§ 57-40.3-04 — Exemptions

North Dakota § 57-40.3-04

• Jurisdiction: North Dakota
• Title 57: Taxation
• Ch. 57-40.3: Motor Vehicle Excise Tax

Text

There are specifically exempted from the provisions of this chapter and from computation of
the amount of tax imposed by it the following:
1. Any motor vehicle acquired by, or leased and in the possession of, a resident disabled
veteran under the provisions of Pub. L. 79-663 [38 U.S.C. 3901], a resident disabled
veteran who has a one hundred percent service-connected disability as determined by
the department of veterans' affairs, or a resident disabled veteran who has an
extra-schedular rating to include individual unemployability which results in the veteran
being paid at the one hundred percent rate as determined by the department of
veterans' affairs who registers, or is eligible to register, the vehicle with a distinctive
license plate issued by the department of transportation under subdivision j of
subsection 2 of section 39-04-18. A surviving spouse who is receiving United States
department of veterans affairs dependency and indemnity compensation is eligible for
the exemption in this subsection. If the determination of disability or service-connected
death occurs subsequent to the qualifying veteran's death through application of a law
that renders a surviving spouse of a qualifying veteran eligible for United States
department of veterans affairs disability and indemnity compensation, the
determination for purposes of the exemption under this subsection is presumed to
precede the veteran's death. Sufficient proof of receipt of United States department of
veterans affairs dependency and indemnity compensation includes correspondence
directed to a surviving spouse of a qualifying veteran by the United States department
of veterans affairs which indicates the surviving spouse is a survivor of the qualifying
veteran and is in receipt of United States department of veterans affairs dependency
and indemnity compensation.
2. a. Any motor vehicle procured by, owned, or in possession of:
(1) The federal government;
(2) The state government;
(3) A political subdivision of this state;
(4) A tribal government of a federally recognized Indian tribe within the
boundaries of any reservation in this state; or
(5) A person on behalf of the North Dakota lottery when the motor vehicle is to
be awarded as a prize in a game or promotion.
b. For purposes of this subsection, an "Indian tribe" means a tribal government
agency, instrumentality, or political subdivision that performs essential
government functions. The term does not include a business entity or agency with
the primary purpose of operating a business enterprise.
3. Motor carrier vehicles in excess of twenty thousand pounds [9071.85 kilograms] gross
weight, whether owned or leased, engaged in interstate commerce but only to the
extent their fleet miles outside North Dakota bear to their total fleet miles. For the
purposes of this subsection, "fleet miles" means those miles reported in accordance
with the international registration plan and must coincide with the mileage reporting
period required by the plan. For the purposes of this subsection, "motor carrier
vehicles" means any vehicles used upon public streets or highways for the purpose of

transporting persons or property for commercial purposes. To claim this exemption, the
motor carrier's vehicles must be both titled and registered in this state.
4. Any motor vehicle transferred without consideration to or from a person within thirty
days prior to that person entering into the armed services of the United States or within
thirty days after discharge therefrom or while serving in the armed services of the
United States; provided the person certifies to the director of the department of
transportation that the transfer is made only by reason of entering into, serving in, or
being discharged from the armed services of the United States.
5. a. A motor vehicle acquired by inheritance from, by bequest of, or operation of a
trust created by a decedent who owned it;
b. The transfer of a motor vehicle that was previously titled or licensed in the name
of an individual or in the names of two or more joint tenants and subsequently
transferred without monetary consideration to one or more joint tenants, including
a transfer into a trust in which one or more of the joint tenants is beneficiary or
trustee;
c. The transfer of a motor vehicle by way of gift between a husband and wife, parent
and child, grandparent and grandchild, or brothers and sisters, including a
transfer into a trust in which the trustor and beneficiary occupy one of these
relationships;
d. The transfer of a motor vehicle without monetary consideration into a trust in
which the beneficiary is the person in whose name the motor vehicle was
previously titled or licensed;
e. The transfer of a motor vehicle to reflect a new name of the owner caused by a
business reorganization in which the ownership of the reorganized business
remains in the same person or persons as before the reorganization, if the title
transfer is completed within one hundred eighty days from the effective date of
the reorganization;
f. The transfer of a motor vehicle previously transferred under subdivision e which
returns ownership to the previous owner; and
g. The transfer of a motor vehicle without monetary consideration from a revocable
living trust to the trustor or to the spouse, child, or sibling of the trustor.
6. Motor vehicles transferred between a lessee and lessor; provided, that the lessee has
been in continuous possession of such vehicle for a period of one year or longer, and
further provided that the lessor has paid either the tax imposed under section
57-40.3-02 at the time of titling or licensing the vehicle in this state or the use tax
imposed by chapter 57-40.2.
7. Any motor vehicle in the possession of and used exclusively by a nonprofit senior
citizens' or handicapped persons' corporation for transportation of the elderly or
disabled; provided, that the motor vehicle may not be used for commercial activities.
8. Any motor vehicle that does not exceed ten thousand pounds [4535.92 kilograms]
gross weight and which is acquired by, or leased and in the possession of, a
permanently physically disabled, licensed driver who is restricted to operating only
motor vehicles equipped with special controls to compensate for the disability, or by
permanently physically disabled individuals who have either surrendered or who have
been denied a driver's license because of a permanent physical disability, provided the
individuals obtain from the director of the department of transportation or the director's
authorized representative a statement that the individual has a restricted driver's
license or has either surrendered or has not been issued a driver's license because of
a permanent physical disability; a copy of the statement must be attached to the
application for registration of the title to the motor vehicle for which the exemption from
tax under this chapter is claimed. If the applicant does not have the statement at the
time of application for registration of the title, motor vehicle excise tax is due and must
be paid. However, if the applicant provides the statement to the director of the
department of transportation, the applicant may apply for a refund of the taxes paid in
the manner provided in chapter 57-40.4. Any motor vehicle acquired subject to this
exemption must be disposed of either by transfer to another permanently physically

