Section 7 - Legal Considerations
CHAPTER 53-08
LIABILITY LIMITED FOR OWNERS OF RECREATION LANDS
(North
Dakota Century Code Chapter 53-08 will cover all of the definitions,
etc listed below)
53-08-01. Definitions. In this chapter, unless the context or subject
matter otherwise requires: "Charge" means the amount of money asked in return
for an invitation to enter or go upon the land.
"Land" includes all public and private land, roads, water, watercourses,
and ways and buildings, structures, and machinery or equipment thereon. "Owner"
includes tenant, lessee, occupant, or person in control of the premises.
"Recreational purposes" included any activity engaged in for the purpose
of exercise, relaxation, pleasure, or education.
53-08-02. Duty of care of landowner. Subject to the provisions of
section 53-08-05, an owner of land owes no duty of care to keep the premises
safe for entry or use by others for recreational purposes or to give any
warning of a dangerous condition, use, structure, or activity on such premises
to persons entering for such purposes.
53-08-03. Not invitee or licensee of landowner. Subject to the provisions
of section
53-08-05, an owner of land who either directly or indirectly invites
or permits without charge any person to use such property for recreational
purposes does not hereby:
Extend any assurance that the premises are safe for any purpose;
Confer upon such persons the legal status of an invitee or licensee to whom
a duty of care is owed; or
Assume responsibility for or incur liability for any injury to person or
property caused by an act or omission of such persons.
53-08-04. Leased land to state or political subdivisions. Unless otherwise
agreed in writing, an owner of land leased to the state or its political
subdivisions for recreational purposes owes no duty of care to keep that
land safe for entry or use by others or to give warning to persons entering
or going upon such land of any hazardous conditions, uses, structures, or
activities thereon. An owner who leases land to the state or its political
subdivisions for recreational purposes does not by giving such lease:
Extend any assurance to any person using the land that the premises are safe
for any purpose;
Confer upon such persons the legal status of an invitee or licensee to whom
a duty of care is owed; or
Assume responsibility for or incur liability for any injury to person or
property caused by an act or omission of a person who enters upon the leased
land.
The provisions of this section apply whether the person entering upon the
leased land is an invitee, licensee, trespasser, or otherwise.
53-08-05. Failure to warn against dangerous conditions. Charge to enter.
Nothing in this chapter limits in any way an liability which otherwise
exists for:
Willful and malicious failure to guard or warn against a dangerous condition,
use, structure, or activity; or
Injury suffered in any case when the owner of land charges the person or
persons who enter or go on the land other than the amount, if any, paid to
the owner of the land by the state.
53-08-06. Duty of care or liability for injury. Nothing in this chapter
may be construed as creating a duty of care or grounds of liability for injury
to person or property. Nothing herein limits in any way the obligation of
a person entering upon or using the land of another for recreational purposes
to exercise due care in that person's use of such land and in that person's
activities thereon.
Prepared by the Office of State Tax Commissioner -
February 2004
Leona Kuntz, Compliance Officer - 701-328-3389,
lekuntz@state.nd.us
Tax Department website:
http://www.state.nd.us/taxdpt
For sales tax and income withholding tax purposes, Bed & Breakfasts fall under
the categories of hotels/motels, restaurants and liquor establishments if
alcoholic beverages are sold. This is a brief overview of the sales and use tax
and income withholding tax obligations in the Bed & Breakfast business.
The State Tax Department's website http://www.state.nd.us.taxdpt contains; access application, guidelines, newsletters and statistical data, E-mail addresses, phone numbers, fax numbers and New Business Registration web site for state http://www.state.nd.us/businessreg
Guidelines
Sales and Use Tax Requirements, Shooting Preserve, Game Farms and Hunting clubs,
Hotels, Motels, and Tourist Court Accommodations, (Memorandum regarding sales
tax rate increase on hotel, motel and tourist court accommodations).
Restaurants, Bars and Rental and Leasing Companies.
What are taxable sales and services and what are not?
Items subject to sales tax:
* Rental of rooms and other tourist court accommodations.
*Rental of motor vehicles, including snowmobiles, ATV's and motorcycles (call
Tax Department 701-328-3389 for specifics).
- Tax rate is 5 percent sales tax plus 3 percent rental surcharge.
- Rental for less than 30 days.
- Actual vehicle weight 10,000 pounds or less.
*Rental of equipment such as boats, camping equipment, TV, VCR.
*Sales of retail items such as t-shirts, sweatshirts, hats, ammunition.
*Prepared meals, alcoholic beverages, soft drinks, all coffee products, tea,
cocoa drinks, candy.
*Taxable items should be purchased with a Certificate of Resale to avoid paying
tax at time of purchase.
Items NOT subject to sales tax:
*Rental of hotel/motel and tourist court accommodations if same
individual occupies same room for more than 30 consecutive days.
*Fees to hunt on land.
*Hunting guide services.
Retailer has option of two billing methods, but must be consistent in how
they bill.
*Itemized Billing - separately state taxable items or services and
non-taxable items or services, i.e., food, lodging, hunting fees, hunting guide
services - only taxable items are subject to tax.
*Lump Sum Billing - Package Fee - includes both taxable items and
non-taxable items - entire package fee is subject to tax.
State Tax Rates
*General rate - 5 percent
*Lodging rates - 5 and 6 percent
- Licensed by Health Department as bed and breakfast - 5 percent
- Licensed by Health Department as lodging establishment - 6 percent
*Alcoholic beverage rate - 7 percent
NOTE: Montana residents are not exempt from sales tax of room
rental or purchases of prepared meals - the services are used and meals are
consumed in North Dakota.
Use Tax - State has use tax law but not all cities and counties have use tax.
*Items purchased for resale but used for personal use, such as ammunition,
candy, pop, cigarettes
- Purchased with Certificate of Resale to avoid paying tax at time
of purchase
- Removed items from inventory for personal use - tax due on
taxpayer's cost of items
*Equipment, supplies and materials purchased for use in operating business are
subject to sale tax.
- Purchased from an out-of-state wholesaler that did not charge sales tax
- use tax due on cost of equipment, supplies and/or materials.
- Purchased from catalog or off Internet and sales tax not collected at
time of purchase.
Local Option Taxes - City and County
*Local option taxes are in addition to state tax.
*Local option tax applies only if facility is located or services are provided
within city or county limits of location with a local option tax.
*State Tax Department administers city and county taxes - report local option
taxes on same form as state tax.
*Local Option Taxes by Location Guideline available on web site - lists
locations, tax type, tax rate, additional exemptions, locations with City
Lodging Tax and City Lodging & Restaurant Taxes - updated beginning of
each quarter.
- City sales tax is in addition to state rate provided city granted no
additional exemptions.
- City lodging tax - in addition to state and city tax.
- City Lodging and Restaurant Tax - in addition to state, city, and/or
city lodging tax.
Who Needs Sales Tax Permit?
*Making retail sales
*Buy for resale
*Owe use tax on purchases
Obtain application from Tax Commissioner's office or web site
http://www.state.nd.us/taxdpt-
complete, sign and mail application 30 days before opening business.
