SALES TAX TUESDAY: North Dakota

Practice Management

I was watching a re-run of the 1996 movie ‘Fargo’1 the other night and it made me realize that I hadn’t covered North Dakota in our Sales Tax Tuesday 2018 series yet. Winter is almost on us, or at least the first ‘really frigid’ Polar Cold Front, so I thought I had better get my little Sales Tax RV up to the coldest ‘city’ in the continental USA before it hits. OK folks, I admit it, it's a 'trip of the mind' since I'm not really traveling anymore.

While Fargo is North Dakota’s largest city with approximately 1/7th of the total state population it isn’t the capital of the state. That honor goes to Bismarck. But the ‘coldest city’ is Grand Forks, only Fairbanks Alaska has colder average temperatures. Grand Forks has an average monthly minimum temperature of -3.1 degrees Fahrenheit. But, as it happens, two more North Dakota cities, Fargo and Williston, rank in 3rd and 4th place as coldest US cities, both with average monthly minimum temperatures of 0.1 degrees Fahrenheit. Bismarck is way down the list, in 8th place, at a balmy 2.2 degrees Fahrenheit for the average month minimum temperature, “can you say, ‘heat wave’?”

Back in my 2015 edition of Sales Tax Tuesday, I told you that on a state-wide basis, North Dakota had an average ‘high temperature’ of 21 degrees (F) during the month of January. Folks, I said that was the ‘high temperature,’ which is still 11 degrees ‘below freezing.’

Speaking of Sales Tax Tuesday, I have to say that thanks to Avalara, the 'tax people,' this article is one in our updated 2018 (and 2019) series covering sales tax issues associated with each and every state tax jurisdiction in the United States. We are taking significantly longer this time around to get through the entire US sales tax exploration as a result of the many ‘breaking news’ features related to sales tax that have taken place thus far during 2018.  As such, you can count on seeing Sales Tax Tuesday in our headlines through much of early 2019.

Back on the subject of North Dakota, they have recently ‘refreshed their brand;’ funny, I didn’t know that state’s had brands, I’ve heard of a state moto or state slogan or state nickname, but I can’t recall ever hearing the term brand used in connection with a state before. Well, the official state website says that North Dakota has unveiled the new brand, and it isn’t ‘new at all’… it’s now “Be Legendary,” which they say builds upon their “Legendary” brand used to promote the state for more than 15 years. And this new ‘brand’ includes a new updated logo (shown at the right).

With those average temperatures so low, I’m surprised the brand and logo isn’t something like “Be Cold,” or perhaps “The Burrrrrrr State.”

Just to make my point, each January during the last 1/3rd of the month, Fargo holds what they call ‘Frostival’ designed to ‘embrace the cool of winter;’ “who are they fooling, the event might be ‘cool’, but the temperatures will be downright frigid?”  By the way, that’s a giant block of snow that has been decorated with the Frostival logo sitting in front of the Fargo train station.

The festival features outdoor events like snow golf, cross country skiing, ice skating, and generally freezing-to-death while also taking in cardboard sled races and snow volleyball. “Funny, I thought volleyball was a beach sport.” 

They even have live music and a beer garden; “now just how do you keep the beer from being a Popsicle if the average high temperature is only 21-degrees?”

Snow sculptures, sleigh rides, crafts, and ‘snowga’ (frozen yoga) are also available. There is also a ‘chili feed,’ “I think they misspelled that, I suspect they mean to say, ‘chilly feed.’”  Thank goodness, the base camp also hosts a Cocoa cook-off; “nothing like wall to wall hot chocolate to help keep your body temperature from going hypothermic.” But really, if you care to ‘embrace the cold’, this year’s frigid festival is being held January 25-26, 2019.

During the late 1800’s, Fargo was named for the founder of the Wells Fargo company. The city was a stopping off point for steamboats traveling the Red River where river traffic could connect with the Northern Pacific Railway.

By the way, Amtrak still runs a passenger line through North Dakota called the ‘Empire Builder,’ the same name as run by the Great Northern Railway in the 1800s; you can jump on the train and travel east to Chicago, or west to either Seattle or Portland. In fact, Amtrak and the National Park Service have partnered to offer not only scenic tours as part of this route, but interpretive insights with National Park Service personnel on-board while traveling the great vistas.

But there is a lot more than celebrations of the cold and train travel, going on in North Dakota. The ‘Bakken boom’ has propelled North Dakota into the top ranks of oil-producing states. The boom has given North Dakota a state population of about 725,000 and a billion-dollar budgetary surplus. While the ‘boom’ has gone up and down like the pump-jacks in this picture since it began, things in the last year or two have picked-up again as America has gained prominence in world oil and gas production even out-producing OPEC. Things are definitely back on track in terms of the oil and gas related economy for North Dakota and the US as a whole.

Despite the frigid winters, North Dakota has always been, and continues to be an ‘agriculture state;’ in its early history, ‘fur trading’ was a major source of expansion into the state, but today almost 90% of the total territory represents farmland. Less than 10% of the state’s population is involved in agriculture but the state is ranked 18th in total agricultural production within the US.

