North Dakota Tax Relief: Payment Plans & Penalty Help
Owe North Dakota state taxes or received a notice from the North Dakota Office of State Tax Commissioner? Do not guess your next move. North Dakota has no formal Offer in Compromise program, strict appeal deadlines, and unique rules for penalty abatement. We review your ND tax balance, notice, deadline, payment options, and collection risk so you know what to do next.
Thank you for submitting!
North Dakota Tax Relief Overview
Owing North Dakota state taxes is different from owing the IRS. The North Dakota Office of State Tax Commissioner has its own rules, deadlines, and collection tools. Federal tax relief strategies, such as Offers in Compromise, do not automatically apply to North Dakota state tax debt.
Important: North Dakota Does Not Have a Formal Offer in Compromise Program
Unlike the IRS, North Dakota does not have a formal OIC program that lets taxpayers apply to settle a debt for less than the full amount as a standard option. The Tax Commissioner can waive penalty and interest for good cause. Waiver of the underlying tax itself is possible only in narrow circumstances — for example, where a lien has already been filed against the taxpayer's property and the Attorney General approves the waiver — and is not something taxpayers can request as a general settlement path. If the IRS approves an OIC, North Dakota may follow suit with its own compromise based on that federal approval.
Depending on your situation, you may need one or more of the following:
- A payment plan to pay over time via ND TAP
- An appeal if you received a Notice of Determination, you disagree with
- Good-cause penalty abatement — but you must request it BEFORE paying penalties
- Lien resolution or levy help if collection action has started
- Filing help if you have unfiled North Dakota tax returns
If you run a business in North Dakota and owe sales tax or withholding tax, the stakes are higher. Corporate officers, LLC governors, and managers can be held personally liable under NDCC 57-39.2-18.1, and dissolution of the business does not discharge that liability.
North Dakota Tax Relief Options at a Glance
Offer in Compromise: Not a standard option in North Dakota. The Tax Commissioner generally cannot compromise the underlying tax debt, except in the narrow lien-plus-Attorney-General-approval circumstance described above. Payment plans and good-cause penalty abatement are the primary alternatives. If the IRS approves an OIC, ND may follow suit.
What North Dakota Tax Notice Did You Receive?
Select your notice type for a quick explanation of what it means and your options.
What the North Dakota Office of State Tax Commissioner Can Do to Collect
If you owe North Dakota state taxes and do not address the balance, the Tax Commissioner has a range of collection tools authorized under NDCC Title 57. Not every case reaches the most serious actions, but the longer a balance goes unpaid, the more options the state may use.
North Dakota Tax Payment Plans
If you cannot pay your North Dakota state tax balance in full, a payment plan (installment agreement) may be an option. Payment plans are typically arranged through the ND TAP online portal or by contacting the Accounts Receivable Section directly.
Important: Interest Continues During Payment Plans
While your North Dakota payment plan is active, interest at 12% per year continues to accrue on the unpaid balance. The payment plan does not stop interest from adding up. Penalties already assessed also remain unless separately waived through the good-cause abatement process.
Key Conditions for North Dakota Payment Plans
Businesses must remain current on all tax filings and payments. The plan can cover individual income tax, sales tax, withholding tax, and other North Dakota tax types.
Source: ND Tax Commissioner — Collections Resources. Approval is discretionary. No guarantee of approval.
Which North Dakota Tax Relief Option Fits Your Situation?
Does North Dakota Have an Offer in Compromise Program?
No, not as a standard, apply-for-it option like the IRS's. This is one of the most important differences between North Dakota state tax relief and federal tax relief.
North Dakota law does not give the Tax Commissioner general authority to settle a tax liability for less than the full amount owed. There is one narrow exception: under NDCC 57-01-02(14), the Tax Commissioner may waive "any and all tax due" for good cause, but only after a lien has been filed against the taxpayer's property and with the Attorney General's approval. This is not a routine settlement channel and is not something a taxpayer can simply apply for.
