# Title 57 — Taxation

## Chapter 57-40.2 — Use Tax

### § 57-40.2-01. Definitions.

In this chapter, unless the context and subject matter otherwise require:
1. "Business", "certified automated system", "certified service provider", "commissioner",
"computer software contract", "farm machinery", "gross receipts", "lease or rental",
"local governmental unit", "mandatory computer software maintenance contract",
"optional computer software maintenance contract", "person", "relief agency", "retail
sale", "sale", and "tangible personal property", each has the meaning given to it in
section 57-39.2-01.
2. Property used in "processing", as that term is used in subsection 9, means any
tangible personal property including containers which it is intended, by means of
fabrication, compounding, manufacturing, producing, or germination, shall become an
integral or an ingredient or component part of other tangible personal property
intended to be sold ultimately at retail. The purchase of an item of tangible personal
property for the purpose of incorporating it in or attaching it to real property must be
considered as a purchase of tangible personal property for a purpose other than for
processing.
3. "Purchase" means any transfer of title or possession, exchange, or barter, conditional
or otherwise, in any manner or by any means whatsoever, for a consideration.
"Purchase" also means the severing of sand or gravel from the soil of this state.
4. "Purchase price" applies to the measure subject to use tax and has the same meaning
as gross receipts as defined in section 57-39.2-01.
5. "Purchased at retail" includes:
a. The completion of the fabricating, compounding, or manufacturing of tangible
personal property by a person for storage, use, or consumption by that person.
b. The furnishing of wares, merchandise, and gas, when furnished or delivered to
consumers or users within this state, and the sale of vulcanizing, recapping, and
retreading services for tires.
c. The leasing or renting of tangible personal property, the sale, storage, use, or
consumption of which has not been previously subjected to a retail sales or use
tax in this state.
d. The purchase of magazines or other periodicals. Provided, the words "magazines
and other periodicals" as used in this subdivision do not include newspapers nor
magazines or periodicals that are furnished free by a nonprofit corporation or
organization to its members or because of payment by its members of
membership fees or dues.
e. The severance of sand or gravel from the soil.
f. The purchase, including the leasing or renting, of tangible personal property from
any bank for storage, use, or consumption.
g. The purchase of an item of tangible personal property by a purchaser who rents
or leases it to a person under a finance leasing agreement over the term of which
the property will be substantially consumed, if the purchaser elects to treat it as
being purchased at retail by paying or causing the transferor to pay the use tax to
the commissioner on or before the last day on which payments may be made
without penalty as provided in section 57-40.2-07.
6. "Retailer" includes every person engaged in the business of selling tangible personal
property for use within the meaning of this chapter, but, when in the opinion of the
commissioner, it is necessary for the efficient administration of this chapter to regard
any salesman, representative, trucker, peddler, or canvasser as the agent of the
dealer, distributor, supervisor, employer, or other person under whom that person
operates or from whom that person obtains the tangible personal property sold by that
person, whether that person is making sales in that person's own behalf or in behalf of
such dealer, distributor, supervisor, employer, or other person, the commissioner may

regard that person as such agent, and may regard the dealer, distributor, supervisor,
employer, or other person as a retailer for the purposes of this chapter.
7. "Retailer maintaining a place of business in this state", or any like term, means any
retailer having or maintaining within this state, directly or by a subsidiary, an office,
distribution house, sales house, warehouse, or other place of business, or any agent
operating within this state under the authority of the retailer or its subsidiary, whether
such place of business or agent is located in the state permanently or temporarily, or
whether or not such retailer or subsidiary is authorized to do business within this state.
8. "Use" means the exercise by any person of any right or power over tangible personal
property incident to the ownership or possession of that property, including the
storage, use, or consumption of that property in this state, except that it does not
include processing, or the sale of that property in the regular course of business. "Use"
also means the severing of sand or gravel from the soil of this state for use within or
outside this state.
9. "Use tax" means the tax levied under section 57-40.2-02.1 or imposed under home
rule authority by a city or county.
### § 57-40.2-02. Tax imposed.

Repealed by I.M. approved November 2, 1976, S.L. 1977, ch. 593, § 6.
### § 57-40.2-02.1. Use tax imposed.

1. Except as otherwise expressly provided in this chapter, an excise tax is imposed on
the storage, use, or consumption in this state of tangible personal property purchased
at retail for storage, use, or consumption in this state, at the rate of five percent of the
purchase price of the property. Except as provided in section 57-40.2-11, an excise tax
is imposed on the storage, use, or consumption in this state of tangible personal
property not originally purchased for storage, use, or consumption in this state at the
rate of five percent of the fair market value of the property at the time it was brought
into this state.
2. For purposes of manufactured homes, as defined in section 41-09-02, an excise tax is
imposed on the storage, use, or consumption in this state of manufactured homes
used for residential or business purposes, except as provided in subsection 18 of
section 57-40.2-04 purchased at retail for storage, use, or consumption in this state at
the rate of three percent of the purchase price thereof. Except as provided in section
57-40.2-11, and except as provided in subsection 35 of section 57-39.2-04, an excise
tax is imposed on the storage, use, or consumption in this state of a manufactured
home used for residential or business purposes at the rate of three percent of the fair
market value of a manufactured home used for residential or business purposes at the
time it was brought into this state. A manufactured home removed from North Dakota
for installation in another state is not stored, used, or consumed in this state.
Installation of a manufactured home includes any method established under section
54-21.3-08.
3. Repealed by S.L. 2007, ch. 529, § 7.
4. An excise tax is imposed on the fair market value of sand or gravel severed when
sand or gravel is not sold at retail as tangible personal property by the person severing
the sand or gravel. If the sand or gravel is not sold at retail by the person severing the
sand or gravel, it must be presumed until the contrary is shown by the commissioner
or by the person severing the sand or gravel that the fair market value is eight cents
per ton of two thousand pounds [907.18 kilograms]. If records are not kept as to the
tonnage of sand or gravel severed from the soil, it must be presumed for the purpose
of this chapter that one cubic yard [764.55 liters] of sand or gravel is equal to one and
one-half tons [1360.78 kilograms] of sand or gravel.

### § 57-40.2-02.3. Certain sellers located outside this state required to collect and remit

sales taxes - Criteria.
Notwithstanding any other provision of law, any seller of tangible personal property or other
taxable product for delivery in this state, which does not have a physical presence in this state,
is subject to this chapter and chapter 57-39.2 and shall remit sales or use tax if the seller's
gross sales from the sale of tangible personal property and other taxable items delivered in this
state exceed one hundred thousand dollars in the previous calendar year, or the current
calendar year. A seller that exceeds this sales threshold shall obtain a permit under section
57-39.2-14, and begin collecting the tax on sales delivered during the following calendar year or
beginning sixty days after the threshold is met, whichever is earlier. The seller shall follow all
applicable procedures and requirements of law as if the seller had a physical presence in this
state.
### § 57-40.2-02.4. Marketplace facilitator tax collection requirement.