If you
have a permit you must file returns.
*Filing status assigned based on information received on application, i.e.,
monthly, quarter, semi-annual or annual.
*Seasonal businesses usually assigned annual filing status due at the end of the
season of business.
*Return must be filed even if no sales or tax due - if no return filed we don't
know if you had sales or not.
*Web File is an option in place of paper return.
Income Withholding
*Business has employees - may have income withholding obligation.
*Income withholding no longer at 14 percent of Federal liability.
*Information about new income withholding available on web site.
If you go into the Bed & Breakfast business, you must register with the Tax Department for sales tax and possibly income withholding.
North Dakota Sales and Use Tax Guidelines
Where to obtain forms and assistance -
North Dakota Office of State Tax Commissioner
State Capitol
600 E. Boulevard Ave
Bismarck, ND 58505-0599
701-328-2770
Internet Website
You can obtain tax forms, guidelines, income tax statutes and administrative
rules, and other information on our Internet website
http://www.state.nd.us/taxdpt.
In particular, check out the information on the electronic filing and payment
options currently available, and the electronic technology initiatives that
we're currently working on. You'll also find an on-line message service through
which you can submit your questions and comments to our office.
E-mail address
You don't need to go through our Internet website to access the on-line message
service. You may access it directly through e-mail software program -
General............................................
taxinfo@state.nd.us
Income tax withholding
section..........withhold@state.nd.us
Sales and special taxes
division.........sales tax@state.nd.us
Oil and gas taxes
section...................oiltax@state.nd.us
New Business Registration
A new site was developed to help people going into business. This site provides
links to various state agencies and has information regarding federal
requirements and employee tax information. It may be accessed through Forms
and Publications on the Tax Department Home Page or directly at
www.state.nd.us/businessreg
Calendar
A monthly calendar link is available on our Internet web site. The calendar
provides a schedule of due dates, seminars and other notable events.
Phone numbers
Motor fuels tax section 701-328-3126
Individual income tax section - 701-328-3450
Income tax withholding
section - 701-328-3125
Corporation
income tax section - 701-328-2046
Sales and special taxes division - 701-328-3470
Includes sales, use, motor fuels, estate, city lodging, highway contract
privilege, and music or dramatico-musical composition performing rights taxes.
Oil and gas taxes section - 701-328-3657
Property tax division - 701-328-3127
Main administrative office - 701-2770
Speech/hearing impaired (Relay North Dakota) 1-800-366-6888
Fax Numbers
Sales and Special Taxes - 701-328-0336
Individual and Corporate Income Tax (16th floor) - 701-328-1942
Income Tax Withholding Section - 701-328-0146
Motor Fuels Taxes - 701-328-1283
Oil and Gas Taxes - 701-328-1283
Main administrative office - 701-328-3700
SALES AND USE TAX REQUIREMENTS
ND Office of State Tax Commissioner
701-328-3470
www.ndtaxdepartment.com
In order to promote a better understanding of the North Dakota sales and use
tax laws, the Office of State Tax Commissioner provides the following general
information. Special guidelines for
certain types of businesses also are available and may be obtained by contacting
the Sales Tax Compliance Section of the Office of State Tax Commissioner
or by viewing the guidelines on our the tax department's website at
www.ndtaxdepartment.com
Imposition and Rates
Sales tax is paid by the purchaser and collected by the retailer.
Sales tax is levied at the following rates:
Permits and Reporting
Any business or institution making taxable retail sales of tangible personal
property or services is required to hold a North Dakota sales and use tax
permit. An application to obtain a permit must be submitted to the Sales Tax Section
of the Office of State Tax Commissioner. When a business or institution has
a permit, a sales and use tax return is sent to the taxpayer each calendar quarter
(or every assigned reporting period) to report and remit the sales and
use tax. These returns must be filed each period whether a tax is due or
not. If no tax is due, the return must be filed indicating that no
taxable sales or reportable purchases were made for that period. If the return
is not filed, the Sales Tax Section will notify the permit holder that the
return is delinquent and that penalty is due.
Sales tax applies to sales of tangible personal property and certain services to a final user and consumer. Use tax is complimentary to sales tax and is imposed on the use, storage or consumption of tangible personal property in this state unless the goods have already been subjected to sales tax.
If a business or institution purchases materials, supplies or equipment for resale, the business or institution should not pay the tax to the supplier. Instead, the business or institution should collect tax from the customer when the item is sold and remit the tax to the Office of State Tax Commissioner.
If a business or institution purchases materials, supplies or equipment for use in its business, the business or institution is required to pay sales tax to the supplier of these items. If the supplier does not hold a North Dakota sales and use tax permit, the tax should not be remitted to the supplier, but should be remitted as a use tax directly to the Office of State Tax Commissioner.
Penalties
For returns filed late, a minimum penalty of 5 percent of the tax use or $5.00,
whichever is greater, will be added to the tax due for the first month the
return is late. For each additional month or fraction thereof that a return is
late an additional penalty equal to 5 percent of the tax due will be assessed up
to a maximum of 25 percent of the tax due. Interest is not assessed for the
first month the return is delinquent. Interest of 1 percent of the tax due will
be assessed for each month or fraction of a month after the first month that a
return is late.
Retail Sales-Sales for Resale
A retail sale is the sale of tangible personal property to a person who
will be the final user and consumer of the goods. The seller or supplier
in this instance is required to collect sales tax on the sale of the final
user.
A sale for resale is made when a dealer or supplier sells to another bona fide retailer for resale. The seller or supplier is not required to collect sales tax from the individual or company making the purchase for resale provided the seller obtains a signed certificate of resale from the purchaser.
If a person submits a false certificate of resale to a seller, the person submitting the false certificate is liable for any tax and penalties which may become due. Certificates of resale should be obtained from retailers at least every two years.
The following certificate of resale is prescribed by the State Tax Commissioner and is available on the Tax Departments website at www.ndtaxdepartment.com
CERTIFICATE OF RESALE
I hereby certify that I hold North Dakota Sales and Use Tax Permit Number_______. I am engaged in the business of selling, leasing or renting ______________________________, and that the tangible personal property purchased from_____________________is purchased by me for resale.
I further certify that I will report and remit any sales or use tax and any penalties which become due as a result of purchases made from the above seller which are used or consumed by me.
___________________________
____________________________________
Business Name
Business Address
___________________________
_____________________________________
Authorized Signature
Date
These certificates are not to be sent to the Office of State Tax
Commissioner,
but must be retained in the supplier's files to substantiate sales claimed
as sales for resale.
Purchases Subject to Use Tax
Individuals and businesses that purchase supplies and equipment for use in running
a business or for personal use must pay a sales or use tax on these purchases, based
on the cost of the items being purchased. If these items are purchased from
a firm that does not collect North Dakota sales tax, the purchaser must
report the purchase on the Items Subject to Use Tax line of the sales and use tax return and pay use
tax on the purchase price. Examples of taxable purchases include office supplies,
office equipment, samples, fixtures, display cases, maintenance items, cleaning
supplies, delivery equipment, special installation tools and equipment, etc.
