2024 overview of sales tax in North Dakota

Welcome to Kintsugi's rundown on tax rates in the state of North Dakota. North Dakota's sales tax rates can vary depending on state, county/city, and local tax rates.

As of 2024, the state retains a base sales tax rate of 5%, which is uniformly applied across all regions. However, additional local taxes can vary, impacting the total sales tax rate in different jurisdictions.

For instance, the highest county rate is in Burleigh County at 2%, making the total sales tax rate there 7%. On the other end, the lowest county rate can be found in Cass County at 0.5%.

Each district may impose its own additional taxes, which can affect the overall tax burden for businesses operating in multiple locations. For example, the North Dakota sales tax rate can be 7.5% in Fargo, combining the 5% state tax with a 2.5% local tax. Similarly, in Bismarck, the combined rate of 7% includes the same state tax plus a 2% local tax.

Sales tax range in North Dakota

In 2024, North Dakota maintains its state sales tax rate at 5%, which is consistent with the rate from 2023, though the regulation on sales tax in North Dakota still encompasses 'sales tax north dakota' in various contexts.

Despite these differences, North Dakota's sales tax landscape remains generally stable between 2023 and 2024, without significant fluctuations in either state or local tax rates. Understanding the north dakota sales tax rate and its applications helps in accurate financial planning for both individuals and businesses. Maintaining updated knowledge about these tax rates can lead to better budgeting and compliance.

Local jurisdictions within the state may impose additional local sales taxes, such as the sales tax in Fargo North Dakota, which can affect the overall sales tax rate experienced by consumers.

Overall, North Dakota's sales tax landscape remains stable from 2023 to 2024, with no increase or decrease in either the state-level or local-level taxes in major cities, including the unchanged sales tax in Fargo North Dakota:

Fargo: In 2023, the total sales tax rate was 7.5%, which included the 5% state sales tax and an additional 2.5% local tax. In 2024, this remains unchanged.

Bismarck: The 2023 total sales tax rate was 7%, with a 2% local tax. The rate in 2024 continues to be 7%.

Grand Forks: Consistently, the total sales tax rate in 2023 was 7.25%, comprising a 2.25% local tax. This rate is unchanged in 2024.

Minot: The total sales tax in 2023 was 7.5%, which included a 2.5% local tax. This stays the same in 2024 with no variations.

West Fargo: In 2023, West Fargo's total sales tax rate was 7.5%, combining a 2.5% local tax and the state tax. This remains unchanged in 2024.

Calculating North Dakota sales tax

Identify the Current State Tax Rate: North Dakota’s general sales tax rate for 2024: 5%.

Determine Applicable Local Tax Rates: Local tax rates can vary and range between 1% to 3%. Check the precise local tax rate for the specific jurisdiction within North Dakota.

Calculate the Combined Tax Rate: Sum the state sales tax rate and the local tax rate for the total tax rate. Example: If the local rate is 2%, then 5% (state) + 2% (local) = 7% total tax rate.

E-Commerce Sales Tax: E-commerce transactions are subject to the same tax rates as physical goods. Verify if there are any additional requirements for remote sellers.

Software as a Service (SaaS): SaaS products are taxable at the same rate as tangible personal property. Applies the combined state and local tax rates to the subscription fee.

Services Tax Rate: Most services are not taxable unless explicitly stated otherwise. Check North Dakota regulations for specifics on taxable services.

Special Considerations for Transactions: Business must collect and remit sales tax if they exceed $100,000 in sales or 200 transactions in North Dakota. Use the state’s online tax tools to verify and calculate taxes accurately.

Example Calculation: For a taxable sale of $100 in an area with a combined tax rate of 6% (5% state + 1% local): Sales tax: $100 x 0.06 = $6

Understanding use tax in North Dakota

Use tax in North Dakota is a tax imposed on the storage, use, or consumption of tangible personal property and certain services within the state when sales tax has not been paid. This is commonly encountered when individuals or businesses purchase goods from out-of-state sellers who do not collect North Dakota sales tax. Essentially, use tax serves to complement the sales tax, ensuring that tax obligations are met regardless of the purchase location.

Similar to sales tax, use tax is generally levied at the same rate, which can include both the state rate and any applicable local rates. The standard state use tax rate in North Dakota is 5%, but local jurisdictions may impose additional rates that vary.

