N.D. Admin. Code 81-04.1-01-23.1
Recycling means collecting or recovering solid waste material and processing it so it becomes a raw material or another product for sale. The recycling process begins at the point where the raw materials are first received at the recycling facility and includes all direct processes prior to transporting the product from the facility. To qualify as recycling, the solid waste must be processed. Collecting or transporting waste materials without processing them is not recycling.
Recycling machinery and equipment are exempt from sales and use taxes if the machinery or equipment:
Machinery and equipment used directly in recycling of tangible personal property include pulverizers, shredders, balers, granulators, separators, and conveyors. Motor vehicles used to collect material to be recycled do not qualify for the exemption. Items consumed or destroyed in the recycling process, but which do not become a part of the finished product, are not considered recycling machinery or equipment and are subject to sales tax when purchased for use by the recycler.
Requests for approval to buy recycling machinery or equipment without paying tax or for refunds of tax paid on machinery or equipment that qualifies for the exemption must be made in writing to the tax commissioner. The tax commissioner reserves the right to make an onsite inspection prior to granting permission to purchase qualifying machinery or equipment without paying tax or prior to approving a refund. An onsite inspection by the tax commissioner does not preclude an audit of the taxpayer's books and records.
The tax commissioner shall respond to each exemption request in writing stating whether or not the machinery or equipment qualifies as exempt recycling machinery or equipment. The recycler may provide the approval letter to equipment and machinery suppliers to avoid paying sales or use tax on approved equipment.
If a recycler purchases equipment before requesting a sales tax exemption, it must pay all applicable sales and use taxes at the time of purchase; however, the recycler may apply to the tax commissioner for a refund of taxes paid on qualifying equipment. When a recycler applies for a sales or use tax refund on qualifying machinery and equipment, the exemption application must include documentation showing the amount of tax paid.
N.D. Admin Code 81-04.1-01-23.1
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-04, 57-39.2-04.3, 57-39.2-25, 57-40.2-02.1, 57-40.2-04, 57-40.2-13