Hibou Odoo Suite Enterprise: State of North Dakota


Purpose

The purpose of this documentation is to outline the processes and requirements associated with becoming a new employer and processing payroll in the state of North Dakota. All of these steps are required for running payroll and remaining compliant with the state of North Dakota's requirements for employers. 

Good to Know!

Note: Federal Employer requirements (obtaining federal identification number, withholding of federal income tax, and FICA and filing of all applicable federal returns (FUTA, 940, 941, and 1099-C) will not be covered below - just state of North Dakota's requirements. Click here for a basic (not all inclusive) IRS checklist for Starting a New Business.

Register for Income Tax Withholding


Good to Know!

If you have already registered for income tax withholding, skip to the next section.

An employer is required to withhold North Dakota income tax from wages paid to an employee if the employee performs services within North Dakota and the wages are subject to federal income tax withholding.

Every employer required to withhold North Dakota income tax must register with the Office of State Tax Commissioner by completing and filing the Application to Register for Income Tax Withholding in Taxpayer Access Point (TAP), the online tax filing and account access application.  Click on "Apply for Sales and Use or Withholding Account". 

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Register for Unemployment Insurance Account

Good to Know!

If you have already completed applied for an employer (unemployment insurance) tax account number, skip to the next section. 

An employer must file a Report to Determine Liability or register online (click on "Register Now!") within 20 days after first employing workers. 

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Employers that must pay the tax include:

  • Any employer with one or more workers during 20 different weeks in a calendar year or who has paid $1,500 or more in wages in a calendar quarter.

  • Any employer who acquires the business of another liable employer.

  • Any employer employing workers in North Dakota who is liable under the Federal Unemployment Tax Act (FUTA).

  • Political subdivisions and Indian tribes or business enterprises wholly owned by Indian tribes become liable immediately upon employing any non-excluded workers.

Unemployment Insurance Reporting & Payments

Liable employers must electronically file Employer's Contribution and Wage Reports quarterly. Reports can be filed electronically via our UI EASY online filing feature. Reports must be electronically completed and the tax due electronically paid by the end of the month following each calendar quarter. Reports and payments not filed electronically or submitted on time are subject to interest and penalty charges. 

Tax payments can be made through electronic funds transfer (EFT) via ACH Debit or by credit card in UI EASY. ACH credit is also available on our web page. 

Specific due dates:

1st QuarterJanuary - MarchDue April 30th
2nd QuarterApril - JuneDue July 31st
3rd QuarterJuly - September
Due October 31st

4h QuarterOctober - DecemberDue January 31st

A report must be submitted even if the employer has no employees for a quarter.

For more details, see the Employer's Handbook.

Good To Know!

The 2019 taxable wage base is $36,400.  The 2019 new employer tax rate (non-construction and with a positive balance) is 1.21%.

State Income Tax Withholding 

North Dakota does not have a form comparable to Federal Form W-4. The information on the W-4 is also used for North Dakota income tax withholding purposes. If an employee claims exempt status on the W-4, the exempt status is recognized for North Dakota income tax withholding purposes. If an employer is required to submit a copy of the W-4 to the IRS, the employer must also submit a copy of the W-4 to the North Dakota Office of State Tax Commissioner. N.D.C.C. § 57-38-61. 

State Income Tax Withholding Reporting & Deposits 

Every employer required to withhold North Dakota income tax must file an income tax withholding return on a calendar quarter basis (or, if eligible, on a calendar year basis) and pay the tax withheld with the return. The income tax withholding return may be filed either electronically on TAP or on paper. 

The income tax withholding return may be filed by paper with payment for the tax. If a paper form is needed, the form can be found here.  Failure to receive the proper form does not relieve the obligation to file or pay on time.

If you are paying by check, complete Part III of the paper Form 306 and make your check payable to North Dakota Tax Commissioner. Electronic payments may be made at TAP (select "Make A Payment" under "Businesses"). 

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  W-2 and 1099 Forms

House Bill (HB) 1112, enacted by the 2019 North Dakota State Legislature, states that beginning with returns that are due on January 31, 2020, employers with 10 or more employees will be required to electronically file W-2s and 1099s. 

Businesses with less than 10 employees are also encouraged to electronically file their quarterly return W-2s.

Every employer is required to file a copy of all Federal Forms W-2s issued and any Federal Form 1099’s with state income tax withheld with the Office of State Tax Commissioner to report income earned during the calendar year. This requirement applies even if an employer is not required to register for North Dakota income tax withholding purposes. In addition to the information required to be shown on W-2 or 1099 for federal tax purposes, the copy of W-2 or 1099 filed with North Dakota must show the total amount of North Dakota wages or income earned and North Dakota income tax withheld for the calendar year. Except where an employer is required to file W-2 or 1099 information electronically, an employer may file the information in paper document form or electronically.

Filing of W-2s and 1099s can easily be done by using Taxpayer Access Point (TAP)

If you have less than 10 employees, and you want to file using paper documents, see the Income Tax Withholding Guideline (starting on page 7).   

North Dakota participates in the Combined Federal/State Program offered by the IRS. Rather than submitting Form 1099 information electronically to both the IRS and North Dakota, the payor can request that the IRS provide a copy of the information to North Dakota. If this option is chosen, the following requirements and procedures apply:

  • The payor must notify the Office of State Tax Commissioner in writing that the IRS has granted permission to file Form 1099 information electronically, and that the payor intends to satisfy part or all its North Dakota information return filing requirement through the Combined Federal/State Program.

  • The payor must follow the IRS guidelines for creating a “B” record for the state data. North Dakota does not require any separate notification when filing in this manner. See IRS Publication 1220 for more details.

  • This option may not be used to report any payment from which North Dakota income tax is withheld. See Conditions and procedures applicable to payments from which North Dakota income tax is withheld on page 2 of this guideline for more information.

For more details, see the Guideline - Income Tax Withholding.

New Hire Reporting

All employers must report all newly hired employees to the State Directory of New Hires within 20 days of the employee’s first day of work. A newly hired employee is defined as either:

  • An employee who was not previously employed by you.

  • An employee who was previously employed by you but has been separated from that employment for at least 60 days in a row. 

Either Login to Report New Hires Now or use one of the other Reporting Options.

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