1. For the purposes of this section:
a. "Exemption certificate" means documentation furnished by a buyer to a seller to
claim an exemption from sales or use tax. The term includes a resale certificate
or other documentation authorized in section 57-40.2-04 furnished by a buyer to a
seller.
b. "Marketplace" means a physical or electronic place where one or more
marketplace sellers sell or offer for sale tangible personal property or other
products or services subject to tax under section 57-40.2-02.1, regardless of
whether the marketplace seller has a physical presence in this state. A physical or
electronic place includes a store, booth, internet website, catalog, television, radio
broadcast, or a dedicated sales software application.
c. (1) "Marketplace facilitator" means a person that:
(a) Contracts with sellers to facilitate for consideration, regardless of
whether deducted as fees from the transaction, the sale of the seller's
products through a physical or electronic marketplace operated by the
person;
(b) Engages directly or indirectly, through one or more affiliated persons,
in any of the following:
[1] Transmitting or otherwise communicating the offer or acceptance
between the buyer and seller;
[2] Owning or operating the infrastructure, electronic or physical, or
technology that brings buyers and sellers together;
[3] Providing a virtual currency that buyers are allowed or required to
use to purchase products from the seller; or
[4] Software development or research and development activities
related to any of the activities described in subparagraph a, if
such activities are directly related to a physical presence or
electronic marketplace operated by the person or an affiliated
person; and
(c) Engages in any of the following activities with respect to the seller's
products:
[1] Payment processing services;
[2] Fulfillment or storage services;
[3] Listing products for sale;
[4] Setting prices;
[5] Branding sales as those of the marketplace facilitator;
[6] Order taking;
[7] Advertising or promotion; or
[8] Providing customer service or accepting or assisting with returns
or exchanges.
(2) The term does not include a payment processor business appointed by a
merchant to handle payment transactions from various channels, such as

credit cards and debit cards, and whose sole activity with respect to
marketplace sales is to handle transactions between two parties.
d. "Marketplace seller" means a retailer that sells or offers for sale tangible personal
property or other products or services subject to tax under section 57-40.2-02.1,
through a marketplace that is owned, operated, or controlled by a marketplace
facilitator.
2. Notwithstanding any other provision of law, any marketplace facilitator facilitating sales
of tangible personal property or other products or services subject to tax under section
57-39.2-02.1, which does not have a physical presence in this state, is a retailer
subject to chapters 57-39.2 and 57-40.2 and shall remit sales or use tax if the
marketplace facilitator facilitates or makes sales through the marketplace that, when
the sales are combined, meet the threshold amount in section 57-40.2-02.3. A
marketplace facilitator exceeding the sales threshold shall obtain a permit under
section 57-39.2-14, and begin collecting the tax on sales during the following calendar
year or beginning sixty days after the threshold is met, whichever is earlier.
3. A marketplace facilitator shall be considered the retailer of each sale the facilitator
facilitates on its forum for a marketplace seller. Each marketplace facilitator shall:
a. Be required to collect and remit for each sale any tax imposed under chapters
57-39.2 and 57-40.2.
b. Be responsible for all obligations imposed under chapter 57-40.2 as if the
marketplace facilitator was the retailer of the sale.
c. In accordance with the provisions of section 57-40.2-09, keep such records and
information as may be required by the tax commissioner to ensure proper
collection and remittance of tax.
d. Certify to its marketplace sellers that it will collect and remit state and local sales
and use tax on sales of tangible personal property or other products or services
subject to tax under section 57-40.2-02.1 made through the marketplace. A
marketplace seller that accepts a marketplace facilitator's collection certificate in
good faith may exclude sales made through the marketplace from the
marketplace seller's return of gross receipts under section 57-39.2-11.
e. Be subject to audit by the tax commissioner with respect to all retail sales for
which it is required to collect and pay the tax imposed under chapters 57-39.2
and 57-40.2. Where the tax commissioner audits the marketplace facilitator, the
tax commissioner is prohibited from auditing the marketplace seller for the same
retail sales unless the marketplace facilitator seeks relief under subsection 4.
4. A marketplace facilitator is not liable under this section for failure to collect and remit
sales and use tax if the marketplace facilitator demonstrates to the satisfaction of the
department that:
a. The marketplace facilitator has a system in place to require the seller to provide
accurate information and has made a reasonable effort to obtain accurate
information from the seller about a retail transaction;
b. The failure to collect and remit the correct tax was due to reliance upon incorrect
or insufficient information provided to the marketplace facilitator by the seller. If
the marketplace facilitator is relieved of liability under this subsection, the seller
and the purchaser are liable for any amount of uncollected, unpaid, or unremitted
tax; and
c. The marketplace facilitator and marketplace seller are not affiliated. A
marketplace facilitator and a marketplace seller are affiliated if:
(1) Either owns more than five percent of the other; or
(2) Both are subject to the control of a common entity that owns more than five
percent of each.
5. Notwithstanding any other provision of law, the tax imposed under this section may be
refunded under the following conditions:
a. An entity qualifying for an exemption under subsection 5, 6, 24, 32, 43, 48, or 52
of section 57-39.2-04 may apply in writing to the tax commissioner on a form and

in the manner as the tax commissioner may prescribe reciting sufficient facts
establishing the exempt status of the sale.
b. The refund is five dollars or more. Qualifying sales may be accumulated for
periods not in excess of one calendar year in order to reach the five dollar limit.
6. A class action may not be brought against a marketplace facilitator on behalf of
purchasers arising from or in any way related to an overpayment of sales or use tax
collected by the marketplace facilitator, regardless of whether such action is
characterized as a tax refund claim.
7. No marketplace facilitator is required to collect or remit sales or use tax under this
section on any sale made before October 1, 2019.
### § 57-40.2-03. Separate and additional use tax.

Repealed by I.M. approved November 2, 1976, S.L. 1977, ch. 593, § 6.
### § 57-40.2-03.1. Separate and additional use tax.

Repealed by I.M. approved November 2, 1976, S.L. 1977, ch. 593, § 6.
### § 57-40.2-03.2. Use tax on tobacco products.

Notwithstanding any other provision of law, the use taxes imposed by this chapter apply to
the storage, use, or consumption in this state of cigarettes, cigars, and other tobacco products,
provided that gross receipts from the sale thereof mean and include any other taxes imposed on
such merchandise or its use or on the retail or other sale thereof.
### § 57-40.2-03.3. Use tax on contractors.

(Effective through June 30, 2029)
1. When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2. The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3. The tax imposed by this section does not apply to:
a. Production equipment or tangible personal property as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.2;
b. Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
c. Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5;
d. Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6;
e. Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10;

f. Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11;
g. Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14;
h. Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15; or
i. Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j. Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k. Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
l. Raw materials, single-use product contact systems, and reagents used for
biologic manufacturing as authorized or approved for exemption by the
tax commissioner under section 57-39.2-04.19.
Use tax on contractors. (Effective after June 30, 2029)
1. When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2. The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3. The tax imposed by this section does not apply to:
a. Production equipment or tangible personal property as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.2;
b. Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
c. Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5;
d. Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6;
e. Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10;
f. Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11;
g. Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14;

h. Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15; or
i. Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j. Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k. Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
### § 57-40.2-03.4. Reduced rate for manufacturing machinery and equipment.

