# Title 81 — Tax Commissioner

## Article 81-04.1 — Sales and Use Taxes

## Chapter 81-04.1-03 — Miscellaneous Sales

### § 81-04.1-03-01. Sales to American Indians - Sales on an Indian reservation.

An Indian retailer whose place of business is on an Indian reservation in this state is not required to
hold a North Dakota sales tax permit or to collect North Dakota sales tax on sales to any customer.
A non-Indian retailer whose place of business is on an Indian reservation cannot collect sales tax
on sales to enrolled Indian customers but must collect and remit North Dakota sales tax on all sales to
non-Indian customers.
Any retailer whose place of business is outside an Indian reservation may exempt sales made by
delivery to an enrolled Indian customer living on an Indian reservation if the retailer maintains adequate
records supporting the exempt status of the sale.
All sales to American Indians outside of an Indian reservation are subject to sales tax.
History: Effective June 1, 1984.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-04
### § 81-04.1-03-01.1. State-tribal tax administration agreement - Effect on other rules.

If an agreement is in effect between the state and a Native American tribal government under the
authority of North Dakota Century Code chapter 54-40.2 or 57-39.8, then the provisions of that
agreement apply with respect to retail sales to enrolled Native Americans on an Indian reservation in
lieu of section 81-04.1-03-01.
History: Effective July 1, 2016.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.8
### § 81-04.1-03-02. Sales by employers to employees.

Purchases of tangible personal property by employees from their employer are subject to sales tax.
Employers operating a restaurant or cafeteria exclusively for employees are retailers and the gross
receipts from such sales are subject to sales tax. Employees ordering merchandise from an employer's
wholesale catalog for personal use are subject to sales tax.

Employers who provide free meals to their employees are subject to tax on the cost of the items
given away. When an employer is unable to determine the exact cost of a giveaway meal, tax is due on
fifty percent of the retail selling price of the meal.
History: Effective June 1, 1984; amended effective March 1, 1988.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-03.2, 57-39.2-03.3
### § 81-04.1-03-03. Food and food products for human consumption.

Food or food ingredients are exempt from sales tax. Food and food ingredients do not include
alcoholic beverages, candy, dietary supplements, prepared food, soft drinks, or tobacco, which remain
subject to sales tax. For purposes of this section:
1. "Alcoholic beverage" for human consumption means beverages containing one-half of
one percent or more of alcohol by volume.
2. "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in
combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars,
drops, or pieces. Candy does not include any preparation as described herein, containing
flour, or any item requiring refrigeration.
3. "Dietary supplement" means a product subject to tax if the product label contains a
"supplemental facts" box. If the product label contains a "nutrition facts" box, the product is
regarded as food, and is exempt from tax.
4. "Prepared food" is subject to sales tax and includes food sold in a heated state or heated by
the seller, or food that is prepared by mixing or combining two or more food ingredients for
sale as a single item, or food sold with eating utensils, such as plates, knives, forks, spoons,
glasses, cups, napkins, or straws provided by the seller. Food sold in an unheated state by
weight or volume as a single item is taxable only if sold with eating utensils. Food that
ordinarily requires cooking, as opposed to just reheating, by the consumer prior to
consumption is not prepared food. Generally businesses that sell prepared food include
restaurants, convenience stores, delicatessens, concession stands, coffee shops, and
caterers.
5. "Soft drinks" subject to sales tax include nonalcoholic beverages that contain natural or
artificial sweeteners, and that do not contain milk or milk products, soy, rice, or similar milk
substitutes, or that contain greater than fifty percent vegetable or fruit juice by volume. Soft
drinks generally include pop and fruit drinks or fruit punches that are less than fifty percent
juice by volume.
6. "Tobacco" means any cigarettes, cigars, chewing or pipe tobacco, or any other items that
contain tobacco.
The exemption for food and food products given, or to be given, as samples to consumers for
consumption on the premises of a food store does not apply to food given away by restaurants or other
businesses which regularly and primarily sell prepared food and beverages.
History: Effective June 1, 1984; amended effective July 1, 1985; November 1, 1987; March 1, 1990;
April 1, 2006; July 1, 2016.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-04.1, 57-40.2-04.1