If you owe North Dakota state taxes, your resolution options are generally limited to:
- Paying in full — The simplest option if you have the funds
- Payment plan — Available through ND TAP or by calling 701-328-1244, typically 6 months to 2 years
- Good-cause penalty abatement — If you qualify under ND Admin. Code 81-01.1-01-09 (must request before paying)
- Appeal — If you dispute the assessment and act within the 30-day deadline (90 days if outside the US)
IRS coordination: If the IRS approves an OIC, North Dakota may follow suit with its own compromise based on that federal approval. This is not guaranteed and must be pursued separately with the ND Tax Commissioner.
Do not assume federal OIC strategies apply directly to North Dakota state tax debt. North Dakota does not offer a general OIC-type program for settling tax liabilities for less than the full amount.
North Dakota Good-Cause Penalty Abatement
Penalty abatement is different from a payment plan. A payment plan lets you pay over time. Penalty abatement asks North Dakota to reduce or remove penalties when you have "good cause" under state rules.
North Dakota penalties may be waived upon a determination of "good cause" under ND Admin. Code 81-01.1-01-09 and NDCC 57-39.2-18(4).
Critical: Must Request BEFORE Paying Penalties
Unlike many other states, North Dakota requires that you submit your good-cause penalty abatement request BEFORE paying the penalties and interest. Once penalties are paid, your right to pursue relief is forfeited. Do not pay penalties first and then ask for relief.
What Qualifies as "Good Cause" in North Dakota?
Good cause generally means a taxpayer who has been cooperative during the audit process and has a history of correct filing. Acceptable reasons include:
- Medical hardship — Serious illness, hospitalization
- Natural disasters — Floods, fires, tornadoes
- Loss of records — Due to theft, fire, flood beyond the taxpayer's control
- Reliance on erroneous written advice — From a division director or section supervisor
- Tax preparer error — If ordinary care was exercised in selecting the preparer
Reasons Generally Denied
- Simple forgetfulness or oversight
- Lack of knowledge about tax requirements
- Financial hardship alone
- Reliance on another person's failure to file
How to Request Penalty Abatement
- Submit a written narrative request to the Office of the State Tax Commissioner
- There is no prescribed form — a detailed letter explaining your circumstances is required
- Request must be made BEFORE paying penalties
Automatic Interest Waiver Triggers
North Dakota law provides for an automatic pro rata interest waiver in certain situations:
- Audit delay: If Notice of Determination is issued later than 12 months after commencement of audit, pro rata interest from the deadline to issuance is waived
- Response delay: If the Tax Commissioner fails to respond to the Statement of Grounds within 90 days, pro rata interest is waived
- Reconsideration delay: If the Notice of Reconsideration is not issued within 9 months after the Statement of Grounds, pro rata interest is waived
North Dakota Penalty and Interest Rates
Source: North Dakota Administrative Code 81-01.1-01-09 (rules.legis.nd.gov) | NDCC 57-39.2-18
Penalty Abatement vs. Payment Plan
A penalty abatement and a payment plan are separate processes. A payment plan does not automatically remove penalties. Penalty abatement must be requested separately and approved based on good cause. Even if penalties are waived, the underlying tax and interest must still be paid. And remember: you must request abatement BEFORE paying penalties.
North Dakota Tax Assessment and Appeals
A Notice of Determination or Notice of Refund Change from the North Dakota Office of State Tax Commissioner is a serious step. Once issued, it becomes the official amount North Dakota says you owe. If you ignore it, your options to challenge the balance may be limited.
The North Dakota Protest Process
North Dakota has a formal, multi-step protest process under NDCC 57-39.2-16 and the Administrative Agencies Practice Act (NDCC Chapter 28-32).
30-Day Notice of Protest Deadline
The Notice of Protest deadline is 30 days from the postmark of the Notice of Determination (extended to 90 days if you live outside the United States). 3 days are added to deadlines if notice was sent by mail (6 days if mailed out of state). Missing this deadline can severely limit your ability to challenge the assessment. Do not wait.
You may request an informal conference at any point during the protest process. This can sometimes resolve issues without going through the full formal process.
