- Gross receipts tax is applied to sales of:
- Alcohol at 7%
- New farm machinery used exclusively for agriculture production at 3%
- New mobile homes at 3%
- Local Taxes – City or County Taxes – Cities and counties may levy sales and use taxes, as well as special taxes such as lodging taxes, lodging and restaurant taxes, and motor vehicle rental taxes. These taxes are administered by the Office of State Tax Commissioner on behalf of the city or county.
Use Tax
Use tax is the counterpart to sales tax. All individuals, including businesses operating in the state, must pay use tax if sales tax was not collected by the seller on tangible personal property brought or shipped into North Dakota for storage, use, or consumption. Tangible personal property includes items that can be moved or touched, like home goods, clothing, shop supplies, equipment, and building materials. Use tax applies to the purchase price, which is calculated by using the same basis as sales tax.
In addition, tangible personal property not originally purchased for use in North Dakota is subject to 5% use tax plus applicable local taxes based on its fair market value at the time it was brought into the state. A purchaser owes North Dakota use tax if the sales and use tax paid in another state was not at a rate equal to or greater than the North Dakota’s sales tax rate plus applicable local taxes.
Move to Digital
Starting January 1, 2023, the Office of State Tax Commissioner will no longer mail paper return forms for sales and use, lodging and restaurant, and prepaid wireless 911 fee tax returns. Moving forward, you can file and pay your tax return on our user-friendly, online portal, ND TAP.
Apply for a Sales and Use Tax Permit
Sellers that sell taxable tangible personal property, admissions to recreational activities, and the rental of lodging accommodations must obtain a sales tax permit. You should apply for a permit 30 days prior to opening for business. If you purchase an existing business, you must apply for a new sales tax permit, as permits are not transferable.
The application for a Sales and Use Tax Permit is available in ND TAP.
Filing, Paying, & Amending Sales and Use Tax
Filing a Return and Paying Tax
Depending how often your sales occur, you may be required to file and pay sales tax on a monthly, quarterly, or annual basis. This will be determined at the time you apply for your permit. You may contact our office if you need to change your filing frequency.
For information regarding Sales Tax Return XML Upload, see E-Filing for Businesses.
Sales tax returns and payments are made through ND TAP.
Amending a Return
Sales, use, and gross receipts tax returns may be amended to report additional tax due or to request a refund of tax paid in error. Amendments are made through ND TAP.
For instructions on obtaining and completing an amended sales tax return by mail, contact our office at 701-328-1246.
If you receive a calculation worksheet for a currently filed return, the correction should be made on the worksheet provided and returned to our office at the address indicated.
Failure to File or Pay Taxes
If you do not file returns or pay taxes due, North Dakota law requires:
- Late Filing Penalty – For the first month that a return is not filed, penalty of 5% or $5 (whichever is greater) will be assessed. Each additional month the return is not filed, an additional 5% will be added to the penalty up to a 25% maximum penalty of the tax due.
- Late Payment Penalty – There is a 5% penalty on any tax that is not paid by the deadline or $5 (whichever is greater). North Dakota charges interest at the rate of 12% per year. It is computed from the filing deadline to the date when all tax, interest and penalties are fully paid. Interest is not collected for the first month a return is filed late.
The Office of State Tax Commissioner may also take the following actions for continued failure to file or pay your sales and use taxes:
- Issue an assessment of the estimated tax, penalty, or interest.
- Place a lien on your personal property.
- A lien is a legal claim against your property that may prevent you from selling or buying current or future property without a clear title.
- A lien is a public record and may be picked up by credit reporting agencies which could adversely affect your credit score.
Local Taxes – City and County Taxes
Cities and counties may levy sales and use taxes, as well as special taxes such as lodging taxes, lodging and restaurant taxes, and motor vehicle rental taxes.
Exemptions
Who is Exempt from Sales Tax?
North Dakota law specifically exempts government entities and certain organizations from sales tax on purchases they make. North Dakota law does not exempt religious, charitable, or non-profit organizations. Purchases made by churches are subject to tax; however, bibles, prayer books, hymnals and religious textbooks purchased by churches are exempt by state statute.
Learn more about organizations who qualify in the Guideline - Exempt Organizations.
Exempt organizations include:
- Government entities
- Federal chartered corporations (American National Red Cross, Big Brothers – Big Sisters of America)
- Public and private non-profit schools
- Hospitals, nursing homes, intermediate care, basic care, assisted living facilities, residential end-of-life facilities, and emergency medical providers licensed by the North Dakota Department of Health and Human Services (on qualifying purchases)
- Qualifying voluntary health organizations
- Qualifying senior citizen organizations
A charge for hotel and motel accommodations or meals to an employee on official government or qualifying school business is exempt from North Dakota sales tax if the purchase is made by credit card and regarded as centrally billed charges. For more information, see the Exemption Certificate for Government and Qualifying School Lodging Accommodations.
Business or Contractor Purchases that are Exempt
Businesses or contractors may also buy certain items without tax if they present one of the below certificates upon purchase:
- Certificate of Processing – items purchased to manufacture, fabricate or compound other tangible personal property to be sold in the future by another seller
- Certificate of Resale – items purchased by a seller for resale
- Contractor's Certificate – items purchased by a contractor
- Streamlined Sales Tax Certificate of Exemption
- Multistate Tax Commission Uniform Sales & Use Tax Resale Certificate Multijurisdiction Form
Organizations who are exempt from North Dakota sales and use tax in law should apply for a sales tax exemption: Application for Sales Tax Exemption Certificate
Montana Sales Tax Exemption
Sale of tangible personal property to a person from Montana is exempt provided they are:
- Making a specific purchase in the state of North Dakota
- Making a purchase that is 50 dollars or more
- Removing the purchase from the state of North Dakota for use exclusively outside this state
A person from Montana means a natural person, corporation, and other business entity when the owners, partners, or members are individual residents or domestic business entities from Montana.
If you apply for the Montana sales tax exemption, complete the Certificate of Purchase – Exempt Sales to a Person from Montana form.
Audits - Sales and Use Tax
Audits are a routine review of business and any taxpayer documents and processes to determine if sales and use taxes were correctly reported and paid. Any business may be selected for audit.
Records you should keep include general ledger, chart of accounts, sales journal, sales invoices and receipts, check register, accounts payable invoices and receipts, job cost details, depreciation schedule, exemption certificates, supporting information to the sales and use tax returns and any other information pertinent to the business. Records should be retained for a period of three (3) years and three (3) months under North Dakota law.
If selected for an audit, a sales tax auditor will work with you to determine how the audit will be the least disruptive to your business. Prior to the audit, the auditor will request a time to review your business records. Auditors use these records to confirm the accuracy of your returns and if the appropriate sales or use tax is paid on purchases. If it is determined that in a single reporting period a 25% discrepancy has occurred and it is past the 3 year statute of limitations, audit assessments can be made in the period the discrepancy occurred up to 6 years from the date the return was due or filed, whichever period expires later.
Once the audit is complete, the auditor will make a determination that may include tax, penalty and interest. If taxes were overpaid, you will be issued a refund. If taxes are underpaid, you will be assessed the additional amount due. You will have an opportunity to review the determination and discuss it with the auditor before any assessment is issued.
Marketplace Facilitator
A marketplace facilitator is required to collect North Dakota sales and use taxes, as well as local taxes, on North Dakota sales made on its marketplace.