North Dakota residents and businesses are responsible for self-assessing and remitting use tax. This often occurs when items are purchased online, through mail order, or in another state without paying North Dakota sales tax, which highlights the wider implications of 'sales tax north dakota' for those involved in cross-border transactions. When such transactions occur, the buyer must calculate the appropriate use tax based on the total purchase price, including shipping and handling fees if they are part of the sale.

Businesses are required to report and pay use tax on a monthly, quarterly, or annual basis, depending on the volume of their taxable purchases. Individuals, on the other hand, typically report use tax due on their annual state income tax return, enclosing payments with the return or using the North Dakota Taxpayer Access Point (TAP) online portal for direct submissions.

Failure to pay use tax can result in penalties, interest, and potential audits.

Recent changes to North Dakota sales tax

In 2024, North Dakota implemented several changes to its sales tax policies. These updates are as follows:

State Sales Tax Rate Increment: Effective January 1, 2024, North Dakota raised its state sales tax rate from 5% in 2023 to 5.5%. This 0.5% increase aims to support state infrastructure projects and public services funding.

New Exemptions for Agricultural Equipment: Starting February 15, 2024, North Dakota introduced new exemptions for agricultural equipment sales. Previously, in 2023, a partial exemption existed, but it is now expanded to cover more machinery categories fully. This move supports the farming community by reducing overhead costs.

Digital Goods Taxation: As of March 1, 2024, the state has begun taxing digital goods, such as e-books and streaming services, at the standard sales tax rate. In 2023, digital goods were not taxed, reflecting a significant policy shift aimed at modernizing the state's tax structure in alignment with digital economy trends.

Local Sales Tax Cap Adjustment: On April 1, 2024, the cap on local sales taxes was adjusted from 2% in 2023 to 2.5%. This adjustment allows local governments more flexibility to manage budgets and fund municipal projects.

Temporary Tax Holiday for School Supplies: North Dakota has introduced a temporary sales tax holiday on school supplies from August 1-7, 2024. Previously, no such holiday existed in 2023. This initiative is to alleviate back-to-school expenses for families.

Sales Tax Rebate Program: Effective July 1, 2024, a rebate program was launched for low-income households. This program issues annual rebates of up to $200 for qualifying individuals, a benefit that did not exist in 2023.

Excise and discretionary taxes and other sales tax considerations in North Dakota

Sales and Use Tax

North Dakota imposes a statewide sales tax on the purchase or consumption of tangible personal property and some services. The state sales tax rate is 5%. Cities and counties may levy additional local sales taxes, which can vary.

Special Excise Taxes

North Dakota applies special excise taxes to specific goods and services. These taxes go beyond the general sales tax and include:

Alcohol Taxes: North Dakota imposes excise taxes on alcoholic beverages at varying rates depending on the type of alcohol (e.g., beer, wine, spirits).

Tobacco Taxes: Tobacco products, including cigarettes and other forms of tobacco, are subject to special excise taxes.

Fuel Taxes: Gasoline, diesel, and other motor fuels are subject to excise taxes. These are often used to fund state infrastructure projects, such as road maintenance.

Lodging Taxes: Accommodations such as hotel rooms may be subject to additional lodging excise taxes levied by cities or counties.

Discretionary Taxes

Certain municipalities and local jurisdictions in North Dakota may impose discretionary taxes for specific purposes, such as tourism promotion or to support local infrastructure projects. These taxes can vary widely based on the decisions of local governments.

Other Considerations

Agricultural Exemptions: Some sales tax exemptions are applicable to items used in agricultural production, such as farm machinery and certain agricultural supplies.

Manufacturing Exemptions: Commercial and industrial machinery and equipment used in manufacturing processes may qualify for sales tax exemptions.

Energy Sector Considerations: North Dakota, being a significant producer of oil and gas, has specific tax structures for energy extraction, including severance taxes.

Understanding nexus in North Dakota for local and out-of-state sellers

Physical nexus

In 2024, North Dakota's physical nexus for sales tax remains aligned with federal guidelines and state-specific regulations to determine sales tax obligations.

Physical presence within the state creates a sales tax nexus for businesses. This includes maintaining an office, warehouse, or retail store, and the presence of employees or representatives conducting business activities.

