# Title 57 — Taxation

## Chapter 57-34 — Telecommunications Carriers Taxation

### § 57-34-01. Definitions.

The definitions in this section may not be construed to subject a telecommunications carrier
or telecommunications service to the provisions of title 49. As used in this chapter, unless the
context or subject matter otherwise clearly requires:
1. "Adjusted gross receipts" means telecommunications carrier gross receipts less all
amounts paid by the reporting telecommunications carrier on telecommunications
service that is taxable under this chapter in state and local sales and use taxes and
federal excise taxes and less amounts paid by the reporting telecommunications
carrier to another telecommunications carrier for directory assistance originated by a
caller in this state.
2. "Company" includes any individual, copartnership, business trust, corporation, limited
liability company, joint-stock company, association, or any other organization.
3. "Gross receipts" means all telecommunications carrier retail revenues from
telecommunications service charges billed to any station in this state and from charges
to another telecommunications carrier for directory assistance originated by a caller in
this state.
4. "Station" means a subscriber service address located in this state with a distinct call
number designation or distinct extension number designation. If this is not a defined
location, "station" means the location of the primary use of telecommunications
equipment as determined by telephone number, authorization code, or billing address.
5. "Telecommunications carrier" means a company that is engaged in the business of
furnishing telecommunications service within this state. The term includes a reseller of
telecommunications service.
6. "Telecommunications service" means transmitting for consideration of two-way
communication by wire, cable, fiber optics, radio, lightwave, microwave, satellite, or
other means. The term includes:
a. Essential telecommunications service and nonessential telecommunications
service as defined in section 49-21-01;
b. Telecommunications service that originates and terminates in this state and is
billed to a station in this state;
c. Interstate telecommunications service that originates or terminates in this state
and is billed to a station in this state;
d. Mobile telecommunications service that is deemed to be provided by the
customer's home service provider under chapter 57-34.1, regardless of where the
mobile telecommunications service originates, terminates, or passes through; and
e. Telegraph service.
7. "Telecommunications service charges" means the value of all consideration received
by a telecommunications carrier for provision of telecommunications service and
recovery within the year of telecommunications service charges written off in a prior
year as uncollectible. For a telecommunications carrier operating on any form of
mutual basis, the term includes all amounts assessed against the members for the
operation and maintenance of the business. The term does not include revenue from
merchandising, jobbing and contract work, maintenance or repair of customer
premises equipment including equipment leased or rented by the customer from any
source, operations not directly related to provision of telecommunications service,
amounts charged for billing and collection on behalf of another telecommunications
carrier, proceeds from transfer of capital stock, or transfer, sale, or lease of property
not directly related to telecommunications service. The term does not include amounts
collected for or amounts collected from federal and state mechanisms to preserve and
advance universal service.

### § 57-34-02. Reports of telecommunications carriers.

Each telecommunications carrier subject to gross receipts taxes under this chapter shall
make and file with the tax commissioner, on or before May first of each year, on the form as the
tax commissioner may prescribe, a report containing a statement of its gross receipts in this
state during the preceding calendar year, amounts paid by the carrier on telecommunications
service that is taxable under this chapter during the preceding calendar year in state and local
sales and use taxes and federal excise taxes, amounts received from or paid to another
telecommunications carrier for directory assistance, and any other information as the tax
commissioner may require. The form must include a notice of a telecommunications carrier's
right to appeal its assessment to the state board of equalization prior to or at the August meeting
of the state board of equalization. Each report must be signed, subject to section 12.1-11-02, by
the president, secretary, or other official of the telecommunications carrier.
### § 57-34-03. Computation of taxes by tax commissioner - Exemption for high-volume

customers - Continuing appropriation.
1. On or before July fifteenth of each year, the tax commissioner shall review the report
under section 57-34-02 and compute the total tax to be assessed against each
telecommunications carrier in this state at a rate of two and one-half percent of
adjusted gross receipts. If the tax commissioner's computation of the total tax differs
from the amount computed by a telecommunications carrier, the tax commissioner
shall give notice of the change by mail to that telecommunications carrier on or before
July fifteenth. The state board of equalization shall assess the tax under this section
after consideration of any contest presented.
2. A telecommunications carrier's retail customer in this state is entitled to a refund equal
to two and one-half percent of the amount of telecommunications service charges paid
to telecommunications carriers by that customer in excess of eight hundred thousand
dollars in a calendar year. A refund claim under this subsection must be filed with the
tax commissioner before December thirty-first of the year following the calendar year
for which the refund is claimed. A claim for refund must be made in the manner
prescribed by the tax commissioner. The tax commissioner shall verify that the
telecommunications carrier to which the retail customer paid telecommunications
service charges has paid the telecommunications gross receipts tax for the year for
which the refund is claimed before a refund may be paid. Refunds under this
subsection must be paid by the tax commissioner and are appropriated from the state
general fund as a standing and continuing appropriation to the tax commissioner for
that purpose.
### § 57-34-04. Assessment by state board of equalization.