Repealed by S.L. 1991, ch. 680, § 2.
### § 57-40.2-04. Exemptions.

This chapter hereby is declared to be an independent and separate tax law but
complementary to the retail sales tax laws of this state provided for by chapter 57-39.2 and does
not apply to:
1. Any tangible personal property or taxable service upon the sale of which the retail
sales tax imposed by chapter 57-39.2 has been collected by a retailer holding the
permit prescribed by section 57-39.2-14.
2. Tangible personal property brought into this state by a nonresident thereof for that
person's own storage, use, or consumption while temporarily within this state, except
that such property is not exempt if brought into this state for storage, use, or
consumption in the conduct of a trade, occupation, business, or profession.
3. Any motor vehicle either subject to or expressly exempted from the motor vehicle
excise taxes imposed by chapter 57-40.3.
4. Tangible personal property upon which the state now imposes and collects a special
tax, whether in the form of license tax, stamp tax, or otherwise.
5. Railway cars and locomotives used in interstate commerce, and tangible personal
property which becomes a component part thereof.
6. Newsprint and ink actually used in the publication of a newspaper.
7. Repealed by S.L. 1981, ch. 582, § 3.
8. Gross receipts from the leasing or renting of motion picture film to motion picture
exhibitors for exhibition in this state if the sale of the tickets or admissions to the
exhibition of the film is subject to the sales tax imposed by chapter 57-39.2.
9. Adjuvants, agrichemical tank cleaners and foam markers, commercial fertilizers,
fungicides, seed treatments, inoculants and fumigants, herbicides and insecticides
used by agricultural or commercial vegetable producers and commercial applicators;
chemicals used to preserve agricultural crops being stored; and seeds, roots, bulbs,
and small plants used by commercial users or consumers for planting or transplanting
for commercial vegetable gardens or agricultural purposes.
10. Gross receipts from the leasing, or renting, for residential housing, for periods of more
than thirty consecutive days, of manufactured homes, modular living units, or sectional
homes, whether or not placed on a permanent foundation.
11. Bibles, hymnals, textbooks, and prayerbooks used by nonprofit religious organizations.
12. Gross receipts from sales of prosthetic devices, durable medical equipment, or
mobility-enhancing equipment. For purposes of this subsection:
a. "Durable medical equipment" means equipment, not including mobility-enhancing
equipment, for home use, including repair and replacement parts for such
equipment, which:
(1) Can withstand repeated use;
(2) Is primarily and customarily used to serve a medical purpose;
(3) Generally is not useful to a person in the absence of illness or injury; and
(4) Is not worn in or on the body.

"Durable medical equipment" includes equipment and devices designed or
intended for ostomy care and management and equipment and devices used
exclusively for a person with bladder dysfunction. An exemption certificate is not
required to obtain exemption. Repair and replacement parts as used in this
definition include all components or attachments used in conjunction with the
durable medical equipment. Repair and replacement parts do not include items
which are for single patient use only.
b. "Mobility-enhancing equipment" means equipment not including durable medical
equipment sold under a doctor's written prescription, including repair and
replacement parts for mobility-enhancing equipment, which:
(1) Is primarily and customarily used to provide or increase the ability to move
from one place to another and which is appropriate for use either at home or
in a motor vehicle;
(2) Is not generally used by a person with normal mobility; and
(3) Does not include any motor vehicle or equipment on a motor vehicle
normally provided by a motor vehicle manufacturer.
"Mobility-enhancing equipment" includes crutches and wheelchairs for the use of
disabled persons, equipment, including manual control units, van lifts, van door
opening units, and raised roofs for attaching to or modifying a motor vehicle for
use by a permanently physically disabled person, equipment, including elevators,
dumbwaiters, chair lifts, and bedroom or bathroom lifts, whether or not sold for
attaching to real property, for use by a permanently physically disabled person in
that person's principal dwelling, and equipment, including manual control units,
for attaching to or modifying motorized implements of husbandry for use by a
permanently physically disabled person.
c. "Prosthetic device" means a replacement, corrective, or supportive device sold
under a doctor's written prescription, including repair and replacement parts for
such a device, worn on or in the body to:
(1) Artificially replace a missing portion of the body;
(2) Prevent or correct a physical deformity or malfunction; or
(3) Support a weak or deformed portion of the body.
"Prosthetic device" includes artificial devices individually designed, constructed,
or altered solely for the use of a particular disabled person so as to become a
brace, support, supplement, correction, or substitute for the bodily structure,
including the extremities of the individual, artificial limbs, artificial eyes, hearing
aids, and other equipment worn as a correction or substitute for any functioning
portion of the body, artificial teeth sold by a dentist, and eyeglasses when
especially designed or prescribed by an ophthalmologist, physician, oculist, or
optometrist for the personal use of the owner or purchaser.
d. "Supplies for ostomy care or bladder dysfunction" includes:
(1) Supplies designed or intended for ostomy care and management, including
collection devices, colostomy irrigation equipment and supplies, skin
barriers or skin protectors, and other supplies especially designed for use of
ostomates.
(2) Supplies to be used exclusively by a person with bladder dysfunction,
including catheters, collection devices, incontinence pads and pants, adult
diapers, and other items used for the care and management of bladder
dysfunction. For the purposes of this paragraph:
(a) "Adult diapers" means diapers other than children's diapers.
(b) "Children's diapers" means diapers marketed to be worn by children.
(c) "Diaper" means an absorbent garment worn by humans who are
incapable of, or have difficulty, controlling their bladder or bowel
movements.
13. Purchases of electricity.
14. The leasing or renting of any tangible personal property upon which a North Dakota
sales tax or use tax has been paid under the election of the purchaser under