### § 81-04.1-03-04. Sales in interstate commerce.

When tangible personal property is sold by a North Dakota retailer for use or consumption and
delivered to the purchaser in another state and the goods are not to be returned to this state, the sale is
not subject to sales tax. However, where the seller actually delivers possession of the goods to the
buyer or the buyer's representative or agent within this state, the transaction is then terminated, and the
tax applies. If a shipping company takes possession of goods on behalf of a purchaser, the purchaser
has not taken possession of the goods.
Tangible personal property sold by a North Dakota retailer is not subject to sales tax if it is shipped
from the source of supply in another state to the purchaser at a point outside this state or delivered to
the purchaser at the source of supply outside the state. If the property is brought into this state, it is
subject to use tax.
Sales of tangible personal property made within this state by salesmen, representatives, agents,
persons, or firms residing outside this state and delivered in this state are subject to tax.
History: Effective June 1, 1984; amended effective July 1, 2016.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-03.2, 57-39.2-04, 57-39.2-10,
57-39.4-12, 57-40.2-01, 57-40.2-03.3
### § 81-04.1-03-05. Sales of legal tender coins, currency, and precious metals.

Coins or currency issued as legal tender by foreign nations are exempt from sales tax. Sales of
precious metal that has been refined to a purity of not less than nine hundred ninety-nine parts per one
thousand and is in such form or condition that its value depends upon its precious metal content and
not its form are exempt from sales tax.
History: Effective June 1, 1984; amended effective July 1, 1985; April 1, 2006.
General Authority: NDCC 57-39.2-10
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-04
### § 81-04.1-03-06. Meal tickets and gift certificates.

A meal ticket or gift certificate is not subject to sales tax when it is sold to the consumer. Sales tax
is added when the meals or merchandise are purchased.
History: Effective June 1, 1984.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1
### § 81-04.1-03-07. Sales to owners or operators of a building.

Purchases of tangible personal property by an owner or operator of a building for tenants' use in
alterations, repair, or convenience are subject to sales tax.
History: Effective June 1, 1984.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1
### § 81-04.1-03-08. Sales by trustees, receivers, executors, and administrators.

When trustees, receivers, executors, and administrators operate, manage, or control a business
engaged in selling tangible personal property or services, they must collect and remit sales tax on the
gross receipts. It is immaterial that the officer may have been appointed by a federal court.

Trustees, receivers, executors, or administrators engaged in liquidating the assets of the business
are subject to sales tax if liquidation is by sales made in the usual and customary manner for use or
consumption.
The trustee, receiver, executor, or administrator may not report and remit under a permit issued to
the previous owner but must apply for and obtain a separate sales tax permit.
History: Effective June 1, 1984.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-03.2, 57-39.2-03.3, 57-39.2-14
### § 81-04.1-03-09. Sales of microfiche.

The gross receipts from the sale of an original copy of microfiche are not subject to sales tax. This
sale is exempt from sales tax as a nontaxable service.
The gross receipts from the sale of all copies of an original microfiche are subject to sales tax
because they are sales of tangible personal property.
When a retailer sells an original copy of microfiche with additional copies, the original copy is
exempt from sales tax as a nontaxable service if it is separately billed. The separately billed copies
remain subject to sales tax. If a lump sum amount is billed to the purchaser, the total gross receipts,
including labor charges, are subject to sales tax.
History: Effective October 1, 1986.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01(3), 57-39.2-01(7), 57-39.2-02.1
### § 81-04.1-03-10. Mailing lists.

The gross receipts from the sale of a prepared mailing list are subject to sales tax if the retailer of
the mailing list prepared the list for sale to a number of purchasers.
The gross receipts from the sale of a prepared mailing list are not subject to sales tax if the retailer
of the mailing list prepared the list on a custom basis for a specific purchaser.
History: Effective October 1, 1986.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01(3), 57-39.2-01(7), 57-39.2-02.1
### § 81-04.1-03-11. Computers - Hardware and software.

