North Dakota Office of State Tax Commissioner

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               ReceiptsReceiptsRece        TaxTax RequirementsiptsRequirements            Tax Requirements

In order to promote a better understanding of the North Dakota sales, use and gross receipts tax laws, the Office of State Tax 
Commissioner provides the following general information. Special guidelines for certain types of businesses also are available 
and may be obtained by contacting the Sales Tax Compliance Section of the Office of State Tax Commissioner or by viewing the 
guidelines at www.tax.nd.gov/salesanduse/guidelines.

Imposition and Rates - Sales & Use Tax
Sales tax is paid by the purchaser and collected by the retailer.

Sales tax is levied at the following rates:
  •  3 percent on the total receipts from retail sales of new manufactured homes.  (Used manufactured homes are exempt.)
  •  5 percent on the total receipts from the leasing or renting of hotel, motel or tourist court accommodations for periods of less 
than 30 consecutive days.
  •  5 percent on the total receipts from all other taxable retail sales of tangible personal property and certain services.

Imposition and Rates - Gross Receipts Tax
Gross receipts tax is levied at the following rates:
  •  3 percent on the gross receipts from retail sales of new farm machinery and new irrigation equipment used exclusively for 
agricultural purposes.
  •  5 percent on the cost of new farm machinery and new irrigation equipment used exclusively for agricultural purposes and 
attached or affixed to real property.
  •  7 percent on the gross receipts from retail sales of alcoholic beverages sold for consumption either on or off the premises.

Permit Requirements
Any business or institution with a physical presence in North Dakota making taxable retail sales of tangible personal property or 
certain services is required to hold a North Dakota sales, use and gross receipts tax permit, and to collect North Dakota and local sales 
and use taxes. 

Any out-of-state “remote” seller making taxable sales into North Dakota is required to hold a North Dakota sales, use and gross 
receipts tax permit, and to collect North Dakota and local sales and use taxes unless they qualify for the small seller exception as 
defined in N.D.C.C. § 57-39.2-02.2. The small seller exception requires sales tax collection by remote sellers only if their taxable sales 
into the state within a calendar year 1) meet or exceed $100,000 or 2) meet or exceed 200 separate transactions. More information on 
remote sellers can be found at www.tax.nd.gov/remoteseller. 

Businesses may obtain a North Dakota sales tax permit by completing the application available at www.tax.nd.gov/tap/application. 

Reporting Requirements
When a business or institution has a permit, a sales, use and gross receipts tax return is sent to the taxpayer each calendar quarter (or 
each assigned reporting period) to report and remit the sales, use and gross receipts tax. However, for faster and more secure filing and 
payment options, businesses may use the state’s electronic sales, use and gross receipts tax filing system found at www.tax.nd.gov/tap.  
These returns must be filed each period whether tax is due or not. If no tax is due, the return must be filed indicating that no taxable 
sales or reportable purchases were made for that period. If the return is not filed, the Sales Tax Compliance Section will notify the 
permit holder that the return is delinquent and that a penalty is due.

                                                                        tax.nd.gov | salestax@nd.gov 
                                                    600 E. Boulevard Ave., Dept 127 | Bismarck, ND 58505-0599 
                                                                      Phone: 701-328-1246 | TTY: 800-366-6888

Sales, Use and Gross Receipts 
Tax Requirements Guideline

Sales tax applies to sales of tangible personal property and certain services to a final user and consumer. Use tax is complementary to 
sales tax and is imposed on the use, storage or consumption of tangible personal property in this state unless the goods already have 
been subjected to sales tax. 

If a business or institution purchases materials, supplies or equipment for resale, the business or institution should not pay the tax to 
the supplier. Instead, the business or institution should collect tax from the customer when the item is sold and remit the tax to the 
Office of State Tax Commissioner.

Penalties
For returns filed late, a minimum penalty of 5 percent of the tax due or $5.00, whichever is greater, will be added to the tax due for the 
first month the return is late.  For each additional month or fraction of a month that a return is late an additional penalty equal to  
5 percent of the tax due will be assessed up to a maximum of 25 percent of the tax due.  Interest is not assessed for the first month the 
return is delinquent.  Interest of 1 percent of the tax due will be assessed for each month or fraction of a month after the first month 
that a return is late.  Penalty and interest is calculated separately for sales/use tax and gross receipts tax.

Retail sales-Sales For Resale
A retail sale is the sale of tangible personal property to a person who is the final user and consumer of the goods. The seller or supplier 
in this instance is required to collect sales tax on the sale to the final user.