Repealed by S.L. 1997, ch. 483, § 15.
### § 57-34-04.1. Tax commissioner to audit returns and state board of equalization to

assess tax.
The tax commissioner shall proceed to audit the returns of telecommunications carriers not
later than three years after the due date of the return, or three years after the return was filed,
whichever period expires later. The state board of equalization shall assess the tax and, if any
additional tax is found due, the tax commissioner shall notify the taxpayer in detail as to the
reason for the increase.
### § 57-34-04.2. Deficiency, protest, and appeal.

1. When tax is understated on a return because of a mathematical or clerical error, the
tax commissioner shall notify the telecommunications carrier of the error and the
amount of additional tax due. This notice is not a notice of deficiency and the
telecommunications carrier has no right to protest.
2. If upon audit the tax commissioner finds additional tax due, the tax commissioner shall
notify the telecommunications carrier and the state board of equalization of the

deficiency in the tax amount. A notice of deficiency must be sent to the
telecommunications carrier by first-class mail and must state the amount of additional
tax due and set forth the reasons for the increase.
3. A telecommunications carrier has thirty days from the date of mailing of the notice of
deficiency to file a written protest with the state board of equalization objecting to the
assessment of additional tax due. The protest must set forth the basis for the protest
and any other information that may be required by the state board of equalization. If a
telecommunications carrier fails to file a written protest within the time provided, the
amount of additional tax stated in the notice of deficiency becomes finally and
irrevocably fixed. If a telecommunications carrier protests only a portion of the tax
commissioner's finding, the portion that is not protested becomes finally and
irrevocably fixed.
4. If a protest is filed, the state board of equalization shall reconsider the assessment of
additional tax due.
5. Within six months after the protest is filed, the state board of equalization shall mail to
the telecommunications carrier a notice of reconsideration and assessment which
must respond to the telecommunications carrier's protest and assess the amount of
any additional tax due. The amount set forth in that notice becomes finally and
irrevocably fixed unless the telecommunications carrier brings an action against the
state in district court within six months of the mailing of the notice of reconsideration
and assessment.
### § 57-34-04.3. Claims for credit or refund - Continuing appropriation.

1. A telecommunications carrier may file a claim for credit or refund of an overpayment of
any tax imposed by this chapter within three years after the due date of the return or
within three years after the return was filed, whichever period expires later.
2. A claim for credit or refund must be made by filing with the tax commissioner an
amended return, or other report as prescribed by the tax commissioner, accompanied
by a statement outlining the specific grounds upon which the claim for credit or refund
is based.
3. Refunds under this section must be paid by the tax commissioner and are
appropriated from the state general fund as a standing and continuing appropriation to
the tax commissioner for that purpose.
4. The tax commissioner shall notify the telecommunications carrier if the state board of
equalization disallows all or part of a claim for credit or refund. The decision of the
state board of equalization denying a claim for credit or refund is final and irrevocable
unless the telecommunications carrier brings an action against the state in district
court within six months of the mailing of the notice denying the claim for credit or
refund.
### § 57-34-04.4. Preservation of records.

Every telecommunications carrier required to make a return and pay any tax under this
chapter shall preserve records of the gross proceeds of sale as the commissioner may require
and every carrier shall preserve for a period of three years and three months all invoices and
other records of telecommunications services purchased for resale. All of these books, invoices,
and other records must be open to examination at any time by the commissioner or any duly
authorized agent of the commissioner.
### § 57-34-04.5. Resale certificates.

A telecommunications carrier who receives a resale certificate certifying that another
telecommunications carrier holds a North Dakota sales and use tax permit for sales or use tax
purposes under section 57-39.2-14 is relieved from submitting the telecommunications gross
receipts tax upon the sale of telecommunications services to be resold by the
telecommunications carrier submitting the certificate. When a telecommunications carrier
submits a false resale certificate to another telecommunications carrier, the telecommunications

carrier that submitted the certificate is liable for the telecommunications gross receipts tax on
the sale. A hospital, hotel, motel, or similar place of temporary accommodation selling
telecommunications service to its patients or guests is not a telecommunications carrier under
this section.
### § 57-34-05. Deposit of tax revenues - Allocation to counties - Telecommunications

