North Dakota — Sales & Use Tax

North Dakota imposes a 5% sales tax on the gross receipts from all retail sales of tangible personal property within the state, including leasing or renting such property. The tax is paid by the purchaser and collected by the seller. "Tangible personal property" is defined broadly to include items that can be seen, weighed, measured, felt, or touched, and expressly includes electricity, water, gas, steam, and prewritten computer software.

Certain items are taxed at different rates. New manufactured homes are taxed at 3%, while most other retail sales of tangible personal property are subject to the 5% rate. The sales tax applies to retail sales occurring within North Dakota; sales in interstate commerce where goods are delivered to purchasers outside the state are not subject to North Dakota sales tax.

Source: N.D.C.C. § 57-39.2-02.1; N.D.C.C. § 57-39.2-01; ND Tax Commissioner Guideline

North Dakota requires remote sellers without physical presence in the state to collect and remit sales or use tax if their taxable sales into North Dakota exceed $100,000 in the current or previous calendar year. The state repealed its prior 200-transaction threshold in 2019, leaving only the $100,000 gross sales test. Remote sellers who meet this threshold must register and collect tax.

Source: Sales and Use Tax History, North Dakota Office of State Tax Commissioner

North Dakota exempts gross receipts from sales of food and food ingredients from sales tax, but this exemption does not apply to alcoholic beverages, candy, chewing gum, dietary supplements, prepared food, or soft drinks containing fifty percent or less fruit juice. Exempt food includes items sold in an unheated state by weight or volume as a single item, and food that is only cut, repackaged, or pasteurized by the seller. The statute defines each taxable category separately, and practitioners should consult the detailed definitions in subsection 26 of the exemptions statute for classification questions.

Source: N.D.C.C. § 57-39.2-04, subsection 26

North Dakota imposes a 5% use tax on the storage, use, or consumption of tangible personal property within the state when no sales tax was collected on the purchase. The use tax is complementary to the sales tax and applies to purchases made for use in North Dakota. If the seller holds a North Dakota sales and use tax permit, the purchaser must pay the use tax to that seller; if the seller does not hold a permit, the purchaser must remit the tax directly to the Tax Commissioner.

Source: N.D.C.C. § 57-40.2-02.1; N.D. Admin. Code § 81-04.1-01-02

The North Dakota Tax Commissioner assigns each registered retailer a filing frequency—monthly, quarterly, semi-annual, or annual—based on the retailer's sales volume. Retailers whose taxable sales in the preceding calendar year exceeded $25,000 must file and pay on a monthly basis. For retailers with lower sales volumes, the Tax Commissioner may assign quarterly, semi-annual, or annual filing frequencies at registration or upon subsequent review.

Sales and use tax returns and payments are due by the last day of the month following the reporting period. For example, a monthly filer's return covering January activity is due February 28 (or 29 in a leap year); a quarterly filer's return for the first quarter (January–March) is due April 30. When a due date falls on a weekend or legal holiday, the deadline shifts to the next business day.

Electronic filing requirement. Retailers required to file monthly returns must file electronically using a method approved by the Tax Commissioner. The Tax Commissioner may waive this electronic-filing requirement for good cause shown. Retailers who fail to comply with the electronic-filing mandate are deemed to have failed to file and are subject to the penalties set forth in N.D.C.C. § 57-39.2-18.

Zero returns. Retailers must file a return for each assigned reporting period even if no sales tax was collected during that period. A "zero return" reporting no taxable sales is required; failure to file a zero return may result in delinquency penalties.

Source: N.D.C.C. § 57-39.2-12; Sales and Use Tax Deadlines, North Dakota Office of State Tax Commissioner

North Dakota requires marketplace facilitators to collect and remit sales and use tax on sales made through their platforms. A marketplace facilitator is a person that contracts with sellers to facilitate the sale of their products through a marketplace—defined as a physical or electronic place, including stores, internet websites, catalogs, television or radio broadcasts, or dedicated sales software applications—and either (a) directly or indirectly collects payment from the purchaser and transmits payment to the seller, or (b) provides a virtual currency that buyers use to purchase products from the seller.

Payment processors whose sole activity is handling payment transactions between seller and purchaser are excluded from the marketplace facilitator definition.

Economic nexus threshold for marketplace facilitators. A marketplace facilitator without physical presence in North Dakota must collect and remit tax if its taxable sales into the state exceed $100,000 in the current or previous calendar year. For purposes of determining whether this threshold is met, the marketplace facilitator includes all taxable sales made through the marketplace, including sales made on its own behalf as well as those facilitated for marketplace sellers.

Registration timing. A marketplace facilitator without physical presence that meets the $100,000 threshold for the first time in the current calendar year must register and begin collecting tax within 60 days after reaching the threshold or on January 1 of the following calendar year, whichever is earlier. Facilitators with physical nexus must collect tax regardless of sales volume.

Certification and marketplace seller relief. North Dakota law requires marketplace facilitators to certify to each marketplace seller that the facilitator will collect and remit all state and local sales and use taxes on marketplace sales. Once a marketplace seller receives this written certification, the seller is no longer liable for tax on sales made through that marketplace. Marketplace sellers who hold a valid North Dakota sales and use tax permit should not report sales made through a certified marketplace facilitator on their own returns.

Liability relief for marketplace facilitators. A marketplace facilitator is not liable for failure to collect and remit the correct tax if the facilitator demonstrates to the Tax Commissioner's satisfaction that: (1) the facilitator maintains a system to require sellers to provide accurate information and has made reasonable efforts to obtain accurate information from the seller about the retail transaction; (2) the failure to collect the correct tax was due to reliance on incorrect or insufficient information provided by the seller; and (3) the marketplace facilitator and marketplace seller are not affiliated. When a facilitator qualifies for this relief, the seller and the purchaser remain liable for any uncollected, unpaid, or unremitted tax.

Effective date. North Dakota's marketplace facilitator law took effect October 1, 2019, enacted as Senate Bill 2338 during the 66th Legislative Assembly. Marketplace facilitators were not required to collect or remit tax on sales made before October 1, 2019.

Source: N.D.C.C. § 57-39.2-02.3; N.D.C.C. § 57-40.2-02.4; Marketplace Facilitator, North Dakota Office of State Tax Commissioner