Sales Tax Guide for North Dakota

What Is Taxable in North Dakota?

In North Dakota, most tangible personal property is subject to sales tax. Exemptions include prescription drugs, certain groceries, agricultural equipment, and some digital products.

If your business sells taxable goods or services, you are responsible for collecting and remitting sales tax appropriately. Ensure you check if additional use taxes apply when receiving products from out-of-state purchases.

Who Needs to Collect Sales Tax?

Businesses that must collect sales tax include:

• Retailers with a physical presence in North Dakota
• Online sellers that satisfy the state’s economic nexus threshold
• Service providers, depending on the nature of the service

North Dakota enforces an economic nexus threshold of $100,000 in sales or 200 transactions per year. Exceeding this limit subjects you to sales tax registration even if you lack a physical presence in the state. Failure to comply may lead to penalties and back payment, underscoring the importance of doola’s Bookkeeping service for maintaining compliance and avoiding issues.

How to Register for a Sales Tax Permit in North Dakota

Registering for a sales tax permit in North Dakota involves the following steps:

1. Collect necessary documents: EIN, business license, and business details.
2. Visit the North Dakota Office of State Tax Commissioner’s website.
3. Complete the online application process.
4. Receive your Sales Tax Permit and start collecting tax.

Collecting tax without a permit is illegal, so ensure you register before making taxable sales. doola’s expert bookkeeping team is available to assist in navigating the registration process, easing the administrative burden on your business.

How to Calculate Sales Tax in North Dakota

Follow these steps to accurately calculate sales tax:

Step 1:
Determine the correct sales tax rate based on the location of your business and your customer’s location.

Step 2:
Collect the appropriate amount of tax during the sale.

Step 3:
Maintain accurate and detailed records of each transaction.

North Dakota businesses might need to file sales tax returns monthly, quarterly, or annually, contingent on sales volume. Ensure timely filing to avoid penalties. Additionally, bear in mind the differing local sales tax rates that must be added to the state rate in some jurisdictions.

How to File and Pay Sales Tax in North Dakota

Filing and paying sales tax in North Dakota requires awareness of the state’s resale tax exemption rules. Knowing which goods or services are exempt is crucial to filing correctly.

The procedure generally involves logging into the North Dakota Office of State Tax Commissioner’s online portal, reporting total sales and taxable sales, computing the amount due, and paying using an accepted method of payment.

While this process can become complex, doola’s specialized Bookkeeping service can provide the guidance necessary to leverage sales tax exemptions while maintaining compliance with North Dakota’s sales tax laws.

Common Sales Tax Exemptions in North Dakota

Certain businesses and organizations in North Dakota are entitled to sales tax exemptions, such as:

• Purchases intended for resale (with a valid resale certificate)
• Sales made to charitable or nonprofit organizations
• Certain purchases made for manufacturing or agricultural purposes

To claim these exemptions, proper exemption certificates are required, and records must be meticulously maintained. Improper use of exemption certificates can lead to audits and charges.

Remote Seller and Marketplace Sales Tax Rules in North Dakota

North Dakota has specific requirements for remote sellers and marketplace facilitators such as Amazon, eBay, Shopify, and Etsy.

The state’s economic nexus threshold stands at $100,000 in sales or 200 transactions yearly. Once exceeded, the business must comply with North Dakota’s remote seller tax rules.

Marketplaces are generally subject to different reporting obligations, and participating in these platforms requires familiarity with North Dakota’s sales tax stipulations.

What Triggers a Sales Tax Audit

The North Dakota Office of State Tax Commissioner may audit businesses for reasons including inaccurate or missing sales tax filings, consecutive late payments, significant variances between reported and actual sales, and misuse of exemption certificates.

Maintaining thorough records of sales, exemptions, and tax payments can mitigate the risk of audits. Regular internal audits also help ensure accurate tax return filings.

FAQs About Sales Tax in North Dakota

Here are common inquiries related to North Dakota sales tax:

Does North Dakota tax digital products? 

Yes, specific digital goods are taxable, although some may be exempt. It’s best to check the latest state guidelines.

Do out-of-state vendors need to collect North Dakota sales tax? 

If they meet the threshold of $100,000 in sales or 200 transactions annually, yes, they must collect North Dakota sales tax.

What should I do if I overcharge or undercharge sales tax? 

In cases of overcharging, refunds may be necessary. For undercharges, you might need to pay the shortfall to the state. Meticulous record-keeping can prevent such issues.

Are any services taxable in North Dakota? 

While most services aren’t taxed, exceptions exist, such as certain repair and installation services.

Stay Compliant With doola

Sales tax compliance can seem daunting, but with the right support and knowledge, you can ensure smooth operations and avoid penalties.

doola is here to guide you with compliance tools, offering a range of financial solutions, tax strategies, and bookkeeping services to support your business.