Computers, peripheral computer equipment, and computer software, with the exception of custom
software, are subject to tax.
For purposes of administration of the sales and use tax law, unless the context otherwise requires,
the following definitions apply:
1. "Computer" means an electronic device that accepts information in digital or similar form and
manipulates it for a result based on a sequence of instructions.
2. "Computer software" means a set of coded instructions designed to cause a computer or
automatic data processing equipment to perform a task.
3. "Delivered electronically" means delivered from the seller to the purchaser by means other
than tangible storage media.

4. "Load and leave" means delivery to the purchaser by use of a tangible storage media when
the tangible storage media is not physically transferred to the purchaser.
5. "Prewritten computer software" means computer software, including prewritten upgrades,
which is not designed and developed by the author or other creator to the specifications of a
specific purchaser. The combining of two or more prewritten computer software programs or
prewritten portions thereof does not cause the combination to be other than prewritten
computer software. Prewritten computer software includes software designed and developed
by the author or other creator to the specifications of a specific purchaser when it is sold to a
person other than the purchaser. If a person modifies or enhances computer software of which
the person is not the author or creator, the person is deemed to be the author or creator only
of such person's modifications or enhancements. Prewritten computer software or the
prewritten portion thereof that is modified or enhanced to any degree, if such modification or
enhancement is designed and developed to the specifications of a specific purchaser, remains
prewritten computer software. However, if there is a reasonable, separately stated charge or
an invoice or other statement of the price given to the purchaser of such modification or
enhancement, such modification or enhancement shall not constitute prewritten computer
software.
6. Sale, lease, or rental of prewritten computer software. The transfer of title, possession, or use
for a consideration of any prewritten computer software is taxable.
a. Tax applies to the entire amount charged to the customer. When the consideration
consists of license fees, royalty fees, or program design fees, all fees present or future,
whether for a period of minimum use or for extended periods, are includable in the
purchase price subject to tax.
b. The sale of prewritten computer software is a taxable transaction, even though the
program is delivered electronically or by load and leave. Tax does not apply to the sale or
lease of custom computer software regardless of the form in which the program is
transferred. If the custom computer software is not separately stated from the sale or
lease of equipment, it will be considered taxable as part of the sale.
c. Maintenance contracts sold in connection with the sale or lease of prewritten computer
software required by the seller as a condition of the sale or rental of prewritten computer
software will be considered as part of the sale or rental of the prewritten computer
software, and the gross sales price is subject to tax whether or not the charge for the
maintenance contract is separately stated from the charge for the software.
d. If the purchase of the maintenance contract is optional with the purchaser, but the
purchaser does not have the option to purchase the consultation services separately
from the upgrades or enhancements, then the charges for consultation services are
taxable as part of the sale or lease of upgrades or enhancements. If, however, the
purchaser may at the purchaser's option, contract for the consultation services separately
from the upgrades or enhancements, then the charges for the consultation services are
nontaxable.
e. The sale of statistical reports, graphs, diagrams, microfilm, microfiche, photorecordings,
or any other information, produced or compiled by a computer and sold or reproduced for
sale in substantially the same form as it is produced is a sale of tangible personal
property, unless the information from which such reports were compiled was furnished by
the same person to whom the finished report is sold in which case the original report is
not subject to tax.
f. When additional copies of records, reports, manuals, and tabulations are provided, tax
applies to the charges made for the additional copies. Additional copies are all copies in