Rentals of Tangible Personal Property
The term sale also includes the leasing or renting of tangible personal
property leased or rented for final use or consumption within this state.
Effective July 1, 2001, certain vehicles subject to the motor vehicle excise tax
imposed by the
North Dakota
Century Code Ch. 57-04.3 also will be subject to sales tax if the
vehicle is rented in this state for less than 30 days. Please see the Licensed
Motor Vehicle Dealers Guideline for details..
Delivery to Out of State Residents
Delivery to a customer out of state constitutes a sale in interstate commerce
and is not a taxable sale in North Dakota. For example, if a retailer in
North Dakota sells merchandise to an out-of-state resident and, as a condition
of the sale, agrees to deliver the merchandise or to have the merchandise
delivered to the customer at a point in another state, North Dakota sales
tax does not apply. However, the North Dakota retailers may be obligated to
collect and remit the tax for the state into which the retailer delivers if
the retailer's activities in that state are sufficient to obligate the dealer
to that state's tax law.
On sales to out-of-state residents, retailers must be certain that their
records contain proof of delivery, such as truck records, bills of lading,
statement by the customer, etc. These conditions apply to deliveries into
any state or Canadian Province.
Delivery Charges Taxable
As a normal part of their business, many retailers are required to deliver the
items they sell to the customer. If there is a delivery charge to the
customer, the sales tax must be charged on the total selling price, including
any charges for delivery or setup.
For example: A furniture retailers sells a bedroom set to a customer
living in another city. The retailer agrees to deliver the new bedroom set and
set it up in the customer's home for $25 over and above the agreed selling
price of the furniture. The $25 charge is subject to sales tax even if it
is billed separately to the customer. The proper billing would be as follows:
New bedroom set . . . . . . . . . . . . . . . $600.00
Delivery charge . . . . . . . . . . . .
. . . . . . .25.00
Less trade-in of used bedroom set. . .
(100.00)
Total . . . . . . . . . . . . . . . . . . . .
. . . . . $525.00
5% tax. . . . . . . . . . . . . . . . . . . .
. . . . . $26.25
Sales to Nonprofit Organizations are Taxable
The gross receipts from sales of tangible personal property to nonprofit
organizations for their own use are subject to sales tax. Such organizations include Boy
Scouts, Girl Scouts, FFA. Chamber of Commerce, Lions Clubs and other civic
organizations, as well as churches and religious groups.
Sales to Residents of Montana
North Dakota sales tax law contains an exemption for residents of Montana from
paying sales tax when purchasing
tangible personal property within North Dakota. A resident of Montana can take
delivery of tangible personal property in North Dakota and can purchase this
property without paying the North Dakota sales tax provided the following
conditions are met:
1. The sale is in excess of $50.00
2. The personal property will be taken out of the state of North Dakota and
used exclusively outside this state.
3. The resident of Montana is in North Dakota to make a specific purchase
and not as a tourist.
4. The resident of Montana must sign a certificate of purchase form certifying
a Montana residency and that the goods will be used out of North
Dakota.
The prescribed certificate of purchase for use in making sales to Montana
residents may be obtained from the Office of State Tax Commissioner or from
their website www.ndtaxdepartment.com
Good purchased by Montana residents must be taken from North Dakota and used
entirely outside this state in order to qualify for the exemption. Accordingly,
tax must be paid on lodging accommodations, meals, entertainment and similar
goods and services which are consumed in this state.
Sales to Canadian Residents
Sales to residents of Canada are not exempt from North Dakota sales tax,
however, in some cases the Canadian buyer may obtain a refund of North Dakota
sales tax paid.
The refund is available under the following conditions:
1. The Canadian resident must be in North Dakota to make a purchase and
not as a tourist or temporary resident.
2. The goods must be removed from North Dakota within 30 days of purchase
and permanently used outside of North Dakota.
3. The Canadian resident must apply for a refund to the Tax Commissioner on
a form prescribed by the Tax Commissioner. Refund forms may be obtained from
the Tax Commissioner's office or website.
4. The qualifying purchases (each invoice) must
equal or exceed $25.00 before sales tax.
5. The refund must be $15.00 or more. To reach the $15.00 limit, qualifying purchases may
be accumulated for a period not in excess of one calendar year.
Goods purchased by Canadian residents must be taken out of North Dakota and used entirely outside this state in order for the refund to be allowed. Accordingly, tax paid on lodging accommodations, meals, entertainment, etc. is not subject to refund since these purchases are used in North Dakota.
Sales to Contractors
North Dakota sales and use tax law regards any contractor who incorporates
tangible personal property into real property as the final user and consumer
of the property. As a final user and consumer, the contractor is liable for
sales or use tax on the purchase price of that property.
If a contractor furnishes the seller of construction materials with a completed contractor certificate containing the contractor's license number assigned under the provisions of NDCC Ch.43-07 and the contractor's sales and use tax number assigned by the State Tax Commissioner, the seller is not required to collect tax on the sale. Any contractor furnishing such a certificate must report those purchases on the sales and use tax return for the reporting period in which the purchases are made and pay the tax to the Office of State Tax Commissioner with that return. Reporting the purchases and paying the tax on a completed job basis is not permitted.
The following constitutes the Contractor's Certificate as prescribed by the State Tax Commissioner and available on their website at www.ndtaxdepartment.com
CONTRACTOR'S CERTIFICATE
I, the undersigned, am a construction contractor holding North Dakota Contractor's License No.___________issued by the Secretary of State of the State of North Dakota and North Dakota Sales & Use Tax Permit Number______________ assigned to me by the State Tax Commissioner of the State of North Dakota.
I certify that as a construction contractor, I will report and remit any sales or use tax due directly to the Office of the State Tax Commission as a result of purchases made by me from_____________________________________(Seller)
Dated this ________day of _________,____at______________________________
________________________________
________________________________
(Contractor)
(Address)
If a contractor or subcontractor is also engaged in retail trade and part or all of the machinery, equipment, material or supplies used in carrying out a construction contract are taken from stock that was purchased for resale, the contractor must pay a use tax on his cost of materials. The purchase price or value of the machinery, equipment, materials or supplies used or consumed in carrying out the construction contract must be reported on the Items Subject to Use Tax line of the sales and use tax return.
Local Sales and Use Tax
In addition to state sales and use taxes, various cities also impose local
sales and use taxes. Most locations that impose a local option tax also impose a
local option use tax, with the exception of the cities of Cando, Regent,
Richardton, and Scranton. These locations impose a sales tax only. See the
Local Option Taxes by Location guideline for details about local option
sales and use taxes.
Because Cando, Regent and Richardton and Scranton do not impose a local option use tax, a business must be located within these cities to be affected by local taxes. However, for locations that impose a use tax, businesses not located within the city or county may be required to collect the local option tax if they maintain an office or warehouse in that location, have any employees or representatives working or stationed in that location, deliver goods into the city or county in company owned delivery vehicles or have some other type of presence within the city.
Although local option taxes are imposed locally, the Office of State Tax Commissioner
administers the taxes. Please contact the Office of State Tax Commissioner
for additional information regarding the local taxes which may affect you.
