North Dakota Sales Tax Guide: 5% State Rate, Quarterly Filing Until $333,000, ND TAP Permit and the $100,000 Remote Seller Rule
North Dakota Sales Tax Guide: 5% State Rate, Quarterly Filing Until $333,000, ND TAP Permit and the $100,000 Remote Seller Rule
If you sell taxable goods or services in North Dakota, you need answers to four questions before your first sale: what rate applies, whether you need a permit, how often you file, and when an out of state seller must collect. This guide walks through the north dakota sales tax rules a new seller needs, based on figures from the North Dakota Office of State Tax Commissioner and the North Dakota Century Code.
This article is informational content, not legal or tax advice. Tax rules and agency procedures change. Consult a qualified CPA or tax attorney about your specific situation, and confirm current rates, deadlines and fees on the official agency pages linked in this guide.
The North Dakota Sales Tax Rate
The state sales tax rate is 5% on most retail sales of tangible property and certain services. Cities and counties can add their own sales taxes on top of the state rate, so the total tax you collect can differ from one city or county to the next. North Dakota does not publish one statewide combined rate. Confirm the local rate with the city or county where you sell before you set up your point of sale system.
Several items carry rates or taxes that differ from the standard 5%:
| Item | Rate or tax |
|---|---|
| Most retail sales of tangible property and certain services | 5% state rate, plus any city and county taxes |
| New manufactured or mobile homes | 3% |
| Alcoholic beverages | 7% gross receipts tax, separate from the sales tax |
| New farm machinery | 3% gross receipts tax, separate from the sales tax |
Do You Need a North Dakota Sales Tax Permit?
Any business making taxable sales in North Dakota must hold a sales and use tax permit from the Office of State Tax Commissioner. You apply through ND TAP, the state's online tax system. Apply about 30 days before you plan to open so the permit is in place before your first taxable sale.
The permit carries no application fee set by statute. A fee applies only to reissue a revoked permit. Confirm the current reissue fee with the Tax Commissioner at tax.nd.gov before you budget for it.
The permit is a tax registration, not a general business license. North Dakota has no general statewide business license, and licensing depends on what you do. The rule that catches many new businesses is the contractor license. When the cost, value or price of a construction job exceeds $4,000, the person doing the work must hold a North Dakota contractor license issued through the Secretary of State. The contractor license is separate from your sales tax permit, so you may need both.
Filing Frequency: Quarterly Until $333,000
Your filing frequency is set when the permit is issued, and the rules come from NDCC 57-39.2-12. Returns are quarterly by statute. Once your prior year taxable sales reach $333,000 or more, you file monthly, electronically. If your sales later fall below $333,000, you may return to quarterly filing.
Quarterly returns are due the last day of the month after the quarter ends. For example, the return covering January through March is due April 30. This guide does not state monthly due dates, so confirm them with the Tax Commissioner when you receive your permit.
Two rules apply no matter which schedule you have:
- Returns are required even when no tax is due. A period with no taxable sales still needs a filed return.
- File in ND TAP. Paper returns ended January 1, 2023.
The Vendor Deduction for Paying on Time
North Dakota lets sellers keep a vendor deduction equal to 1.5% of the tax due, under NDCC 57-39.2-12.1. The deduction is capped at $110 per return and applies when the return is paid on time. Here is how the cap works. On a return showing $5,000 in tax due, the deduction is $75. On a return showing $10,000 in tax due, 1.5% would be $150, but the cap limits the deduction to $110.
Penalties and Interest
Late filing and late payment are expensive, so know the schedule before a deadline slips:
| Violation | Penalty |
|---|---|
| Late filing | 5% or $5, whichever is greater, plus 5% per month up to 25% |
| Late payment | 5% or $5 |
| Interest | 12% a year |
Use Tax: The Other Half of the Rule
North Dakota use tax is owed on untaxed purchases. If you buy equipment, supplies or other taxable items from a vendor that did not charge North Dakota sales tax, you may owe use tax on that purchase. North Dakota gives you credit for tax you already paid to another state, so you do not pay twice on the same purchase.
Use tax is the item new sellers miss most often. Nonprofit status does not exempt an organization from use tax. Ask the Tax Commissioner how to report use tax on your filings, especially if you buy equipment or materials from out of state vendors.
Remote Sellers and the $100,000 Rule
Out of state sellers have a separate threshold. A remote seller with more than $100,000 of North Dakota taxable sales in the current or previous calendar year must collect North Dakota sales tax. The test is based on dollar volume only, not the number of transactions.
Marketplace facilitators collect tax on sales they facilitate for third party sellers. If you sell through a large online marketplace, check whether the marketplace already collects on your behalf before you register and collect on your own. North Dakota is a member of the Streamlined Sales Tax project.
Recordkeeping
Keep your sales records, invoices and purchase records for 3 years and 3 months. Store them in a form you can retrieve quickly, so you can support any return within that full period.
Key Figures at a Glance
| Topic | Figure |
|---|---|
| State sales tax rate | 5%, plus city and county taxes |
| Permit application fee | None set by statute |
| Monthly filing threshold | $333,000 in prior year taxable sales |
| Vendor deduction | 1.5% of tax due, capped at $110 per return |
| Interest | 12% a year |
| Records retention | 3 years and 3 months |
| Remote seller threshold | More than $100,000 of North Dakota taxable sales |
| Paper returns | Ended January 1, 2023 |
Common Mistakes to Avoid
- Treating the 5% state rate as your full rate and skipping local city and county taxes.
- Waiting until you open to apply for the permit, rather than applying about 30 days ahead.
- Skipping a return because you owe nothing. Returns are required even with no tax due.
- Assuming your filing schedule never changes. Check your prior year taxable sales against $333,000 each year.
- Overlooking use tax on purchases where no North Dakota sales tax was charged.
- Trying to file on paper. Paper returns ended January 1, 2023.
Next Steps
- Confirm which of your products or services are taxable at the 5% rate or at one of the special rates above.
- Apply for your permit in ND TAP about 30 days before opening.
- Confirm the local city and county sales tax rates before you set prices.
- Put your filing frequency on your calendar, with a reminder for the last day of the month after each quarter.
- Track out of state purchases so you can report use tax correctly.
Official and Helpful Resources
- North Dakota Office of State Tax Commissioner: rates, returns and penalty information
- ND TAP sales and use tax permit application
- North Dakota Secretary of State: activity licenses such as contractors
- North Dakota Small Business Development Centers, hosted by the University of North Dakota Nistler College of Business and Public Administration
Final Note
This guide is informational, not legal or tax advice. Sales tax is simple to register for and costly to get wrong. If you have multistate sales, marketplace sales, construction work or questions about use tax on equipment, talk with a qualified CPA or tax attorney before you file your first return.