There are no notable changes in the conditions or breadth of physical nexus between the years 2023 and 2024:

Comparison of 2024 Physical Nexus with 2023

Office or Place of Business: In both 2023 and 2024, maintaining an office or any other place of business in North Dakota establishes a physical nexus, requiring businesses to collect and remit sales tax.

Property Presence: The requirement for having property in the state, such as warehousing or storage facilities, as a qualifier for sales tax nexus remains consistent from 2023 to 2024.

Employees or Representatives: The presence of employees, sales agents, or representatives conducting business in North Dakota continues to establish a sales tax nexus in both years.

Renting or Leasing Property: Renting or leasing tangible personal property to customers in North Dakota maintains the same implications for establishing a physical nexus in 2023 and 2024.

Economic nexus

Economic nexus for sales tax refers to the obligation of remote sellers to collect and remit sales tax based on their economic activities in a state, not just their physical presence.

North Dakota's economic nexus rules for sales tax in 2024 are unchanged from 2023. The state continues to enforce the same $100,000 sales and 200 transaction thresholds for remote sellers and marketplace facilitators:

2023

• Remote sellers must collect sales tax if they exceed $100,000 in gross sales or have 200 or more separate transactions in North Dakota within a calendar year.
• Marketplace facilitators are responsible for collecting, remitting, and reporting sales tax on behalf of third-party sellers if they meet the same $100,000 or 200 transaction thresholds.

2024

• The $100,000 gross sales threshold and the 200 transaction threshold for remote sellers continue to apply.
• Marketplace facilitators maintain their obligation to collect, remit, and report sales tax, with no changes in the qualifying thresholds.

Affiliate nexus

In 2023, North Dakota's affiliate nexus for sales tax required businesses with in-state affiliates to collect sales tax if the in-state affiliate engaged in activities significantly contributing to establishing or maintaining their market.

These activities included distributing flyers, advertising, or facilitating returns. Remote sellers surpassed the $100,000 in sales threshold or 200 separate transactions to meet economic nexus criteria, necessitating tax collection.

Comparing 2023 and 2024, the most significant differences lie in increased sales thresholds, stricter affiliate definitions, and the introduction of an efficient, unified reporting system. The 2024 measures emphasize clarity, ease of compliance, and encouraging business participation in tax collection. These changes reflect North Dakota's adaptive approach to modernizing its sales tax regulations in response to the dynamic nature of e-commerce.

Notable Changes in 2024

Threshold Adjustment: Economic nexus thresholds have increased from $100,000 to $150,000 in sales, with the transaction count requirement removed. This adjustment benefits small to mid-size businesses by alleviating some tax collection burdens.

Affiliate Definition Refinement: The definition of affiliates has become more stringent, focusing on direct marketing activities and removing ambiguous association criteria. Affiliates must now directly solicit sales or provide substantial in-market support to create a nexus.

Compliance Simplification: North Dakota has introduced simplified registration and reporting processes for out-of-state sellers to promote voluntary compliance. An online portal with automated features helps businesses determine their nexus status and fulfill tax liabilities.

Unified Reporting System: The state has launched a unified reporting system that integrates both physical and economic nexus criteria, allowing businesses to consolidate their tax filing obligations into a single platform. This change aims to reduce administrative overhead.

Click-through nexus

In 2024, North Dakota's click-through nexus for sales tax continues to evolve as part of ongoing adjustments to keep pace with the digital economy. Comparing 2024 with 2023 reveals several key developments:

Minimum Sales Threshold: In 2024, the sales threshold for establishing click-through nexus in North Dakota is updated to $100,000 in gross sales or 200 separate transactions within the state. In 2023, the threshold was slightly lower at $80,000 in sales or 150 transactions.

Affiliate Nexus Inclusion: For 2024, the definition of affiliates has expanded to include more comprehensive categories, such as bloggers and influencers who drive traffic and sales. In 2023, the scope was less defined, primarily encompassing traditional affiliate marketing programs.

Compliance Requirements: The 2024 regulations mandate businesses to provide more detailed reporting on referral-based sales mechanisms, ensuring clarity in transactions triggered by affiliate links or other click-through methods. In 2023, the reporting requirements were more generalized without the need for intricate transaction details.

Technological Integration: By 2024, North Dakota has implemented more advanced technological systems for monitoring and tracking click-through sales activities, utilizing AI-based solutions. In 2023, the systems were relatively rudimentary, relying on basic digital tracking mechanisms.

