Sales And Use Tax Guideline Form - North Dakota Office Of State Tax Commissioner (Page 3 of 4) in pdf

Sand, Rock, Dirt or Scoria

The sale of sand, rock, dirt or scoria is regarded as an installation into real property if the sales contract requires the

contractor to move or place the product after it has been dumped. Charges, in this situation, are not taxable to the

customer but the contractor or subcontractor has the responsibility to pay sales or use tax on the cost of these materials.

If the sand, rock, dirt or scoria is simply dumped in a pile, or if the contractor or subcontractor is not required to level

the materials after they have been dumped, the sale is regarded as a retail sale subject to sales tax. The total charge

to the customer for the materials, including delivery charges, is subject to sales tax.

Sales to truckers, haulers or other businesses who resell the materials are not taxable provided the seller obtains a

completed certificate of resale form.

Local Sales and Use Tax

Contractors and subcontractors that use tangible personal property in the performance of contracts also are subject

to city sales and use taxes. Most of the cities that impose sales taxes also impose use taxes; however, the following

four cities impose only a sales tax (no use tax): Cando, Hettinger, Regent and Richardton.

All city sales and use tax ordinances have a provision to limit the amount of local tax charged on a transaction or

charged to a customer in one day. The maximum city tax does not apply to each contract. Instead, the maximum applies

on each individual purchase (or on one day’s purchases in Minot) a contractor or subcontractor makes to complete

a contract. For purposes of the maximum tax per transaction, each invoice is considered a separate purchase

transaction.

Cities With Sales Tax Only:

Contractors that purchase materials from vendors located within the city limits of Cando, Hettinger, Regent or

Richardton are subject to city sales tax when the contractor takes possession of the goods within the city limits. If a

contractor purchases materials from a vendor located outside of these four cities but takes delivery of the materials

within the city, no city tax applies. This is because a corresponding use tax ordinance was not passed in conjunction

with the city sales tax. Therefore, material purchased outside the city and brought into the city for use is not subject

to city sales tax because no sales actually takes place within the corporate city limits. Goods purchased within Cando,

Hettinger, Regent or Richardton retailers but delivered outside the city limits by the seller or the seller’s agent are also

exempt from city tax.

Cities With Sales and Use Tax:

City use tax may be paid directly to the seller of the material or may be accrued by the contractor for payment to the

Office of State Tax Commissioner. As is the case under state law, a contractor or subcontractor is subject to use tax

regardless who owns the goods unless city sales or use tax has already been paid on the goods.

Materials purchased inside the city limits for use inside the city are subject to city tax. Materials purchased from a

retailer located in the city but delivered outside the city limits for use outside the city are not subject to city tax.

Materials purchased outside the city but used inside the city limits are subject to city use tax. City contractors and

subcontractors are not subject to city tax when the goods are purchased outside the city limits and installed outside

the city limits.

Limited Exemption:

Normally, materials purchased and delivered within a city are subject to that city’s local sales tax regardless of where

the contractor installs the materials. However, seventeen city sales tax ordinances provide a limited exemption for

materials that are purchased within the city but later installed outside of the city where the sale took place. The cities

that allow the limited exemption are Bismarck, Bottineau, Cooperstown, Devils Lake, Dickinson, Enderlin, Fargo,

Fort Ransom, Hankinson, LaMoure, Lidgerwood, Lisbon, Mandan, McVille, Mohall, St. John and Williston.

Sales And Use Tax Guideline Form - North Dakota Office Of State Tax Commissioner Page 3