subsection 21 of section 57-39.2-01 or subsection 5 of section 57-40.2-01 and the
retailer has separately indicated on an invoice, contract, lease agreement, or other
supporting sale document that the retailer paid sales or use tax on the retailer's
purchase of the tangible personal property.
15. Any tangible personal property or service which would be exempt from the retail sales
tax pursuant to an express exemption provided in chapter 57-39.2 if it were purchased
in North Dakota.
16. Gross receipts from the sale of money, including all legal tender coins and currency.
17. Gross receipts from sales to nonprofit voluntary health associations which are exempt
from federal income tax under section 501(c)(3) of the United States Internal Revenue
Code [26 U.S.C. 501(c)(3)]. As used in this subsection, a voluntary health association
is an organization recognized by the internal revenue service, the national health
council, the state tax commissioner, and the North Dakota secretary of state as a
nonprofit organization that is exempt under section 501(c)(3) of the United States
Internal Revenue Code and meets the following requirements: It has been organized
and operated exclusively in providing services for the purposes of preventing and
alleviating human illness and injury. Methods used to obtain these goals would include
education, research, community service, and direct patient services, income being
derived solely from private donations with some exceptions of a minimal membership
fee. Its members are not limited to only individuals who themselves are licensed or
otherwise legally authorized to render the same professional services as the
organization. The disbursement of funds within a volunteer health association is to be
controlled by a board of directors who work voluntarily and without pay.
18. Gross receipts from the sale of a manufactured home that has been sold, bargained,
exchanged, given away, or transferred by the person who first acquired it from a
retailer in a sale at retail and upon which the North Dakota use tax has previously
been imposed.
19. The donation by a retailer of tangible personal property to an organization exempt from
federal income tax under section 501(c)(3) of the United States Internal Revenue
Code [26 U.S.C. 501(c)(3)].
20. Air carrier transportation property subject to ad valorem property taxation pursuant to
the provisions of chapters 57-06, 57-07, 57-08, 57-13, and 57-32.
21. Tangible personal property consisting of flight simulators or mechanical or electronic
equipment for use in association with a flight simulator.
22. Gross receipts from the initial sale of beneficiated coal.
23. Gross receipts from electronic games of chance licensed by the attorney general
under chapter 53-06.1.
24. Gross receipts from sales of carbon dioxide used for enhanced recovery of oil or
natural gas or secure geologic storage.
25. Gross receipts from the sale of items delivered electronically, including specified digital
products. For purposes of this subsection:
a. "Specified digital products" means:
(1) "Digital audio-visual works" which means a series of related images which,
when shown in succession, impart an impression of motion, together with
accompanying sounds, if any;
(2) "Digital audio works" which means works that result from the fixation of a
series of musical, spoken, or other sounds, including ringtones; and
(3) "Digital books" which means works that are generally recognized in the
ordinary and usual sense as books.
b. For purposes of the definition of "specified digital products", "transferred
electronically" means obtained by the purchaser by means other than tangible
storage media.
c. For purposes of the definition of "digital audio works", "ringtones" means digitized
sound files that are downloaded onto a device and which may be used to alert the
customer with respect to a communication.

d. "Specified digital products" may not be construed to include prewritten computer
software as that term is defined in subdivision g of subsection 1 of section
57-39.2-02.1.
26. (Contingent effective date - See note) Gross receipts from sales of liquefied natural
gas used for agricultural, industrial, or railroad purposes as defined in section
57-43.2-01.
27. a. Gross receipts from sales to a senior citizen organization that provides
informational, health, welfare, counseling, and referral services for senior citizens
in this state if the senior citizen organization:
(1) Is recognized by the internal revenue service as having exempt status under
26 U.S.C. 501(c)(3);
(2) Is recognized by the secretary of state as a charitable organization; and
(3) Either:
(a) Provides services through the aging services division of the
department of health and human services;
(b) Receives grant funds through the department of transportation which
are used for enhanced mobility of seniors and individuals with
disabilities; or
(c) Provides services through a contract with the department of health
and human services as a program of all-inclusive care for the elderly.
b. The department of health and human services and the department of
transportation shall notify the tax commissioner if a senior citizen organization no
longer meets the criteria in paragraph 3 of subdivision a.
### § 57-40.2-04.1. Use tax exemption for food and food ingredients.

Gross receipts from sales for human consumption of food and food ingredients are exempt
from taxes imposed under this chapter. Gross receipts from sales for human consumption of
food and food products given, or to be given, as samples to consumers for consumption on the
premises of a food store are exempt from taxes imposed by this chapter. For purposes of this
section, "food" and "food ingredients" mean substances, whether in liquid, concentrated, solid,
frozen, dried, or dehydrated form, which are sold for ingestion or chewing by humans and are
consumed for taste or nutritional value.
1. For purposes of this section, "food" and "food ingredients" do not include:
a. Alcoholic beverages.
b. Candy or chewing gum.
c. Dietary supplements.
d. Prepared food.
e. Soft drinks containing fifty percent or less fruit juice.
f. Tobacco.
2. For purposes of this section:
a. "Alcoholic beverages" means beverages that are suitable for human consumption
and contain one-half of one percent or more of alcohol by volume.
b. "Candy" means a preparation of sugar, honey, or other natural or artificial
sweeteners in combination with chocolate, fruits, nuts, or other ingredients or
flavoring in the form of bars, drops, or pieces. Candy does not include any
preparation containing flour and that does not require refrigeration.
c. "Dietary supplement" means any product, other than tobacco, intended to
supplement the diet which contains one or more of the following dietary
ingredients: a vitamin; a mineral; an herb or other botanical; an amino acid; a
dietary substance for use by humans to supplement the diet by increasing the
total dietary intake; an oral concentrate, metabolite, constitute, extract, or
combination of any dietary ingredients described in this subdivision and which is
intended for ingestion in tablet, capsule, powder, soft gel cap, or liquid form, or if
not represented for use as a sole item of a meal or of a diet; and is required to be
labeled as a dietary supplement, identifiable by the supplemental facts box found
on the label and as required pursuant to 21 CFR 101.36.

d. "Prepared food" means:
(1) Food sold in a heated state or heated by the seller;
(2) Two or more food ingredients mixed or combined by the seller for sale as a
single item; or
(3) Food sold with eating utensils provided by the seller, including plates,
knives, forks, spoons, glasses, cups, napkins, or straws. A plate does not
include a container or packaging used to transport the food.
e. "Prepared food" does not mean:
(1) Food that is only cut, repackaged, or pasteurized by the seller.
(2) Eggs, fish, meat, poultry, and foods containing these raw animal foods
requiring cooking by the consumer as recommended by the food and drug
administration in chapter 3, part 401.11, of its food code so as to prevent
foodborne illness.
(3) If sold without eating utensils provided by the seller:
(a) Food sold by a seller whose proper primary North American industry
classification system classification is manufacturing in sector 311,
except subsector 3118, bakeries.
(b) Food sold in an unheated state by weight or volume as a single item.
(c) Bakery items, including bread, rolls, buns, biscuits, bagels, croissants,
pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars,
cookies, and tortillas.
(d) Food sold that ordinarily requires additional cooking, as opposed to
just reheating, by the consumer prior to consumption.
f. "Soft drinks" means nonalcoholic beverages that contain natural or artificial
sweeteners. "Soft drinks" does not include beverages that contain milk or milk
products, soy, rice, or similar milk substitutes, or greater than fifty percent of
vegetable or fruit juice by volume.
g. "Tobacco" means cigarettes, cigars, chewing or pipe tobacco, or any other item
that contains tobacco.
3. For purposes of this section, "eating utensils provided by the seller" is determined as
follows:
a. Determine the prepared food ratio, where the numerator is the sum of food
defined in paragraphs 1 and 2 of subdivision d of subsection 2 plus food when
plates, bowls, glasses, or cups are necessary for the purchaser to receive the
food and the denominator is all sales of food and food ingredients, including
prepared food, candy, dietary supplements, and soft drinks. Alcoholic beverages
are not included in either the numerator or denominator.
b. If the prepared food ratio is seventy-five percent or less, utensils are provided by
the seller if the seller's practice is to physically give or hand them to the
purchaser, except plates, bowls, glasses, or cups necessary for the purchaser to
receive the food need only be made available.
c. If the prepared food ratio is greater than seventy-five percent, utensils are
provided by the seller if they are made available to the purchaser. When sellers
with a food ratio greater than seventy-five percent sell items that contain four or
more servings packaged as one item and sold for a single price, the item does
not become prepared food unless the seller's practice is to physically give or
hand the purchaser utensils as in subdivision b. Serving size is determined by the
label of the item sold. If no label is available, the seller will reasonably determine
the number of servings.
d. When a seller sells food items that have a utensil placed in a package by a
person other than the seller and that person's North American industry
classification system classification code is that of manufacturers (sector 311), the
seller shall not be considered to have provided the utensils except as in
subdivisions b and c. For any other packager with any other North American
industry classification system classification code, the seller shall be considered to
have provided the utensil.

