North Dakota Utility Sales Tax Exemption
North Dakota provides a sales and use tax exemption on electricity, natural gas, and other fuel sources consumed directly in qualifying production activities, such as manufacturing, processing, refining, or agriculture. To qualify, more than 50% of the utility usage must be used in exempt production activities.
Utility Study Requirement
A utility usage study is recommended to substantiate the exemption. The study should:
- List all equipment and systems consuming the utility
- Distinguish between exempt production usage and non-production usage (like office, lighting, HVAC)
- Calculate the percentage of usage tied directly to production
- Support the conclusion that production usage exceeds 50%
- Be retained in company records for audit purposes
Filing Requirements
To claim the exemption, businesses must submit North Dakota Form 208, Sales Tax Exemption Certificate, to their utility provider. This certificate indicates that utility use qualifies for the production exemption and authorizes the provider to stop charging tax on the exempt portion of utility usage going forward.
If sales tax was paid on qualifying utility usage in prior periods, businesses may file a refund claim with the North Dakota Office of State Tax Commissioner for up to three years prior. Records such as utility bills, exemption certificates, and utility usage studies must be maintained to support both exemption claims and refund applications.