North Dakota ready to change online sales tax collection

November 19, 2017 GMT

BISMARCK, N.D. (AP) — North Dakota could level the playing field between online retailers and brick and mortar businesses should any federal changes to sales tax collection be made.

North Dakota is among several states to have joined South Dakota in pushing for the U.S. Supreme Court to reconsider if retailers should be required to collect sales taxes in a state where they’re not physically located.

If a court ruling is made or federal law passes, North Dakota is ready to act, the Bismarck Tribune reported.


The Legislature passed a measure in its latest session that would permit the tax department to immediately require online retailers to collect sales tax, should federal law change.

Mike Rud, president of the North Dakota Retail Association, said the law is critical. “Now we’re ready as soon as the case is heard by the Supreme Court,” Rud said.

“This is a pretty serious issue and everyone is becoming quite aware something needs to be done here,” said Rud.

U.S. Sen. Heidi Heitkamp is one of many lawmakers that wrote to the Supreme Court to ask for the issue to be considered.

According to Heitkamp, retailers without a physical presence have a price advantage of up to 8.5 percent over brick and mortar stores.

“When these retailers can charge lower prices, our small businesses and jobs are at risk,” the North Dakota Democrat wrote with other lawmakers.

The state tax commissioner’s office estimates up to $30 million wasn’t collected in 2012 because online retailers weren’t required to collect. Considering that online sales have grown by up to 50 percent since then, Rud said the recent losses are likely between $30 million to $40 million.

Jeff Hinz, who owns Ace Hardware in Bismarck, said it doesn’t seem fair because online retailers still use North Dakota’s roads to ship their items but they don’t help cover the tax burden associated with maintaining them.

“UPS, the Postal Service and Fedex are their brick and mortar,” Hinz said.