North Dakota Sales Tax Rates

Total Range for 2024

5%–8.5%

north dakota tax

Nexus in North Dakota

Similar to other states, North Dakota has both physical nexus and economic nexus rules to determine a business’s obligation to collect sales tax:

  • Physical Nexus: Having a physical presence in North Dakota, like an office, warehouse, or employees in the state, triggers this type. If you do, you likely need to collect sales tax.
  • Economic Nexus: This kicks in when your sales within North Dakota exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

In North Dakota, the economic nexus threshold is $100,000 or more of gross sales from deliveries of tangible personal property or services to locations within North Dakota State during the previous twelve months.

Why do you need to collect sales tax in North Dakota?

Businesses are required to collect sales tax in North Dakota for two primary reasons:

  1. Supporting Essential Government Services: Sales tax serves as a vital source of revenue for both state and local governments in North Dakota. This revenue is crucial for funding essential services such as law enforcement, firefighting, road maintenance, and public education. By collecting sales tax, businesses with a significant presence (nexus) in North Dakota play a role in sustaining these critical services.
  2. Promoting Fair Competition: Sales tax collection ensures fair competition among businesses operating within North Dakota. Without it, out-of-state vendors could gain an unfair advantage over local businesses by not collecting sales tax. Sales tax guarantees that all businesses selling similar products or services in North Dakota contribute fairly to the state and local tax base.

Is what you’re selling taxable in North Dakota?

In North Dakota, sales tax applies to most tangible personal property, certain specified digital products, and some services. Here’s a breakdown to help you determine if your product or service is taxable:

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How to Register for Sales Tax in North Dakota

If you’ve determined you need to collect sales tax in North Dakota, registering for a Sales Tax Certificate is the next step. Here’s how you can do it:

  1. Online Registration:

The North Dakota Office of State Tax Commissioner offers online registration through their Taxpayer Access Point (TAP) system. This is generally the fastest and most convenient method. Here’s what you’ll need:

  • Business name and address
  • Contact information
  • Federal Employer Identification Number (EIN)
  • Business activity start date
  • Projected monthly sales and taxable sales
  • Products or services offered
  1. Mail-in Registration:

If online registration isn’t an option, you can also register by mail using an application form (Sales and Use Tax Permit Application – Form ND Revenue 2).

  • Download the North Dakota Sales and Use Tax Permit Application (Form ND Revenue 2) from the Tax Commissioner’s website.
  • Complete the form following the instructions provided.
  • Mail the completed application form along with any required documentation to the address listed on the form.

Whichever method you choose, make sure to have all the necessary information readily available to ensure a smooth registration process.

Additional Notes:

  • You may be required to file a surety bond along with your application, depending on your business type and projected sales tax liability.
  • Once your application is approved, you’ll receive a Sales and Use Tax Permit with your permit number. You’ll need this number to collect and report sales tax.

How to Collect Sales Tax in North Dakota

Once you’ve registered for a Sales and Use Tax Permit and received your permit number in North Dakota, here’s what you need to know about collecting sales tax:

  1. Determine the Tax Rate:

The sales tax rate in North Dakota is a single statewide base rate of 5%.  There are no additional local sales tax rates imposed in North Dakota.

  1. Apply the Tax Rate:

Once you know the sales tax rate (5%), simply add it to the taxable sales price of your goods or services to determine the amount of sales tax to collect from the customer.

  • Example: If you sell a product for $100 in North Dakota, the sales tax amount would be $5 (100 x 5%). You would collect $105 ($100 + $5) from the customer.
  1. Keep Good Records:

It’s crucial to maintain accurate records of your sales and sales tax collected. These records are essential for filing sales tax returns and during any potential audits by the state.

  1. Report and Remit Sales Tax:

North Dakota businesses are required to file sales tax returns and remit the collected tax on a regular basis. The specific filing frequency depends on your business’s total sales tax liability.

  • Generally, businesses with lower sales tax liability will file quarterly, while those with higher liability may need to file monthly.

You can find detailed information on sales tax filing deadlines and remittance procedures on the North Dakota Department of Revenue website or by contacting them directly.

Additional Tips:

  • Consider hiring a sales tax wingman to take care of calculations, filing, and remittance, saving you time and ensuring accuracy.
  • Stay informed: Sales tax laws and regulations can change, so stay updated on any changes that might affect your business.

FAQs

How often should you file sales tax returns in North Dakota?

The frequency of filing sales tax returns in North Dakota varies depending on your business’s total sales tax liability. The North Dakota Office of State Tax Commissioner assigns a filing frequency upon registration for your Sales and Use Tax Permit.

In general:

  • Businesses with minimal sales tax liability (below a specific threshold) typically file annually.
  • Businesses with moderate liability may file quarterly.
  • Businesses with significant liability may need to file monthly.

These thresholds and filing requirements are subject to change, so it’s advisable to check the Tax Commissioner’s website or contact them directly for the most up-to-date information.

Is a seller/reseller permit required?

Yes, in North Dakota, a seller’s permit is referred to as a Sales and Use Tax Permit. It’s necessary to obtain a Sales and Use Tax Permit to collect sales tax in North Dakota. Instructions for registering for a Sales and Use Tax Permit can be found in the “How to Register for Sales Tax in North Dakota” section above.

When are sales tax returns due in North Dakota?

Sales tax return deadlines in North Dakota depend on your assigned filing frequency (monthly, quarterly, or annually) and the month when your permit became effective.

Detailed information regarding filing deadlines based on your filing frequency and registration month is available on the Tax Commissioner’s website.

Are there any exceptions to sales tax on digital products?

There are limited exceptions regarding certain digital products in North Dakota. Here’s a brief overview:

  • Taxable: Downloaded digital products like ebooks, audiobooks, and music purchased for personal use are subject to sales tax in North Dakota.
  • Non-Taxable: Services associated with digital products, such as separately billed subscriptions to streaming services or online gaming platforms, may not be subject to taxation.

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