e. The prepared food ratio is to be calculated by the seller for each calendar or fiscal
year not later than ninety days after the end of each year and based on the
seller's data from the previous year.
f. A single prepared food ratio will be determined annually and used for all of the
seller's locations in the state.
g. A new business shall make a good-faith estimate of the prepared food ratio for
the first year and shall adjust its good-faith estimate after the first three months if
the actual prepared food ratio is materially different than the estimate.
### § 57-40.2-04.2. Use tax exemption for power plant construction, production,

environmental upgrade, and repowering equipment and oil refinery or gas processing
plant environmental upgrade equipment.
1. As used in this section, unless the context otherwise requires:
a. (1) "Environmental upgrade" means an investment greater than twenty-five
million dollars or one hundred thousand dollars per megawatt of installed
nameplate capacity, whichever is less, in machinery, equipment, and related
facilities for reducing emissions or increasing efficiency at an existing power
plant.
(2) "Environmental upgrade" for purposes of a process unit means an
investment greater than one hundred thousand dollars in machinery,
equipment, and related facilities for reducing emissions, increasing
efficiency, or enhancing reliability of the equipment at a new or existing
process unit.
b. "Operator" means any person owning, holding, or leasing a power plant or
process unit.
c. "Power plant" means:
(1) An electrical generating plant, and all additions to the plant, which
processes or converts coal in its natural form or beneficiated coal into
electrical power and which has at least one single electrical energy
generation unit with a capacity of fifty thousand kilowatts or more.
(2) A wind-powered electrical generating facility, on which construction is
completed before January 1, 2015, and all additions to the facility, which
provides electrical power through wind generation and which has at least
one single electrical energy generation unit with a nameplate capacity of
one hundred kilowatts or more.
(3) Any other type of electrical power generating facility excluding the types of
power plants identified in paragraphs 1 and 2 which has a capacity of one
hundred kilowatts or more and produces electricity for resale or for
consumption in a business activity.
d. "Process unit" means an oil refinery or gas processing plant and all adjacent units
that are utilized in the processing of crude oil or natural gas.
e. "Production equipment" means machinery and attachment units, other than
replacement parts, directly and exclusively used in the generation, transmission,
or distribution of electrical energy for sale by a power plant.
f. "Repowering" means an investment of more than two hundred million dollars or
one million dollars per megawatt of installed nameplate capacity, whichever is
less, in an existing power plant that modifies or replaces the process used for
converting coal in its natural form or beneficiated coal into electric power.
2. Sales of production or environmental upgrade equipment that is delivered on or after
January 1, 2007, and used exclusively in power plants or repowering existing power
plants or in process units are exempt from the tax imposed by this chapter.
3. Sales of tangible personal property, other than production or environmental upgrade
equipment, which is used in the construction of new power plants or to expand existing
power plants or to add environmental upgrades to existing power plants or repowering
existing power plants or to add environmental upgrades to existing process units are
exempt from the tax imposed by this chapter.

4. To receive the exemption at the time of purchase, the operator must receive from the
commissioner a certificate that the tangible personal property or production equipment
the operator intends to purchase qualifies for the reduced rate or exemption. If a
certificate is not received prior to the purchase, the operator shall pay the applicable
tax imposed by this chapter and apply to the commissioner for a refund.
5. If the tangible personal property or production equipment is purchased or installed by a
contractor subject to the tax imposed by this chapter, the operator may apply for a
refund of the difference between the amount remitted by the contractor and the
reduced rate or exemption imposed or allowed by this section.
### § 57-40.2-05. Evidence of use.

For the purpose of the proper administration of this chapter, and to prevent evasion of the
tax, evidence that tangible personal property was sold by any person for delivery in this state is
prima facie evidence that such tangible personal property was sold for use in this state.
### § 57-40.2-06. Payment of tax.

The tax imposed by this chapter must be paid in the following manner:
1. The tax upon tangible personal property which is sold by a retailer maintaining a place
of business in this state, or by such other retailer as the commissioner shall authorize
pursuant to subsection 2 of section 57-40.2-07, must be collected by the retailer and
remitted to the commissioner as provided by section 57-40.2-07; provided, that any
such retailer may not collect the tax on any purchases made by a contractor who
furnishes to the retailer a certificate which includes the contractor's license number
assigned to the contractor under the provisions of chapter 43-07 and the use tax
account number assigned to the contractor by the commissioner pursuant to section
### § 43-07-04. Such certificate must be in the form prescribed by the commissioner and

must be furnished by the contractor to the retailer each calendar year prior to the
making of any purchases during such calendar year from the retailer without liability for
paying the tax to the retailer.
2. The tax, when not paid in conformity with subsection 1, must be paid to the
commissioner directly by any person storing, using, or consuming such property within
this state, pursuant to the provisions of section 57-40.2-07.
### § 57-40.2-07. Collection of use tax.

The tax imposed by this chapter must be collected in the following manner:
1. Except as otherwise provided by section 57-39.2-14.1, every retailer maintaining a
place of business in this state and making sales of tangible personal property for use
in this state, not exempted under the provisions of section 57-40.2-04, before making
any sales shall obtain a permit from the commissioner to collect the tax imposed by
this chapter, which permit is subject to all of the requirements, conditions, and fees for
its issuance that apply with respect to a retail sales tax permit, and at the time of
making such sales, whether within or without the state, shall except as otherwise
provided in subsection 1 of section 57-40.2-06, collect the tax imposed by this chapter
from the purchaser, and give to the purchaser a receipt therefor in the manner and
form prescribed by the commissioner, if the commissioner, by regulation, shall require
such receipt. Each such retailer shall list with the commissioner the name and address
of all of the retailer's agents operating in this state and the location of each of the
retailer's distribution or sales houses or offices or other places of business in this state.
2. The commissioner, upon application, may authorize the collection of the tax imposed
by this chapter by any retailer not maintaining a place of business within the state,
who, to the satisfaction of the commissioner, furnishes adequate security to ensure
collections and payment of the tax. To such retailer must be issued a permit to collect
the tax in such manner and subject to such regulations and agreements as the
commissioner shall prescribe. When so authorized, such retailer shall, except as
otherwise provided in subsection 1 of section 57-40.2-06, collect the tax upon all

