North Dakota Sales Tax Nonpayment Risk Checklist
What This Issue Means
Sales tax nonpayment occurs when a business collects sales and use taxes from customers but fails to remit them to the North Dakota Office of State Tax Commissioner by the required due date. This creates tax liabilities owed directly to the state because the collected money belongs to North Dakota, not the business. Nonpayment may be identified by a missed return filing, a partial payment, or a complete failure to remit collected taxes to state tax authorities.
Why the State Requires This
North Dakota requires businesses to collect and remit state sales tax on taxable transactions to fund public services and infrastructure. When nonpayment occurs, the Office of State Tax
Commissioner investigates through its filing and payment processing system. The state issues notices after the due date passes without payment and assesses tax penalties and interest on unpaid amounts under North Dakota state tax law.
What Happens If This Is Ignored
If sales tax nonpayment is not addressed, the state issues additional notices and assesses failure-to-pay penalties and interest on the unpaid amount. Collection action may escalate to liens, levies, or other enforcement measures, and the total debt increases due to accruing interest and penalties. In serious cases, failure to remit collected sales tax can result in Class A misdemeanor charges under North Dakota law, though most cases are handled through civil collection processes.
What This Does Not Mean
Nonpayment does not automatically mean that your sales tax permit has been revoked or that the state has seized personal property or business assets without first sending notices. It does not mean the state has begun wage garnishment without providing an opportunity to respond, and criminal charges are rare in typical nonpayment situations. Sales tax nonpayment is primarily a civil tax matter handled through the Office of the State Tax Commissioner’s collection processes.
Understanding Your Tax Compliance Obligations
Businesses with nexus obligations in North Dakota must maintain sales tax compliance by filing returns and remitting sales tax according to established tax remittance periods. An economic
nexus exists when your business exceeds the $100,000 threshold for taxable sales into the state, as established in South Dakota v. Wayfair, 2018. Physical nexus occurs when your company has a physical presence in North Dakota, including employees, inventory, or offices within the state's boundaries.
Step-by-Step Checklist for Addressing Sales Tax
Nonpayment
Step 1: Gather All Notices and Documents
Collect any letters, notices, or documents from the North Dakota Office of State Tax
Commissioner related to sales tax nonpayment and back taxes. Write down the dates received, amounts listed, account numbers, and any identification numbers shown on the notices.
Step 2: Review Notice Details Carefully
Read the notice to identify the tax periods affected, the amount of unpaid sales and use tax, any failure to file penalties or failure to pay penalties listed, and the deadline for payment or response. Note the contact information for the office that issued the notice and instructions for dispute, appeal, or payment options.
Step 3: Check Your Business Records
Review your accounting records, bank statements, and sales tax return filings for the periods mentioned in the notice using your tax compliance software or data analytics tools. Confirm whether you filed a return, whether payment was sent but not processed, whether a return was not filed at all, or whether a partial payment was made.
Step 4: Contact the Collections Department
Call the Office of State Tax Commissioner, Collections Department, at 701-328-1244 or email collectionstax@nd.gov to confirm the amount owed and the relevant periods. Ask about payment options or arrangements, request clarification on fees, tax penalties, or interest, and obtain information about appeal procedures if you dispute the amount.
Step 5: Determine Your Payment Ability
Assess your business’s current financial situation and liabilities to determine whether full payment can be made immediately or if a payment plan is necessary. Determine what funds are available without disrupting operations, and prepare to discuss your circumstances with the collections department.
Step 6: Request Payment Plan Options
If you cannot pay the full amount immediately, contact the Collections Department at
701-328-1244 or use the online ND TAP payment solution to request a payment plan. The state offers payment arrangements for taxpayers who cannot pay in full, though interest will continue to accrue at 12 percent per year until the balance is paid in full.
Step 7: File Any Missing Returns
If the notice indicates that you did not file a return for certain periods, obtain the proper forms and file them immediately through the mail or online. Include payment with the return if the amount is due, and keep copies of all submitted returns and payment confirmations for your records to avoid future failure-to-file issues.
Step 8: Document Your Payment
If you believe payment was already made by electronic funds transfer or another payment method, gather bank statements showing the payment, cancelled checks, or digital payment confirmations, and any correspondence confirming receipt of payment. Organize these documents in date order and have them ready to share with state tax authorities if requested.
Step 9: Keep Records of All Communication
Document all phone calls, emails, letters, and conversations with the state by writing down the date and time of contact, the name of the person you spoke with, and the topic discussed. Save copies of all written correspondence sent to or received from the Office of State Tax
Commissioner for future reference during the tax statute of limitations period.
- Missing Response Deadlines: Nonpayment notices include specific response
- Ignoring Follow-Up Communication: The state may send multiple notices as part of its
- Not Keeping Payment Records: If you make a payment by electronic funds transfer or
- Assuming Payment Plans Are Automatic: Payment arrangements require application
- Confusing Sales Tax with Income Tax: Sales and use taxes are separate from income
- State tax notice review and response
- Penalty and interest reduction options
- Payroll and trust fund tax assistance
- Payment plan and relief eligibility review
- Representation with state tax agencies
Step 10: Monitor for Follow-Up Notices
Watch for additional mail from the Office of State Tax Commissioner that may include confirmation of payment plan approval, demands for immediate payment, or notices of enforcement action. Respond promptly to any follow-up notices and contact the collections department immediately if you have questions or need clarification about next steps.
Understanding Penalties and Interest
North Dakota assesses specific penalties for sales tax compliance failures under state tax law.
Failure to file penalties equal five percent of the tax due or five dollars, whichever is greater, for the first month, with an additional five percent for each additional month up to a maximum of 25 percent. Failure to pay penalties also equals five percent of the unpaid tax or five dollars, whichever is greater, assessed when payment is not made by the deadline. Interest accrues at one percent per month, excluding the first month after the due date, until all tax, interest, and penalties are fully paid.
Common Mistakes to Avoid deadlines, and failing to respond or pay by the date shown can trigger additional tax penalties or enforcement action. Always respond before the deadline stated in the notice to avoid operational setbacks and increased collection costs. collection process, and ignoring any of them does not stop collection efforts. Each notice should be opened, read carefully, and addressed in accordance with the instructions provided to prevent reputational damage and to avoid escalated enforcement actions. another method, keep proof of the payment, including receipts, confirmation numbers, and bank statements. Without documentation, state tax authorities may not record the payment properly, and you may be unable to prove payment if it is disputed later. and approval from the collections department, and you should not take an arrangement exists without written confirmation. Always contact the state at 701-328-1244 to formally request and confirm any payment plan before relying on it. tax obligations, and addressing one type of tax liability does not resolve the other. Each tax type has different filing requirements, due dates, and contact departments within state tax authorities.
What Happens After This Is Completed
After you respond to the nonpayment issue, the Office of State Tax Commissioner processes your response and may send written confirmation of any payment plan or resolution. If payment is made in full, the account should be marked as paid, though interest continues to accrue at 12 percent per year until fully paid. North Dakota state tax law excludes the first month after the due date from interest charges, but subsequent months incur interest at 1% per month until all tax, interest, and penalties are fully paid. Resolving sales tax compliance issues promptly protects your sales tax permit and prevents further enforcement actions.
Received a State Tax Notice?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
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