North Dakota vacation rental tax guide

With a bounty of popular destinations including Bismarck and Fargo, the Peace Garden State offers ample opportunity for short-term rental (STR) businesses.

But these opportunities come with tax obligations. Like hotel stays, STRs in North Dakota are subject to lodging taxes. Failure to comply with state and local tax laws can result in fines and interest penalties. Tax jurisdictions are increasingly making STR tax compliance a priority, so it’s important to address compliance before tax authorities address it for you. 

Avalara MyLodgeTax put together this guide to help you comply with North Dakota lodging tax laws at the state level. Local jurisdictions such as cities or counties may have their own lodging tax rules. For more information on the tax rates and jurisdictions that apply to your rental’s specific location, use our lodging tax lookup tool.

No lodging tax guide is a substitute for professional tax advice. Consider this an asset to help you understand and prioritize your vacation rental questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with North Dakota tax laws.

Lodging tax basics

Lodging tax is calculated as a percentage of the cost of your guest’s stay and added to the price on the bill. The guest pays the tax, but the STR operator is responsible for collecting and paying it to the proper tax authority.

What’s the definition of “short-term rental” in North Dakota?

Renting a house, apartment, a portion of a home, or a room in a home for less than 30 days is subject to North Dakota lodging taxes.

Who’s required to collect and file taxes on short-term rentals in North Dakota?

If you collect payment from short-term guests renting out a room, apartment, house, or other dwelling, you’re likely responsible for collecting, filing, and remitting lodging taxes to North Dakota tax authorities. You’re not liable for state-administered lodging taxes if a marketplace facilitator such as Airbnb or Vrbo collects all taxes on your behalf, but you may still be liable for local lodging taxes.

Location is key to compliance

The location of your rental is a crucial piece of information for lodging tax compliance. Your address determines which tax jurisdictions you’re required to report to, which taxes you need to collect, and the appropriate tax rates.

Use our lodging tax lookup tool to get a rate report specific to your North Dakota rental’s address. The report includes the estimated total tax rate to collect from guests, number of required registrations, number and frequency of returns per year, and minimum number of rented days to qualify as a taxable stay. It should be noted that tax rates and the rules governing them change frequently. Please consider your tax rate report to be informative rather than authoritative.

Local short-term rental regulations

STR operators in North Dakota should be aware of the local regulations that apply to them, including rules covering:

• Legality
• Permits, licenses, and registration
• Zoning
• Advertising
• Neighborhood notification
• Building and housing standards

Homeowner associations (HOAs), condominium communities, co-ops, and landlords may also have specific rules regarding vacation rentals. It’s your responsibility to be aware of STR policies that apply to your property.

Registering with tax authorities

Before you can begin collecting taxes on your STR in North Dakota, you’re legally required to register with the North Dakota Office of State Tax Commissioner. You can register online to receive a sales tax permit as well as instructions on filing your lodging taxes. Depending on your jurisdiction, you may be required to register with your local tax authority and file local lodging tax returns in addition to state registration and filing.

Collecting lodging taxes

Once you’ve registered with tax authorities, you’re ready to start collecting lodging taxes, which you’ll add to your guest’s bill when they pay for their stay.

Which lodging taxes apply to North Dakota short-term rentals?

In North Dakota, a number of different state and local lodging taxes may apply to your STR, depending on your location. These can include:

Tax rates

Before you can begin collecting lodging taxes, you need to know the correct rate to charge to avoid compliance issues. Our lodging tax lookup tool can give you a rate report specific to your North Dakota address.

What charges are taxable?

In North Dakota, all charges for accommodations are taxable. This includes charges such as cleaning fees, pet fees, rollaway bed fees, extra person fees, etc. Extra services offered to customers, such as valet, laundry, and childcare services are not taxable.

What happens when my short-term rental marketplace (such as Airbnb or Vrbo) collects lodging taxes for me? 

In North Dakota, all “marketplace facilitators,” including Airbnb and Vrbo are required to certify to sellers (hosts) that they will collect and remit state-administered lodging taxes.

STR operators that have received written certification that a marketplace facilitator will collect state-administered lodging taxes are no longer liable for tax on sales made through that marketplace. Local tax jurisdictions may have their own rules. If taxes aren’t being paid for you, you’re responsible for remitting them to tax authorities.

Are guests ever exempt from taxes?

There are situations in which you aren’t required to collect lodging taxes in North Dakota. For example, a guest who rents for a long term rather than a short term is exempt from short-term lodging taxes.

In North Dakota, the federal government, state governments, county governments, city governments, political subdivisions, and their agencies are exempt from paying state-administered lodging taxes when the charges are billed to and paid by the governmental entity. Exemption certificates are required.

Filing lodging tax returns

After you’ve collected taxes from your guests, it’s time to file your tax returns with the North Dakota Office of State Tax Commissioner. In North Dakota, you can file returns and pay tax online. The North Dakota Office of State Tax Commissioner allows credit card payments, but you may be charged convenience fees for this type of payment.

When do I need to file my returns?

You’ll be assigned a filing frequency and due dates when you register with the tax authority. For filing with the North Dakota Office of State Tax Commissioner, due dates are as follows:

I didn’t rent my property during this filing period. Am I still required to file a lodging tax return with the North Dakota Office of State Tax Commissioner?

Yes. STR operators registered with the North Dakota Office of State Tax Commissioner are required to file returns each assigned filing period, regardless of whether you had STR income or collected lodging taxes. Such returns are commonly known as “zero dollar returns.” Local tax authorities may have their own requirements.

Are there penalties for filing lodging taxes late?

Whether you choose to offer STRs through a marketplace like Airbnb or Vrbo, or directly to guests, you open the door to tax liability at the state and local level. As tax revenue is a major source of local funding, tax authorities are becoming more aggressive in their efforts to identify individuals and businesses not in compliance with tax laws. Failure to register with tax authorities and file lodging tax returns in North Dakota on time may result in late fees, interest payments, and in extreme cases, legal action.

I’ve been offering short-term rentals without collecting lodging tax. What options do I have? 

If you’re already operating an STR but not collecting taxes, you may be in violation of North Dakota tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risk of continuing to not collect tax.

STR operators in North Dakota may be able to take advantage of a voluntary disclosure agreement (VDA). A VDA offers an opportunity for hosts to proactively disclose prior period tax liabilities in accordance with a binding agreement with the North Dakota Office of State Tax Commissioner. VDAs are offered to encourage cooperation with state tax laws and may result in some or all penalty and interest payments being waived.

Are there options for outsourcing lodging tax filing?

Yes. Many STR operators in North Dakota file several state and local lodging tax returns every year. Filing solutions such as Avalara MyLodgeTax can relieve this burden.