For sales tax appeals, you may also appeal directly to district court within 30 days after receiving notice of the commissioner's determination, in the district court of the county where you reside or have your principal place of business.
Source: How to Protest a Tax Assessment (ND Tax Commissioner) | NDCC 57-39.2-16
North Dakota Tax Liens
A tax lien is a public claim against your property. In North Dakota, the Tax Commissioner indexes a notice of lien in the central indexing system maintained by the Secretary of State. It can affect your credit, your ability to sell or refinance property, and your business operations.
How North Dakota Tax Liens Work
- Filing: The Tax Commissioner indexes the lien notice in the central indexing system maintained by the Secretary of State. The commissioner is exempt from filing fees.
- Attachment: The lien attaches to ALL property and rights to property (both real and personal) belonging to the taxpayer at the time the tax becomes due and payable.
- Duration: The lien continues until the liability is satisfied. There is no automatic expiration.
- Priority: The state tax lien has priority over mortgages, purchasers, judgment creditors, and other lien claimants who acquire interest AFTER the commissioner files notice in the central indexing system. Those who acquired interest BEFORE filing take free of or have priority over the lien.
- Notice Data: The lien includes the taxpayer's name, the "State of North Dakota" as the claimant, date/time indexing, the amount of the lien, and the TIN or SSN.
- Satisfaction: Upon payment, the commissioner indexes a satisfaction of the lien in the central indexing system.
- Enforcement: The Attorney General may bring action to enforce payment or foreclose the lien. As noted above, the Attorney General's involvement also opens the narrow door for a good-cause waiver of the underlying tax once a lien has been filed.
Lien Covers All Property
Unlike some states where liens are limited to real property, a North Dakota state tax lien attaches to all property and rights to property — both real estate and personal property. This includes bank accounts, vehicles, equipment, accounts receivable, and property acquired after the lien attaches.
Source: NDCC 57-39.2-13 | Letters Relating to Unpaid Taxes
North Dakota Bank Levy and Distraint
If you do not pay your North Dakota tax debt, the state has several tools to seize assets. These include distraint (the sheriff's seizure of property), bank account garnishment, and vendor payment interception.
Distraint of Property (NDCC 57-45-13)
Under supplemental proceedings to enforce the collection of state taxes:
- Delinquent tax is certified to the sheriff
- The sheriff demands payment
- If unpaid, the sheriff distrains (seizes) sufficient property to satisfy the debt
- Property is advertised and sold at public auction after 10 days' notice
- Any surplus is returned to the taxpayer
Tax Commissioner's Collection Powers (NDCC 57-45-04)
When tax is due and unpaid, and local officers neglect to act, the Tax Commissioner may:
- Institute legal proceedings
- Employ assistance
- Exercise any power conferred by law upon any state or local officer, including the distraint of property.
Bank Account Levy
After obtaining a judgment, North Dakota may garnish bank accounts through the judicial garnishment process. The state may take the full amount in the account at the time of garnishment, up to the tax liability. This can create immediate cash-flow problems.
Vendor Payment and Treasury Offset
- Vendor garnishment: State vendor payments can be redirected to pay delinquent tax liability
- Treasury Offset Program: North Dakota participates in the federal TOP. Past-due individual income tax debts are submitted, and future federal tax refunds may be applied to your ND tax debt.
Source: NDCC Chapter 57-45 | NDCC Chapter 32-09.1
North Dakota Wage Garnishment for Tax Debt
Wage garnishment means North Dakota can take money directly from your paycheck to pay your state tax debt.
Note on the garnishment formula: North Dakota's general wage garnishment statute (NDCC Chapter 32-09.1) caps ordinary creditor garnishments at the lesser of 25% of disposable earnings or the amount by which weekly disposable earnings exceed 40 times the federal minimum wage, with a $20-per-dependent reduction. However, NDCC 32-09.1-03(3)(c) specifically states that this cap does not apply to "any debt due for any state or federal tax." The specific limit, if any, the Tax Commissioner applies instead for state tax wage garnishments has not been independently confirmed — this should be verified directly with the Tax Commissioner's office or statute before being treated as settled.