disabled person or by a trade-in on another exempt sale or by a transfer involving a
sale subject to sales or use tax before another motor vehicle can be acquired subject
to the benefits of this exemption clause.
9. Any motor vehicle registered under chapter 39-04 for the first time by a person other
than a manufacturer of motor vehicles, as defined in section 39-01-01, who assembled
the motor vehicle for that person's own use.
10. Motor vehicles acquired by, or leased and in the possession of, any parochial or
private nonprofit school to be used for the transportation of students; provided, that to
qualify a school must normally maintain a regular faculty and curriculum and must
have a regularly organized body of students in attendance, and provided that the
vehicles are not to be used for commercial activities.
11. Any motor vehicle with a gross vehicle weight of at least a class six, seven, or eight
chassis, purchased for installation or assembly of heavy duty equipment by a person
engaged in the business of installing or assembling the equipment, which when
completed forms an integral part of a vehicle, has limited marketability, and is not
normally sold to the general public. This exemption applies only when the
manufacturer's statement of origin is reassigned to the installer or assembler by a
licensed new motor vehicle dealer on a form prescribed by the tax commissioner. The
motor vehicle and installed equipment must be sold as a unit when completed. "Heavy
duty equipment" includes fuel delivery tanks, refuse bodies, cranes, aerial bucket
devices, bus bodies regardless of gross vehicle weight, and digger derricks.
12. Motor vehicles acquired through purchase or gift by any nonprofit county and local
historical societies that are exempt from federal income taxation under section 501(c)
(3) of the United States Internal Revenue Code [26 U.S.C. 501(c)(3)].
13. Any motor vehicle acquired by, or leased and in the possession of, a resident who was
a prisoner of war and who registers the vehicle with a distinctive license plate issued
by the department of transportation under subdivision o of subsection 2 of section
39-04-18. The owner or lessor of the motor vehicle who qualifies for the exemption
under this subsection is entitled to a refund of taxes paid under this chapter on
acquisition or leasing of the vehicle if the distinctive license plate was acquired not
more than sixty days after acquisition or leasing of the vehicle.
14. Any motor vehicle acquired by a charitable organization to be awarded as a prize in a
raffle conducted in accordance with law if upon registration the motor vehicle will be
subject to taxes under this chapter or the motor vehicle is registered in another state.
15. A motor vehicle acquired at any location within this state by an individual who is an
enrolled member of a federally recognized Indian tribe residing within the boundaries
of any reservation in this state, provided the exemption in this subsection does not
apply to a motor vehicle purchased by an individual whose primary residence is not
within the boundaries of any reservation in this state.
16. A motor vehicle originally manufactured for use as an ambulance, when purchased by
the operator of an emergency medical services operation licensed under chapter
23-27.
17. Motor vehicles registered in another state or territory, if the motor vehicle is registered
in this state under section 39-04-18.2.
18. A motor vehicle donated to a qualified nonprofit organization that is exempt from
federal taxation under Internal Revenue Code section 501(c)(3) [26 U.S.C. 501(c)(3)] if
that organization is organized or incorporated in this state, has its certificate of
incorporation or certificate of authority in good standing with the secretary of state, and
has an established program with the primary purpose of receiving donations of motor
vehicles that it then donates to individuals with demonstrated need of a motor vehicle
necessary to the individual's effort to become a self-sufficient member of the
workforce.
a. An exemption under this subsection is rescinded if the organization has not
transferred title to a donated motor vehicle and donated that motor vehicle to an
individual with demonstrated need of a motor vehicle necessary to the individual's
effort to become a self-sufficient member of the workforce within ninety days after

taking possession or ownership of the motor vehicle, in which case the
organization shall pay the tax based on the retail value of the motor vehicle, as
determined by the national automobile dealers association official used car guide,
at the time it took possession or ownership.
b. An exemption under this subsection is rescinded if the organization sells a
donated motor vehicle for more than five hundred dollars after taking possession
or ownership of the motor vehicle, in which case the organization shall pay the
tax based on the retail value of the motor vehicle, as determined by the national
automobile dealers association official used car guide, at the time it took
possession or ownership.
c. The commissioner shall issue a certificate of exemption to a qualified nonprofit
organization exempted by this subsection. The qualified nonprofit organization
shall present the certificate of exemption to the registrar whenever the exemption
under this subsection is claimed.
19. Any damaged motor vehicle transferred to an insurance company in the settlement of
an insurance claim.
20. Any motor vehicle in the possession of and used exclusively by a public transportation
provider that receives a distribution of funds under section 39-04.2-04 to provide public
transportation services.
21. Any motor vehicle transferred from an individual to a former spouse of the individual if
the transfer is the result of a divorce decree. A transfer of a motor vehicle is the result
of a divorce if the transfer occurs within one year after the date the divorce became
final.
22. Any motor vehicle transferred under subsection 2 of section 23.1-15-07.