North Dakota passed their “ENexus” law in 2017 that was to become effective on the date the US Supreme Court overruled North Dakota’s loss to Quill in 1992. The US Supreme Court overruled Quill on June 21, 2018. The North Dakota Office of the State Tax Commissioner issued guidance on their prospective registration and filing requirements for remote sellers beginning October 1, 2018. That’s 82 days from today (July 10, 2018) to register and be prepared to collect. After October 1, 2018 a “big” remote seller will be accumulating potential tax risk and exposure. Is your company a big remote seller or a small seller? How will one prove this status in 21 states (and counting)?
There is a small seller exception as there is in most other states that passed ENexus laws (see below for threshold). It seems to me that at some point a small seller may be asked to prove their sales volume in order to verify their business is not required to register and remit in the state. What will that obligation look like? What documentation will North Dakota accept as proof of qualification as a small seller? Or will North Dakota just take the small seller at their word? Bottom line – will small sellers need to prove their small seller status across the various states? How often? Wouldn’t that look like an audit anyway? According to North Dakota a small seller converting to a big seller will have 60 days to comply after the company transitions from small to big…ok…
Small Seller Threshold
“If you do not meet the Small Seller Exception (see below) and you are not already registered and collecting North Dakota sales tax, you will need to be registered and begin collecting the tax in North Dakota on October 1, 2018, or 60 days after you meet the Small Seller Exception threshold, whichever is later. Remote sellers may voluntarily begin collecting any time prior to October 1.
Small Seller Exception
North Dakota law includes an exception for small sellers, which will require sales tax collection by remote sellers ONLY IF their sales into the state meet one of the following criteria in the current or previous calendar year:
- Taxable sales shipped to North Dakota meet or exceed $100,000 OR
- Taxable sales shipped to North Dakota meet or exceed 200 separate transactions”
For further information
- Frequently Asked Questions (FAQs)
- Register to Collect Sales Tax in Multiple States through the Streamlined Sales Tax Registration System
- Use this link to register to collect and remit applicable sales and use tax in all Streamlined member states in which you make sales, including North Dakota
- Apply for a North Dakota Sales & Use Tax Permit
- Use this link to register to collect and remit applicable sales and use tax in North Dakota ONLY. Use the Streamline Sales Tax Registration link above if you need to register to collect sales tax in multiple states.
- Sign Up to Receive Sales Tax Emails
- What is taxable in North Dakota?
- Supreme Court Opinion on South Dakota vs. Wayfair
- North Dakota Century Code (N.D.C.C.) 57-39.2-02.2 (page 7)