Dependent Reduction (General Garnishment Framework)
For garnishments where the standard restriction does apply, there is a $20 reduction in the garnishment amount for each dependent family member residing with you. You must provide a list of dependents within 10 days of receiving the garnishee summons to claim this reduction.
North Dakota Wage Garnishment at a Glance
If you have received a garnishment notice, do not ignore it. Once garnishment starts, the money is taken before you receive your paycheck. Acting quickly may help in certain cases.
Source: NDCC Chapter 32-09.1
North Dakota Unfiled Tax Returns
If you have not filed North Dakota tax returns for one or more years, that can block most resolution options. The Tax Commissioner may estimate your tax and issue assessments based on those estimates — sometimes higher than what you actually owe.
Assessment Period
North Dakota generally has 3 years after the due date of the tax return to issue an assessment. This extends to 6 years if the tax is understated by more than 25%. Filing accurate returns starts the clock and can sometimes reduce an incorrect balance.
Why Filing Matters
- Unfiled returns block payment plan eligibility
- The Tax Commissioner may issue substitute returns with a higher tax than you actually owe
- Penalty abatement generally requires all returns to be filed
- The assessment limitations period may not start until a return is filed
- You may miss credits or deductions the state owes you
Do not rush or file bad returns. It's better to get the returns prepared correctly with the right income, deductions, and North Dakota credits.
North Dakota Business, Sales Tax, and Payroll Tax Debt
Business tax debt is riskier than individual income tax debt. Sales tax and income withholding tax are trust fund taxes — money you collected or withheld that belongs to the state. The North Dakota Tax Commissioner takes these very seriously.
Responsible Person Warning: Personal Liability for Corporate Officers and LLC Governors/Managers
Under NDCC 57-39.2-18.1 (sales tax) and NDCC 57-38-60.1 through 57-38-60.3 (withholding tax), the following individuals can be held personally liable for unpaid business taxes:
- For Corporations: President, vice president, secretary, or treasurer — jointly or severally — who had control, supervision, or were charged with responsibility for making returns and payments.
- For LLCs: Governors, managers, or members of a member-controlled LLC — jointly or severally — charged with responsibility for supervising preparation of returns and payments.
- For LLLPs: General partners, jointly or severally, are responsible for supervising the preparation of returns and the payment of tax.
Key points:
- Dissolution of the business does NOT discharge personal liability for prior failure to file or remit tax
- Taxes, penalties, and interest may be assessed and collected under the same provisions as the business
- Officers/members may elect not to be personally liable if the corporation/LLC posts a bond or makes a cash deposit equal to the estimated annual tax liability.
Withholding Tax Is Held in Trust
Income tax withheld from employees' wages is held in trust for the State of North Dakota under NDCC 57-38-60(8). This means it is not your money — you are merely holding it for the state. Failure to remit withholding tax can trigger both business and personal liability.
Bond in Lieu of Personal Liability
Corporate officers and LLC members/governors who would otherwise be personally liable may avoid that liability if the business:
- Makes a cash deposit equal to the estimated annual tax liability, OR
- Posts a bond equal to the estimated annual tax liability
This must be arranged before any liability arises.
Source: NDCC 57-39.2-18.1 | NDCC 57-38-60.1 through 57-38-60.3
North Dakota Tax Relief Tools & Calculators
Use these North Dakota resources to estimate your balance, understand your obligations, and access official forms. Then request a review if the numbers show the balance is growing or collection is already active.
North Dakota Government Resources
These are the official North Dakota sources for tax information, payment plans, appeals, and rules. Always check the official source for the most current information.
- North Dakota Office of State Tax Commissioner — Official tax agency portal
- ND TAP (Taxpayer Access Point) — Online account portal for taxpayers
- ND Tax Commissioner — Collections Resources — Payment plan and collection information
- How to Protest a Tax Assessment (PDF) — Official protest process brochure
- Letters Relating to Unpaid Taxes — Notice explanations from the Tax Commissioner
- NDCC Chapter 57-39.2 — Sales tax statutes (liens, penalties, appeals, responsible persons)
- NDCC Chapter 57-38 — Income tax and withholding statutes
- NDCC Chapter 57-45 — Tax collection and enforcement statutes
- NDCC Chapter 32-09.1 — Garnishment statutes
- ND Admin. Code 81-01.1-01-09 — Good cause penalty abatement rules
Not Sure What to Do With Your North Dakota Tax Situation?
