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Under SB 2359, a certified service provider (CSP) responsible for filing retailer’s taxes under the Streamlined Sales and Use Tax Agreement may be authorized by that retailer to claim all or part of any compensation owed to the retailer. Currently, retailers may deduct and retain 1.5% of any taxes due, provided the taxes are paid within the prescribed time limit. (SB 2359, North Dakota Senate, passed February 9, 2005)


The North Dakota State Tax Commissioner recently discussed the taxability of maintenance contracts as they pertain to computer software. They stated that a mandatory maintenance agreement is considered a component of the sale and is subject to sales tax. When the maintenance agreement is optional, the portion of the maintenance fee applicable to prewritten program improvements or updates is subject to sales tax if any consulting charges are separately stated. If the charges for consulting are not separately stated, the entire bill is taxable. (Sales Tax Newsletter, North Dakota Office of the State Tax Commissioner, September 2004)


Gross receipts from garbage or solid waste disposal services are subject to the state’s 4% sales tax, but statutorily exempted from municipal sales taxes. Garbage disposal services include collection of recyclables and hazardous wastes, and tipping fees or landfill charges are included in the gross receipts calculation. In addition, the tax applies regardless of whether the dumping site is inside or outside the state if collection occurs in South Dakota. All consumable tangible items used to perform disposal services are also subject to the tax. However, solid waste services performed for exempt entities, such as schools, state and federal agencies, tribal entities, or non-profit hospitals, are not subject to the tax. (Tax Facts #175, South Dakota Department of Revenue & Regulation, July 2004)


The Tax Commissioner has clarified that repair services are not taxable but that tangible personal property transferred in connection with repair services is subject to sales or use tax. Service providers must separately state the repair charges on bills and if labor and parts are not itemized, the entire cost is taxable. However, items that become a part of real property or are considered a capital improvement are not taxable to the customer. In addition, items which are repaired in North Dakota and subsequently shipped outside the state are also exempt, provided the repair person itemizes the charges for labor and parts. If property is shipped outside North Dakota for repairs and transferred back, the repair parts will be subject to tax if transferred back to North Dakota, with credit provided for sales or use taxes paid to other states. Retailers providing parts to a person who will provide a repair service must obtain a completed certificate of resale. Warranties are also not subject to sales tax but charges for parts must be stated separately. (Office of State Tax Commissioner, Sales and Use Tax Guideline, March 2004)


North Dakota has passed legislation which creates a tax amnesty program running from October 1, 2003 through January 31, 2004. The tax amnesty program includes all state taxes and local option taxes administered by the Office of State Tax Commissioner. Penalty fees will be waived and 75% of the interest normally assessed will be forgiven. (Sales Tax Newsletter, North Dakota Office of the State Tax Commissioner, September 2003)



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