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North Dakota Office of State Tax Commissioner September 2005 Sales Tax Newsletter News and developments Cory Fong Tax Commissioner A publication of the Sales and Special Taxes Division Special Edition CITY AND COUNTY CAPS ARE ELIMINATED Beginning October 1, 2005, caps will no longer apply when retailers collect city and county sales and use taxes on sales transactions. For those cities that do not impose a cap on sales transactions, this Special Edition will not apply. Inside this issue: ã C
   North Dakota Office of State Tax Commissioner  Sales Tax Newsletter News and developments A publication of the Sales and Special Taxes Division ndTax  Office of State Tax Commissioner 600 E Blvd Ave, Dept 127Bismarck ND 58505-0599701.328.3470 ndtaxdepartment.govsalestax@state.nd.us www.nd.gov Page 1 Cory Fong Tax Commissioner   September 2005 Inside this issue: ã City & County Caps Are Eliminated ......1- Customer Refund Instructions ..........2- Credit Option for Businesses .............2ã Taxpayer Assistance .........................2 Special Edition Special Edition CITY AND COUNTY CAPS ARE ELIMINATED Beginning October 1, 2005, caps will no longer apply when retailers collect city and countysales and use taxes on sales transactions. For those cities that do not impose a cap on salestransactions, this Special Edition will not apply.Because the cap will not apply, retailers will collectthe full amount of the city or county sales and use taxon all sales transactions within their taxing jurisdictionon or after October 1.Example: Sale of jewelry to a customer by aBismarck retailer having a selling price of $4,000.Prior to October 1, 2005 Effective October 1, 2005 Sale Price $ 4,000 Sale Price $ 4,000State Tax (5%) $ 200 State Tax (5%) $ 200Bismarck City Bismarck CitySales Tax (1%) $ 25* Sales Tax (1%) $ 40Total $ 4,225 Total $ 4,240 * City Tax capped at $25.00The customer may apply to the Tax Commissioner for a refund of local tax in excess of the capfor sales transactions occurring on or after October 1, 2005. The amount of local sales and usetax that may be refunded is the difference between the amount of the city and county sales anduse tax paid, and the amount that would have been due by the previous application of the cap.In the example above, the customer will be able to apply for a refund of $15.00.ã The 1% city sales tax equals $40.ã The cap imposed by the city is $25.ã The refund available is $15 ($40.00 total less $25.00). Customer Refund Instructions To request the refund, the customer will complete a Claim for Refund of City or CountySales and Use Tax Transmittal  form, which requires a listing of invoices on which the localsales and use tax was paid. This completed form is directed by the customer to the State TaxCommissioner along with the srcinal invoices.All refunds will be processed by the Tax Commissioner’s office and the srcinal invoices will bereturned to the customer.  Page 2 North Dakota Office of State Tax Commissioner Businesses not holding an activeNorth Dakota sales and usetax permit will use the Claim forRefund of Cityor County Salesand Use TaxTransmittal formto request thisrefund . Enclosed with this Special Edition Newsletter is a copy of the Claim for Refund of City or County Sales and Use Tax Transmittal  form. You may make copies of this form for use byyour customers, or you may obtain copies from the Office of State Tax Commissioner, Sales &Withholding Tax Section at (701) 328-3470, or by e-mail at salestax@state.nd.us, or from theTax Department’s web site at www.ndtaxdepartment.gov. Retailers may also request additionalcopies that they can provide to their customers, as needed. Credit Option for Businesses For businesses holding an active North Dakota sales and use tax permit and purchasing tangible personal property or taxable services  for their own use on which local sales and use tax wasimposed, an alternative is available in lieu of filing the Claim for Refund of City or County Salesand Use Tax Transmittal  formBusinesses that hold an active North Dakota sales and use tax permit and file periodic sales anduse tax reports with the State Tax Commissioner may deduct the amount of the city or countysales and use tax that would qualify for refund directly on their sales and use tax return. Theamount of the city or county sales and use tax qualifying for refund may be deducted from theappropriate city tax account in Column C ( Total Local Option Tax ).○ For example, ABC Hardware purchases office equipment and fixtures for usein the Bismarck store. The total purchase price of these items was $7,800.(Bismarck previously provided for a cap on local sales and use tax of $25.00.)ã A 1% Bismarck city sales tax totals $78.00.ã The eligible credit or refund is $53 ($78-$25).ã The business customer may apply the credit of $53.00 on its sales tax return, or request a refund from the Tax Department using the Claim for Refund of City or County Sales and Use Tax Transmittal form.To claim the credit on its sales tax report, ABC Hardware deducts the $53.00 credit fromthe local tax it would report for Bismarck in Column C of the local tax information. If the $53 credit is more than the Bismarck city tax due, a negative value will be reportedfor Bismarck. In this example, if the Bismarck city tax due before the credit was $33,the net value of -$20 would be reported for Bismarck city tax in Column C.Businesses not holding an active North Dakota sales and use tax permit will use the Claim for  Refund of City or County Sales and Use Tax Transmittal  form to request this refund. TAXPAYER ASSISTANCE If you have questions regarding sales tax or about correspondence received from our office,the following information will be helpful in ensuring that your call or visit to our office iscompleted in a speedy and efficient manner:ã If you have general sales tax questions, please call our Sales Tax Compliance Section at(701) 328-3470. This newsletter is available free of charge on our Web site at www.ndtaxdepartment.gov  or in hard copy.We offer an e-mail notification service to subscribers as soon as a new issue is placed on our Web site.To join the e-mail service, simply visit our Web site and click on “Newsletter Subscription” located in thetop blue bar at the right side of our home page.
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