Guideline - Sales Tax: Exempt Organizations

tax.nd.gov | salesta[email protected]

600 E. Boulevard Ave., Dept. 127 | Bismarck, ND 58505-0599

Phone: 701-328-1246 | TTY: 800-366-6888

Guideline - Sales Tax: Exempt Organizations Guideline - Sales Tax: Exempt Organizations

North Dakota Ofce of State Tax Commissioner

Guideline - Sales Tax: Exempt Organizations

Sales Made to Exempt Organizations

The North Dakota Oce of State Tax Commissioner issues sales tax exemption certicates to

organizations that are exempt from paying North Dakota sales and use tax on purchases made by

the organization. Sellers making exempt sales to exempt organizations must receive a copy of the

exemption certicate and keep the copy in the seller’s les to support the exempt sales.

Exempt organizations include:

A. Government Units

Sales, rentals, or leases of tangible personal property to the United States government, state

government, its departments and institutions, and political subdivisions are exempt from sales and

use tax. To be exempt, payment must be made directly to the seller and paid from government

funds by government warrant, check, or credit card that is centrally billed to and paid by the

government entity.

B. Native American Tribal Governments

Sales made to a tribal government are exempt from sales and use tax. This includes a tribal

government agency that performs essential government functions.

C. Schools

Public schools are considered instrumentalities of state government and are exempt from North

Dakota sales and use tax on all purchases made by the school if payment is made directly to the

seller using school funds.

Private or parochial schools are exempt from sales tax when purchasing items to be used

exclusively in the operation of the school. These items include textbooks, yearbooks, school

supplies, and items purchased by the school for use in classrooms, gymnasiums, athletic elds,

and oces.

 Federal, state, and local

government units

 Schools (public and private)

 Hospitals, nursing homes,

intermediate/basic care facilities,

emergency medical service providers,

and residential end-of-life facilities

licensed by ND Department of Health

 Assisted living facilities licensed by

ND Department of Human Services

 Nonprot voluntary health groups

(recognized by National Health

Council)

 State and local fairs

 Nonprot meal delivery groups, but

only on items that pass to the nal

consumer of the meal, including

containers, packages, and wrappers

 Qualied senior citizen organizations

Guideline - Exempt Organizations

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The exemption granted to a school does not extend to any charitable groups associated with the

school. Parent Teacher Organizations (PTOs) and sports booster clubs may not use the school’s

exemption certicate to make purchases.

D. Health Providers

Hospitals, skilled nursing facilities, intermediate and basic care facilities, residential end-of-life

facilities, and emergency medical service providers licensed by the North Dakota Department of

Health are exempt organizations. Sales to assisted living facilities licensed by the North Dakota

Department of Human Services are also exempt.

Voluntary health associations that are recognized by the Internal Revenue Service (IRS), the

National Health Council, the Oce of State Tax Commissioner, and the North Dakota Secretary of

State as a nonprot organization are exempt from sales tax.

Qualied senior citizen organizations that are 501(c)(3) organizations and listed as charitable

organizations with the North Dakota Secretary of State, and either provide services through the

aging services division of the North Dakota Department of Human Services or receive grant funds

through the North Dakota Department of Transportation under the Federal Transit Administration’s

enhanced mobility of seniors and individuals with disabilities program are exempt from sales and

use tax.

Exemption Certicate Registration and Use

To make purchases that are sales and use tax exempt, exempt organizations must provide sellers

their Certicate of Exempt Status. Exempt organizations must complete the Application for Sales Tax

Exemption Certicate and submit it to our oce to obtain this certicate. See the application at

www.tax.nd.gov/forms. Only groups identied on this certicate may buy goods without sales and use

tax. In the absence of this certicate, the seller is obligated to charge sales tax.

Contracts With Exempt Organizations

Contractors performing a contract for the United States government, state government, its departments

and institutions, or political subdivisions and other organizations that are exempt from sales and use

tax in North Dakota are not exempt from paying sales and use tax on materials and supplies used or

consumed in carrying out contracts. In these cases, the contractor is required to pay sales and use tax

as required for contracts with non-exempt organizations. The only exception is for contractors hired for

labor only contracts.

