Sales And Use Tax Guideline Form - North Dakota Office Of State Tax Commissioner printable pdf download

North Dakota

Office of State Tax Commissioner

ONTRACTORS

ICK

LAYBURGH

OMMISSIONER

Sales and Use Tax Guideline

Contractors Are Final Users

A contractor or subcontractor entering into any contract including a service contract, is regarded as the ultimate user

or consumer of all materials or supplies incorporated as improvements to real property by erection of buildings or by

any other alteration, improvement or repair to real property. Sales to contractors are to a final user and are subject to

sales tax.

Contracts to Install Material Owned by Someone Else

Contractors who install personal property into real estate are always subject to sales or use tax on the cost of such

property, regardless of who owns it. It is the responsibility of the contractor to pay tax on all materials installed into

real estate unless the person who owns the materials has already paid a sales or use tax on them.

On contracts with government agencies, hospitals, schools or other tax-exempt institutions, the contractor must pay

sales or use tax on the purchase price of all materials installed, even if the exempt institution purchases the materials.

Contractor’s Certificate

A contractor is subject to sales or use tax on the supplies, materials and equipment purchased to complete construction

contracts. However, a contractor is allowed to make purchases of supplies and materials without payment of sales tax

to the seller as long as the contractor executes a “contractor’s certificate.” The contractor’s certificate certifies that

the contractor will be directly responsible for the sales tax on the materials being purchased by reporting the purchase

as “items subject to use tax” on the sales and use tax return. A contractor must have a North Dakota sales and use tax

permit to execute a contractor’s certificate.

Contractors Engaged in Retail Trade

If a contractor or subcontractor is also engaged in retail trade and part or all of the machinery, equipment, material

or supplies used in carrying out contracts is taken from stock which was purchased for resale, the contractor or

subcontractor must pay use tax on the purchase price of the machinery, equipment, materials or supplies used. If a

contractor or subcontractor assembles, fabricates or manufactures part of the articles used or consumed in carrying

out a contract, sales tax is due on the cost of any materials, items or supplies incorporated into the articles or used in

the assembling, fabricating or manufacturing of such articles. This retail sales activity requires the purchase of

materials and supplies on the theory of resale. In other words, the contractors should provide their suppliers with a

signed certificate of resale for their purchases thereby exempting their purchases from sales tax. A certificate of resale

accepted by a supplier relieves the supplier of the responsibility of collecting sales tax from the buyer.

Contracts with Government

A contractor performing any contract, including service contracts, for the United States Government, State of North

Dakota, Counties, Cities, Villages, School Districts, Park Boards or any other municipal corporations in North Dakota

is NOT EXEMPT from payment of sales or use tax on material and supplies used or consumed in carrying out such

contracts. In these cases, the contractor is required to file returns and pay sales and use tax just as required for contracts

with private parties.

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Sales And Use Tax Guideline Form - North Dakota Office Of State Tax Commissioner