North Dakota Sales Tax Guide 2024: Compliance, Rates, and Regulations for Ecommerce Businesses

Sales tax at a glance

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North Dakota sales tax rates & calculations in 2023

The North Dakota sales tax rate in 2023 ranges from 6% to 8.5%, comprising a base state rate of 5% plus local rates ranging from 1% to 3.5%, depending on the jurisdiction. In some areas, the total tax rate can be as high as 8.5%.

To calculate North Dakota sales tax, you can use the following formula:

Sales tax = (5% base rate + local rate) * purchase price

For instance, if the local rate is 2% and the purchase price is $100, the sales tax would be $7.

List of local sales tax rates in North Dakota

You can look up the full table of sales tax rates in each city and county in North Dakota on the state tax website. Here are a few examples:

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FAQs

How do you calculate North Dakota sales tax?

To calculate North Dakota sales tax, you can use the following formula:

Sales tax = (5% base rate + local rate) * purchase price

For instance, if the base rate is 5%, the local rate is 2%, and the purchase price is $100, the sales tax would be $7.

What are the penalties for not paying North Dakota sales tax?

The penalties for not paying North Dakota sales tax can include:

• Late filing penalty of 5% of tax due or $5, whichever is greater
• Late payment penalty of 5% of unpaid tax or $5
• Interest charges of 12% annually on unpaid tax

What’s the difference between destination-based and origin-based sales tax states?

Destination-based sales tax states calculate tax based on where the purchaser is located. Origin-based sales tax states calculate tax based on where the seller is located.

Is the North Dakota sales tax destination-based or origin-based?

North Dakota is a destination-based sales tax state. Sales tax is calculated based on the purchaser's ship-to address.

Is North Dakota a Streamlined Sales Tax state?

Yes, North Dakota is a full member state of the Streamlined Sales and Use Tax Agreement (SSUTA).

Sales tax nexus table in North Dakota

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FAQs

Do I need a North Dakota seller's permit if I’m only a wholesaler?

Yes, you need a North Dakota seller's permit even if you only sell goods wholesale and not retail. However, you may need to provide a resale certificate to suppliers.

Do I need a North Dakota seller's permit if I only sell temporarily in the state?

Yes, if you sell goods in North Dakota, even temporarily, you likely need a North Dakota seller's permit. This includes selling at trade shows, conventions, flea markets, etc.

Exemptions from sales tax in North Dakota

Some exemptions from North Dakota sales tax include:

• Most non-prepared food items
• Prescription drugs
• Some medical devices
• Farm machinery and equipment
• Items purchased for resale
• Groceries
• Diapers

FAQs

Are groceries taxable in North Dakota?

Most groceries are exempt from sales tax in North Dakota. However, prepared foods, dietary supplements, soft drinks, candy, etc., are taxable.

Is clothing taxable in North Dakota?

Yes, clothing is generally taxable in North Dakota unless it can be considered protective equipment.

Are digital products taxable in North Dakota?

No, digital products like digital books, music, movies, etc., are not taxable in North Dakota.

Is software-as-a-service (SaaS) taxable in North Dakota?

No, software-as-a-service is not considered taxable in most cases.

Are services taxable in North Dakota?

Some services, like installation, repair, laundering, etc., are taxable. Professional services like legal, medical, and financial services are not taxable.

Excise taxes in North Dakota (alcohol, tobacco, gasoline, fuel, marijuana)

North Dakota levies excise taxes on alcohol, tobacco, gasoline, special fuels, and medical marijuana. The tax rates are:

• Liquor: $2.50 per gallon
• Wine: $0.50 per gallon
• Beer: $0.16 per gallon
• Cigarettes: $0.44 per pack of 20
• Tobacco products: 28% of wholesale purchase price
• Gasoline: $0.23 per gallon
• Special fuel: $0.23 per gallon
• Medical marijuana: 5%

Remote sellers in North Dakota

Remote sellers with over $100,000 in annual sales or 200 transactions from North Dakota must register and collect North Dakota sales tax.

Discretionary taxes in North Dakota (local sales taxes)

In addition to the 5% statewide sales tax, counties and cities in North Dakota can impose local option sales taxes ranging from 1% to 3.5%. These discretionary sales taxes result in total rates ranging from 6% to 8.5%.

Collecting sales tax in North Dakota

Let's examine the detailed steps to properly collect, report, and remit sales tax in North Dakota.

How to collect North Dakota sales tax for out-of-state sellers

Even if your business has no physical presence within North Dakota, you may still be required to register and collect North Dakota sales tax if you meet certain economic thresholds for sales into the state.

Specifically, out-of-state sellers are considered to have nexus. They must collect North Dakota sales tax if they exceed $100,000 in gross annual sales or 200 separate transactions delivered into the state.

Once these thresholds are met, out-of-state sellers must:

• Register for a North Dakota seller's permit
• Begin collecting state sales tax at 5% plus applicable local rates on taxable sales in North Dakota
• File regular North Dakota sales and use tax returns
• Remit the sales tax collected to the North Dakota Office of State Tax Commissioner

There are also specific rules around attending trade shows, inventory stored in fulfillment centers, and sales facilitated by online marketplaces that can trigger a North Dakota sales tax collection obligation for out-of-state sellers.

It's essential for sellers to closely monitor their economic connections and sales volumes in North Dakota so they know if and when they meet the sales tax economic nexus thresholds.