Guideline
SHOOTING PRESERVES, GAME FARMS, AND HUNTING
CLUBS
Shooting preserves, game farms and hunting clubs are in the business of permitting individuals the privilege of hunting in designated areas for a fee. This fee is regarded as a charge for nontaxable service. Charges for lodging, meals and sales of tangible personal property are subject to tax.
If a charge includes both taxable and nontaxable charges, the total charges are subject to sales tax. Nontaxable charges are not subject to sales tax provided the nontaxable charges are separately stated on the invoice or billing to the customer.
Membership Fees or Charges
The fees or charges for membership to these facilities, which provide access
to private lands, are not subject to sales tax. This includes the charges
for guides, guided hunting trips or game release charges.
Purchase and Sale of Game
The purchase and sale of game for use in the operation of shooting preserves,
game farms, or hunting clubs are not subject to sales or use tax. The purchase
of feed, which is fed to the game, are not subject to sales or use
tax.
Taxable Charges
Lodging and meals: Charges for lodging or meals are subject to sales tax.
If the shooting preserve, game farm or hunting club provides a bed and breakfast
accommodations, such operations are regarded in the same manner as those
by a hotel or motel. Accordingly, any charge made on for lodging or meals
will be subject to sales tax. For additional information on lodging and
meals, please refer to the Hotel, Motel Sales and Use Tax and Restaurant
Sales and Use Tax guidelines which are available on our web site or by
contacting our office.
Sales of tangible personal property: The sales of tangible personal property are subject to sales tax. This may include sales of gift items, ammunitions, clothing, or other items.
Purchases for your own use
The purchases of supplies and equipment used in the operation of the shooting
preserves, game farms, or hunting clubs are taxable, unless the items are
specifically identified as nontaxable; i.e., game birds, game animals, and
feed. Tax should be paid to suppliers when purchasing taxable items. If sales
taxes are not paid at the time of purchase, tax should be reported on the
cost of the items on the Items Subject to Use Tax line of State Sales and Use Tax Return.
HOTELS AND MOTELS
RE: Sales Tax Rate Increase on Hotel, Motel, and Tourist Court
Accommodations
The North Dakota Legislative Assembly increased the state sales tax rate from 5 to 6 percent effective July 1, 2003 on the gross receipts from leasing or renting hotel, motel, or tourist court accommodations for periods of fewer than 30 consecutive days excluding bed and breakfast accommodations. The gross receipts from leasing or renting bed and breakfast accommodations licensed under North Dakota Century Code ch.23-09.1 remain subject to state tax at 5 percent.
The 6 percent rate applies to leasing or renting sleeping rooms at hotels,
motels and other tourist court accommodations. The sales tax rate on rental of
conference rooms, banquet rooms, swimming pools and on sales of meals,
beverages, gift shop items, and other tangible personal property remains at the
general state sales tax rate of 5 percent. The 6 percent rate is effective for
all reporting periods beginning July 1, 2003 through periods ending June 30,
2007. The purpose of the rate increase is to generate funds for the promotion of
the Lewis and Clark bicentennial celebration.
Under the new law, retailers leasing or renting sleeping rooms at
hotel, motels and other tourist court accommodations may be collecting North
Dakota sales tax at three different rates (excluding all local taxes). Leasing
or renting sleeping rooms is (effective July 1) subject to 6 percent state sales
tax; alcoholic beverage sales are subject to 7 percent sales tax; and, all other
taxable sales of products (e.g. prepares meals, soft drinks, gift shop items,
candy, etc.) are taxed at 5 percent. The additional 1 percent tax that applies
to the gross receipts from leasing or renting sleeping rooms must be reported
separately on your sales tax return. Therefore, the following unique
instructions apply to hotel, motel, and tourist court accommodations reporting 6
percent North Dakota sales tax collections.
Alcoholic beverages: hotel, motel, and tourist court accommodations that
sell alcoholic beverages receive a sales tax return with two columns of
information. Sales of alcoholic beverages are reported in Column A and a tax
rate of 7 percent is multiplied times the sales amount to determine the correct
state sales tax.
All other sales: All sales except alcohol, which are taxes at 5 or 6
percent, are reported in Column B of the two-column return. A tax rate of 5
percent is multiplied times the sales reported in Column A (or in the single
column of a one-column return). The additional 1 percent sales tax collected on
6 percent sales will be reported separately on the back side of the sales tax
return in the Local Option sales and Use Tax section. Hotel, motel, and tourist
court accommodations that do not sell alcoholic beverages receive a return with
one column, which is used to report all 5 and 6 percent sales.
Additional 1 percent tax: A special line of information will be
preprinted in the Local Option Sales and Use Tax section on your return for the
purpose of reporting the additional 1 percent sales tax collected on hotel,
motel and other tourist court accommodations. This section of the return
has six columns labeled A through F. The local code (Column A) will be
identified as 600 and the name/location (Column B) will be listed as
"ND Hotel/Motel." Report the amount of 1 percent tax due in Columns C
and F of the schedule. Columns D and E are not applicable to the additional 1
percent sales tax collected on hotel, motel and other tourist court
accommodations. Please note sales are not reported in the Local Option
Section of the return. The tax reported in Columns C and F will be equal to 1
percent of your gross receipts from leasing or renting sleeping rooms. Rental of
conference rooms, banquet rooms and swimming pools and other sales of food,
drink, and miscellaneous sundries are not subject to the 6 percent state tax
rate.
Please view the rate chart on the Office of State Tax Departments website @ www.nd]dtaxdepartment.com
HOTELS AND MOTELS
Gross Receipts are Taxable
Gross receipts from the rental of hotel, motel or tourist court accommodations
including, but not limited to, meeting rooms, conference rooms, banquet rooms
or swimming facilities are subject to sales tax, provided that the period
for which the accommodations are rented is less than 30 consecutive days
or one month. If a hotel or motel operates a bar, lounge, coffee shop, cafe,
dining room or gift shop, those receipts are also subject to sales tax. Items
sold at a newsstand, such as books and magazines, are subject to sales tax;
however, newspapers are specifically exempt.
Lodging Sales Tax Rates
The 2003 North Dakota Legislative Assembly increased the state sales tax rate
from 5 to 6 percent effectively July 1, 2003 on the gross receipts from leasing
or renting hotel, motel or tourist court accommodations for periods of fewer
than 30 consecutive days excluding bed and breakfast accommodations.
The gross receipts from leasing or renting bed and breakfast accommodations
licensed under North Dakota Century Code ch.23-09.1 remain subject to state tax
at 5 percent.
The 6 percent rate applies to leasing or renting sleeping rooms at hotels, motels and other tourist court accommodations. The sales tax rate on rental of conference rooms, banquet rooms, swimming pools and on sales of meals, beverages, gift shop items and other tangible personal property remains at the general state sales tax rate of 5 percent. The 6 percent rate is effective for all reporting periods beginning July 1, 2003, through periods ending June 30, 2007. The purpose of the rate increase is to generate funds for the promotion of the Lewis and Clark bicentennial celebration.