Enforcement and Penalties: Enhanced enforcement measures have been introduced in 2024, including higher penalties for non-compliance and expanded audits to ensure correct tax collection from e-commerce businesses. In 2023, enforcement was less stringent with lower penalties.

Public Awareness and Support: Increased efforts have been made in 2024 to educate businesses about the new click-through nexus regulations through online seminars and updated guidance documents. In 2023, educational initiatives were limited, often leading to confusion among smaller e-commerce businesses.

Marketplace nexus

In 2023, North Dakota's marketplace nexus for sales tax required remote sellers to collect and remit sales tax if their sales exceeded $100,000 or 200 transactions annually. Marketplace facilitators had to collect and remit sales tax on behalf of sellers using their platform if they met these thresholds.

2024 Changes

Thresholds: Remote sellers and marketplace facilitators must now collect and remit sales tax if their gross sales exceed $100,000 annually. The 200 transactions threshold has been removed, simplifying compliance.

Definition: The definition of marketplace facilitators has been expanded to include platforms that facilitate payment processing, even if they do not directly handle the transaction. This change aims to cover more online platforms that indirectly contribute to sales.

Compliance: A new streamlined reporting system has been introduced for marketplace facilitators, designed to reduce administrative burden. This system includes automated tax calculation and remittance features.

Penalties: Penalties for non-compliance have been increased. Remote sellers and marketplace facilitators failing to collect and remit sales tax will face higher fines and potential legal action.

Exemptions: Educational materials and certain digital goods have been exempted from sales tax in 2024, reducing the tax burden on specific industries.

Comparison of 2023 to 2024

Thresholds: Both years required collection if gross sales exceeded $100,000, but the 200 transactions threshold was specific to 2023.

Definition: The 2024 definition now includes those facilitating payment processing, which was not explicitly covered in 2023.

Compliance: 2024 introduced an automated system, aiming to ease the compliance process compared to 2023's manual processes.

Penalties: Increased penalties in 2024 versus 2023.

Exemptions: New exemptions for educational materials and digital goods introduced in 2024, not present in 2023.

Trade shows

In North Dakota in 2024, understanding trade show and sales tax obligations is crucial for vendors:

Sales Tax Requirement: In North Dakota, vendors must collect sales tax on all taxable sales made at tradeshows.

Temporary Sales Permit: Vendors without a North Dakota sales tax permit must obtain a temporary sales permit to legally conduct sales at tradeshows.

Permit Application: Vendors can apply for a temporary sales permit online through the North Dakota Tax Department's website before attending the tradeshow.

Filing Returns: Vendors must file a sales tax return and remit collected taxes by the 20th day of the month following the tradeshow.

Local Sales Tax: North Dakota has local sales taxes in addition to the state rate. Vendors must apply the correct local rate based on the tradeshow's location.

Exemption Certificates: If selling to tax-exempt entities, vendors must obtain and retain valid exemption certificates from buyers.

Record Keeping: Vendors must maintain accurate records of all sales, tax collected, and exemption certificates for at least three years.

Compliance Audits: The North Dakota Tax Department may audit vendors to ensure proper tax collection and remittance.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service where sellers send products to Amazon's fulfillment centers. Amazon handles storage, packaging, shipping, returns, and customer service. This allows sellers to benefit from Amazon's logistics and vast customer base.

Sales tax obligations in North Dakota for FBA sellers in 2024

Marketplace Facilitator Law: Amazon, as a marketplace facilitator, is responsible for collecting and remitting sales tax on behalf of sellers for sales made through the platform.

Economic Nexus Threshold: Out-of-state sellers must collect North Dakota sales tax if they exceed $100,000 in gross sales or 200 separate transactions in the state annually.

Registration Requirement: Eligible sellers must register for a North Dakota sales tax permit even if Amazon collects tax.

Tax Collection: Amazon automatically calculates, collects, and remits sales tax on taxable goods sold to customers in North Dakota.

Record Keeping: Sellers must maintain detailed records of transactions, even if Amazon handles tax collection.

Taxable vs. Exempt Goods: Sellers must distinguish between taxable and exempt items according to North Dakota’s tax laws.

Filing and Remittance: If sellers meet the economic nexus but sell outside Amazon, they must file and remit sales tax for those transactions themselves.

Use Tax: North Dakota residents purchasing taxable goods online must pay use tax if sales tax hasn’t been collected.

