§ 57-39.4-18 — (317) Administration of exemptions

North Dakota § 57-39.4-18

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

Text

1. Each member state shall observe the following provisions when a purchaser claims an
exemption:
a. The seller shall obtain identifying information of the purchaser and the reason for
claiming a tax exemption at the time of the purchase as determined by the
governing board.
b. A purchaser is not required to provide a signature to claim an exemption from tax
unless a paper exemption certificate is used.
c. The seller shall use the standard form for claiming an exemption electronically as
adopted by the governing board.
d. The seller shall obtain the same information for proof of a claimed exemption
regardless of the medium in which the transaction occurred.
e. A member state may utilize a system in which the purchaser exempt from the
payment of the tax is issued an identification number that shall be presented to
the seller at the time of the sale.
f. The seller shall maintain proper records of exempt transactions and provide them
to a member state when requested.
g. A member state shall administer use-based and entity-based exemptions when
practicable through a direct pay permit, an exemption certificate, or another
means that does not burden sellers.
h. In the case of drop shipment sales, member states must allow a third-party
vendor, drop shipper, to claim a resale exemption based on an exemption
certificate by its customer or reseller or any other acceptable information
available to the third-party vendor evidencing qualification for a resale exemption,
regardless of whether the customer or reseller is registered to collect and remit
sales and use tax in the state where the sale is sourced.
2. Each member state shall relieve sellers that follow the requirements of this section
from the tax otherwise applicable if it is determined that the purchaser improperly
claimed an exemption and to hold the purchaser liable for the nonpayment of tax. This
relief from liability does not apply to a seller who fraudulently fails to collect the tax; to
a seller who solicits purchasers to participate in the unlawful claim of an exemption; to
a seller who accepts an exemption certificate when the purchaser claims an
entity-based exemption when the subject of the transaction sought to be covered by
the exemption certificate is actually received by the purchaser at a location operated
by the seller and the state in which that location resides provides an exemption
certificate that clearly and affirmatively indicates that the claimed exemption is not
available in that state. Graying out exemption reason types on the uniform form and
posting it on a state's website is an indicator.

3. Each member state shall relieve a seller of the tax otherwise applicable if the seller
obtains a fully completed exemption certificate or captures the relevant data elements
required under the agreement within ninety days subsequent to the date of sale. A
member state may provide for a period longer than ninety days for the seller to obtain
the necessary information.
4. If the seller has not obtained an exemption certificate or all relevant data elements as
provided by this section, a member state shall provide the seller with one hundred
twenty days subsequent to a request for substantiation by a member state, to either
obtain:
a. A fully completed exemption certificate from the purchaser, taken in good faith
which means that the seller obtain a certificate that claims an exemption that was
statutorily available on the date of the transaction in the jurisdiction where the
transaction is sourced, could be applicable to the item being purchased, and is
reasonable for the purchaser's type of business; or
b. Other information establishing that the transaction was not subject to the tax. A
member state may provide for a period longer than one hundred twenty days for
sellers to obtain the necessary information.
c. If the seller obtains the information described in this subsection, the member
state shall relieve the seller of any liability for the tax on the transaction unless it
is discovered through the audit process that the seller had knowledge or had
reason to know at the time such information was provided that the information
relating to the exemption claimed was materially false or the seller otherwise
knowingly participated in activity intended to purposefully evade the tax that is
properly due on the transaction. The state must establish that the seller had
knowledge or had reason to know at the time the information was provided that
the information was materially false.
5. Nothing in this section shall affect the ability of member states to require purchasers to
update exemption certificate information or to reapply with the state to claim certain
exemptions.
6. Each member state shall relieve a seller of the tax otherwise applicable if it obtains a
blanket exemption certificate from a purchaser with which the seller has a recurring
business relationship. Notwithstanding the provisions of subsection 5, a member state
may not request from the seller renewal of blanket certificates or updates of exemption
certificate information or data elements when there is a recurring business relationship
between the buyer and seller. For purposes of this section, a recurring business
relationship exists when a period of no more than twelve months elapses between
sales transactions.
7. Each member state shall post on its website the uniform paper exemption certificate,
streamlined sales and use tax exemption certificate, as revised and adopted by the
governing board, with any applicable graying out of nonapplicable exemption types
under subsection 2.