North Dakota Sales Tax Guide
Chapter 3: Getting registered to collect North Dakota sales tax
The first step toward proper management of North Dakota sales tax involves getting registered with the North Dakota Office of State Tax Commissioner. We get a lot of questions regarding this and recognize it may be the most difficult hurdle for small businesses to overcome. Registering to collect sales tax in North Dakota means you've acknowledged your legal responsibility to collect and consequently file and remit sales tax to the state.
When do I need to register to collect sales tax in North Dakota?
There are two ways to think about this question. The first involves a topic called "nexus". Nexus, in the tax world refers to a company's connection to a state. While this connection is typically that of a physical nature (warehouse in the North Dakota, inventory in North Dakota, etc.), nexus is not limited to a physical presence. There are many nexus triggers we won't delve into here and, more importantly, nexus is often determined by a combination of events rather than a single event.
If it is determined you have nexus in North Dakota, the North Dakota Office of State Tax Commissioner has the legal right to require you to collect, file, and pay sales tax.
If you've determined you have nexus in North Dakota, the second question involves a topic we call "materiality". In short, you'll want to ask yourself whether the amount of sales tax you are required to collect and remit to the North Dakota Office of State Tax Commissioner is enough to put you at an unacceptable level of penalty and interest risk. As everyone's level of risk tolerance is different, this is a question that can only be answered by you, the business owner.
Prior to selling taxable goods or offering taxable services in North Dakota, a business that has established nexus within the state is required to register for an Sales & Use Tax Permit.
What triggers nexus in North Dakota?
Nexus is a complex topic that, depending on your situation, may require the in-depth knowledge of a qualified tax professional. That being said, there are a few common business events and situations that are known to trigger nexus in North Dakota. The most common include the following:
- Opening an office in North Dakota
- Storing inventory in a warehouse in North Dakota
- Having remote employees located in North Dakota
How do I register to collect sales tax in North Dakota
Businesses may register for an North Dakota Sales & Use Tax Permit online by visiting the North Dakota Office of State Tax Commissioner and following the instructions provided.
It is also possible to get registered for a Sales & Use Tax Permit by completing and mailing in a Application for Income Tax Withholding and Sales & Use Tax Permit (SNF 59507), but this approach is not recommended. Form based registration is being phased out in favor of online registration. It’s fast, free, and more reliable than mailing in a completed paper form.
What information is required to register for a North Dakota Sales & Use Tax Permit ?
When applying for a North Dakota Sales & Use Tax Permit, there are a number of pieces of information that may be required. These include, but are likely not limited to:
- Business name
- Business entity type
- Description of business activities
- Date business activities began or will begin
- Business address and mailing address
- Business contact information
- The North American Industry Classification System (NAICS) code that best matches your business
- Federal Employer Identification Number (FEIN)
- Your name, Social Security Number (SSN), driver license number, personal address, and personal contact information of owner/sole proprietor
- List of business officers, partners, managing members, and/or trustees
- Employment information (date of hire, number of employees, payroll amounts, payroll agent’s PTIN, if applicable)
How much does it cost to register for a North Dakota Sales & Use Tax Permit ?
The cost to register for a North Dakota Sales & Use Tax Permit is currently $0.
Do I need a Federal EIN in order to register in North Dakota?
The North Dakota Office of State Tax Commissioner requires businesses requesting a new Sales & Use Tax Permit to supply a valid Federal EIN number during the initial registration process. You can apply for an EIN number online by visiting the IRS website.
Which North Dakota governement agencies do I need to register with in order to get a new Sales & Use Tax Permit?
We recommend you contact the North Dakota Office of State Tax Commissioner to verify which government agencies you will be required to register with. Potential agencies include the following:
- North Dakota Department of Revenue
- North Dakota State Employment Agency
- North Dakota State Department of Labor
- North Dakota Local Tax Jurisdictions
Do I need to register for a new Sales & Use Tax Permit if I acquired a registered business?
Yes! North Dakota Sales & Use Tax Permit registration is unique to the state of a business. The North Dakota Office of State Tax Commissioner requires all registered businesses to have current business owner name and contact information on file.