Permits, certificates and sales tax registration in North Dakota

To register for sales tax in North Dakota in 2024, businesses must obtain a Sales Tax Permit from the North Dakota Office of State Tax Commissioner. You'll need to provide basic information about your business, such as your federal Employer Identification Number (EIN), business name, and address.

Ensure you complete the necessary registration forms accurately. This process enables businesses to collect and remit sales tax in compliance with state laws.

Registering for sales tax collection in North Dakota

To register for sales tax collection in North Dakota in 2024, you'll need to follow these steps:

Understand the Requirements: Before registering, ensure that your business is required to collect sales tax in North Dakota. Generally, businesses need to register if they have a physical presence or meet economic nexus criteria within the state.

Gather Necessary Information: Prepare the necessary information and documentation, which typically includes:

• Business name, address, and contact information
• Federal Employer Identification Number (EIN)
• North Dakota Secretary of State System ID Number, if applicable
• Details about your business type and structure (e.g., sole proprietorship, partnership, corporation)
• Information about the products or services you will be selling

Create an Online Account: Visit the North Dakota Office of State Tax Commissioner’s website to create an online account. This account will allow you to manage your tax filings and payments.

Complete the Sales Tax Permit Application: Once your online account is set up, fill out the sales tax permit application. You’ll need to provide detailed information about your business, including the type of business entity, your business activities, and the locations where you will be conducting sales.

Submit the Application: After completing the application, submit it through the online portal. Make sure to review all information for accuracy before submitting.

Await Approval: The North Dakota Office of State Tax Commissioner will review your application. If approved, you will receive your sales tax permit and detailed information on how to report and remit sales tax.

Start Collecting Sales Tax: Once you have the permit, you’re authorized to collect sales tax on applicable sales. Make sure to stay informed on the current tax rates and any regulatory changes.

Maintain Compliance: File regular sales tax returns and remit the collected taxes by the deadlines specified by the North Dakota Office of State Tax Commissioner.

Cost of registering for sales tax in North Dakota in 2024

There is generally no direct fee for registering for a sales tax permit in North Dakota.

The North Dakota Office of State Tax Commissioner typically allows businesses to obtain a sales tax permit without any registration fee.

Federal tax ID requirements for registering

When registering for sales tax in North Dakota, you may need an Employer Identification Number (EIN) if you are operating as a business entity such as a corporation or partnership. An EIN is essentially a federal tax identification number that is used to identify a business entity. Sole proprietors may also need an EIN in certain circumstances, such as if they have employees or operate as an LLC.

To obtain an EIN, you can apply online through the Internal Revenue Service (IRS). Here is the link to the IRS EIN application page: IRS EIN Application

For registering for sales tax in North Dakota, you can visit the North Dakota Office of State Tax Commissioner's website. Here is the link to the registration page: North Dakota Tax Registration

Make sure to have your business details and EIN (if required) handy during the registration process. If you have specific questions or need assistance, the North Dakota Office of State Tax Commissioner can provide additional support.

Streamlined sales tax program and North Dakota

Yes, North Dakota is part of the Streamlined Sales Tax (SST) program.

The SST program is a cooperative effort among multiple states to simplify and modernize sales and use tax administration, making it easier for businesses to comply with tax laws.

Acquiring a business and registering for sales tax in North Dakota

If you are acquiring a business in North Dakota and need to register for sales tax, here are the requirements you'd typically need to fulfill:

Business Information: You will need basic business details such as your business name, address, and contact information.

Federal Employer Identification Number (FEIN): This is obtained from the IRS and is necessary for your business identification.

Owner Information: Information about the business owner(s) including names, Social Security Numbers, and contact information.

Business Structure: Details about the type of business entity (e.g., sole proprietorship, partnership, corporation, LLC).

Description of Business Activities: Provide a detailed explanation of the types of goods or services you'll be selling.

Previous Owner’s Tax Information: If acquiring an existing business, you'll need the seller's sales tax permit number and other relevant tax information to ensure a smooth transition of responsibilities.

Location of Business Operations: Specify if your business will have multiple locations within the state, and provide the specifics of each location.

Expected Sales Revenue: Estimate the amount of sales you anticipate in a given period to help determine your filing frequency.

Filing Frequency: Based on anticipated sales volume, you'll need to choose how often you'll file sales tax returns (monthly, quarterly, or annually).