Under the new law, retailers leasing or renting sleeping rooms at hotels, motels and other tourist court accommodations may be collecting North Dakota sales tax at 3 different rates (excluding all local taxes.) Effective July 1, 2003, leasing or renting sleeping rooms is subject to 6 percent state sales tax: alcoholic beverage sales are subject to 7 percent sales tax; and all other taxable sales of products (e.g. prepared meals, soft drinks, gift shop items, candy, etc.) are taxed at 5 percent.
The additional 1 percent tax that applies to the gross receipts from leasing or renting sleeping rooms must be reported separately on your sales and use tax return. The 5 percent state sales tax due on room rentals continues to be reported with your other 5 percent sales, but the additional 1 percent sales tax is reported in the Local Option Tax section on page 2 of the Form ST on a line identified as ND Hotel/Motel. Please contact our office if you have any questions on how to report the additional 1 percent tax on the gross receipts from leasing or renting hotel, motel or tourist court accommodations.
Accommodations Rented for Periods of Thirty Consecutive Days or More
Hotel, motel, and tourist court accommodations occupied by the same individual
or individuals for residential housing for periods of thirty or more consecutive
days are exempt from tax.
To qualify for the exemption, each occupied room must include continuous residency by at least one specific individual for 30 or more consecutive days. Any break in the continuous occupancy of the room by that individual will result in a continuous occupancy of less than 30 consecutive days and will subject the accommodations to tax. In cases where an occupancy break results in one continuous occupancy period of 30 or more consecutive days and one continuous occupancy period of less than 30 consecutive days, the exemption applies only to the occupancy period of 30 or more consecutive days.
Exempt Institutions
Under sales tax law, the United States government and its agencies as well
as the state government and all of its political subdivisions are exempt
from payment of sales tax.
Individuals who represent any of these agencies and who rent hotel or motel accommodations are subject to sales tax on accommodations; this includes federal employees, state employees, county and city employees and school groups. Accommodation for these individuals and groups are taxable unless payment for the room is made directly by government warrant or government check.
Example: If the local high school's basketball team travels to another North Dakota city where they rent hotel rooms for an overnight stay, sales tax applies to the rental charge for those rooms unless the accommodations are paid for by a school check.
Government employees, whether they are traveling for the Federal government, the state government or local government, are subject to sales tax when staying at a hotel or motel in North Dakota if they pay for their own lodging and are then reimbursed by the unit of government for which they work.
Rooms Provided Free of Charge
Some hotel and motel operators include a room as part of the fee paid to
entertainers who appear in the hotel or motel lounge. Despite the fact that
it is included in the entertainer's pay, there is use tax due on the value
of that room. The value is considered to be the lowest commercial rate offered
by that hotel or motel for that particular room.
Non-Taxable Service
Services offered to customers, such as valet, laundry or babysitting, are
not taxable under North Dakota sales tax law.
Telephone Charges
Under North Dakota tax law, charges for communication services (including
telephone service) are subject to tax.
When guests at hotels and motels make intrastate telephone calls (interstate calls are exempt from state and local sales tax), applicable toll and tax charges are assessed by the phone company on the hotel's or motel's telephone bill. The hotel or motel then typically passes these toll and tax charges along to the guest making the call. In these cases, applicable sales tax will be paid by the hotel or motel to the phone company and it is not necessary to remit sales tax a second time on the actual expenses recovered from the quest.
If a hotel or motel adds any type of surcharge to a guest's telephone charges (over and above what is actually expensed by the telephone company), the surcharge is subject to sales tax. Such charges always are taxable as local communication charges, no exemption is provided for surcharges imposed on interstate telephone service.
Items Subject to Sales or Use Tax
Hotels and motels are subject to sales or use tax on all equipment, supplies
and materials purchased for use in the operation of the hotel and motel,
including a bar, lounge, coffee shop, or dining room. Examples of taxable
items for each of these operations are set out in the paragraphs below. If
these items are purchased from the supplier who holds a North Dakota sales
and use tax permit, North Dakota sales tax should be paid directly to the
supplier. If these items are purchased from a supplier who fails to charge
North Dakota sales or use tax, the purchaser should include the cost of the
purchases on the Items Subject to Use Tax line of the North Dakota sales and use tax return and remit
the use tax on those items directly to the Office of State Tax Commissioner.
A. Hotels and Motels: A hotel or motel must pay sales or use tax on the purchase price of all items of equipment, including beds, furniture, television sets, room furnishings and other similar items. They are also responsible for sales or use tax on supplies furnished to guests or used in the operation of the hotel or motel. These supplies include items such as linen, bedding, towels, soap, toilet tissue, laundry bags, drinking glasses, stationery, matched, menus, keys, registration books, office supplies, and cleaning supplies.
B. Bars and Lounges: All bar and lounge owners are required to pay sales or use tax on purchases of equipment and supplies for their own use. Examples of these items include: drinking glasses, cleaning compounds, equipment and furniture, coin-operated machines, chairs, cash registers, and similar items.
C. Restaurants and Cafes: All restaurant or cafe owners must pay sales
or use tax on items of equipment, materials or supplies purchased for personal
or business use, with the exception of those food items which are expressly
exempt from tax. Purchases of cleaning and sanitary supplies such as soap,
cleansers, brooms, sweeping compounds, toilet tissue and light bulbs are
subject to North Dakota sales tax.
Restaurants
Sales Tax Applies on Most Restaurant Sales
Virtually all sales made by restaurants, cafes, caters, drive-in eating places
and dairy product stores are subject to North Dakota sales tax. All sales of
meals, lunches, snacks, candy, chewing gum, coffee, tea, milk, soft drinks, ice
cream, cigarettes, cigars, tobacco, alcoholic beverages and sundries are subject
to sales tax when sold to final consumers. Sales of prepared meals for
take-out-delivery services are also subject to sales tax.
Restaurants, Cafes & Caterers
A business or person who engages in the business of providing meals to the
general public, either in a restaurant or a cafe or as a caterer, is liable
for collection of North Dakota sales tax. Sales tax must be added to the
selling price of all meals, lunches, snacks, candy, chewing gum, coffee,
soft drinks, inc cream, cigarettes, cigars, and tobacco sold by these businesses.
Sales of food products which are prepared for immediate consumption are subject to sales tax even though such products are packaged or wrapped and are sold on a take-out or to-go basis. However, bulk items are not purchased for immediate consumption are not taxable. Examples of bulk items are whole pies or cakes, large quantities of bakery items and bulk ice cream.
Coin-Operated Vending Machines
The gross receipts from coin-operated vending machines are subject to sales
tax. Receipts from cigarette vending machines are taxable as are the receipts
from soft drink vending machines, candy or gum vending machines or other
vending machines which dispense merchandise. The only exception is for those
vending machines which dispense peanuts, gum balls or other products for
15 cents or less.