Select the card that matches your situation to jump to the relevant section.
Frequently Asked Questions About North Dakota Tax Relief
Does North Dakota have an Offer in Compromise program?
Not as a standard program taxpayers can apply for, no. The North Dakota Office of State Tax Commissioner generally cannot eliminate the underlying tax portion of a debt. The Tax Commissioner may waive all or part of a penalty and interest for good cause. There is one narrow exception: under NDCC 57-01-02(14), the Commissioner may waive the tax, but only after a lien has been filed and with the Attorney General's approval — this is not a routine settlement path. If the IRS approves an OIC, North Dakota may follow suit with its own compromise based on that federal approval.
Can North Dakota waive my tax penalties?
Yes, North Dakota may waive penalties for "good cause" under ND Admin. Code 81-01.1-01-09 and NDCC 57-39.2-18(4). Good cause includes being cooperative during the audit process and having a history of correct filing. Specific qualifying reasons include medical hardship, natural disasters, loss of records beyond your control, reliance on erroneous written advice from division staff, or tax preparer error if ordinary care was exercised. However, the request MUST be submitted BEFORE paying the penalties. Once penalties are paid, the right to pursue relief is forfeited.
What is North Dakota's interest rate on taxes?
North Dakota charges interest at 1% per month (12% per year) on unpaid tax liabilities. There is no statutory cap on the amount of interest that can accrue. Interest continues until the liability is paid in full. However, there are automatic interest waiver triggers: if a Notice of Determination is issued later than 12 months after audit commencement, if the Tax Commissioner fails to respond to a Statement of Grounds within 90 days, or if a Notice of Reconsideration is not issued within 9 months after the Statement of Grounds.
How long do I have to appeal a North Dakota tax assessment?
You have 30 days from the postmark of a Notice of Determination or Notice of Refund Change to file a Notice of Protest (90 days if living outside the United States). Three days are added if the notice was sent by mail (six days if mailed out of state). You then have 90 days from the postmark to submit a Statement of Grounds explaining your position in detail. Missing these deadlines can severely limit your ability to challenge the assessment.
Can I get a payment plan for North Dakota state taxes?
Yes. North Dakota offers payment plans (installment agreements) through the ND TAP online portal or by contacting the Accounts Receivable Section (Collections) at 701-328-1244. Plans typically range from 6 months to 2 years depending on your compliance history and the amount owed. Generally no down payment is required unless you owe a large amount or have a history of non-compliance. Financial information is generally not required unless you need additional time. Interest at 12% per year continues to accrue on the unpaid balance with no statutory cap.
Does a North Dakota payment plan stop penalties and interest?
No. A payment plan lets you pay over time, but interest continues to accrue at 12% per year (1% per month) on the unpaid balance during the plan. There is no statutory cap on interest. Penalties already assessed remain unless separately waived through North Dakota's good-cause abatement process. The plan does not erase the underlying tax debt. If you default, collection action may resume immediately.
Can North Dakota take my federal tax refund?
Yes. North Dakota participates in the federal Treasury Offset Program (TOP). Past-due individual income tax debts are submitted to TOP, meaning future federal tax refunds may be applied to your North Dakota tax debt. State tax refunds may also be offset. This can happen even if you are on a payment plan.
Can North Dakota file a tax lien?
Yes. The North Dakota Tax Commissioner indexes a notice of lien in the central indexing system maintained by the Secretary of State. The lien attaches to ALL property and rights to property (both real and personal) belonging to the taxpayer at the time the tax becomes due. It continues until the liability is satisfied. The lien has priority over mortgages, purchasers, and other claimants who acquire interest after the commissioner files notice. Upon full payment, the commissioner indexes a satisfaction of the lien.