tangible property sold to the retailer's knowledge for use within this state, as a retailer
maintaining a place of business within this state collects such tax. Such authority and
permit may be canceled at any time, if the commissioner considers the security
inadequate, or believes that such tax can be collected more effectively from the person
using such property in this state.
3. The tax required to be collected, and any tax collected, by any retailer under
subsections 1 and 2 constitutes a debt owed by the retailer to this state.
4. Except as provided in subsection 7, each retailer required or authorized, pursuant to
this section, to collect such tax shall pay the tax in quarterly installments on or before
the last day of the month next succeeding each quarterly period ending March
thirty-first, June thirtieth, September thirtieth, and December thirty-first of each year.
Except that when there is a sale of any business by any retailer required or authorized,
pursuant to this section, to collect such tax or when any business is discontinued by
such retailer, the tax becomes due immediately prior to the sale or discontinuance of
such business and, if not paid within fifteen days thereafter, it becomes delinquent and
subject to the penalties provided in section 57-40.2-15. Every retailer, at the time of
making the return required by this chapter, shall compute and pay to the commissioner
the tax due for the preceding period.
5. Except as provided in subsection 7, the retailer, on or before the last day of the month
following the close of the first quarterly period as defined in subsection 4, and on or
before the last day of the month following each subsequent quarterly period of three
months, shall make out a return for the preceding quarterly period in such form and
manner as may be prescribed by the commissioner, showing the gross receipts of the
retailer, the amount of the tax for the period covered by such return, and such further
information as the commissioner may require to enable the commissioner correctly to
compute and collect such tax, but the commissioner, upon receipt of a proper showing
by any retailer of the necessity therefor, may grant such retailer an extension of time
not to exceed thirty days for making such return. If such extension is granted to any
retailer, the time in which the retailer is required to make payment must be extended
for the same period. If the commissioner deems it necessary or advisable in order to
ensure the payment of the tax, or if the commissioner deems it practical, the
commissioner may require returns and payment of the tax to be made for annual
periods or other than quarterly periods, the provisions of this chapter to the contrary
notwithstanding. A return must be signed by the taxpayer or the taxpayer's duly
authorized agent and must contain a written declaration that it is made and subscribed
under penalties of this chapter.
6. Except as provided in subsection 7, any person who uses any property upon which the
said tax has not been paid, either to the retailer or directly to the commissioner, is
liable therefor, and, on or before the last day of the month next succeeding each
quarterly period, shall pay the tax upon all such property used by that person during
the preceding quarterly period, in such manner and accompanied by such returns as
the commissioner shall prescribe.
7. If total sales and purchases subject to sales and use taxes for the preceding calendar
year equal or exceed three hundred thirty-three thousand dollars, the tax levied by this
chapter is payable monthly on or before the last day of the next succeeding month.
The tax commissioner may, upon request and for good cause shown, waive the
requirement to file and remit monthly. The amount of monthly tax payable, manner of
payment, filing of the return, penalty, and waiver of penalty must be that prescribed in
subsection 1 of section 57-39.2-12. Penalty and interest for failure to file a return or
corrected return or to pay the tax imposed must be that prescribed in section
### § 57-40.2-15. If a person is required to file more than one return pursuant to this section,

the monthly payment requirement applies separately to each return. If total sales and
purchases subject to sales and use taxes for any succeeding calendar year decrease
below three hundred thirty-three thousand dollars, a person may return to quarterly
installments. In the event of a business reorganization in which the ownership of the
business organization remains in the same person or persons as prior to the

reorganization, the total sales subject to sales and use taxes for the preceding
calendar year for the business that was reorganized must be used to determine
whether the tax is payable monthly under this section.
8. The commissioner, when in the commissioner's judgment it is necessary and advisable
to do so in order to secure the collection of such tax, may require any person subject
to the tax to file with the commissioner a bond, issued by a surety company authorized
to transact business in this state and approved by the insurance commissioner as to
solvency and responsibility, in such amount as the commissioner may fix, to secure the
payment of any tax or penalties due or which may become due from such person. In
lieu of such bond, securities approved by the commissioner, in an amount which the
commissioner may prescribe, may be deposited with the commissioner, and such
securities must be kept in the custody of the commissioner, and may be sold by the
commissioner at public or private sale, without notice to the depositor thereof, if it
becomes necessary so to do in order to recover any tax or penalties due. Upon such
sale, the surplus, if any remains above the amounts due, must be returned to the
person who deposited the securities.
9. The commissioner may adopt rules for adding such tax, or the average equivalent
thereof, by providing different methods applying uniformly to retailers within the same
general classification for the purpose of enabling such retailers to add and collect, as
far as practicable, the amount of such tax.
### § 57-40.2-07.1. Deduction to reimburse retailer for administrative expenses.

1. A retailer registered to report and remit sales, use, or gross receipts tax imposed under
chapter 57-39.2, 57-39.5, 57-39.6, or 57-40.2 may deduct and retain one and one-half
percent of the tax due. The aggregate of deductions allowed by this section and
section 57-39.2-12.1 may not exceed one hundred ten dollars per return. Retailers that
receive compensation under this subsection may not receive additional compensation
under subsection 2 or 3 for the same period.
2. A certified service provider that contracts with retailers to calculate, collect, and remit
tax due on behalf of retailers may deduct and retain from the tax remitted to the tax
commissioner compensation or a monetary allowance up to the amount approved by
the streamlined sales and use tax governing board effective June 1, 2006. The
compensation provided in this subsection applies only to tax remitted by certified
service providers on behalf of retailers that are remote sellers registered to collect
sales and use tax in this state under chapter 57-39.4. Certified service providers that
receive compensation under this subsection may not receive additional compensation
under subsection 1 or 3 for the same period.
3. A retailer that is a remote seller registered to collect sales and use tax under
chapter 57-39.4 and that uses a certified automated system to calculate, report, and
remit tax due under chapters 57-39.2, 57-39.4, and 57-40.2 may deduct and retain
compensation or a monetary allowance up to the amount approved by the streamlined
sales and use tax governing board during its December 2006 meeting. Retailers that
receive compensation under this subsection may not receive additional compensation
under subsection 1 or 2 for the same period.
4. For purposes of this section, "remote seller" means a retailer that does not have an
adequate physical presence to establish nexus in this state for sales and use tax
purposes.
5. Compensation may not be deducted and retained under this section unless the tax
due is paid within the time limitations under section 57-39.2-12 or 57-40.2-07 or
chapter 57-39.4. If a retailer fails to timely file a return or pay the tax due, the tax
commissioner may, for good cause shown, allow the retailer to deduct and retain the
compensation under this section.
6. The deduction allowed retailers or certified service providers by this section is to
reimburse retailers directly or indirectly for expenses incurred in keeping records,
preparing and filing returns, remitting the tax, and supplying information to the tax
commissioner upon request.

