New Sales Tax Exemption in North Dakota
- Apr 30, 2015 | Gail Cole
Governor Jack Dalrymple (R) of North Dakota has signed legislation that creates a sales and use tax exemption for materials used to construct a fertilizer or chemical processing facility. It takes effect retroactively, for taxable events beginning after December 31, 2014.
Under the new law, gross receipts from sales of tangible personal property used to construct a fertilizer or chemical processing facility [in North Dakota], and any component integral to the fertilizer or chemical processing plant, are exempt from taxes.” A fertilizer or chemical processing facility is defined here as a “processing plant that produces for retail or wholesale a fertilizer, chemical or chemical derivative from natural gas, natural gas liquids, or crude oil components.”
In order for the exemption to be valid, the following must be true:
- “The tangible personal property must be incorporated in the structure of the facility or used in the construction process to the point of having no residual economic value.”
- The integral component to the fertilizer or chemical processing plant is located at the facility site and is necessary for the plant’s processing of fertilizer or chemicals.
- The owner of the plant must receive an air quality permit or notice that the air quality permit application is complete and remit this documentation to the North Dakota Department of Revenue by June 30, 2019.
- Prior to making an exempt purchase, the owner of the plant must receive from the tax commissioner a certificate that the tangible personal property used to construct the processing facility which the owner intents to purchase qualifies for the exemption. If the owner has not received such an exemption certificate, sales tax must be paid at the time of purchase. A refund may then be sought.
In the event that a contractor purchases and installs materials eligible for the exemption and pays the sales tax, “the owner may apply for a refund of the difference between the amount remitted by the contractor and the exemption imposed or allowed by this section.” The tax commissioner must be able to verify the payment of sales and use taxes and “the exempt status of the sale or use.” Additional information is available in the text of Senate Bill 2035.
Facilitate the management of sales tax exemptions and increase compliance by implementing automated sales tax Software-as-a-Service (SaaS). Learn more.