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North Dakota Sales Tax 2022 for Businesses: A Complete Guide

“For most retail sales in North Dakota, the sales tax rate is 5%.”

What Does North Dakota Sales Tax Mean?

The current state sales tax rate in North Dakota (ND) is 5%. Depending on individual municipalities, the total tax rate might be as high as 8.5 percent.

North Dakota collects municipal taxes at the city and county levels, but not for special jurisdictional areas like education districts or transportation authorities.

Amazon.com owns and runs a customer service facility in North Dakota. Because of this physical presence, or nexus, Amazon and many sellers participating in Amazon’s Seller Central and Fulfillment By Amazon (FBA) programs are subject to sales tax.

The state of North Dakota charges a sales tax on gross receipts from retail establishments. Sales, use, and other taxes can be imposed at the municipal level by cities and counties with home rule charters.

North Dakota has a simple sales tax system. Out-of-state retailers should register with the state since they may have to pay sales tax.

Therefore, this is what the North Dakota sales tax is. Now, you must be wondering what are the considerations for the sales tax, how to file the tax, how to pay the tax, and a lot more. No worries! This blog is specially tailored to help you know about the North Dakota Sales Tax. Let’s dig into the concept.

How Much is the North Dakota Sales Tax for Businesses?

Retail sales in North Dakota are subject to a sales tax. The seller is responsible to collect the tax from the buyer.

In North Dakota, there are two types of sales tax:

State Sales Tax- For most retail sales in North Dakota, the sales tax rate is 5%. The gross receipts tax applies to items including

  • Alcohol content is 7%.
  • The use of new farm machinery in agriculture accounts for 3% of all new equipment.
  • At 3%, new mobile homes are being built.

Local Taxes- City or County Taxes- Cities and counties may impose special taxes such as lodging taxes, hotel taxes, restaurant taxes, and motor vehicle rental taxes. On behalf of the city or county, the Office of State Tax Commissioner administers these taxes.

In North Dakota, Do You Have to Collect Sales Tax?

If you have a nexus in North Dakota, you must collect sales tax. A seller can be nexus with a state in two different ways: physically or economically. Physical nexus means having enough tangible presence or activity in a state to make paying sales tax there beneficial. An economic nexus occurs when a business exceeds a state’s income threshold or a number of transactions. The below table shows how much is the North Dakota sales tax and the threshold limit:

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North Dakota Sales Tax

Threshold Limit

5%

$100,000 in annual sales

Now, the major question arises, what is taxable in North Dakota? Let’s see.

What is Taxable in North Dakota?

Services

Lawyers, architects, landscapers, and other professionals provide professional services. Many exceptions apply to the term, which might be quite broad. Your best bet is to check with the North Dakota Department of Revenue to see if your service is taxable in the first place.

Tangible Products

With a few exceptions, tangible goods are taxable in North Dakota. Certain groceries, prescription medicine, and medical gadgets, as well as agricultural machinery and chemicals, are exempt. The sale of motor vehicles and aircraft may be subject to excise duty. 

How to Collect Sales Tax in North Dakota?

Now it’s time to get down to business! Tax rates and sales taxes differ on the basis of the location of your business and the location of your customers.

North Dakota has a 5% sales tax that applies to the entire state.

Local governments also levy extra levels of sales tax.

Because North Dakota has a destination-based sales tax system, you must be aware of the varied tax rates throughout the state. Because your goods or service is being delivered to the buyer’s address, you should charge the buyer’s tax rate.

Note:  While this is true in most cases in North Dakota, several states have unusual tax rates for remote vendors. To be sure, contact the state’s Department of Revenue.

In North Dakota, there is a sales tax on shipping charges

In North Dakota, shipping costs are subject to sales tax. For a taxable item, taxes will apply to shipping charges. (The same is true in reverse: if the shipping item is exempt from sales tax, neither are the shipping charges.)

If you’re shipping both taxable and nontaxable items, you’ll have to pay tax on the entire package.

Now, as if you are clear about the North Dakota Sales Tax for business, let’s see how you need to file the tax. 

How to File North Dakota Sales Tax?

When it comes to filing sales tax in North Dakota, there are three things you must do:

  • Calculation of taxable amount.
  • Fill out and submit a sales tax return.
  • Make a deposit

Even if you don’t have any sales tax to report or pay, North Dakota requires that any seller with a sales tax permit file a sales tax return by the due date. You must file a “zero-tax filing” even if you didn’t make a single sale in North Dakota during the reporting period.

However, it is quite obvious that being a business owner you must be thinking for are there any penalties chargeable on non-filing of tax or any other benefits that the government may provide. Let’s see.

Are There Any Penalties or Benefits on North Dakota Sales Tax?

Penalty

Certain fines may apply if you miss a filing or payment deadline. If you don’t pay your tax before the deadline, there is a penalty of 5%, or $5. (whichever is greater). Interest is chargeable at a rate of 12% per year in North Dakota.

Discounts

On the plus side, you might qualify for sales tax breaks in North Dakota! These discounts are usually intended to save you some money as a reward for adhering to the sales tax system.

Sales Tax Holidays

The sales tax holidays in North Dakota are another challenging feature of the state’s sales tax. You are not required to charge sales tax during these times of the year, and consumers will anticipate that there will not be any charges.

Need Assistance for North Dakota Sales Tax?

We at Freecashflow.io are experts in aiding online entrepreneurs like you. Our coworkers have worked for multibillion-dollar companies including Warner Brothers, EY, and Paramount Pictures. Freecashflow.io is a dependable partner who can help you with your tax and accounting requirements. Get in touch with us!

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