carriers tax fund - Continuing appropriation.
Gross receipts tax revenues of up to eight million four hundred thousand dollars under this
chapter must be deposited in a special fund in the state treasury, the telecommunications
carriers tax fund. Gross receipts tax revenues under this chapter exceeding eight million four
hundred thousand dollars must be deposited in the state general fund. The tax commissioner
shall allocate moneys in the telecommunications carriers tax fund among counties in the same
proportion that taxes paid by telecommunications carriers in locally assessed property taxes and
taxes assessed under chapter 57-06 and this chapter in 1997 and received by taxing districts in
the county bears to all taxes paid by telecommunications carriers in locally assessed property
taxes and taxes assessed under chapter 57-06 and this chapter in 1997 and received by taxing
districts in the state. The balance in the telecommunications carriers tax fund, not exceeding
eight million four hundred thousand dollars, is appropriated as a standing and continuing
appropriation to the tax commissioner for annual allocation to counties under this section. If
gross receipts tax revenues available for allocation on the first day of March of any year are less
than eight million four hundred thousand dollars, there is appropriated as a standing and
continuing appropriation from the state general fund the amount that, when added to gross
receipts tax revenues available for allocation from the telecommunications carriers tax fund
results in allocation of eight million four hundred thousand dollars to counties per calendar year.
On or before the first day of March of each year, the tax commissioner shall certify for payment
to the state treasurer an amount determined to be due each county. The state treasurer shall
remit the certified amount to the county treasurers according to the allocation made by the tax
commissioner under this section not later than March thirty-first of each year.
### § 57-34-06. Duties of county treasurer.

The county treasurer shall allocate taxes received under this chapter to the state, the
county, and the various taxing districts within the county according to the proportion that taxes
paid by telecommunications carriers in locally assessed property taxes and taxes assessed
under chapter 57-06 and this chapter in 1997 and received by the state, the county, and each
currently existing taxing district in the county bears to all taxes paid by telecommunications
carriers in locally assessed property taxes and taxes assessed under chapter 57-06 and this
chapter in 1997 and received by the state, the county, and all taxing districts in the county.
### § 57-34-07. Reports to county auditor.

Repealed by S.L. 1965, ch. 401, § 9.
### § 57-34-08. Administrative laws applicable.

Repealed by S.L. 1997, ch. 483, § 15.
### § 57-34-09. Disposition of revenue.

Repealed by S.L. 1965, ch. 401, § 9.
### § 57-34-10. Penalties - Interest - Lien for tax.

1. If a telecommunications carrier refuses or neglects to make the reports required by this
chapter, or refuses or neglects to furnish any information requested, the tax
commissioner shall use the best available facts and estimates to determine taxation of
the gross receipts of that carrier. The tax must be imposed upon the basis of that
information. If any company fails to make the report required under this chapter on or
before the first day of May of any year, the state board of equalization shall add a
penalty of one-quarter of the tax due for failure to make the required report which must

be collected as a part of the tax, but the tax commissioner, upon application, may grant
extensions of time within which the returns must be filed. For good cause shown, the
tax commissioner may waive all or any part of the penalty that attached under this
section.
2. Taxes levied under this chapter are due and payable to the tax commissioner on
January first following the year in which the taxes were assessed. A remittance of tax
need not be made and any assessment or collection of tax may not be made unless
the amount is at least five dollars, including penalty and interest.
3. If any amount of tax imposed by this chapter is not paid on or before March first, or if
upon audit an additional tax is found to be due, there must be added to the tax
remaining due interest at the rate of one percent of the additional tax for each month
or fraction of a month during which the tax remains unpaid, computed from March first
to the date paid.
4. Whenever any taxpayer liable to pay a tax or penalty imposed refuses or neglects to
pay the liability, the amount, including any interest, penalty, or addition to the tax, and
the additional costs that may accrue are a lien in favor of the state of North Dakota
upon all property and rights to property, whether real or personal, belonging to the
taxpayer. The lien attaches at the time the tax becomes due and payable and
continues until the liability for the amount is satisfied.
5. Any mortgagee, purchaser, judgment creditor, or lien claimant acquiring any interest in,
or lien on, any property situated in the state, prior to the tax commissioner filing in the
central indexing system maintained by the secretary of state a notice of the lien
provided for in subsection 4, takes free of, or has priority over, the lien. The tax
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. the next day following the indexing of the
notice. The tax commissioner shall index any notice of lien with no payment of fees or
costs to the secretary of state.
6. Upon payment of the tax, and any accrued penalties and interest, as to which the tax
commissioner has filed a notice of lien, the tax commissioner shall index a satisfaction
of the lien in the central indexing system without fees or costs.
### § 57-34-11. Taxes in lieu of property taxes.

The taxes imposed by this chapter are taxes upon the privilege of doing business in this
state and are in lieu of all real and personal property taxes levied by the state or any of its
political subdivisions upon real or personal property to the extent the property is directly used by
the telecommunications carrier in its telecommunications operations.
### § 57-34-12. Rules.

1. The tax commissioner may adopt any rules necessary to carry out this chapter.
2. The tax commissioner shall adopt rules as necessary to avoid double taxation of gross
receipts and to eliminate the avoidance of taxation of gross receipts of
telecommunications carriers under this chapter.