See the Guideline - Contractor’s for additional information - www.tax.nd.gov/guidelines.

Sales Made by Exempt Organizations

Exempt organizations that operate ongoing and in direct competition with other retailers must always

collect and remit sales tax regardless of the use of the net sales receipt.

Guideline - Exempt Organizations

Nonprot Organizations

North Dakota sales and use tax law does not automatically exempt purchases made by nonprot

organizations. Instead, the law identies specic organizations that, if certain conditions are met, are

exempt from sales and use tax. Examples of these organizations are:

 Churches and church groups  Labor organizations

 Service clubs  Fraternities and sororities

 Social clubs  Professional associations

 Veterans’ groups  Private, for-prot schools

 Trusts  Sports booster clubs

 Recreation groups  PTOs

 Youth groups  Dance teams

Exempt Sales Made by Nonprot Organizations

Under certain conditions, the gross receipts from sales made by qualifying nonprot organizations may

be exempt from sales tax. A qualifying nonprot must meet ALL three requirements below to qualify:

1. The net proceeds from the sale must be used for charitable, educational, or religious purposes.

2. The seller may not compete with retailers by maintaining inventory, conducting regular sales from

a permanent or seasonal location, or making online sales.

3. The sales cannot be made on a regular, on-going basis.

If the gross receipts from an event held in a publicly owned facility are greater than $10,000 for a single

event, sales tax must be remitted to the Oce of State Tax Commissioner on the amount of sales over

$10,000. Public owned facilities include civic centers, public schools, government fairgrounds, or State

Capitol grounds.

Example: The Elementary School PTO’s fall fundraiser was held at the public school. The fundraiser

had total sales of $10,650. The Elementary School PTO must remit sales tax on the amount of $650.

Other conditions where the gross receipts from sales are exempt from sales tax include:

1. Sales of tickets or admissions to state, county, district, and local fairs.

2. Sales of tickets or admissions to athletic, musical, dramatic, or scholastic events held, sponsored,

hosted, or controlled by an institution of higher education.

3. Sales from any public school district if the receipts are expended in accordance with N.D.C.C

§ 15.1-07-10 or 15.1-07-11.

4. Sales by a nonprot music or dramatic arts organization that is exempt from federal income

taxation and is organized and operated for the presentation of live public performances of

musical or theatrical works on a regular basis. Examples of qualifying organizations include a

community theater group or local symphony or orchestra.

Gross receipts from sales of tickets or admissions to or sales made at an annual church supper or

bazaar held in a publicly owned facility are not subject to sales tax. Annual means occurring not more

than one time in any calendar year.

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Guideline - Exempt Organizations

Letter of Exemption

Nonprot organizations qualifying to make sales exempt from sales tax may obtain a letter of exemption

by contacting the Sales Tax Compliance section at [email protected]. This letter allows qualifying

nonprot organizations to purchase the goods they will be reselling without paying sales and use tax on

their purchase price.

To apply for a letter of exemption, submit a request to the Sales Tax Compliance Section at

[email protected] with the following information:

 Name and contact information for the organization.

 Name of the event.

 Description of the fundraising event.

 Frequency of the event.

 Dates of the event.

 Location of the event.

 Whether the event is in-person or online.

 How the net receipts from the event will be used.

 The name of the vendor the organization is purchasing from.

Taxable Sales Made by a Nonprot Organization

Nonprot groups that operate ongoing and in direct competition with other retailers must always collect

and remit sales tax regardless of the use of the net sales receipt.

Organizations that make regular retail sales must have a North Dakota sales and use tax permit to

collect and remit applicable tax. Organizations operating on a limited basis in publicly owned facilities

should contact the Sales Tax Compliance Section at [email protected] or 701-328-1246 prior to

making taxable sales.

Contact Information

If you have questions, please contact the Sales Tax Compliance Section at [email protected] or

701-328-1246.

22081

(Revised February 2022)

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