Sales And Use Tax Guideline Form - North Dakota Office Of State Tax Commissioner (Page 2 of 4) in pdf

Sales or Use Tax Paid to Another State

When an article of tangible personal property, except a motor vehicle, has been subjected to sales or use tax by another

state or political subdivision (in an amount equal to or greater than the amount imposed by North Dakota use tax law),

no further tax is due to the state of North Dakota provided the other state or political subdivision allows a similar tax

credit with respect to the retail sales and use tax imposed by this state. This includes contractors’ machinery and

equipment purchased and used outside this state and later are brought into North Dakota for use in this state.

If the amount of tax paid to another state or political subdivision is less than the amount of tax imposed by North Dakota

use tax law, the tax due to North Dakota is the difference between the tax paid to the other state or political subdivision

and the tax due under North Dakota law. Persons claiming exemption from the payment of North Dakota use tax on

the grounds that they have paid tax to another state or political subdivision must prove to the satisfaction of the

Commissioner that such tax has been paid.

Purchases Made in Other States

When contractors purchase tools, machinery, equipment, or materials and supplies outside of North Dakota for use

in North Dakota, and not for resale or processing, they are required to file a sales and use tax return and pay use tax

on such purchases. However, if the supplier from whom the purchases were made holds a North Dakota sales and use

tax permit, use tax should be paid to the supplier.

Material Purchased in North Dakota for Installation Out of State

Contractors making purchases of material in North Dakota for installation into real estate located outside of North

Dakota are required to pay sales tax to North Dakota. Tax should be paid directly to the seller, however, if the contractor

signs a “Contractor’s Certificate” for the seller and pays no tax at the time of the sale, the contractor is responsible

for payment of tax directly to the Office of State Tax Commissioner.

An exception is made when a contractor buys material in North Dakota for installation into real property in Montana.

The contractor is not responsible for payment of North Dakota sales or use tax on materials bought here for installation

in Montana.

Contractor’s Procedures in Billing Customers

As the ultimate user or consumer of all materials, supplies and equipment incorporated as improvements to real

property, a contractor or subcontractor is regarded as the final user and responsible for the payment of sales or use tax

on all purchases of materials, supplies and equipment. The sales or use tax paid by the contractor or subcontractor

on such materials can be passed on to your customer as part of the materials cost, but cannot be itemized as a “sales

tax” charge on the customer’s invoice.

Installation Contracts on an Indian Reservation

Generally, the purchase of materials by a contractor for use in the completion of an installation contract on a reservation

is subject to North Dakota sales and use tax. The payment of any reservation taxes does not exempt the materials from

the state sales or use taxes. In these cases, both taxes are due. An exception involves construction projects which are

authorized and funded under Federal Public Law and completed for an Indian tribe. The Office of State Tax

Commissioner issues a letter to the tribal government or the contractor to document an exempt job.

Manufacturing and Agricultural Product Processing Equipment

The North Dakota sales tax law provides for a sales tax exemption on machinery and equipment purchased by new

or expanding manufacturers. In addition, agricultural commodity processors also may qualify for a sales tax

exemption on building materials used to construct an agricultural commodity processing facility.

Exempt purchases may only be made by manufacturers and agricultural commodity processors. Contractors

purchasing and installing manufacturing or agricultural processing machinery and equipment must pay North Dakota

sales or use tax on the goods. The manufacturer or agricultural commodity processor may then apply for a refund of

the tax paid by the contractor. The contractor may not apply for this refund.

Sales And Use Tax Guideline Form - North Dakota Office Of State Tax Commissioner Page 2