Sales tax is included in the gross receipts from coin operated vending machines
and must be deducted before calculating gross receipts subject to sales tax
(taxable sales). Taxable sales from coin-operated vending machines are calculated
as follows:
a)
5% State Sales Tax only Taxable Sales = Gross Receipts
÷ 105% (1.05)
b)
5% State Sales Tax and City Sales
Taxable Sales =Gross Receipts ÷ [105% + city tax percent]
Example: 1% city sales tax
Taxable Sales = Gross Receipts
÷ 106% (1.06)
1 1/2% city sales tax Taxable Sales = Gross Receipts
÷ 106%
(1.065)
1 3/4% city sales tax Taxable Sales = Gross Receipts
÷ 106%
(1.0675)
The owner of the coin-operated vending machine is the one responsible for sales tax on receipts from the machine. Sales tax should be subtracted from total receipts by the machine owner before calculating the percentage of receipts which go to the location owner.
Amusement Sales
State sales tax is due on eighty percent (80%) of the gross receipts collected
from coin-operated amusement devices. Grand Forks provides for city sales
tax on fifty-six percent (56%) of the gross receipts. All other cities that
tax coin-operated amusement, tax 80% of the gross proceeds. Sales tax is
included in the gross receipts from coin-operated amusement devices and must
be deducted before calculating gross receipts subject to sales tax (taxable
sales).
Taxable sales from coin-operated amusement machines are calculated as follows:
a)
5% State Sales Tax only Taxable Sales = Gross Receipts
x 76.92 (.7692)
b)
5% State Sales Tax and 1% City Sales Tax Taxable Sales
= Gross Receipts x 76.34 (.7634)
c)
5% State Sales Tax and (State)
Taxable Sales - Gross Receipts x76.20% (.7620)
1 3/4 % Grand Forks City Sales Tax (City)
Taxable Sales = Gross Receipts x 53.35% (.5334)
The owner of the coin-operated amusement device is the one responsible for sales tax on the receipts from the machine. Sales tax should be subtracted from total receipts by the machine owner before calculating the percentage of receipts which go to the location owner.
Employee Meals
The selling price of meals to employees, is subject to sales tax. Meals given to
employees or provided free as compensation are subject to use tax. The
employer's cost of meals given to employees at no cost must be reported as items
subject to use tax on the employer's sales tax return. If records are not
available to document the employer's cost, the fair market value (normal selling
price) is the reportable value.
Purchase Subject or Sales or Use Tax
Restaurants, cafes, drive-ins and dairy stores buy quantities of food and
grocery items from wholesale grocers under the theory of resale. Each of these businesses should have a retail sales
and use tax permit number and should sign a Certificate of Resale and present
it to the wholesale grocer indicating that certain items purchased from that
wholesale grocer are for resale.
Restaurants, cafes, drive-ins and dairy stores also buy numerous items which
they do not intend to sell. It should be evident from the nature of these
items that they are being purchased by theses businesses for final use and
the wholesale grocer should charge sales tax on these items. Examples of
there items are shown below.
There are certain items which are not classified as food or grocery items
but which do not pass to the customer with the purchase of a meal. These
items are purchased for resale when purchased by restaurants, cafes, drive-ins,
and dairy stores.
| Nontaxable Purchases for Resale | Taxable Purchases for Final Use | |
| Food, including seasonings, etc | Soap | Can liners |
| Sandwich bags | Bleach | Dishwashing soap |
| Doggie bags | Disinfectant | Softener salt |
| Paper cups | Paper towels | Towel dispensers |
| Paper plates | Ammonia | Sweeping compound |
| Paper napkins | Toilet tissue | Saniflush |
| Toothpicks | Brooms | Oven cleaner |
| Butterchips | Cleansers | Menus |
| Creamer cups | Grill bricks | String |
| Hot cups and lids | Aluminum foil | Tableware |
| Sandwich wrap | Scouring pads | Insect spray |
| Plastic or wood utensils | Banquet paper | Bathroom plunger |
| Drinking straws | Placemats (paper & others) | Sales tickets |
| To go containers | Tablecloths (paper & others) | |
BARS, LOUNGES AND TAVERNS - Sales and Use Tax
Guideline
Alcoholic Beverage Sales
All sales of beer, wine, mixed drinks and other alcoholic beverages are subject
to North Dakota sales tax whether these products are sold for consumption on or
off the premises. The North Dakota sales and use tax rate on alcoholic beverages
is 7 percent, not the general rate of 5 percent.
For ease of administration, alcoholic beverage retailers may include sales tax in the posted price of all on-sale beverages and off-sale alcoholic beverages. Prices for nonalcoholic off-sale beverages and other taxable goods should not include sales tax. When the posted price of on-sale alcoholic beverages includes sales tax, a sign should be posted advising patrons that the posted price includes sales tax.
When sales tax is included in the selling price of merchandise, the tax should be deducted from the gross sales receipts to arrive at the actual taxable sales amount. For alcoholic beverage sales, taxable sales are calculated as follows:
a) 7% State Sales Tax only
Taxable Sales = Gross Receipts ÷ 107% (1.07)
b) 7 % State Sales Tax and City Sales Tax
Taxable Sales = Gross Receipts ÷ [107% + city tax percent]
Example 1% city sales tax
Taxable Sales = Gross Receipts ÷ 108% (1.08)
1 1/2 % city sales tax
Taxable Sales = Gross Receipts ÷ 108 1/2% (1.085)
1 3/4% city sales tax
Taxable Sales = Gross Receipts ÷ 108 3/4% (1.0875)
2% city sales tax
Taxable Sales = Gross Receipts ÷109% (1.09)
For nonalcoholic merchandise sales, the tax should be deducted from gross sales receipts in the same manner as provided for Coin-Operated Vending Machines.
Food, Candy, Soft Drinks, tobacco Products and
Sundries
Bar sales of snacks, lunches or meals are subject to sales tax. Examples of
these items include potato chips, peanuts, popcorn, pizza, sandwiches, hard
boiled eggs, pretzels and similar snacks.
Sales of all candy, chewing gum and soft drinks, whether consumed on or off the premises of the seller, are taxable. Soft drinks include various fruit drinks if the amount of pure fruit juice in those fruit drinks does not equal or exceed 70 percent of the product. Sales of water (When sold in containers of less than one gallon) are taxable, however, sales of ice are not subject to tax.
Sales of cigarettes and tobacco products are subject to North Dakota sales tax, as are sundries such as nail clippers, handkerchiefs, pocket combs and similar items.
Coin-Operated Vending Machines
The gross receipts from coin-operated vending machines are subject to sales tax.
Receipts from cigarette vending machines are taxable as are the receipts from
soft drink vending machines, candy or gum vending machines or other vending
machines which dispense merchandise. The only exception is for those vending
machines which dispense peanuts, gum balls or other products for 15 cents or
less.
