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The Ultimate Guide To North Dakota Sales Tax

Welcome to our handy guide on North Dakota sales tax. We'll walk you through everything you need to know, from the specific sales tax rates in different counties and cities across North Dakota to answering some of the most common questions. Plus, we'll guide you on how to efficiently collect and file your sales tax in North Dakota.

Sales Tax Rate

5.00%

Local Rate?

Yes

Website

North Dakota Office of State Tax Commissioner

Sales Threshold

$100,000

Tax Line

(701) 328-1246

Transactions Threshold

NA

What is Nexus?

You'll need to collect sales tax in North Dakota if you have nexus there. There are two main ways that sellers can be tied to a state when it comes to nexus: physical, or economic.

Physical nexus means having enough tangible presence, or activity in a state to merit paying sales tax in that state.

Economic nexus means passing a states' economic threshold, for total revenue, or the number of transactions in that state.

Calculating Nexus in North Dakota

Physical Nexus

Your business has physical nexus if it has a real-world presence in North Dakota. This includes:
  • Owning or leasing space like an office, warehouse, or shop.
  • Employees based in North Dakota.
  • Storing inventory within the state, even at a third-party location.
  • Regularly soliciting sales in North Dakota.

Economic Nexus

Economic nexus means your business makes a significant number of sales or transactions in North Dakota, regardless of physical presence. The current criteria are:
  • $100,000 in gross sales, or
  • 200 separate transactions in a calendar year.
Hit these numbers, and you'll need to collect and remit sales tax in North Dakota.

Affiliate Nexus

Affiliate nexus happens when your business is connected to another entity in North Dakota that helps boost your sales. This could be:
  • A related company like a parent or subsidiary based in the state.
  • Third-party agents in North Dakota who help sell or deliver your products.

Click-Through Nexus

Click-through nexus involves online referrals. While North Dakota hasn't laid out specific click-through nexus laws as of 2021, keep an eye out for changes in this area.

Marketplace Nexus

Selling through online marketplaces like Amazon or eBay? Marketplace nexus applies when these platforms handle your sales tax. In North Dakota, marketplace facilitators are responsible for sales tax if they meet the state's economic nexus thresholds.
Did you know logo

Wedding cakes are not taxable, but if you sell the slices separately, they are. It's like saying, "I don't," to a tax on love.

Sales Tax Registration in North Dakota

How to Get Your North Dakota Sales Tax Permit

Here's what you need to do:
  1. Check if You Need a License: Selling taxable goods or services in North Dakota? Then you'll need a sales tax license.
  2. Gather Your Info: Round up some basic details like your business name, contact info, SSN or EIN, business type, and if you've got one, your North Dakota tax ID.
  3. Sign Up on North Dakota TAP: Head over to the North Dakota Taxpayer Access Point (TAP) website. Click on "Register for TAP Access" and set up your account.
  4. Fill Out the Application: Once you're logged into TAP, choose "Apply for a New Permit/License" and complete the sales tax license form. You'll need to put in info about your business and what you're selling.
  5. Submit Your Application: Double-check your details for accuracy, then submit your application right there on TAP.
  6. Wait for Approval: Your application will be reviewed by the North Dakota Office of State Tax Commissioner. This usually takes a couple of weeks. You can track the status in your TAP account.
  7. Show Off Your License: Got your license? Great! Make sure it's displayed in your business or kept handy in your registered office.

Cost of Registering for a North Dakota Sales Tax License

Good news - it's free to register for a sales tax license in North Dakota.

Federal Tax ID for North Dakota Sales Tax License

Your business type may require you to register with other North Dakota agencies:

Other North Dakota Registrations to Consider

Your business type may require you to register with other North Dakota agencies:
  • North Dakota Secretary of State: For corporations, LLCs, or partnerships, check out their website for registration info.
  • North Dakota Department of Labor and Human Rights: Got employees? You'll need to register here for things like unemployment insurance.
  • North Dakota Department of Health: Selling or handling food? You might need licenses or permits from these folks. Their website has all the details on food safety and regulations.

Guide to collecting sales tax in North Dakota

Is North Dakota an Origin or Destination Sales Tax State?

