US Sales Tax Guide/North Dakota Tax Guide
State-Based Sales Tax Rate
5%
Transactions Threshold
Nil
Local Tax Rate
Ranging from 1% to 3.5%
Filing Due Date
Last day of the following month
Economic Nexus Threshold
$100,000
Tax Authority
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Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting. However, you will collect the sales tax if you determine the nexus in North Dakota. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office location in North Dakota. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
A physical nexus is integrated when your business is engaged in the following in North Dakota:
If you are a remote seller (i.e., one who doesn’t have a physical presence in the state) and your business sales in North Dakota exceed $100,000 during the current or previous calendar year, you are required to comply with and register under sales tax rules.
You may also refer to the North Dakota Revenue Department advisory to know more about business activities that may create an economic nexus within the state.
You can apply online for a sales tax permit in the state. You should apply 30 days before opening the business.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
Tangible Property: Sales tax in North Dakota is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services: A few services are chargeable to sales tax, such as service or labour costs leading to the creation of tangible personal property, repair, laundering, etc. Click here to learn more about the taxability of services.
Digital Product: North Dakota generally doesn’t charge sales tax on digital products such as software, streaming services, e-books, etc. Please see the North Dakota Revenue Department advisory (pg.4) on digital transactions.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. It is non-taxable in North Dakota. Refer here for more details.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, manufacturing equipment, etc. To see what exemptions are covered, please click here.
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not in North Dakota, as the sales tax is destination-based in North Dakota, which means you must collect taxes on tangible property sold to buyers based in North Dakota.
Complexities involved where you have a business nexus even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
North Dakota has a base sales tax rate of 5%, followed by the local tax rates, which vary based on the cities and municipalities. Click here for the city-wise sales tax rates (including local rates).
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectable = Sale value * (5% plus local tax rate)
If non-taxable items are sold, shipping charges associated with such a sale are not subject to sales tax. However, when a sale includes taxable and non-taxable items, shipping charges need to be apportioned relatively between the taxable and non-taxable parts of the sale. Accordingly, sales tax applies to the taxable portion of the sale. Refer to more detailed guidance on delivery charges.
E-file: You can file your return online through North Dakota taxpayer access point (TAP).
Payments and returns are also to be remitted. The state accepts payments through checks, EFT, credit cards, etc.
Even if your sales tax liability is zero, you must file the return to avoid penalty or interest.
Based on your reported sales tax or estimated taxable sales, the state assigns you a filing frequency which can be Monthly, Quarterly or Yearly. According to your filing frequency, the due date for filing sales tax would be the last day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official website of the North Dakota Revenue Department, where you can see what the state has to say about sales tax filing due dates.
If you fail to file or pay the sales tax within the due dates, the state levies a penalty of 5% of sales tax in the first month of default (subject to a minimum of $5). Afterwards, a penalty of 5% for each subsequent month of default is levied. The total penalty amount can’t exceed 25% of the tax due.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines issued by the North Dakota Department of Revenue for penalties and interest.
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