Sales tax is included in the gross receipts from coin-operated vending machines and must be deducted before calculating gross receipts subject to sales tax (taxable sales). Taxable sales from coin-operated vending machines are calculated as follows:
| a) 5% state sales tax only | Taxable Sales=Gross Receipts ÷ 105% (1.05) |
| b) 5% state sales tax and | Taxable Sales=Gross Receipts÷ [105% + city tax percent] |
| city sales tax | |
| Example: 1% city sales tax | Taxable Sales=Gross Receipts ÷ 106% (1.06) |
| 1 1/2% city sales tax | Taxable Sales=Gross Receipts ÷ 106% (1.065) |
| 1 3/4% city sales tax | Taxable Sales=Gross Receipts ÷ 106% (1.0675) |
The owner of the coin-operated vending machine is the one responsible for sales tax on receipts from the machine. Sales tax should be subtracted from total receipts by the machine owner before calculating the percentage of receipts which go to the location owner.
Coin-Operated Amusement Device Sales
State sales tax is due on 80 percent of the gross receipts collected from
coin-operated amusement devices. Grand Forks provides for city sales tax on 56
percent of the gross receipts. All other cities that tax coin-operated
amusement, tax 80 percent of the gross proceeds. Sales tax is included in the
gross receipts from coin-operated amusement devices and must be deducted before
calculating gross receipts subject to sales tax (taxable sales).
Taxable sales from coin-operated amusement machines are calculated as follows:
| a) 5% state sales tax only | Taxable Sales=Gross Receipt x 76.92% (.7692) |
| b) 5% state sales tax and | Taxable Sales=Gross Receipts x 76.34% (.7634) |
| 1% city sales tax | |
| c) 5% state sales tax and | (State) Taxable Sales=Gross Receipts x 76.20% (.7620) |
| 1¾% Grand Forks city | (City) Taxable Sales=Gross Receipts x 53.34% (.5334) |
| sales tax |
The owner of the coin-operated amusement device is the one responsible for sales tax on the receipts from the machine. Sales tax should be subtracted from total receipts by the machine owner before calculating the percentage of receipts which go to the location owner.
Receipts from amusement, entertainment or admission charges also are subject to North Dakota sales tax. Receipts from cover chares, dance tickets, or charges for billiards and card games are subject to sales tax.
Giveaways
If a bar, lounge, or tavern owner removes inventory from stock and uses it
personally, the owner becomes liable for payment of North Dakota use tax on the
cost of these items. If a bar, lounge, or tavern owner provides free drinks to
members of teams which are sponsored by the establishment, or provides free
drinks on a good will basis to customers, or if the owner allows
employees to consume merchandise at no charge, the cost of such give away
merchandise is subject to use tax.
Advertising items such as pens, calendars, ashtrays, shot glasses and similar items are taxable. If these items are purchased from a supplier who holds a North Dakota sales and use tax permit, North Dakota sales tax should be paid directly to the supplier. If these items are purchased from a supplier who does not charge North Dakota sales or use tax, the purchaser should include the cost of such purchases on the Items Subject to Use Tax line of the North Dakota sales and use tax return and remit the use tax on those items directly to the Office of State Tax Commissioner.
Purchases Subject to Use Tax
All bar, lounge and tavern owners are required to pay sales or use tax on
purchases of equipment and supplies for their own use. If these items are
purchased from a supplier who holds a North Dakota sales and use tax permit, tax
should be paid directly to the supplier. If these items are purchased without
paying any tax, the purchaser should include the cost of such purchases on the
Items Subject to Use Tax line of the North Dakota sales and use tax
return and remit use tax on those items directly to the Office of State Tax
Commissioner.
RENTAL AND LEASING COMPANIES - Sales and Use Tax Guideline
Rentals Subject to Tax
A retail sale, as defined by North Dakota sales and use tax law, includes the
lease and rental of tangible personal property for storage, use or consumption
in this state. Gross receipts derived from the hourly, daily, weekly, monthly or
annual lease or rental of tangible personal property are subject to sales tax.
Special rules apply to rental and lease of motor vehicles (see back side for
details). In the case of a lease-purchase agreement, sales tax is charged on the
lease payments until the purchase option is exercised. Sales tax also must be
charged on any additional amount that the purchaser is obligated to pay to
complete the purchase.
A person leasing tangible personal property to the public (for example: garden equipment, camping supplies, tools formal wear) is a retailer and the rental receipts from this activity are taxable. When property is purchased by the retailer to be held for rental purposes, it is a purchase for resale and sales tax should not be paid on the purchase price.
If the item being leased is used in North Dakota, the lease is a North Dakota sale and is subject to North Dakota sales tax. If the item also is used outside North Dakota, it is exempt from North Dakota sales tax while being used outside the state. If the lessor delivers the leased item to a point outside North Dakota for use outside North Dakota, the lease is exempted by federal law governing sales in interstate commerce. The lease is transacted or finalized outside North Dakota and, therefore, is subject to the sales and use tax laws of the state in which delivery is made. If the leased property is returned to North Dakota by the lessee, the lease is subject to North Dakota sales tax from the date the property is brought back into North Dakota.
Rental of Equipment with an Operator
In certain instances, equipment may be rented with an operator. In these cases,
the renter is not engaged in a taxable transaction, instead, the renter is
providing a nontaxable service in which the renter's operator uses equipment
owned by the renter in the performances of the agreement.
Example: Contractor A agrees for a certain consideration to provide an earth mover and an operator to Contractor B to do some landscaping. Since both the equipment and operator are provided by Contractor A, the agreement between Contractors A and B is an agreement requiring a landscaping service and not a rental of tangible personal property. In this example, Contractor A should have paid sales or use tax on the earthmover when it was purchased.
Casual Rentals
On occasion, a business not engaged in lease or rental activity may make a shore
lease or rental of business owned equipment. Such rentals are not taxable.
Rental of property not originally purchases for lease or rental purposes is not
a retail sale and is exempt from sales tax as a casual sale provided the
retailer has purchased the property for final use, has paid sales or use tax on
the original purchase price and does not regularly lease or rent the property.
Example: Contractor A leases a pay loader to Contractor B for thirty days in consideration of $1000. This is recorded as a nontaxable sale if the pay loader was originally purchased by contractor A for final use, and sales or use tax was paid on the pay loader at the time of purchase.
Retailers Who Also Rent Property
It is fairly common practice for a retailer who maintains an inventory of goods
for sale to also rent goods on a regular basis. Men's clothing stores rent
formal wear in many cases or a hardware store may rent a machine used for
shampooing carpets. These transactions are taxable and the retailer is required
to collect and remit sales tax on all such rentals. Other typical examples of
taxable rentals include the rental of bowling shoes at a bowling alley, the
rental of golf carts at a golf course and the rental of bicycles and sporting
goods.
Rental of Installed Equipment
Charges for rental or lease of installed equipment are not subject to North
Dakota sales tax. When tangible personal property is installed or affixed to the
ground or to a building by means of bolts, nails, glue, cement or other means of
affixing it temporarily or permanently to a building or to the ground, it is
generally regarded as real property. Since North Dakota sales tax generally
applies only to the sale, lease or rental of tangible personal property, the
rental of equipment which has been installed into real estate is not subject to
North Dakota sales and use tax.
Contractors purchasing equipment for installation or contractors supplying and installing tangible personal property into real property are regarded as the final users of the personal property. As the final user, a lessor or contractor is subject to sales or use tax on the purchase price of the tangible personal property.