North Dakota plays by the destination-based sales tax rules. This means you'll charge sales tax based on where your customer is located, not where your business is. So, keep an eye on your customer's shipping address or delivery spot.

What Sales are Subject to Sales Tax in North Dakota?

In North Dakota, you're looking at taxing:
  • Tangible stuff like furniture, electronics, and clothes.
  • Certain services, think repair jobs, cleaning, or telecom services.
  • Digital goodies like e-books, music, and video streams.

Is Software as a Service (SaaS) Taxed in North Dakota?

SaaS isn't typically on North Dakota's tax radar. It's usually seen as a service, which generally skips sales tax here. But, if your SaaS is more like a digital product or used non-commercially, it might be taxable. If you're in doubt, have a chat with a tax expert to sort it out.

What is Exempt from North Dakotane Sales Tax?

North Dakota lets a few things slide on sales tax:
  • Prescription meds and some medical supplies.
  • Your groceries and basic uncooked food.
  • Farming goods and machinery.
  • Newspapers and magazines.
  • Sales made to government bodies.

Who is Eligible for North Dakota Sales Tax Exemptions?

Look out for these groups who might not need to pay sales tax:
  • Nonprofits, including religious, educational, and charity organizations.
  • Government agencies, from federal to local.
  • Folks buying for resale or as ingredients for products they'll sell.

What To Do If Your Customer is Exempt from Sales Tax in North Dakota?

Got a customer who's tax-exempt? Grab a North Dakota Sales Tax Exemption Certificate (Form ST-101) from them and keep it filed away. It's your proof for the tax-free sale.

What if You Lose a North Dakota Sales Tax Exemption Certificate?

If that exemption certificate goes missing, reach out to your customer for another copy. Keeping your records straight is key, especially if the tax folks come knocking for an audit.
Did you know logo

In North Dakota, if you're buying a bison to start a herd, it's tax-exempt. It's as though the state is encouraging you to embrace your inner rancher and saying, "Go ahead, start your bison empire, tax-free!" This law caters to the state's agricultural and ranching heritage, making it a bit easier (and more financially appealing) to contribute to the bison population.

Steps for Filing a North Dakota Sales Tax Return

In North Dakota, how often you file and pay depends on your tax haul:
  • Monthly Filing: If you rake in over $166.67 monthly in tax, file and pay each month. Get it done by the 25th day after your reporting month.
  • Quarterly Filing: Pulling in between $16.67 and $166.67 monthly? Then it's quarterly filing for you. Deadlines are April 25, July 25, October 25, and January 25.
  • Annual Filing: Under $16.67 monthly? You're on an annual schedule. File and pay by January 25 the following year.

What If a Filing Date Falls on a Weekend or Holiday?

If your filing date lands on a weekend or holiday, just push it to the next business day. No stress!

How to File a North Dakota Sales Tax Return

To get your sales tax return sorted:
  1. Gather Your Info: Get all your sales data ready - taxable, exempt, deductions, the works.
  2. Hop onto TAP: Log in to your account on North Dakota's TAP website.
  3. Pick Your Period: Choose the right filing period in the "File a Return" section.
  4. Fill Out the Form: Enter all your sales details accurately.
  5. Double-Check: Review everything. Mistakes can cost you!
  6. Submit and Pay: Send off your return and pay any owed tax using a payment method like a credit card or electronic check.
  7. Keep Records: Hang onto those filings and payment confirmations for at least three years.

Penalties for Late Filing in North Dakota

Missed deadlines can bite. You might face:
  • Late Filing: 5% of owed tax (or $5) per month, maxing out at 25%.
  • Late Payment: 10% of owed tax (or $10) for tardiness.
  • Underpayment: 10% (or $10) if you underpay due to negligence.
  • And yep, interest piles up on unpaid tax from the due date.

Sales Tax Incentives in North Dakota

North Dakota gives some perks:
  • For Farmers: Cut rates and exemptions on farm gear and some products.
  • For Makers: Exemptions on manufacturing equipment and materials.
  • For Green Energy: Exemptions and lower rates for renewable energy stuff.

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Top 5 Tips for Filing Sales Tax in North Dakota

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