A sale for resale is made when a dealer or supplier sells to another retailer for resale. The seller or supplier is not required to collect 
sales tax from the individual or company making the purchase for resale provided the seller obtains a Multistate Tax Commission 
Uniform Sales and Use Certificate, or a Streamlined Sales Tax Agreement Certificate of Exemption from the purchaser.

If a person submits a false certificate of exemption to a seller, the person submitting the false certificate is liable for any tax and 
penalties which may become due.  Exemption certificates should be obtained from retailers at least every two years.  The Streamlined 
Sales Tax Agreement certificate of exemption is available on our website.

These certificates are not to be sent to the Office of State Tax Commissioner, but must be retained in the supplier’s files to 
substantiate sales claimed as sales for resale.

Purchases Subject to Use Tax
Individuals and businesses that purchase supplies and equipment for use in running a business or for personal use must pay a sales 
or use tax on the cost of the items purchased. If these items are purchased from a firm that does not collect North Dakota sales tax, 
the purchaser must report the purchase on the Items Subject to Use Tax line of the sales, use and gross receipts tax return and pay a 
use tax on the purchase price. Examples of taxable purchases include office supplies and equip ment, samples, fixtures, display cases, 
maintenance items, cleaning supplies, delivery equipment, special installation tools and equipment, etc.

Rentals of Tangible Personal Property
The term sale also includes the leasing or renting of tangible personal property leased or rented for final use or consumption within 
this state.  Certain vehicles subject to the motor vehicle excise tax imposed by the North Dakota Century Code (N.D.C.C.)  
ch. 57-40.3 also will be subject to sales tax if the vehicle is rented in this state for less than 30 days.  Please see the Licensed Motor 
Vehicle Dealers Guideline for details.

Delivery To Out-Of-State Residents
Delivery to a customer out-of-state constitutes a sale in inter state commerce and is not a taxable sale in North Dakota. For example, 
if a retailer in North Dakota sells merchandise to an out-of-state resident and, as a condition of the sale, agrees to deliver the 
merchandise or to have the merchandise delivered to the customer at a point in another state, North Dakota sales tax does not apply. 
However, the North Dakota retailer may be obligated to collect and remit the tax for the state into which the retailer delivers if the 
retailer’s activities in that state are sufficient to obligate the retailer to that state’s tax law.

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Sales, Use and Gross Receipts 
Tax Requirements Guideline

On sales to out-of-state residents, retailers must be certain that their records contain proof of delivery, such as truck records, bills of 
lading, statement by the customer, etc.  These conditions apply to deliveries into any state or Canadian province.

Delivery Charges Taxable
Freight, delivery, and other transportation charges, including shipping and handling charges and setup charges, are always considered 
to be part of the selling price.  If the sale is taxable, the freight, delivery, and other transportation charges are taxable.  If the product 
being delivered is exempt from sales tax, then the freight, delivery and other transportation charges are also exempt.  Delivery charges 
billed directly to the customer by delivery services that are not making the sale of tangible personal property remain exempt from sales 
and use tax.

Sales to Nonprofit Organizations Are Taxable
The total receipts from sales of tangible personal property to nonprofit organizations for their own use are subject to sales tax. Such 
organizations include Boy Scouts, Girl Scouts, F.F.A., Chambers of Commerce, Lions Clubs and other civic organizations, as well as 
churches and religious groups.

Sales to Residents of Montana
North Dakota sales tax law contains an exemption for persons or business entities from Montana, defined by N.D.C.C.  
§ 57-39.2-04(12) from paying sales tax when purchasing tangible personal property within North Dakota.  Business entities that 
qualify for the sales tax exemption are domestic Montana corporations or other entities when the owners, partners, or members are 
individual Montana residents or domestic Montana corporations.  A person or business entity of Montana can take delivery of tangible 
personal property in North Dakota and can purchase this property without paying the North Dakota sales tax provided the following 
conditions are met:
  1.  The sale is in excess of $50.00.
  2.  The personal property will be taken out of the state of North Dakota and used exclusively outside this state.
  3.  The resident or business entity of Montana is in North Dakota to make a specific purchase.
  4.  The resident or business entity of Montana must sign a certificate of purchase form certifying Montana residency and that the 
goods will be used outside of North Dakota.

The prescribed certificate of purchase for use in making sales to persons or business entities from Montana may be obtained from the 
Office of State Tax Commissioner or from our website at www.tax.nd.gov/salesanduse/forms.

