ND

North Dakota Sales Tax Tips for Online Sellers

by Mark Faggiano

North Dakota Sales Tax Guide

This blog post may now be out of date. For our most up-to-date info on North Dakota sales tax, check out our “North Dakota Sales Tax Guide for Businesses.”

This post is all about what you as an online seller need to know about when and how to collect sales tax in North Dakota. The following examples go through the most common types of online businesses that we see at TaxJar. If your particular case is more unique than what I’ve outlined, be sure to contact a tax professional.

You’re an online seller but you don’t live in North Dakota
If you live in New Mexico (or any state other than North Dakota for that matter) and operate your online business through your house or office then you’re not required to collect sales tax on orders shipped to North Dakota addresses.

You live and/or operate your business in North Dakota
If you’re like a lot of online sellers and your home and business location are the same thing and that location is in North Dakota, then you’re business has nexus in North Dakota. That means you’re required to collect sales tax on orders you ship to addresses in the state.

If you’re going to collect sales tax, make sure your business has a sales tax permit no less than 30 days before you open up for business. Here’s a link to the form to fill out to register.

You’re an online seller, live out-of-state, and use a fulfillment service
Besides living in North Dakota, this is the other common way an online seller gains nexus in the state. Let’s say that you live in Arkansas and use a fulfillment service that stores or warehouses your inventory in North Dakota. Even if you’ve never had the pleasure of visiting North Dakota, your inventory creates enough presence that the state requires you to collect sales tax on items shipped to addresses in North Dakota. For more info you can read ND’s helpful Out of State Retailer’s Guide (PDF).

Collecting the correct sales tax rate
First, a bit of high-level background on North Dakota sales tax. As an online seller, the rate you charge customers is a sum of the state sales tax (5.00%) plus additional local taxes.

The tax rate you’re supposed to use for a transaction is based on where the item is being delivered. For example, let’s say you;re business is based in Ashley, ND and you sell a taxable item to a customer in Cando. The rate effective in Cando (as I write this it’s 7.00%) is what you should charge your customer. That’s 5.00% for the state and 2.00% for the local sales tax.

The second scenario that’s worth going through is if you’re an out-of-state seller with nexus because your inventory is stored in North Dakota. In this case, the amount of sales tax you need to collect is calculated the same way. It’s based on where the item is being delivered.

Summary: if your business has nexus, collect based on shipping address
If you have zero ties to North Dakota, then you don’t need to collect sales tax from customers in the state. If you live or operate your online business in the state or of your have inventory stored or warehoused there, then you need to collect sales tax on items delivered to ND addresses. The sales tax rate used on an order is based on where the item is being delivered.

Have any questions? Feedback? Tell me about your experience selling in North Dakota in the discussion section below.

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  • firewired

    Hey Mark, thanks for the great article. So if I am a business that is based out of my home in ND, which will be an online retailer only, do I need to charge sales tax for people who purchase outside of the state of ND? Will I need to charge sales tax for people in the state of ND as well? Thanks

    • Hi –

      If your business is based in North Dakota, then the state says you are required to register that business with the state and collect sales tax on orders being shipped within the state.

      Your not required to collect sales tax on order outside the state as long as you don’t have nexus in any of those other states.

      • firewired

        Thanks for the reply Mark. One more question for you too, it seems like it could go either way for an EIN number. I have another business that is a sole proprietorship, and I have just started a new business as an LLC. From doing some reading, it looks like I may or may not be required to get a new EIN number for it. Since I’m the only member of the LLC, it looks like I wouldn’t need one, but if I want to open a bank account for that company it looks like I should have one. Is there any way that getting a new EIN number would make things more difficult for taxes etc, even if I weren’t required to get a new one? Thanks again. – firewired

        • Hi firewired –

          I think your best option is to talk to both the state and a tax professional about that. I’m not trying to pass it off, but there are just too many factors involved to give you a blanket answer.

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