakota?  

Having nexus, also known as "sufficient business presence,” with North Dakota means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in North Dakota because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the North Dakota State Tax Commissioner even if you never step foot in North Dakota.   

So, how do you create sales tax nexus in North Dakota?

 

What creates sales tax nexus?

A business establishes a nexus in North Dakota by:

  • having a business location in North Dakota;
  • having property stored in North Dakota;
  • employing any person in North Dakota;
  • contracting with a salesperson or other agent in North Dakota;
  • leasing equipment used in North Dakota;
  • performing services in North Dakota;
  • licensing the use of intangible property in North Dakota, or transporting property in North Dakota using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored, such as in the instance of an Amazon warehouse. 

 

 

Does Amazon have fulfillment centers in North Dakota?

Nope, North Dakota has no Amazon fulfillment centers at this time.

(This matters for our customers who sell on Amazon or through FBA)

 

 

Does North Dakota have economic nexus?

Yes, North Dakota now has an economic nexus law. As of July 1st, 2019 remote sellers with gross revenue of over $100,000 are required to pay sales tax. 

For  more information see the North Dakota DOT’s remote sellers page here.

 

 

Does North Dakota have click-through nexus?

Nope, not at this time. This means if you’re making revenue through affiliate marketing you don’t have to register if you don’t otherwise have nexus.

 

 

Is North Dakota a streamlined sales tax state?

Yep! Since October, 2005 North Dakota has been a full member of Streamlined Sales Tax.

If you are planning on taking advantage of the Streamlined Sales Tax as a business, it is recommended you use a Certified Service Provider though businesses may opt to register themselves without a CSP. Ultimately the aim of streamlined sales tax is to simplify payment to multiple different states of sales and use tax. It isn’t required that you utilize them, but it can significantly reduce complexity to do so, especially if your business sells in multiple states.

 

 

More effectively manage your tax needs by keeping this guide handy. 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in North Dakota.

 

 

 


Collecting Sales Tax in North Dakota

Collecting Sales Tax in North Dakota

 

By now you know if you are a business that has established a nexus with North Dakota. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their North Dakota Sales Tax obligations. 

  • How do I collect North Dakota Sales Tax?
  • Who is eligible for North Dakota Sales Tax exemptions?
  • What should I do if my customer is exempt from sales tax in North Dakota?
  • What happens if I lose a North Dakota nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in North Dakota.

 

 

How do I collect North Dakota Sales Tax?

As we mentioned above, North Dakota is a destination state, so you charge sales tax based on the location of the buyer. It’s also important to declare the tax on the receipt or invoice, as North Dakota doesn’t permit “eating the tax.” 

 

 

What are the current North Dakota Sales Tax rates?   

North Dakota’s state-wide sales tax rate is 5% at the time of this article’s writing, with local surtaxes potentially adding on top of that. Since sales tax rates may change, we shall refer you to check out the North Dakota State Tax Commissioner tax rate lookup page. Any change will be reflected on that page.

It always helps to be accurate and up to date with this type of information! :) 

 

 

What is exempt from North Dakota Sales Tax?

What is exempt from sales tax in North Dakota?

 

Here is a sample list of exemptions: 

  • Purchases for resale
  • Everyday clothing items
  • Medical supplies
  • Groceries 

North Dakota does not have many exemptions beyond the standard ones, but they do offer a complete list of exempted items.

 

 

Who are eligible for North Dakota sales tax exemptions?

At this point, you should know what products are exempt from sales tax in North Dakota. You also want to know who may be exempt. 

Under North Dakota law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

Note that a non-profit or contractor status doesn’t necessarily immediately confer tax exempt status.

 

 

What should I do if my customer is exempt from sales tax in North Dakota?

Purchasers who are tax exempt must have completed resale certificate (PDF) and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales. The ND DOT offers a page to verify the validity of an exemption certificate.

Remember, you always want to collect and file a copy of the exempt certificate. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales.

 

 

What happens if I lose a North Dakota Sales Tax exemption certificate?

Hmm... Obviously this issue is best to be avoided! Imagine finding out you’ll be audited and discovering you cannot produce an exemption certificate for a buyer! That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking proper care with your paperwork… which happens to be one of our specialties! :) 

 

 

Does North Dakota have a sales tax holiday?

No, unfortunately they offer nary a day’s respite! :\

 

***** 

 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in North Dakota state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

 

 


Filing and Paying Sales Tax in North Dakota

Filing and Paying Sales Tax in North Dakota

 

It is time to talk about filing and paying your sales taxes in North Dakota. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is North Dakota Sales Tax due?
  • What are the North Dakota Sales Tax thresholds?
  • What if a North Dakota Sales Tax filing date falls on a weekend or holiday?
  • How do I file a North Dakota Sales Tax Return?
  • How do I correct a North Dakota Sales Tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in North Dakota?
  • If I close my business, do I need to file a final sales tax return?
  • Does the North Dakota State Tax Commissioner offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your North Dakota Sales Tax.

 

 

When is North Dakota sales tax due?

North Dakota sales tax payments are due based on the filing interval. Filing intervals are based on the company’s tax liability [detailed ahead, be patient! :p] 

The state of North Dakota requires payment by no later than the 20th of the month following the reporting period

 

 

What are the North Dakota sales tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

 

Average Tax Liability Owed Monthly*

Filing interval

Less than $2,750

Annually

Between $2,750.00 - $6,666.65

Quarterly

Anything from $6,666.66 and up

Monthly

 

*anticipated if new business, actual if existing company

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of North Dakota so that you don't miss any shift in deadlines.

 

 

What if a North Dakota Sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

 

 

How do I file a North Dakota sales tax return?

Paper: Download and fill out form ST (PDF) and mail to the address on the form 

Electronic: File North Dakota Taxpayer Access Point and submit payment via EFT.

 

  

How do I correct a North Dakota sales tax return?

Paper: Fill another form ST (PDF) but check the ‘amended’ box at the top.

Electronic: Amend online via the North Dakota Taxpayer Access Point

 

 

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! Ultimately the business will be held liable for the due tax. Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful. 

 

 

Protip: You are still responsible for remitting sales taxes even if you failed to collect them. 

 

 

What happens if I file or pay my sales tax return late?

North Dakota's State Tax Commissioner charges separate penalties for late filing or late payment ranging from $5 or 5% (whichever is greater) to 25% of the tax owed, depending on how late. Additionally, interest of 1% is applied after the first month.

 

 

Do I need to file a return if I don’t collect any sales tax in North Dakota?

Indeed! North Dakota requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period.

 

 

If I close my business, do I need to file a final sales tax return?

Absolutely, North Dakota requires businesses to file a “Final sales tax” return when closing their doors.

 

 

Does the North Dakota State Tax Commissioner offer a discount for filing on time?

Yes! North Dakota offers an early filing discount of 1.5% up to a maximum of $110/mo with no minimum. 

 

*****

 

Now that we have covered all our bases for filing and paying sales taxes in the state of North Dakota, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you may do so electronically or by paper.
  • If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of North Dakota.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final sales tax report” when you close your business.

 

Now, you are ready to file and pay your sales tax in North Dakota. If you have any more questions, feel free to contact us.

  

Click here if you think sales tax is boring. Book a meeting.

 


Please note: This blog is for informational purposes only and the information is accurate as of 9/20/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.