Section 81-04.1-01-23.3 - Computer and telecommunications equipment1. Purchases of computer and telecommunications equipment intended for a new primary sector business or a physical or economic expansion of a primary sector business are exempt from sales tax. As used in this section: a. "Computer equipment" means stored program processing equipment and all devices fastened to it by means of signal cables or any communication medium that serves the function of a signal cable. Examples of devices fastened by a signal cable or other communication medium include terminals, card or tape punchers, printers, optical readers, display units or monitors, document sorters, and card readers. b. "Primary sector business" means a business that has been certified by the North Dakota department of commerce division of economic development and finance as a primary sector business. c. "Telecommunications equipment" means tangible personal property used to provide a communication service, as defined by section 81-04.1-04-41.1. 2. Purchase of replacement communications and telecommunications equipment is subject to sales or use tax. 3. A contractor installing qualifying computer and telecommunications equipment shall pay the application sales or use tax and the primary sector business shall apply in writing for refund of the taxes paid by the contractor on computers and telecommunications equipment qualifying for a sales or use tax exemption. 4. Requests for a primary sector business to purchase or lease computer or telecommunications equipment without paying tax or for refunds of tax paid on machinery or equipment which qualify for exemption must be made in writing to the tax commissioner. Only the primary sector business may apply for a refund of the sales or use tax paid on exempt computer or telecommunications equipment. A request for refund must include documentation showing the amount of tax paid by the primary sector business or contractor. The tax commissioner reserves the right to make an onsite inspection prior to granting permission to purchase qualifying computer and telecommunications equipment without paying tax and prior to approving a refund. An onsite inspection by the tax commissioner does not preclude an audit of the taxpayer's books and records. 5. The tax commissioner shall respond in writing to each exemption request, stating whether or not the computer or telecommunications equipment qualifies for an exemption. The primary sector business may provide the approval letter to its computer and telecommunications equipment suppliers to avoid paying sales or use taxes on approved equipment. If a primary sector business purchases equipment before requesting a sales tax exemption, it shall pay all applicable sales and use taxes at the time of purchase but may apply to the tax commissioner for a refund of the taxes paid. 6. The primary sector business may request that the refund amount be taken as a credit adjustment on its next sales and use tax return; however, the tax exemption must be approved in writing by the tax commissioner before the credit may be applied on a sales and use tax return. A letter from the tax commissioner stating the amount of the approved credit must be attached to the sales and use tax return on which the credit is applied. N.D. Admin Code 81-04.1-01-23.3
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, 57-40.2-04, 57-40.2-13