### § 57-40.2-08. Unlawful advertising.

It is unlawful for any retailer to advertise or hold out or state to the public or to any
purchaser, consumer, or user, directly or indirectly, that the tax or any part thereof imposed by
this chapter will be assumed or absorbed by the retailer, or that it will not be added to the selling
price of the property sold, or if added that it or any part thereof will be refunded.
### § 57-40.2-09. Records required.

Each retailer required or authorized to collect the tax imposed by this chapter, and each
person using in this state tangible personal property purchased for resale or for use shall keep
such records, receipts, invoices, and other pertinent papers as the commissioner shall require
and each such retailer or person shall preserve for a period of three years and three months all
invoices and other records of such tangible personal property purchased for resale or for use.
The commissioner, or any duly authorized agent, may examine the books, papers, records, and
equipment of any person who sells tangible personal property or who is liable for such tax, and
may investigate the character of the business of any such person to verify the accuracy of any
return made, or if no return was made, to ascertain and determine the amount due. Any such
books, papers, and records must be made available within this state for such examination upon
reasonable notice if the commissioner shall make an order to that effect.
### § 57-40.2-10. Revocation of permit and authority to do business.

If any retailer maintaining a place of business in this state, or authorized to collect the tax
imposed by this chapter, fails to comply with any of the provisions of this chapter, or with any
order or regulation of the commissioner, the commissioner, by order, may revoke the permit, if
any was issued to such retailer, or if the retailer is a corporation or limited liability company
authorized to do business in this state, the commissioner may certify to the secretary of state a
copy of an order finding that such retailer has failed to comply with certain specified provisions,
orders, rules, or regulations. The secretary of state, upon receipt of such certified copy, may
revoke the certificate authorizing such corporation or limited liability company to do business in
this state, and shall issue a new certificate only when the corporation or limited liability company
shall have obtained from the commissioner an order finding that the corporation or limited
liability company has complied with its obligations under this chapter. Any order shall be made
under this section only after a retailer has had an opportunity, upon ten days' notice of the time,
place, and purpose of a hearing, to show cause why such order should not be made. The
commissioner may issue a new permit after a revocation.
### § 57-40.2-11. Tax paid on articles in other states or political subdivisions of other

states.
If tax has been paid on any article or tangible personal property in any other state or political
subdivision thereof in respect to its sale or use in an amount less than the tax imposed by this
chapter, the provisions of this chapter apply, but in an amount equal to the difference between
the tax imposed by this chapter and the tax paid in the other state or political subdivision
thereof. If the tax paid in the other state or political subdivision thereof is the same or more, then
no tax is due on such article. The provisions of this section apply only if such other state or
political subdivision thereof allows a tax credit with respect to the retail sales and use taxes
imposed by this state which is substantially similar in effect to the credit allowed by this section.
The tax commissioner may require the taxpayer to provide written proof from the other state or
political subdivision that the tax was legally due and paid.
### § 57-40.2-12. Unlawful sale or soliciting.

No agent, canvasser, or employee of any retailer, not authorized by permit from the
commissioner, may collect the tax as prescribed by this chapter, nor sell, solicit orders for, nor
deliver, any tangible personal property in this state.

### § 57-40.2-13. Provisions of sales tax law applicable.

The provisions of chapter 57-39.2, pertaining to the administration of the retail sales tax,
including provisions for refund or credit provided therein, not in conflict with the provisions of this
chapter, govern the administration of the tax levied in this chapter.
### § 57-40.2-14. Contractor's performance bonds for payment of use tax.

For the purposes of this section, the term "contractor" includes any person or group or
combination of persons acting as a unit; "subcontractor" includes a person or group or
combination of persons acting as a unit, who undertakes to perform all or any part of work
covered by the original contract entered into by the contractor, including the furnishing of any
supplies, materials, equipment, or any other tangible personal property; "surety" means a bond
or undertaking executed by a surety company authorized to do business in this state; and
"surety company" means any person executing the surety.
Whenever any contractor or subcontractor enters into any contract for the erection of
buildings or the alteration, improvement, or repair of real property in this state and the contractor
or subcontractor furnishes surety for the faithful performance of such contract, there is hereby
imposed the additional obligation upon the surety company to the state of North Dakota that
said contractor or subcontractor shall promptly pay all use taxes which may accrue to the state
of North Dakota under this chapter. In the case of a contractor and the contractor's surety
company, this additional obligation shall include liability to pay to the commissioner on
purchases made by either the contractor or the subcontractor all such use taxes which have not
been paid to a retailer authorized or required to collect such taxes; and the contractor or the
contractor's surety company may recover from the subcontractor the amount of any use taxes
accruing with respect to purchases made by the subcontractor which the contractor or the
surety company may be required to pay to the commissioner, or to withhold from the amount
due the subcontractor under the subcontract an amount equal to any use taxes accruing with
respect to purchases of the subcontractor which have not been paid by the subcontractor to the
commissioner or to a retailer authorized or required to collect such taxes. Such liability on the
part of the surety company is limited to three percent of the amount of the contract price.
The surety company within sixty days after executing such surety shall send written notice
of the same to the commissioner, which notice must give the names and addresses of the
parties contracting with respect to the real property and the place where the contract is to be
performed. After the completion of the contract and the acceptance of the improvement by the
owner of the real property improved, the surety company shall give written notice of such
completion and acceptance to the commissioner.
Six months after the completion of the contract and the acceptance of the improvement by
the owner thereof, the additional obligation imposed upon the surety company ceases unless
written notice, within such period of time, of unpaid use taxes, is given to the surety company by
the commissioner.
This section does not modify or repeal any provision of chapter 48-01.2.
### § 57-40.2-15. Penalties - Offenses.

1. a. Any person failing to file a return or corrected return or to pay any tax imposed
under this chapter, within the time required by this chapter, is subject to interest of
one percent of the tax for each month or fraction of a month except the first
month after the return or the tax became due.
b. In addition to the tax and interest prescribed in this chapter, a taxpayer is subject
to penalties as follows:
(1) If any taxpayer, without intent to evade any tax imposed by this chapter, fails
to file a return, on or before the prescribed or extended due date, a penalty
equal to five percent of the tax required to be reported, or five dollars,
whichever is greater, must be added if the failure is for not more than one
month, counting each fraction of a month as an entire month, with an
additional five percent for each additional month or fraction of a month
during which the failure continues, not exceeding twenty-five percent in the
aggregate.