As you might expect, due to the cold winters, crops must be hearty; therefore, the largest production are cereal grains such as barley and durum (hard red winter) wheat, and oats as well as buckwheat. While some corn is grown, it is mainly limited to the southeast part of the state. There are also a lot of cattle and Bison ranches.

And where there is beef or buffalo, and perhaps even beefalo, there is Bar-B-Que. Undoubtedly the number one place for BBQ in all of North Dakota can be found in Mandan at Taylor Made BBQ. They say it’s ‘Texas Style’ because they feature brisket, but they also feature ‘beef ribs’ and I have heard ‘bison ribs’ at certain times of the year. Unfortunately, I won’t get to partake of any BBQ from there this trip because they are currently closed for renovations and expansion.

As I mentioned earlier in discussing the train, there is a great deal of vast scenery and majesty to be found in North Dakota. One such place is Theodore Roosevelt National Park, located in the colorful badlands of the state. It is the only national park named after a person. It’s the home to bison, wild horses, prairie dogs and elk. This place is not only ‘always’ on top of the most scenic places to see in North Dakota by almost every travel-log, but it has also been ranked by the New York Times as the “#5 Place to Visit ‘in the World.” I’m not even going to try to show you all the grandeur there is with this place, but just a couple of snapshots to stir your interest to visit.

The park is divided into two different segments, the National Park Services refers to them as ‘units.’ The South Unit is located near Dickinson, North Dakota and features a winding 36-mile paved roadway through the badlands ranging from grasslands to steep mountains and cliffs. The North Unit is located about an hour north of Belfield, North Dakota; while the scenic drive is shorter, it offers a more diverse series of trails with many steeper climbs or descents if you intend to get in some hiking.

It’s at this point I must turn our attention back to the topic of Sales Tax. Sales tax provides critical revenue for states as well as many counties and cities. Other than property and income tax, sales tax is the largest source of tax revenue in most states that collect it, in fact in some states it may rank 2nd overall in terms of revenue source.

From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to ensure that you are aware of the key sales tax facts for your state. That’s why we are looking at sales tax facts for each state we visit during this Sales Tax Tuesday 2018 series.

North Dakota Sales Tax Facts

  • The North Dakota (ND) state sales tax rate is currently 5%. Depending on local municipalities, the total tax rate can be as high as 8.5%.
  • North Dakota assesses local tax at the city and county levels but does not assess local tax for special jurisdictional areas such as school districts or transportation authorities.
  • North Dakota imposes sales tax on retailers’ gross receipts. Cities or counties that have adopted home rule charters may levy sales and use and other taxes at the local level.
  • North Dakota imposes a sales tax on the retail sale or lease of tangible personal property. Communications services, admission fees, and accommodations (30 days or less) are also subject to sales tax.
  • Numerous sales tax exemptions apply, they can be found in the most recent version of the state’s Sales Tax Guidelines website exemption PDF.   
  • A higher (7%) sales tax rate is charged on alcoholic beverages and a lower (3%) rate is charged on the retail sales of new farm equipment, irrigation equipment and mobile homes.
  • The state does NOT offer any sales tax holidays.
  • North Dakota is a destination sourcing state. This means that sales tax is based on the location of the buyer, not the seller.
  • North Dakota is a Streamlined Sales Tax state.
  • Holders of North Dakota sales and use tax permits are encouraged to file sales and use tax returns online through North Dakota Sales Tax WebFile.
  • Businesses registered through WebFile do not receive paper returns from the State Tax Commissioner.
  • All sales and use tax forms are available through the Office of the State Tax Commissioner.
  • Out-of-state retailers may be liable for sales and use tax and are encouraged to register with the state.
  • Businesses making more than $333,000 of taxable sales and purchases in North Dakota in the previous calendar year are required to file monthly returns.
  • Businesses that reported more than ten local taxes in the previous year should use Schedule ST-Local to report all local taxes. Businesses that reported ten or less local option taxes should look at the Local Option Tax section on Form ST for information about each local jurisdiction. See ND Tax for additional information about local option taxes.
  • Sales and use tax returns and payments must be postmarked by the US Postal Service on or by before the last day of the month following the reporting period. Additional dates are listed on the Sales and Use Calendar.

Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via AvaTax allows businesses to be fully sales tax compliant without sacrificing productivity.

By the way, if you are attending QuickBooks Connect this week make certain to stop by the Avalara booth in the Exhibit Hall to find out for yourself why Avalara is absolutely ‘the way to go’ when it comes to staying sales tax compliant.

1 – ‘Fargo’ is a 1996 reality-based crime drama from PolyGram Film Entertainment and Working Title Films, distributed by Gramercy Pictures. It was produced by Ethan Coen, directed by Joel Coen, and written by Joel and Ethan Coen. It starred Frances McDormand and William H. Macy.