§ 57-39.4-11.1 — (310.1) Election for origin-based sourcing

North Dakota § 57-39.4-11.1

• Jurisdiction: North Dakota
• Title 57: Taxation
• Ch. 57-39.4: Streamlined Sales and Use Tax Agreement

Text

1. A member state that has local jurisdictions that levy or receive sales or use taxes may
elect to source the retail sale of tangible personal property and digital goods under the
provisions of this section in lieu of the provisions of subdivisions b, c, and d of
subsection 1 of section 57-39.4-11 if the state complies with subsection 3 of this
section and the only exception to section 57-39.4-11 is in subsection 2 of this section.
2. A member state may source retail sales, excluding lease or rental, of tangible personal
property or digital goods to the location where the order is received by the seller if:

a. The order is received in the same state by the seller where receipt of the product
by the purchaser or the purchaser's designated donee occurs;
b. The location where receipt of the product by the purchaser occurs is determined
under subdivisions b, c, and d of subsection 1 of section 57-39.4-11; and
c. At the time the order is received, the recordkeeping system of the seller used to
calculate the proper amount of sales or use tax to be imposed captures the
location where the order is received.
3. A member state electing to source sales under this section shall comply with all of the
following:
a. When the location where the order is received by the seller and the location
where the receipt of the product by the purchaser or the purchaser's designated
donee occurs as determined under subdivisions b, c, and d of subsection 1 of
section 57-39.4-11 are in different states, the sale must be sourced under the
provisions of section 57-39.4-11.
b. When the sale is sourced under this section to the location where the order is
received by the seller, only the sales tax for the location where the order is
received by the seller may be levied. No additional sales or use tax based on the
location where the product is delivered to the purchaser may be levied on that
sale. The purchaser shall not be entitled to any refund if the combined state and
local rate at the location where the product is received by the purchaser is lower
than the rate where the order is received by the seller.
c. A member state may not require a seller to use a recordkeeping system that
captures the location where the order is received to calculate the proper amount
of sales or use tax to be imposed.
d. A purchaser shall not have an additional liability to the state for tax, penalty, or
interest on a sale for which the purchaser remits tax to the seller in the amount
invoiced by the seller if the invoice amount is calculated at either the rate
applicable to the location where receipt by the purchaser occurs or at the rate
applicable to the location where the order is received by the seller. A purchaser
may rely on a written representation by the seller as to the location where the
order for the sale was received by the seller. When the purchaser does not have
a written representation by the seller as to the location where the order for the
sale was received by the seller, the purchaser may use the seller's business
address that is available from the purchaser's business records maintained in the
ordinary course of the purchaser's business to determine the rate applicable to
the location where the order was received.
e. The location where the order is received by or on behalf of the seller means the
physical location of a seller or third party such as an established outlet, office
location, or automated order receipt system operated by or on behalf of the seller,
where an order is initially received by or on behalf of the seller and not where the
order may be subsequently accepted, completed, or fulfilled. An order is received
when all of the information from the purchaser necessary to determine whether
the order can be accepted has been received by or on behalf of the seller. The
location from which a product is shipped must not be used in determining the
location where the order is received by the seller.
f. A member state must provide for direct pay permits under section 57-39.4-27 and
the requirements of this subsection. Purchasers that remit sales and use tax
under a direct pay permit shall remit tax at the rate in effect for the location where
receipt of the product by the purchaser occurs or the product is first used as
determined by state law. A member state may establish reasonable thresholds at
which the member state will consider direct pay applications, provided the
threshold must be based upon purchases with no distinction between taxable and
nontaxable purchases. The member state shall establish a process for application
for a direct pay permit as provided in this chapter. The member state may require
the direct pay permit applicant to demonstrate:
(1) An ability to comply with the sales and use tax laws of the state;

(2) A business purpose for seeking a direct pay permit and how the permit will
benefit tax compliance; and
(3) Proof of good standing under the tax laws of the state. The member state
shall review all permit applications in a timely manner. Notification of
authorization or denial must be received by applicants within one hundred
twenty days of application. The member state may not limit direct pay permit
applicants to businesses engaged in manufacturing or businesses that do
not know the ultimate use of the product at the time of the purchase.
g. When taxable services are sold with tangible personal property or digital products
under a single contract or in the same transaction, are billed on the same billing
statement, and because of the application of this section, would be sourced to
different jurisdictions, a member state shall elect either origin sourcing or
destination sourcing to determine a single situs for that transaction. The member
state election is required until the governing board adopts a uniform methodology
to address these sales.
h. A member state that elects to source the sale of tangible personal property and
digital goods under the provisions of this section shall inform the governing board
of the election.