Collecting sales tax on shipping charges in North Dakota

In North Dakota, delivery charges, shipping charges, handling fees, and transportation charges are generally considered part of the taxable sales price of tangible personal property. Therefore, if the sale is subject to North Dakota sales tax, the seller must also collect applicable state and local sales tax on shipping charges billed to the customer.

The taxation of shipping charges applies whether the charges are separately stated or included in the sales price. There is no exemption in North Dakota for shipping and handling charges, except when the sale qualifies as exempt.

Filing and paying sales taxes in North Dakota

All retailers registered to collect North Dakota sales tax must file returns and remit any collected sales tax regularly. Filing frequencies are monthly, quarterly, or annually, depending on sales volumes. Returns and payments must be submitted electronically via the North Dakota Taxpayer Access Point (TAP) system.

North Dakota sales tax return filing schedule and due dates

The Office of the State Tax Commissioner assigns a filing frequency to each business based on anticipated taxable sales volumes. The schedules are monthly, quarterly, or annual.

Below are the tax return due dates that apply in North Dakota:

Monthly

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Quarterly

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Annually

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Filing penalties in North Dakota

North Dakota imposes penalties for late filing of sales tax returns:

• A 5% penalty (or $5 minimum) applies in the first month
• An additional 5% penalty for each subsequent month
• Maximum 25% penalty

Interest charges may also apply.

When are returns due in North Dakota?

In North Dakota, sales tax returns are due by the last day of the month following the close of the filing period.

For example, for a quarterly filer, if the filing period ends March 31, the return must be filed and paid by April 30.

FAQs

What are the North Dakota sales tax due dates?

The due dates vary based on filing frequency - monthly filers must submit returns by the last day of the following month, quarterly filers by the last day of April/July/October/January, and annual filers by January 31.

I didn’t collect any North Dakota sales tax during this period. Do I still need to file a return?

Yes, every retailer must file a $0 sales tax return for reporting periods where no sales tax was collected.

Can I amend a North Dakota sales tax return?

Retailers can file an amended return to correct errors or report additional tax owed. Amendments can be submitted electronically through the TAP system.

What is the penalty for filing and paying North Dakota sales tax late?

When filing late, the penalty is 5% of the tax owed or $5 minimum. Additional 5% penalties apply for each subsequent month, up to 25% plus interest charges.

Audit & appeals process

The audit and appeals process in North Dakota involves several steps if a business is audited and disputes the findings. It starts with the audit, then goes to appeals with the Office of State Tax Commissioner, and finally to the District Court.

North Dakota sales tax audit process

The typical audit process in North Dakota includes:

• The auditor contacts the business to schedule an audit
• Auditor reviews records and sales tax returns
• Auditor issues assessment report with findings
• Companies can discuss results with the auditor
• If the business disagrees, it can file an appeal

What to expect during the audit?

During a North Dakota sales tax audit, the business should expect the auditor to review relevant records like sales invoices, purchase invoices, bank statements, accounting books, exemption certificates, and past sales tax returns. The auditor is looking for any unreported or underpaid sales tax.

After the audit – Appealing the results

If a business disagrees with the auditor's findings, it can file an appeal within 30 days. This involves submitting a written request for review along with supporting documentation. The business will then schedule an appeals conference to present its case. If the appeal is denied, the next step is to file with the District Court.

Sales tax registration

Below are the key steps to register for a North Dakota sales tax permit:

How to register for sales tax in North Dakota

Registering for a sales tax permit in North Dakota is essential for any business making taxable retail sales in the state. You should register at least 30 days before commencing retail operations. Here is the step-by-step process:

1. You will need to have basic details about your business ready before registering. This includes:

• Legal business name
• Ownership structure
• Federal EIN
• Physical business locations
• Mailing address
• Email
• Anticipated monthly sales
• North Dakota sales locations
• Type of products sold

2. Visit the North Dakota Taxpayer Access Point (TAP) website and create an online account for your business. You will use this portal for all future sales tax filing and payment.

3. After creating your TAP account, you can complete the online sales tax permit application. Answer all questions about your business activities and products sold in North Dakota.

4. After reviewing your application, the Office of the State Tax Commissioner may contact you to obtain clarification or additional details about your business. Respond promptly to any requests to avoid delays.

5. After approving your application, the Tax Commissioner's office will assign a sales tax account number and filing frequency. You will receive an official North Dakota Sales and Use Tax Permit via email or mail.

Once registered, you must collect tax on taxable sales and file returns even if no sales tax was collected. Filing frequencies are monthly, quarterly, or annually based on sales volume.

Registration requirements for online sellers

Remote sellers exceeding $100,000 in annual North Dakota sales or 200 transactions must register to collect state sales tax. Additional registration rules apply to online sellers who are selling on online marketplaces.

Cost of registration for a North Dakota sales tax license

There is no fee to obtain a North Dakota seller's permit. However, some businesses may need to furnish a bond that is eligible for refund after 2 years of timely filing.

More Information & Contacts

For help with North Dakota sales tax filing, registration, audits, or appeals, contact:

• Authority Name: North Dakota Office of State Tax Commissioner
• Phone number: 701-328-1246
• Website: tax.nd.gov

There you have it—a perfect guide on North Dakota's sales tax rules and regulations. Need help filing taxes for your ecommerce store? Schedule a demo with Numeral now.