57-40.2-04. Exemptions

57-40.2-04. Exemptions

This chapter hereby is declared to be an independent and separate tax law but

complementary to the retail sales tax laws of this state provided for by chapter 57-39.2 and does

not apply to:

1. Any tangible personal property or taxable service upon the sale of which the retail

sales tax imposed by chapter 57-39.2 has been collected by a retailer holding the

permit prescribed by section 57-39.2-14.

2. Tangible personal property brought into this state by a nonresident thereof for that

person's own storage, use, or consumption while temporarily within this state, except

that such property is not exempt if brought into this state for storage, use, or

consumption in the conduct of a trade, occupation, business, or profession.

3. Any motor vehicle either subject to or expressly exempted from the motor vehicle

excise taxes imposed by chapter 57-40.3.

4. Tangible personal property upon which the state now imposes and collects a special

tax, whether in the form of license tax, stamp tax, or otherwise.

5. Railway cars and locomotives used in interstate commerce, and tangible personal

property which becomes a component part thereof.

6. Newsprint and ink actually used in the publication of a newspaper.

7. Repealed by S.L. 1981, ch. 582, § 3.

8. Gross receipts from the leasing or renting of motion picture film to motion picture

exhibitors for exhibition in this state if the sale of the tickets or admissions to the

exhibition of the film is subject to the sales tax imposed by chapter 57-39.2.

9. Adjuvants, agrichemical tank cleaners and foam markers, commercial fertilizers,

fungicides, seed treatments, inoculants and fumigants, herbicides and insecticides

used by agricultural or commercial vegetable producers and commercial applicators;

chemicals used to preserve agricultural crops being stored; and seeds, roots, bulbs,

and small plants used by commercial users or consumers for planting or transplanting

for commercial vegetable gardens or agricultural purposes.

10. Gross receipts from the leasing, or renting, for residential housing, for periods of more

than thirty consecutive days, of manufactured homes, modular living units, or sectional

homes, whether or not placed on a permanent foundation.

11. Bibles, hymnals, textbooks, and prayerbooks used by nonprofit religious organizations.

12. Gross receipts from sales of prosthetic devices, durable medical equipment, or

mobility-enhancing equipment. For purposes of this subsection:

a. "Durable medical equipment" means equipment, not including mobility-enhancing

equipment, for home use, including repair and replacement parts for such

equipment, which:

(1) Can withstand repeated use;

(2) Is primarily and customarily used to serve a medical purpose;

(3) Generally is not useful to a person in the absence of illness or injury; and

(4) Is not worn in or on the body.

"Durable medical equipment" includes equipment and devices designed or

intended for ostomy care and management and equipment and devices used

exclusively for a person with bladder dysfunction. An exemption certificate is not

required to obtain exemption. Repair and replacement parts as used in this

definition include all components or attachments used in conjunction with the

durable medical equipment. Repair and replacement parts do not include items

which are for single patient use only.

b. "Mobility-enhancing equipment" means equipment not including durable medical

equipment sold under a doctor's written prescription, including repair and

replacement parts for mobility-enhancing equipment, which:

(1) Is primarily and customarily used to provide or increase the ability to move

from one place to another and which is appropriate for use either at home or

in a motor vehicle;

(2) Is not generally used by a person with normal mobility; and

ng durable medical

equipment sold under a doctor's written prescription, including repair and

replacement parts for mobility-enhancing equipment, which:

(1) Is primarily and customarily used to provide or increase the ability to move

from one place to another and which is appropriate for use either at home or

in a motor vehicle;

(2) Is not generally used by a person with normal mobility; and

(3) Does not include any motor vehicle or equipment on a motor vehicle

normally provided by a motor vehicle manufacturer.

"Mobility-enhancing equipment" includes crutches and wheelchairs for the use of

disabled persons, equipment, including manual control units, van lifts, van door

opening units, and raised roofs for attaching to or modifying a motor vehicle for

use by a permanently physically disabled person, equipment, including elevators,

dumbwaiters, chair lifts, and bedroom or bathroom lifts, whether or not sold for

attaching to real property, for use by a permanently physically disabled person in

that person's principal dwelling, and equipment, including manual control units,

for attaching to or modifying motorized implements of husbandry for use by a

permanently physically disabled person.

c. "Prosthetic device" means a replacement, corrective, or supportive device sold

under a doctor's written prescription, including repair and replacement parts for

such a device, worn on or in the body to:

(1) Artificially replace a missing portion of the body;

(2) Prevent or correct a physical deformity or malfunction; or

(3) Support a weak or deformed portion of the body.

"Prosthetic device" includes artificial devices individually designed, constructed,

or altered solely for the use of a particular disabled person so as to become a

brace, support, supplement, correction, or substitute for the bodily structure,

including the extremities of the individual, artificial limbs, artificial eyes, hearing

aids, and other equipment worn as a correction or substitute for any functioning

portion of the body, artificial teeth sold by a dentist, and eyeglasses when

especially designed or prescribed by an ophthalmologist, physician, oculist, or

optometrist for the personal use of the owner or purchaser.

d. "Supplies for ostomy care or bladder dysfunction" includes:

(1) Supplies designed or intended for ostomy care and management, including

collection devices, colostomy irrigation equipment and supplies, skin

barriers or skin protectors, and other supplies especially designed for use of

ostomates.