Goods purchased by persons or business entities from Montana must be taken from North Dakota and used entirely outside this state 
in order to qualify for the exemption. According ly, tax must be paid on lodging accommodations, meals, entertainment and similar 
goods and services which are consumed in this state.  A Montana contractor should not be purchasing tax-free for a North Dakota job.  
Also a Montana resident attending a North Dakota college should not be purchasing tax-free while attending school.

Sales to Canadian Residents
Sales to residents of Canada are not exempt from North Dakota sales tax, however, in some cases the Canadian buyer may apply  
online for a refund of North Dakota sales tax paid.  Additional information about obtaining a refund may be found at  
www.tax.nd.gov/canadianrefund.

The refund is available under the following conditions:
  1.  The Canadian resident must be in North Dakota to make a purchase and not as a tourist or temporary resident.
  2.  The goods must be removed from North Dakota within 30 days of purchase and permanently used outside of North Dakota.
  3.  The Canadian resident must apply online to the Tax Commissioner using our website www.tax.nd.gov.
  4.  The qualifying purchases (each invoice) must equal or exceed $25.00 before sales tax.
  5.  The total refund must be $15.00 per year, per request.  

Goods purchased by Canadian residents must be taken out of North Dakota and used entirely outside this state in order for the refund 
to be allowed. According ly, tax paid on lodging accommodations, meals, entertainment, etc. is not subject to refund since these 
purchases are used in North Dakota.

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Sales, Use and Gross Receipts 
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Sales to Contractors
North Dakota sales and use tax law regards any contractor who incorporates tangible personal property into real property as the final 
user and consumer of the property. As a final user and consumer, the contractor is liable for sales or use tax on the purchase price of 
that property.

If a contractor furnishes the seller of construction materials with a completed contractor certificate containing the contractor’s license 
number assigned under the provisions of N.D.C.C. ch. 43-07 and the contractor’s sales and use tax number assigned by the State 
Tax Commissioner, the seller is not required to collect tax on the sale. Any contractor furnishing such a certifi cate must report those 
purchases on the sales and use tax return for the repor ting period in which the purchases are made and pay the tax to the Office of 
State Tax Commissioner with that return. Reporting the purchases and paying the tax on a completed job basis is not permitted.

The following constitutes the Contractor’s Certificate as prescribed by the State Tax Commissioner and is available on our website.

                                              Contractor’s  Certificate
I, the undersigned, am a construction contractor holding North Dakota Contrac tor’s License No. ___________ issued by the Secretary 
of State of the State of North Dakota and North Dakota Sales and Use Tax Permit Number _________________ assigned to me by the 
State Tax Commissioner of the State of North Dakota.

I certify that as a construction contractor, I will report and remit any sales or use tax due directly to the Office of the North Dakota 
State Tax Commissioner as a result of purchases made by me from ______________________________ (Seller)

Dated this _______ day of ________________________, _________ at _______________________________________
______________________________________________                        ______________________________________________
(Contractor)                                                          (Address)

If a contractor or subcontractor also is engaged in retail trade and part or all of the machinery, equipment, material or supplies used in 
carrying out a construction contract are taken from stock that was purchased for resale, the contractor must pay a use tax on his cost 
of the materials.  The purchase price or value of the machinery, equipment, materials or supplies used or consumed in carrying out the 
construction contract must be reported on the Items Subject to Use Tax line of the sales, use and gross receipts tax return.

Local Sales and Use Tax
In addition to state sales, use and gross receipts taxes, various cities and counties also impose local option sales, use and gross receipts 
taxes. Most locations that impose a local option sales tax also impose a local option use tax, with the exception of the cities of Bisbee, 
Cando, and Scranton.   These locations impose a sales tax but not a use tax.  

Because Bisbee, Cando, and Scranton do not impose a local option use tax, a business must be located within these cities to be 
affected by the local taxes. However, for locations that impose a use tax, businesses not located within the city or county may be 
required to collect the local option tax. 

Although local option taxes are imposed locally, the Office of State Tax Commissioner administers the taxes. Please contact the Office 
of State Tax Commissioner for additional information regarding the local taxes which may affect you.  A complete listing of the city 
and county taxes is available in the Local Option Taxes by Location guideline at www.tax.nd.gov/salesanduse/guidelines.

Streamlined Sales & Use Tax Agreement
North Dakota is a member state that is in compliance with the Streamlined Sales and Use Tax Agreement.  It is the purpose of this 
agreement to simplify and modernize sales and use tax administration to reduce the burden of tax compliance.  You may find more 
information regarding the Streamlined Sales and Use Tax Agreement at www.tax.nd.gov/salesanduse/streamlinetax or contact 
salestax@nd.gov. 

21826
(Revised 11-2018)

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