Do you need to collect and remit sales tax in North Dakota?
In North Dakota, sales tax is imposed on retail sales at a combination of state and local rates. This includes selling tangible personal property, admissions to recreational activities, and rental lodging accommodations. However, exemptions apply depending on the type of business and the services or sales made.
For instance, remote sellers without a physical presence in North Dakota, (such as a store or employees), are exempt unless their taxable sales exceed a specified threshold. Moreover, there are exempt organizations like government entities, public and private non-profit schools, and qualifying health or senior citizen organizations. A detailed list of North Dakota exempt organizations can be found in this guideline.
Remember! In order to legally make an exempt purchase or sale, a sales tax exemption certificate must be obtained.
Do you have sales tax nexus in North Dakota?
Understanding the concept of sales tax nexus is crucial for any business, as it determines whether a company must collect and remit sales tax. There are generally two main types of nexus: physical and economic. These classifications help businesses, both within and outside the state, understand their sales tax obligations and ensure that the state receives the appropriate collections.
Physical sales tax nexus in North Dakota
Physical sales tax nexus refers to businesses having a tangible presence within the state. Examples of a physical presence include having a storefront, office, or employees in the state. Businesses with physical nexus in North Dakota must collect and remit sales tax on taxable sales regardless of their gross proceeds, unless they have a valid sales tax exemption certificate.
Economic sales tax nexus in North Dakota
Economic sales tax nexus applies to businesses that have a significant economic presence in the state, but do not have physical nexus. Remote sellers with significant economic presence will have met the state’s economic nexus threshold, which is taxable sales that exceed $100,000 in the current or previous calendar year. Once this threshold is met, the business must register with North Dakota and begin collecting sales tax within 60 days or on January 1st, whichever date comes sooner.
Economic nexus is a relatively recent concept implemented by many states. As ecommerce continues to grow, economic nexus laws play a vital role in guaranteeing that sales tax is collected from a wider variety of businesses. This ensures a level playing field, where businesses with a physical presence are not at a disadvantage by having to collect sales tax while online or remote sellers remain exempt.
Are marketplace facilitators required to collect and remit sales tax in North Dakota?
North Dakota law mandates that marketplace facilitators collect and remit sales, use, and local taxes on sales made through their platforms. Facilitators with a physical presence in the state are required to collect and remit sales tax regardless of gross proceeds. Meanwhile, those without a physical presence must do so only if their taxable sales surpass $100,000 in the current or prior calendar year. A marketplace seller—which is a remote seller or business who uses a facilitator to sell their products or services—isn’t responsible for sales tax on sales made through the facilitator. If you sell through a marketplace, ensure that the facilitator provides written certification of a valid North Dakota sales and use tax permit.
Note: Marketplace sellers with nexus in North Dakota should not report sales made via a marketplace.
What platforms are marketplace facilitators?
What is a marketplace facilitator?
A marketplace facilitator, sometimes referred to as a Multivendor Marketplace Platform (MMP), is an online platform that allows customers to purchase goods or services from various vendors in one convenient location. These platforms can benefit businesses by increasing product visibility and attracting a larger customer base. Additionally, marketplace facilitators often have the legal responsibility to collect and remit sales tax on behalf of sellers, which can help ease the sales tax burden for businesses.
Filing North Dakota Sales Tax
If you have nexus in North Dakota and need to start collecting sales tax from your customers, you will need to register for a sales tax permit, collect sales tax at the right rate, and file your tax returns with the state according to your filing frequency. If all these steps feel overwhelming or unattainable, refer to the table below!
|Step||Process||Instruction||Tips & Best Practices|
|1.||Register for a North Dakota Sales Tax Permit||Visit North Dakota’s online Taxpayer Access Point (TAP) to register your business.||Keep your business information handy while completing the application and double-check all details for accuracy!|
|2.||Collect North Dakota Sales Tax||North Dakota uses a destination-based sales tax system, which means that sales tax is collected at the rate of where the item or service is delivered. Include delivery charges as a part of the sale to be taxed. Collect based on the filing frequency assigned to you by the state (more on this later).||North Dakota provides a sales tax rate lookup tool, which can be helpful especially in the case of changing rates.|
|3.||File Sales Tax Returns||File your sales tax returns online through the North Dakota Taxpayer Access Point (TAP) by the due date. Remitting payment is also required online after your return is submitted. Sales tax returns must be filed even if there are no sales or tax to report.||Set reminders for filing deadlines to avoid late filing penalties, or opt-in to electronic correspondence with the North Dakota Tax department to receive email reminders!|
|4.||Maintain Accurate Records||Keep detailed records of all sales transactions, including invoices, receipts, tax returns, and tax-exempt sales. Maintain records for at least three years and three months in case of an audit.||Implement a reliable record-keeping system and regularly review your records for accuracy, (or outsource this task to a tax accountant!)|
Let us file for you!
If filing sales tax returns is too overwhelming or time-consuming, you’re not alone. Running a business is demanding work and filing tax returns can be a pain, especially when you need to keep up with all the different rules and regulations. We at SalesTaxSolutions.US are here to make things easier! As a company, we help businesses like yours deal with the many state-by-state regulations and file your sales tax returns for you. We’ve got 20 plus years of knowledge and experience to help you get back to saving time and making money as soon as possible. Message, email or call us at 888-544-7730 for a free quote today!
When are sales tax returns due in North Dakota?
When a business registers for a North Dakota sales tax permit, they will be assigned a filing frequency based on how often sales occur. These frequencies are monthly, quarterly, or annually. Regardless of your filing frequency, sales and use tax returns are due by the end of the month following a reporting period. If the last day of the month falls on a Saturday, Sunday, or holiday, returns are due the next business day.