(2) Supplies to be used exclusively by a person with bladder dysfunction,

including catheters, collection devices, incontinence pads and pants, adult

diapers, and other items used for the care and management of bladder

dysfunction. For the purposes of this paragraph:

(a) "Adult diapers" means diapers other than children's diapers.

(b) "Children's diapers" means diapers marketed to be worn by children.

ies to be used exclusively by a person with bladder dysfunction,

including catheters, collection devices, incontinence pads and pants, adult

diapers, and other items used for the care and management of bladder

dysfunction. For the purposes of this paragraph:

(a) "Adult diapers" means diapers other than children's diapers.

(b) "Children's diapers" means diapers marketed to be worn by children.

(c) "Diaper" means an absorbent garment worn by humans who are

incapable of, or have difficulty, controlling their bladder or bowel

movements.

13. Purchases of electricity.

14. The leasing or renting of any tangible personal property upon which a North Dakota

sales tax or use tax has been paid under the election of the purchaser under

subsection 21 of section 57-39.2-01 or subsection 5 of section 57-40.2-01 and the

retailer has separately indicated on an invoice, contract, lease agreement, or other

supporting sale document that the retailer paid sales or use tax on the retailer's

purchase of the tangible personal property.

15. Any tangible personal property or service which would be exempt from the retail sales

tax pursuant to an express exemption provided in chapter 57-39.2 if it were purchased

in North Dakota.

16. Gross receipts from the sale of money, including all legal tender coins and currency.

17. Gross receipts from sales to nonprofit voluntary health associations which are exempt

from federal income tax under section 501(c)(3) of the United States Internal Revenue

Code [26 U.S.C. 501(c)(3)]. As used in this subsection, a voluntary health association

is an organization recognized by the internal revenue service, the national health

council, the state tax commissioner, and the North Dakota secretary of state as a

nonprofit organization that is exempt under section 501(c)(3) of the United States

Internal Revenue Code and meets the following requirements: It has been organized

and operated exclusively in providing services for the purposes of preventing and

alleviating human illness and injury. Methods used to obtain these goals would include

education, research, community service, and direct patient services, income being

derived solely from private donations with some exceptions of a minimal membership

fee. Its members are not limited to only individuals who themselves are licensed or

otherwise legally authorized to render the same professional services as the

organization. The disbursement of funds within a volunteer health association is to be

controlled by a board of directors who work voluntarily and without pay.

18. Gross receipts from the sale of a manufactured home that has been sold, bargained,

exchanged, given away, or transferred by the person who first acquired it from a

retailer in a sale at retail and upon which the North Dakota use tax has previously

been imposed.

19. The donation by a retailer of tangible personal property to an organization exempt from

federal income tax under section 501(c)(3) of the United States Internal Revenue

Code [26 U.S.C. 501(c)(3)].

20. Air carrier transportation property subject to ad valorem property taxation pursuant to

the provisions of chapters 57-06, 57-07, 57-08, 57-13, and 57-32.

21. Tangible personal property consisting of flight simulators or mechanical or electronic

equipment for use in association with a flight simulator.

22. Gross receipts from the initial sale of beneficiated coal.

23. Gross receipts from electronic games of chance licensed by the attorney general

under chapter 53-06.1.

24. Gross receipts from sales of carbon dioxide used for enhanced recovery of oil or

natural gas or secure geologic storage.

25. Gross receipts from the sale of items delivered electronically, including specified digital

products. For purposes of this subsection:

a. "Specified digital products" means:

pts from electronic games of chance licensed by the attorney general

under chapter 53-06.1.

24. Gross receipts from sales of carbon dioxide used for enhanced recovery of oil or

natural gas or secure geologic storage.

25. Gross receipts from the sale of items delivered electronically, including specified digital

products. For purposes of this subsection:

a. "Specified digital products" means:

(1) "Digital audio-visual works" which means a series of related images which,

when shown in succession, impart an impression of motion, together with

accompanying sounds, if any;

(2) "Digital audio works" which means works that result from the fixation of a

series of musical, spoken, or other sounds, including ringtones; and

(3) "Digital books" which means works that are generally recognized in the

ordinary and usual sense as books.

b. For purposes of the definition of "specified digital products", "transferred

electronically" means obtained by the purchaser by means other than tangible

storage media.

c. For purposes of the definition of "digital audio works", "ringtones" means digitized

sound files that are downloaded onto a device and which may be used to alert the

customer with respect to a communication.

d. "Specified digital products" may not be construed to include prewritten computer

software as that term is defined in subdivision g of subsection 1 of section

57-39.2-02.1.

26. (Contingent effective date - See note) Gross receipts from sales of liquefied natural

gas used for agricultural, industrial, or railroad purposes as defined in section

57-43.2-01.

27. a. Gross receipts from sales to a senior citizen organization that provides

informational, health, welfare, counseling, and referral services for senior citizens

in this state if the senior citizen organization:

(1) Is recognized by the internal revenue service as having exempt status under

26 U.S.C. 501(c)(3);

(2) Is recognized by the secretary of state as a charitable organization; and

(3) Either:

(a) Provides services through the aging services division of the

department of health and human services;

(b) Receives grant funds through the department of transportation which

are used for enhanced mobility of seniors and individuals with

disabilities; or

(c) Provides services through a contract with the department of health

and human services as a program of all-inclusive care for the elderly.

b. The department of health and human services and the department of

transportation shall notify the tax commissioner if a senior citizen organization no

longer meets the criteria in paragraph 3 of subdivision a.