25.1272.01000
Sixty-ninth
Legislative Assembly
of North Dakota
Introduced by
Representatives Berg, B. Anderson, Heinert, Meier, Pyle, Swiontek, Wagner, Weisz
Senator Sorvaag
A BILL for an Act to create and enact a new section to chapter 57-39.2 of the North Dakota
Century Code, relating to a sales and use tax exemption for purchases made by a contractor,
subcontractor, or builder on behalf of the state of North Dakota; to amend and reenact section
57-40.2-03.3 of the North Dakota Century Code, relating to use tax on contractors; and to
provide an effective date.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
SECTION 1. A new section to chapter 57-39.2 of the North Dakota Century Code is created
and enacted as follows:
Exemption for materials acquired by a contractor on behalf of the state.
1.A contractor licensed under chapter 43 - 07 which acquires tangible personal property
for use in the performance of a contract with the state of North Dakota, including a
department or agency of the state, is entitled to a sales and use tax exemption from
the state tax imposed under chapters 57 - 39.2 and 57 - 40.2 for the acquisition of those
items of tangible personal property. To qualify for the exemption under this section, the
contractor shall hold a valid sales tax permit under this chapter, obtain a purchasing
agent authorization letter from the state, and obtain a copy of the exemption certificate
issued to the state by the tax commissioner before purchasing the tangible personal
property.
2.If the contractor also is a retailer transacting retail sales of tangible personal property,
the exemption under this section applies to tangible personal property withdrawn from
inventory for use in a contract with the state if the contractor obtains from the state a
purchasing agent authorization letter and a copy of the exemption certificate issued to
the state by the commissioner before withdrawing the tangible personal property from
inventory.
Page No. 1 25.1272.01000
HOUSE BILL NO. 1546
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3.The exemption under this section applies only to the extent the tangible personal
property becomes part of the improvement to real property in the performance of the
contract with the state and the state owns the real property and the property
improvements.
4.Notwithstanding any other provision of law, the exemption under this section does not
apply to a sales or use tax imposed under home rule authority by a city or county.
SECTION 2. AMENDMENT. Section 57-40.2-03.3 of the North Dakota Century Code is
amended and reenacted as follows:
57-40.2-03.3. Use tax on contractors. (Effective through June 30, 2025)
1.When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2.The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3.The tax imposed by this section does not apply to:
a.Production equipment or tangible personal property as authorized or approved
for exemption by the tax commissioner under section 57-39.2-04.2.
b.Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4.
c.Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
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authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5.
d.Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6.
e.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10.
f.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11.
g.Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14.
h.Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15.
i.Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
l.Raw materials, single-use product contact systems, and reagents used for
biologic manufacturing as authorized or approved for exemption by the
tax commissioner under section 57-39.2-04.19.
m.Tangible personal property used to construct, expand, or upgrade a facility that
refines renewable feedstock into sustainable aviation fuel as authorized or
approved by the tax commissioner under section 57-39.2-04.18.
Page No. 3 25.1272.01000
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Use tax on contractors. (Effective after June 30, 2025, and through June 30, 2029)
1.When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2.The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3.The tax imposed by this section does not apply to:
a.Production equipment or tangible personal property as authorized or approved
for exemption by the tax commissioner under section 57-39.2-04.2;
b.Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
c.Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5;
d.Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6;
e.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10;
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f.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11;
g.Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14;
h.Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15; or
i.Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
l.Raw materials, single-use product contact systems, and reagents used for
biologic manufacturing as authorized or approved for exemption by the
tax commissioner under section 57-39.2-04.19.
m.Tangible personal property purchased by the state of North Dakota, including a
department or agency of the state, or by a contractor under section 1 of this Act,
and which is subsequently installed by a contractor licensed under chapter 43 - 07.
The exemption under this subdivision applies only to the state tax imposed under
this chapter and to the extent the tangible personal property becomes part of the
improvement to real property in the performance of the contract with the state
and the state owns the real property and the property improvements.
Use tax on contractors. (Effective after June 30, 2029)
1.When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
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subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2.The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3.The tax imposed by this section does not apply to:
a.Production equipment or tangible personal property as authorized or approved
for exemption by the tax commissioner under section 57-39.2-04.2;
b.Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
c.Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5;
d.Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6;
e.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10;
f.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11;
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g.Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14;
h.Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15; or
i.Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
l.Tangible personal property purchased by the state of North Dakota, including a
department or agency of the state, or by a contractor under section 1 of this Act,
and which is subsequently installed by a contractor licensed under chapter 43 - 07.
The exemption under this subdivision applies only to the state tax imposed under
this chapter and to the extent the tangible personal property becomes part of the
improvement to real property in the performance of the contract with the state
and the state owns the real property and the property improvements.
SECTION 3. EFFECTIVE DATE. This Act is effective for taxable events occurring after
June 30, 2025.
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