Financial Institution Frequently Asked Questions
Note: Senate Bill 2325, passed by the 2013 North Dakota Legislature, repealed the financial institution tax law for tax years after 2012. For more information, go to Financial Institutions. These questions and answers apply to tax years prior to 2013.
Q: What is a financial institution?
A: A financial institution is defined in North Dakota Century Code (N.D.C.C.) § 57-35.3-01(2).
Q: What is the financial institution tax?
A: The tax under N.D.C.C. ch.57-35.3 is imposed on every financial institution for the grant to it of the privilege of transacting, or for the actual transacting of business in North Dakota. In general, the tax liability of the financial institution is determined by multiplying North Dakota taxable income by seven percent (7%). This amount, which may not be less than fifty dollars ($50.00), is divided between the state general fund and the financial institution tax distribution fund. The state general fund receives 2/7 of the tax while the financial institution tax distribution fund receives 5/7 of the tax.
Q: What are North Dakota's financial institution income tax filing requirements?
A: A financial institution located or doing business within North Dakota must file a North Dakota financial institution tax return, Form 35.
A financial institution has nexus in North Dakota if it has North Dakota receipts, property or payroll as described in N.D.C.C. §§ 57-35.3-15, -16 and -17.
Q: What are the requirements for filing a Form 35?
A: Form 35 must be web filed. The return consists of a properly WebFiled Form 35, a properly completed and signed Financial Institution Tax Remittance Form, and all required enclosures.
Q: How do I obtain a Form 35?
A: Form 35 is a computer program, developed in a menu format, found at electronic_filing/financial_institutions.html
Q: How should qualified subchapter S subsidiaries (QSSS) file?
A: Because the QSSS and parent S corporation are considered one legal entity for federal income tax purposes and complications arise for shareholders if federal treatment is not followed, the S corporation parent, which meets the definition of a financial institution, will file a Form 35 and use its federal taxable income as the starting point. The QSSS will not file a separate North Dakota return.
Q: When is the financial institution tax due?
A: The state general fund portion (2/7) of the net tax liability must be paid on or before April 15 following the close of the taxable year. If a federal or state extension of time to file the return is obtained, the financial institution must determine the state general fund portion of its net tax liability and remit this amount along with Form 35PV, North Dakota Financial Institution Payment Voucher.
The financial institution tax distribution fund portion (5/7) of the net tax liability must be paid on or before January 15 of the year after the return is due. The Office of State Tax Commissioner will send a payment notification to the financial institution prior to the January 15 due date.
Payment for each portion of the tax must be made by check or money order payable to "State Tax Commissioner."
Payment may also be made by electronic funds transfer. Information regarding electronic payments can be found at http://www.nd.gov/tax/financialinst/elecfiling/fit-eft.pdf.
Q: How do I amend taxable years beginning after December 31, 2001?
A: Access the WebFile program for the appropriate taxable year at electronic_filing/financial_institutions.html. Complete the form using the revised information. Be sure to click the amended box on the WebFile program under 'Begin a New Return.'
Q: How do I amend taxable years beginning after December 31, 1996 and ending before January 1, 2001?
A: Use the financial institution tax program which applies to the year being amended and complete the return using the corrected information. Check the "Amended" box on the return. Save the amended information on diskette and label the diskette "(year) Amended Form 35." Mail the diskette to the Tax Commissioner along with all required enclosures (see Frequently Asked Question "What are the requirement for filing Form 35?").
Payments for additional financial institution tax due on amended returns should be sent in with the amended Form 35 and made payable to "State Tax Commissioner."
Q: How do I amend taxable years beginning before January 1, 1997?
A: Except for taxpayers who filed Form 40, obtain a blank copy of the Form 49 (Bank and Trust Company Tax), Form 49.1 (Building and Loan or Savings and Loan Association Tax), or Form 39B (Bank, Trust, and Building and Loan Association Privilege Tax) as used on the original return for the taxable year being amended. Write "Amended" at the top of the form and complete the form using the revised information.
Payments for additional tax due for Bank, Trust, and Building and Loan Association Privilege Tax should be sent in with the amended Form 39B and made payable to "State Tax Commissioner."
Payments for additional tax due for Bank and Trust Company Tax or Building and Loan or Savings and Loan Association Tax will be billed to the bank by the counties.
Taxpayers who filed Form 40 must use Form 40X.