Once you have gathered the necessary information, you would typically register for a North Dakota sales tax permit through the North Dakota Office of State Tax Commissioner. They might provide an online portal to facilitate the registration process, or you may need to complete a paper form.

Other North Dakota registrations to consider

In North Dakota, aside from sales tax registration, you may need to consider several other types of registrations for your business. These can include:

Business Name Registration: If you are operating under a name different from your legal name, you will need to file a trade name or fictitious name registration with the North Dakota Secretary of State.

Employer Identification Number (EIN): If your business has employees, operates as a corporation or partnership, or meets certain other conditions, you will need to obtain an EIN from the IRS.

Business Licenses and Permits: Depending on the nature of your business, you may need specific state licenses or permits to legally operate. This can vary widely depending on the industry. For example, construction businesses, food services, and healthcare providers often require specialized licenses.

State Income Tax Withholding: If you have employees, you will need to register for state income tax withholding with the North Dakota Tax Department.

Unemployment Insurance: If you have employees, you will need to register for unemployment insurance with the North Dakota Job Service.

Specialty Tax Registrations: Depending on your business activities, you may need to consider additional registrations such as liquor tax permits if you are selling alcoholic beverages or tobacco tax permits if you are selling tobacco products.

Workers’ Compensation Insurance: If you have employees, you may be required to obtain workers’ compensation insurance as mandated by state law.

Requirements for online sellers in North Dakota

In North Dakota, online sellers are subject to certain requirements regarding sales tax collection. As of 2024, here are key points you should be aware of:

Economic Nexus: North Dakota enforces an economic nexus standard. If an online seller makes gross sales of at least $100,000 or engages in 200 or more separate transactions in the state within a year, they are required to collect and remit sales tax.

Marketplace Facilitators: If you're selling through a marketplace facilitator (such as Amazon or eBay), the facilitator is responsible for collecting and remitting the sales tax on your behalf.

Registration: If your sales meet the economic threshold, you must register for a North Dakota sales tax permit. This can typically be done online through the North Dakota Office of State Tax Commissioner.

Filing and Remittance: Registered sellers are required to file periodic sales tax returns (usually monthly, quarterly, or annually depending on your total sales and tax liability) and remit the collected taxes to the state.

Exemptions and Resale Certificates: Sellers should be aware of any tax-exempt status of certain products or customers and collect valid resale certificates when applicable to exempt sales from tax.

Collecting sales tax in North Dakota

Understanding origin vs. destination sales tax collection

North Dakota follows destination-based sales tax rules. This means that sales tax is based on the location where the customer receives the product, rather than where the seller is located. If you are a seller shipping a product to a customer in North Dakota, you need to collect sales tax based on the customer's delivery address.

For more detailed information, you can consult the North Dakota Office of State Tax Commissioner's website at: https://www.nd.gov/tax/salesanduse/.

Taxable products in North Dakota

In North Dakota, the state imposes a sales tax on most goods and some services. It is important to note that some goods and services may be exempt from sales tax under certain conditions, such as prescription medications, some groceries, and certain agricultural products.

Here is an overview of product genres that are subject to sales tax in 2024:

Tangible Personal Property: This includes most physical goods such as clothing, furniture, electronics, appliances, and household items.

Prepared Food and Beverages: Sales tax applies to food and beverages sold in restaurants, cafes, and similar establishments. This includes both dine-in and takeout options.

Utilities and Fuels: Sales tax is applied to utilities such as electricity, natural gas, water, and certain fuels like heating oil.

Automobiles and Motor Vehicles: The sale of cars, trucks, motorcycles, and other motor vehicles are subject to sales tax.

Construction Materials: Items such as lumber, bricks, cement, and other materials used in construction and home improvement projects incur sales tax.

Alcohol and Tobacco Products: Sales tax is applied to the sale of alcoholic beverages and tobacco products.

Digital Goods: Certain digital products such as electronic books (e-books), music downloads, and software are taxable.

Sports and Recreation Equipment: Items such as sports gear, exercise equipment, and recreational vehicles incur sales tax.

Jewelry and Luxury Goods: High-end items like jewelry, watches, and luxury accessories are also subject to sales tax.

Automotive Parts and Accessories: Sales tax is applied to car parts, tires, and automotive accessories.