Can North Dakota levy a bank account?
Yes. After obtaining a judgment, North Dakota may garnish bank accounts through the judicial garnishment process. The state may take the full amount in the account at the time of garnishment, up to the tax liability. This can create immediate cash-flow problems. North Dakota can also use distraint (seizure of property by the sheriff) and redirect state vendor payments to satisfy tax debt.
Can North Dakota garnish wages for state taxes?
Yes. North Dakota can garnish wages for unpaid state taxes. Note that the standard 25%-of-disposable-earnings cap and $20 dependent reduction under NDCC Chapter 32-09.1 apply to ordinary creditor garnishments; NDCC 32-09.1-03(3)(c) states that the cap does not apply to state or federal tax debts specifically. The exact formula the Tax Commissioner uses for tax garnishments has not been independently confirmed in this review and should be verified directly with the Tax Commissioner's office before being treated as settled.
What if I have unfiled North Dakota tax returns?
Unfiled returns can block most resolution options. The Tax Commissioner may estimate your tax and issue assessments that are higher than what you actually owe. North Dakota generally has 3 years after the return due date to assess (6 years if understated by more than 25%). Filing accurate returns can sometimes reduce an incorrect balance and starts the assessment limitations clock. Do not rush or file bad returns — get them prepared correctly.
Are corporate officers and LLC members personally liable for North Dakota business taxes?
Yes. Under NDCC 57-39.2-18.1, corporate officers (president, vice president, secretary, or treasurer) and LLC governors, managers, or members of a member-controlled LLC can be held personally liable for unpaid sales tax and withholding tax. Dissolution of the business does NOT discharge this personal liability. Taxes, penalty, and interest may be assessed and collected from these individuals just as from the business. Officers and members may avoid personal liability if the business posts a bond or makes a cash deposit equal to estimated annual tax liability.
Does a North Dakota payment plan stop collection?
No. A payment plan does not prevent the Tax Commissioner from filing liens in the central indexing system, and federal and state refunds may still be offset and applied to your balance. If you default on the plan, collection action may resume immediately, including garnishment, levy, and distraint.
Thank you for submitting!
Sources Used
These are the official North Dakota government sources used for this page. Always check the current official source for the most up-to-date information.
- North Dakota Office of State Tax Commissioner — Official Portal: www.tax.nd.gov ↗
- North Dakota Office of State Tax Commissioner — Collections Resources: www.tax.nd.gov/news/resources/collections ↗
- North Dakota Office of State Tax Commissioner — How to Protest a Tax Assessment: Protest Brochure (PDF) ↗
- North Dakota Office of State Tax Commissioner — Letters Relating to Unpaid Taxes: www.tax.nd.gov/letters-relating-unpaid-taxes ↗
- ND TAP — Taxpayer Access Point: tap.tax.nd.gov ↗
- NDCC 57-39.2-13 — Tax Liens: ndlegis.gov ↗
- NDCC 57-39.2-16 — Appeals: ndlegis.gov ↗
- NDCC 57-39.2-18 — Penalties: ndlegis.gov ↗
- NDCC 57-39.2-18.1 — Responsible Person Liability (Sales Tax): ndlegis.gov ↗
- NDCC 57-38-60.1 through 57-38-60.3 — Responsible Person Liability (Withholding): ndlegis.gov ↗
- NDCC 57-45-04 — Tax Commissioner's Collection Powers: ndlegis.gov ↗
- NDCC 57-45-13 — Distraint: ndlegis.gov ↗
- NDCC Chapter 32-09.1 — Garnishment: ndlegis.gov ↗
- ND Admin. Code 81-01.1-01-09 — Good Cause Penalty Abatement: law.cornell.edu ↗
Disclaimer: This page provides general information about North Dakota state tax collection procedures and is not legal advice. Tax laws and agency procedures change. Always consult the official North Dakota Office of State Tax Commissioner website or a qualified tax professional for advice specific to your situation. No guarantee of any particular outcome is expressed or implied. Approval for payment plans, penalty abatement, and other resolutions is discretionary.