Local Sales Tax
Rental and leasing companies with property (except motor vehicles) located in
cities or counties that impose local option taxes must collect and remit the
local sales tax. Local option taxes are reported and remitted to the Office of
State Tax Commissioner with the state sales and use tax return.
Rental of Motor Vehicles
North Dakota sales tax applies on the rental charges of any licensed
motor vehicle, including every trailer or semi trailer as defined in subsection
2 of N.D.C.C.§ 57-55-10, for periods less than 30
days in the state. In addition to the general sales tax rate, a 3 percent rental
surcharge also supplies on the rental charges of any motor vehicle having a
gross vehicle weight of ten thousand pounds (4535.92 kilograms) or
less, and is required to be registered for use on the streets and highways
of this state.
The general sales tax and the 3 percent surcharge are computed and collected on the total rental charge, excluding taxes, fuel collections, collision damage waiver charges, supplemental liability protection, personal accident insurance, personal effects coverage and airport authority fees. Both taxes are collected at the same time as the rental fees and each tax must be listed separately on the invoice. The entire rental is subject to tax if the renter takes possession of the vehicle in North Dakota. City and county sales taxes do not apply to motor vehicle rentals. The general sales tax is reported on the North Dakota sales tax return. The 3 percent surcharge is reported annually on a special surcharge return.
Rental of motor vehicles for 30 days or more are not subject to the general sales tax or the 3 percent surcharge.
Lease of Motor Vehicles
The lease or purchase of a motor vehicle is subject to North Dakota motor
vehicle excise tax rather than sales tax. The owner if the vehicle is
responsible to remit the motor vehicle excise tax to the North Dakota Department
of Transportation's Motor Vehicle Division at the time the vehicle is titled and
registered. The tax is calculated on the vehicle purchase price or the lease
consideration depending on the lease period and vehicle weight.
For more detailed information about sales tax on vehicle rentals or motor vehicle excise tax on vehicle leases, see our Lease or Rental of Motor Vehicles guideline.
6 WAYS TO REDUCE LIABILITY
Source: Jeff Rotering, Attorney at Law
1. Formulate objectives of the program so customers know what to expect.
2. Disclose all risks in a variety of ways.
3. State that safety is not assured and customers participate at their own
risk.
4. Make other literature about the activities available.
5. Don't pressure people to participate.
6. Don't emphasize only the fun.
7. Obtained signed release.
8. Allow participants to make decisions to participate or not. All
aspects of the experience must be optional.
9. Parents of minors must be involved.
10. More risk if you guide; less risk of you send them out on their
own.
11.Don't have a specific list of safety rules or procedures. Emphasize reasonable
care.
12. Participants should have their own vehicles and medical insurance. Require
proof of insurance.
13. Consider monitoring or restricting alcohol use.
14. Reasonable standard of care must be emphasized. Be overly cautious and
use common sense.
15. Be a friend to your customers.
16. Positively reinforce safe
behaviors.
BUT, IF AN ACCIDENT OCCURS
Don't minimize; be compassionate and caring to victim and victim's
family.
Don't make promises.
Document what people say immediately after the accident; document conditions
and named of witnesses. If serious, get written statements of witnesses.
Take pictures immediately.
Make sure the victim is treated.
Be a friend to the victim and victim's family. Visit victim in the
hospital.
SAMPLE RELEASE LANGUAGE:
WEBSITES
http://www.rocknwater.com
http://www.nelsonrocks.org
ENTITY CHOICES
Sole proprietorship
Partnership
Limited Partnership
Corporation
Cooperative
Limited Liability Company (LLC)
Limited Liability Partnership (LLP)
Limited Liability Limited Partnership (LLLP
Legal Considerations
I. Liability Exposure Risks
A. Injuries to Guests
B. Contractual Obligations
1. "Puffing" - Guest Expectations
C. Agency Law
1. Liability for Employees' Negligence
II. Entity Choice, Tax Consequences, Liability Limitations, Control and
Management, Succession Planning
A. Sole Proprietorship
B. General Partnership
C. Corporation
1. S-Corporation
2. C-Corporation
D. Limited Liability Company
III. Risk Management
A. Insurance
B. Waivers
C. Identifying Risks
D. Choice of Venue
E. Safety Discussions/Manual
F. Personal injury
G. Property damage
H. Emergency procedures
I. Training of employees
J. Signs/warnings
IV. Licensing/Regulatory Scheme
A. July 1, 1998 Legislative Changes
B. Definitions: Guest Ranch, Bed and Breakfast, Outfitting, Guiding and Seasonal
Establishment
1. Applicable Rules and Regulations
Standard - Negligence
Negligence is the lack of ordinary care and diligence required by the
circumstances. It is the lack of such care as persons of common sense and
ordinary prudence usually exercise under the same or similar circumstances.
Duty owed when a person is lawfully on the premises
A possessor of land owes a duty to a lawful entrant upon the premises to use reasonable care to warn the entrant in order to protect the entrant from an unreasonable risk of harm caused by the condition of the premises while the entrant is on the premises.
In determining the reasonable care of the landowner, the following factors
may be considered:
(1). The purpose for which the entrant entered the premises;
(2). The circumstances under which the entrant entered the premises;
(3). The use to which the premises is put or expected to be put;
(4). The foresee ability or possibility of harm;
(5). The reasonableness of the inspection, repair or warning; and
(6). The opportunity and ease of repair or correction or the giving of the
warning.
Limited Liability for Owner of Recreation Lands
(Chapter 53-08)
"53-08-02. Duty of care of landowner. Subject to the provisions
of section 53-08-05, an owner of land owes no duty of care to keep the premises
safe for entry or use by others for recreational purposes, or to give any
warning of a dangerous condition, use, structure, or activity on such premises
to persons entering for such purposes."
Exception - if you charge for coming onto your property.
NDCC
53-08-05.
Insurance - Important to have liability insurance and to know what is/is
not covered by the insurance.
Choice of Type of Entity
- Sole Proprietorship
- Partnership
- Limited Partnership
- Limited Liability Partnership
- Limited Liability Limited Partnership (LLLP)
Corporation
- C-Corporation
- S-Corporation
Limited Liability Companies
Licensing - whether licensing is required is largely dependent upon
the type of business you operate. Examples of licensing requirements.
Check out
North Dakota
Century Code Chapter 23-09.
- Restaurant, hotel, boarding house licenses
- Bed and Breakfast facility license
- Campgrounds
- Private Shooting Preserves
(NDCC Chapter
20.1012)
- Guides and Outfitters
(NDCC
20.1-03-12)
- Boating
(NDCC
20.1-13-04-Licensing Watercraft for Hire)
Taxation
- Income Tax
- Sales Tax
Other legal concerns for business owners
- Real estate matters
- Employment matters
- policies, discrimination, wages, etc.
- contract matters
Financial and Banking
- notes, mortgages, guarantees
- Other
Printed with permission from: Timothy A. Priebe
Mackoff Kellogg Law Firm
46 West Second Street
Dickinson, ND 58602-1097
(701) 227-1841
Tpriebe@mackoff.com
North Dakota State University
NDSU Extension Service