(2) If any taxpayer, without intent to evade any tax imposed by this chapter, fails
to pay the amount shown as tax due on any return, filed on or before the
prescribed or extended due date, a penalty of five percent of the tax due, or
five dollars, whichever is greater, must be added to the tax.
(3) If upon audit of a taxpayer's return an additional tax is found to be due,
penalty as prescribed in subdivision a or b must be added to the tax.
(4) The commissioner, if satisfied that the delay was excusable, may waive, and
if paid, refund all or any part of the penalty and interest. The penalty and
interest must be paid to the commissioner and disposed of in the same
manner as the tax with respect to which it is attached. Unpaid penalties and
interest may be enforced in the same manner as is the tax.
2. Repealed by S.L. 1975, ch. 106, § 673.
3. The certificate of the commissioner to the effect that a tax has not been paid, that a
return has not been filed, or that information has not been supplied pursuant to the
provisions of this chapter is prima facie evidence thereof.
4. Any person failing to comply with any of the provisions of this chapter, or failing to
remit within the time herein provided to the state the tax due on any sale or purchase
of tangible personal property subject to the tax imposed under the provisions of this
chapter, is guilty of a class A misdemeanor.
### § 57-40.2-15.1. Corporate officer liability.

1. If a corporation fails for any reason to file the required returns or to pay the tax due
under this chapter, the president, vice president, secretary, or treasurer of the
corporation, jointly or severally, having control or supervision of, or charged with the
responsibility for making the returns and payments are personally liable for the failure.
The dissolution of a corporation does not discharge an officer's liability for a prior
failure of the corporation to make a return or remit the tax due. The sum due for the
liability may be assessed and collected pursuant to the provisions of this chapter for
the assessment and collection of other liabilities.
2. If the corporate officers, governors, managers, or members of a member-controlled
limited liability company elect not to be personally liable for the failure to file the
required returns or to pay the tax due, the corporation or limited liability company must
be required to make a cash deposit or post and maintain with the tax commissioner a
bond or undertaking executed by a surety company authorized to do business in this
state. The cash deposit, bond, or undertaking provided for in this section must be in an
amount equal to the estimated annual use tax liability of the corporation or limited
liability company.
### § 57-40.2-15.2. Governor and manager liability.

1. If a limited liability company fails for any reason to file the required returns or to pay
the taxes due under this chapter, the governor, manager, or member of a
member-controlled limited liability company, jointly or severally charged with the
responsibility of supervising the preparation of the returns and payments, is personally
liable for the failure. The dissolution of a limited liability company does not discharge a
governor's, manager's, or member's liability for a prior failure of the limited liability
company to file a return or remit the tax due. The sum due for such a liability may be
assessed and collected under the provisions of this chapter.
2. If the governors, managers, or members of a limited liability company elect not to be
personally liable for the failure to file the required returns or to pay the tax due, the
limited liability company must make a cash deposit or post and maintain with the
commissioner a bond or undertaking executed by a surety company authorized to do
business in this state. The cash deposit, bond, or undertaking must be in an amount
equal to the estimated annual use tax liability of the limited liability company.

### § 57-40.2-15.3. Liability of a general partner in a limited liability limited partnership.

1. If a limited liability limited partnership required to hold a permit under this chapter fails
for any reason to file the required returns or to pay the tax due under this chapter, the
general partners, jointly or severally, charged with the responsibility of supervising the
preparation of the returns and payment of the tax are personally liable for the
partnership's failure. The dissolution of a limited liability limited partnership does not
discharge a general partner's liability for a prior failure of the partnership to file a return
or remit the tax due. The taxes, penalty, and interest may be assessed and collected
pursuant to the provisions of this chapter.
2. If the general partners elect not to be personally liable for the failure to file the required
returns or to pay the tax due, the limited liability limited partnership must make a cash
deposit or post and maintain with the commissioner a bond or undertaking executed
by a surety company authorized to do business in this state. The cash deposit, bond,
or undertaking must be in an amount equal to the estimated annual use tax liability of
the limited liability limited partnership.
### § 57-40.2-16. Lien of tax - Collection - Action authorized.

1. Whenever any person liable for payment to the commissioner of the tax imposed by
this chapter or for any penalties in respect thereto refuses or neglects to pay the same
the amount, including any interest, penalty, or addition to such tax, together with the
costs that may accrue in addition thereto, is a lien in favor of the state of North Dakota
upon all property and rights to property, whether real or personal, belonging to said
taxpayer, and in the case of property in which a deceased taxpayer held an interest as
joint tenant or otherwise with right of survivorship at the time of death, the lien
continues as a lien against the property in the hands of the survivor or survivors to the
extent of the deceased taxpayer's interest therein, which interest must be determined
by dividing the value of the entire property at the time of the taxpayer's death by the
number of joint tenants or persons interested therein.
2. The lien aforesaid attaches at the time the tax first becomes payable, as provided by
section 57-40.2-07, and continues until the liability for such amount is satisfied.
3. Any mortgagee, purchaser, judgment creditor, or lien claimant acquiring any interest in,
or lien on, any property situated in the state, prior to the commissioner filing in the
central indexing system maintained by the secretary of state, a notice of the lien
provided for in this section, takes free of, or has priority over, the lien.
4. The commissioner shall index in the central indexing system the following data:
a. The name of the taxpayer.
b. The name "State of North Dakota" as claimant.
c. The date and time the notice of lien was indexed.
d. The amount of the lien.
e. The internal revenue service taxpayer identification number or social security
number of the taxpayer.
The notice of lien is effective as of eight a.m. next following the indexing of the notice.
Any notice of lien filed by the commissioner may be indexed in the central indexing
system without changing its original priority as to property in the county where the lien
was filed.
5. The commissioner is exempt from the payment of the recording and filing fees as
otherwise provided by law for the indexing of the notice of lien, or for its satisfaction.
6. Upon payment of the tax as to which the commissioner has indexed notice in the
central indexing system, the commissioner shall index a satisfaction of the lien in the
central indexing system.
7. The attorney general, upon the request of the commissioner, shall bring an action at
law or in equity, as the facts may justify, without bond to enforce payment of any taxes
and any penalties, or to foreclose the lien therefor in the manner provided for
mortgages on real or personal property, and in such action shall have the assistance of
the state's attorney of the county in which the action is pending.

8. It is expressly provided that the foregoing remedies of the state are cumulative and
that no action taken by the commissioner or attorney general may be construed to be
an election on the part of the state or any of its officers to pursue any remedy
hereunder to the exclusion of any other remedy provided by law.
9. The technical, legal requirements outlined in this section relating to tax liens on all real
and personal property of the taxpayer to ensure payment of the taxes, including
penalties, interest, and other costs, are self-explanatory.
10. Remittances on account of tax due under this chapter may not be deemed or
considered payment thereof unless or until the commissioner has collected or received
the amount due for such tax in cash or equivalent credit.
### § 57-40.2-17. Disposition of excess tax collections.

Whenever a retailer maintaining a place of business in this state has collected a use tax
from a customer in excess of the amount prescribed or due under this chapter, and if the retailer
does not refund the excessive tax collected to the customer, the amount so collected by the
retailer must be paid by the retailer to the tax commissioner in the return filed for the period in
which the excessive collection occurred. If the excessive collection is subsequently refunded by
the retailer to the customer, the retailer may file an amended return with the tax commissioner
for the period the excess tax was collected and file a claim for refund.