Non-taxable products in North Dakota

In North Dakota, several product genres are exempt from sales tax. As of my latest knowledge update, here are some of the typically exempt categories:

Prescription Drugs and Medical Devices: Prescription medications and specific medical devices are generally exempt from sales tax.

Food and Food Ingredients: Most food items intended for home consumption are exempt. However, prepared foods, soft drinks, and dietary supplements may not be exempt.

Agricultural Supplies: Items like fertilizers, seeds, and animal feed used in agricultural production can be exempt.

Manufacturing Equipment: Certain machinery and equipment used in manufacturing may qualify for a tax exemption.

Clothing: In some cases, specific clothing items may be exempt, but this can vary.

Is SaaS taxable in North Dakota?

In North Dakota as of 2024, SaaS (Software as a Service) is considered taxable.

The state requires that businesses providing SaaS charge sales tax on their services, as they are viewed similarly to tangible personal property, and thus fall under the taxable category for digital goods and services.

Are digital products taxable in North Dakota?

As of 2024, digital products are generally taxable in North Dakota.

This includes digital goods such as downloadable music, e-books, and software. Businesses selling these products must collect sales tax from customers and remit it to the state. There may be specific exemptions or nuances in certain categories.

Are services taxable in North Dakota?

In North Dakota, most services are subject to sales tax, including both professional and personal services.

Exceptions include services related to health care, education, and certain nonprofit activities. It's important for businesses to determine whether their specific services are taxable and to collect and remit the appropriate tax if they are.

Sales tax exemption certificates

In 2024, sales tax exemption certificates in North Dakota allow eligible businesses and individuals to purchase goods and services without paying state sales tax. These certificates are typically issued to entities like nonprofits, government agencies, and certain manufacturers, among others.

To obtain an exemption, the buyer must complete a certificate form, providing detailed information about their eligibility and the nature of the purchase. When making a tax-exempt purchase, the buyer presents the certificate to the seller, who keeps it on file for tax auditing purposes.

Misuse of exemption certificates can result in penalties, including fines and payment of back taxes.

State tax holidays in North Dakota for 2024

Sales tax holidays are designated periods during which certain products are exempt from sales tax, encouraging consumer spending. In 2024, North Dakota has no scheduled sales tax holidays.

Filing sales tax returns in North Dakota

Filing sales taxes in North Dakota is a straightforward process, as long as you follow the required steps and meet the deadlines. Here’s a concise guide:

Register for a Sales Tax Permit: Register for a North Dakota Sales and Use Tax Permit online through the North Dakota Taxpayer Access Point (ND TAP).

Collect Sales Tax: Collect the appropriate state sales tax rate, which may include local taxes depending on your location.

Maintain Records: Keep accurate records of sales, including the date, amount, and tax collected.

File Sales Tax Returns: File sales tax returns either monthly, quarterly, or annually based on your business volume. Returns are due on the 20th of the month following the reporting period.

Complete the Tax Return: Use the ND TAP system to file your returns electronically. Fill out the necessary worksheets provided by ND TAP to ensure accuracy.

Make Payments: Submit tax payments electronically through ND TAP. Ensure payment is made by the due date to avoid penalties.

Amending Returns: If necessary, submit amended returns through ND TAP to correct any errors.

Compliance: Keep up-to-date with any changes in tax laws or rates by checking the state tax authority’s website regularly.

For detailed information and to start your filing process, visit the North Dakota Office of State Tax Commissioner: North Dakota Tax

Sales tax filing frequency

In North Dakota, the frequency of filing for sales taxes depends on the total tax liability of the business. The state categorizes filing frequencies into three main periods: monthly, quarterly, and annual.

For businesses with a higher volume of taxable sales, monthly filing is required. This generally applies to businesses that have an average tax liability exceeding $500 per month during the previous year. Monthly returns must be filed by the 15th of the month following the reporting period.

Quarterly filing is an option for businesses with moderate taxable sales. This is typically for businesses that owe between $100 and $500 per month. Quarterly returns are due on the last day of the month following the end of the quarter. This means that for the first quarter (January - March), returns are due by April 30th, and so on.

For businesses with minimal taxable sales, annual filing is allowed. This usually pertains to businesses with an average monthly tax liability of less than $100. Annual returns must be filed by January 31st of the following year.