excess of those produced simultaneously with the production of the original and on the
same printer, when the copies are prepared by running the same program, by using
multiple printers, by looping the program, by using different programs to produce the
same output, or by other means.
If no separate charge is made for additional copies by the service bureau or data
processing firm, then tax applies to that portion of the gross receipts on which the cost of
the additional computer time, the cost of materials, and labor costs to produce the
additional copies bear to the total job cost. Charges for copies produced by means of
photocopying, multilithing, or by other means are subject to tax.
g. Separately stated charges for training services are nontaxable. Tax applies to charges for
training materials, including books and manuals furnished to trainees for a charge
separate from the charge for training services.
7. Time sharing. The sale or lease of computer time through the use of the terminal or as a result
of a batch service arrangement is a nontaxable service and is not subject to tax if separately
billed or charged. However, any charges for computer machines and equipment remain
subject to tax.
8. Data processing service. The charge for reports compiled by a computer exclusively from data
furnished by the same person for whom the data is prepared is a service and is not subject to
sales or use tax unless it is part of a unitary transaction which is subject to sales or use tax.
History: Effective March 1, 1988; amended effective April 1, 2006.
General Authority: NDCC 57-39.2-19, 57-40.2-13
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-40.2-01, 57-40.2-02.1
### § 81-04.1-03-12. Sales by political parties and political committees.

Political parties and political committees organized for political purposes are considered to be
conducting educational activities. Political party or political committee sales of tickets, admissions, or
tangible personal property are exempt from sales or use tax provided the entire net proceeds are used
for political purposes and provided the sales do not occur in a publicly owned facility.
"Political party" means any association, committee, or organization which nominates a candidate
for election to any office which may be filled by a vote of the electors of this state or any of its political
subdivisions and whose name appears on the election ballot as the candidate of the association,
committee, or organization.
"Political committee" means any committee, club, association, or other group of persons which
receives contributions primarily for political purposes.
"Political purpose" means any activity undertaken in support of or in opposition to the election or
nomination of a candidate for public office.
History: Effective March 1, 1988.
General Authority: NDCC 57-39.2-19, 57-40.2-13
Law Implemented: NDCC 16.1-08.1-01, 57-39.2-01, 57-39.2-02.1, 57-39.2-04, 57-40.2-01,
57-40.2-02.1, 57-40.2-04
### § 81-04.1-03-13. Sales to a person from Montana.

Sales of tangible personal property to a person from Montana are exempt from sales tax if the
person is in North Dakota specifically to make a purchase and signs a certificate of purchase or a
certificate of exemption authorized by the streamlined sales tax agreement, the sale is in an amount of

fifty dollars or more, and the goods are taken outside of North Dakota, for use entirely outside this
state.
Sales of meals, onsale beverages, lodging accommodations, entertainment, and similar goods and
services consumed in North Dakota do not qualify for the exemption.
Sales and installation of goods into personal property owned by a person from Montana are not
taxable provided the goods are removed from North Dakota for use exclusively outside this state. Use
which is incidental to removing the goods from North Dakota does not subject the goods to North
Dakota use tax.
For purposes of this exemption, "person" means natural persons, Montana corporations, and other
business entities when the owners, partners, or members are individual Montana residents.
History: Effective March 1, 1990; amended effective April 1, 2006; July 1, 2016.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-04(12)
### § 81-04.1-03-14. Sales to residents of Canada.

Canadian residents are subject to sales and use tax on purchases made in North Dakota.
Canadian residents may apply on forms prescribed by the tax commissioner for a refund of North
Dakota sales tax.
Sales tax paid by residents of Canada is not refundable unless the goods are removed from North
Dakota within thirty days of purchase and will be used permanently outside North Dakota. Sales tax
paid on meals, onsale beverages, lodging accommodations, entertainment, and similar goods and
services which are consumed in North Dakota is not refundable.
Requests for refunds of sales tax paid by Canadian residents must be accompanied by original
sales receipts. The receipt must contain a description of the purchase, including the seller's name, the
amount paid for the goods, and the date the goods were purchased.
A joint refund request is allowed for married couples, married couples and their dependents, and
individuals and their dependents. A joint refund request by unrelated individuals is allowed only if the
sales receipt contains the names of all parties and a letter explaining the joint refund request
accompanies the request form.
History: Effective March 1, 1990.
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-04, 57-39.2-28
