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600 E. Boulevard Ave.
  Bismarck, ND 58505-0599
  701.328.7088 phone
  701.328.3700 fax
  877.328.7088 toll-free
FOR IMMEDIATE RELEASE Contact: Cory Fong, Tax Commissioner 701-328-2770
Friday, September 30, 2005 Gary Anderson, Director, Income, Sales & Special Taxes, 701-328-3471

North Dakota Joins National Sales Tax Simplification Project

BISMARCK, N.D. --- Tax Commissioner Cory Fong reminded retailers and shoppers that beginning October 1 the Streamlined Sales and Use Tax Agreement takes effect in North Dakota. The agreement is the result of a nationwide effort to develop a system that simplifies sales and use tax collection and administration by retailers and states. North Dakota joins 12 other states to implement the streamlined agreement and additional states will be joining in the coming months.

“This is a national initiative of all states and local jurisdictions that have a sales tax to simplify it and make it more uniform,” said Fong. “By working together, states are getting closer to slowing the erosion of sales tax revenue and begin collecting sales tax on purchases made by telephone, through a catalog, or over the Internet.”

The Streamlined Sales Tax Project (SSTP) is designed to reduce the number of sales tax rates, bring uniformity to definitions of taxable items, reduce the paperwork burden on retailers, and incorporate new technology to modernize many administrative functions.

“The purpose of the Streamlined Sales Tax Project is to collect taxes that we don’t collect now,” said Senator Dwight Cook of Mandan. “It addresses the issue of fairness between main street businesses, who have no choice but to collect sales taxes, and remote businesses that currently are not required to collect sales taxes.”

Currently, the law does not require Internet and direct mail companies to collect and remit state and local sales taxes on transactions that occur in areas where they do not have a physical presence. Under the streamlined project, it is anticipated that many companies will voluntarily begin collecting and remitting sales taxes.

“This is a step forward for North Dakota businesses and is made possible because representatives of the business community united with state and local leaders to create a more efficient sales tax system,” said Dave MacIver, President, Greater North Dakota Chamber of Commerce. “As with any major change, this, too, is a work in progress and I look forward to working with the business community and state and local officials to make improvements as the initiative unfolds.”

“In North Dakota, the vast majority of shoppers will not notice the changes,” said Fong. “The primary change will involve high dollar purchases.”

Most cities and counties in North Dakota have a cap on the amount of sales tax they charge. The streamlined project requires the collection of sales tax without regard to any cap on purchases. In North Dakota, the shopper pays the city sales tax on the entire amount of the purchase. The customer will then apply to the Office of State Tax Commissioner for a refund. The refund is the difference between the actual local tax paid and the amount due under the cap.

  • For example, a customer purchases furniture costing $6,000 in a city that previously provided for a $25.00 cap on local tax.
    • A 1% city sales tax equals $60.00.
    • The customer should request a refund from the Tax Department for $35.00.
    • $60.00 less $25.00 cap = $35.00.

The Tax Department administers all local taxes. “As a result, customers will be able to apply to the state Tax Department for a refund of the excess local tax paid,” said Fong. “If a customer does not request the refund, we will send the extra revenue to the city or county as we do with all city and county sales tax revenue. Our job now is to make sure customers and retailers know about the refund process.”

Refund forms are available from the retailer or by contacting the Tax Department’s Sales & Withholding Tax Section at (701) 328-3470, by e-mailing the department at salestax@state.nd.us, or online from the Tax Department’s web site at: www.nd.gov/tax/.

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