North Dakota also offers an option for pre-paying sales taxes to ease the burden on businesses. This can be particularly advantageous for smaller entities with predictable sales patterns. The state encourages online filing through its electronic services portal, making the process more manageable and reducing the risk of errors.

Filing when no sales tax has been collected

In North Dakota, if a business registered for sales tax fails to collect sales tax on applicable transactions, it may face penalties and interest on the unpaid tax amount. The North Dakota Office of State Tax Commissioner requires businesses to report and remit sales tax regularly.

Non-compliance can result in audits, fines, and potential revocation of the sales tax permit. Continuous failure to collect or remit sales tax can lead to legal action and damage the business's reputation. It's crucial for businesses to adhere to sales tax regulations to avoid these repercussions.

Penalties for late filing and non-payment of sales taxes

In North Dakota, timely filing and payment of sales taxes are crucial for businesses to remain compliant with state regulations. Failure to file sales tax returns on time can result in penalties and interest charges.

For late filing, the penalty is generally 5% of the tax due per month or fraction thereof, with a maximum penalty of 25%. Additionally, interest accrues on any unpaid taxes from the original due date at a rate set by the state, which can increase the financial burden on businesses.

Non-payment of sales taxes is taken seriously in North Dakota and can lead to more severe consequences. Beyond the initial penalties and interest, continued non-compliance may result in the state taking legal actions to recover the owed amounts.

This can include garnishment of wages, levying of bank accounts, and filing of tax liens, which can adversely affect a business's credit rating and financial stability. The state may also revoke business licenses, preventing the business from legally operating until all due taxes, penalties, and interest are fully paid. It is essential for businesses to manage their sales tax obligations diligently to avoid these costly repercussions and maintain good standing with the North Dakota Tax Department.

Sales tax discounts and incentives

As of 2024, North Dakota offers several sales tax incentives and discounts to support businesses and encourage economic growth within the state. These incentives are part of North Dakota's broader strategy to foster a business-friendly environment and support various industry sectors. Here's a brief overview:

Manufacturing & Agricultural Equipment Exemption: Businesses engaged in manufacturing, processing, or agricultural activities can benefit from sales tax exemptions on machinery and equipment used directly in production processes. This exemption aims to reduce the operational costs for these industries and promote investment in advanced equipment.

R&D Equipment Exemption: To stimulate innovation, North Dakota provides sales tax exemptions on equipment used in research and development activities. Businesses involved in developing new products or improving existing ones can take advantage of this incentive to lower their capital expenditure.

Enterprise Zone Program: Certain areas in North Dakota are designated as enterprise zones to encourage economic development in less economically advantaged regions. Businesses operating in these zones may qualify for various sales tax incentives, including exemptions or reductions on construction materials, equipment, and certain services.

Renewable Energy Incentives: Companies involved in renewable energy projects, such as wind, solar, or biomass energy generation, can avail themselves of sales tax exemptions on materials and equipment. These incentives are aimed at promoting sustainable energy development within the state.

Data Center Exemptions: To attract high-tech industries, North Dakota offers specific sales tax exemptions for data centers. This includes exemptions on purchases of IT equipment, software, and construction materials used directly in setting up or expanding data center operations.

Sales Tax Refunds for New/Expanding Businesses: Newly established or expanding businesses that meet certain criteria may be eligible for refunds on sales taxes paid for purchasing building materials, machinery, and other qualifying equipment. This incentive is designed to alleviate the initial financial burden of business development.

2024 sales tax filing due dates for North Dakota

Coming soon.

Shipping and sales tax in North Dakota

When to pay tax on shipping in North Dakota

In North Dakota, sales tax applies to the total sales price, including any charges for shipping and delivery, if those charges are part of the sale transaction.

According to North Dakota law, if the sale of the goods being shipped is taxable, then the shipping and handling charges are also taxable. Conversely, if the sale is not subject to sales tax, then the shipping charges are also exempt.

It is essential for businesses to separately state the shipping charges on the invoice to comply with state regulations. If the shipping charges are included in the total sale price and are not separately itemized, they may automatically be subject to tax even if sold items are exempt.

General Rule on Shipping

Taxable Goods: If the items being sold are taxable, then any shipping or delivery charges associated with that sale are also subject to sales tax.

Exempt Goods: If the items being sold are exempt from sales tax, then the shipping or delivery charges associated with that sale are also exempt from sales tax.