nonprofi t private colleges in the state.
• Installation of geothermal, solar, wind energy or biomass devices.
• A portion of North Dakota wages paid to a
developmentally disabled or chronically mentally ill employee.
• Qualifi ed investment in a North Dakota renaissance fund organization.
• Investment in historic property preservation or renovation in a renaissance zone.
• Direct costs incurred to retrofi t an existing facility or adapt a new facility to produce or blend biodiesel fuel or green diesel, or to crush soybeans or canola. • Direct costs incurred by fuel sellers to adapt or add
equipment to their facilities to enable the sales of at least 2% biodiesel fuel or green diesel blends. • Fuel blended by licensed fuel suppliers to contain at
least 5% biodiesel fuel or green diesel (a fi ve cent per gallon credit).
• Investment in an Angel Fund incorporated in North Dakota.
• A portion of compensation paid to interns working in North Dakota.
• Specifi c costs of extraordinary recruitment to hire individuals for hard-to-fi ll positions in North Dakota. • New investment and new employment in a certifi ed
microbusiness.
• Contributions to a qualifi ed endowment of a qualifi ed nonprofi t organization incorporated or organized in North Dakota.
• Payments of part or all of the compensation paid to an employee in the National Guard or U.S. Armed Forces reserve who is mobilized for federal active duty. • Contributions to the Housing Incentive Fund.
(Effective for tax years 2011 and 2012 only.) • Purchases of new or used machinery and equipment
for the purpose of automating a manufacturing process. (Effective for tax years 2013 through 2015 only.)
HISTORICAL OVERVIEW
Signifi cant Changes in Law
1919 Session
• A tax on corporation income was fi rst enacted. Among the deductions allowed was a deduction for taxes paid to federal, state, local or foreign governments.
1923 Session
• The state’s corporation income tax was revised and reenacted with a 3% fl at rate.
1937 Session
• The corporation income tax was changed to a graduated rate structure.
• For tax years after December 31, 1936 corporation income tax rates ranged from 3% to 6%. (See historical rate table on page 33.)
1978 Initiated Measure
• The initiated measure added a tax bracket for taxable income over $25,000.
• For tax years after December 31, 1977, corporation income tax rates ranged from 3% to 8.5%. (See historical rate table on page 33.)
1979 Session
• A tax credit for contributions to nonprofi t private high schools was created.
• The 1% business privilege tax on business income paid by individuals, estates, trusts, partnerships and corporations was repealed.
1981 Session
• A tax credit for the installation of a geothermal energy device was created.
• A deduction was created for interest on bonds issued by a regional railway authority in North Dakota.
• For tax years beginning after December 31, 1980, corporation income tax rates were reduced. Rates ranged from 2% to 7%. (See historical rate table on page 33.)
1983 Session
• Declaration of estimated tax requirements was adopted for corporations with estimated taxes of more than $5,000.
• Corporation income tax rates for tax years beginning after December 31, 1982, were changed. Rates ranged from 3% to 10.5%. (See historical rate table on page 33.)
1985 Session
• A tax credit was provided for investments made in a North Dakota venture capital corporation. (Repealed effective August 1, 2007 in the 2005 Session.) 1987 Session
• Corporations were allowed to choose the water’s edge method of apportioning income for tax years beginning after December 31, 1988.
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• An alternative minimum tax (AMT) was enacted. (Repealed in the 1991 Session.)
• A deduction was added for dividends from the Myron G. Nelson Fund, Inc., a state established venture capital corporation. (This was renamed the North Dakota Small Business Investment Company in the 1995 session and, in the 2005 Session, was repealed effective August 1, 2007.)
• Credits were created for research expenditures, for investments in the Myron G. Nelson Fund, Inc., and for North Dakota wages paid to developmentally disabled or chronically mentally ill employees.
• Income tax returns included a provision for optional contributions to the Nongame Wildlife Fund. (Repealed in the 1991 Session.)
• Limitations were removed on the type of business qualifying for the new business exemption. The exemption was expanded to include service and retail industries, as well as assembling, fabricating, manufacturing, mixing, processing, storing,
warehousing, or distributing any agricultural, mineral or manufactured product.
1989 Session
• A credit was added for investment in a nonprofi t development corporation.
• The alternative minimum tax (AMT) rate was changed from 5% to 6%. A credit was created for the amount the alternative minimum tax exceeds regular liability in past years.
• The water’s edge election was made binding for fi ve years instead of ten. The water's edge spreadsheet requirement was reduced from yearly to the fi rst year and every third year thereafter.
• The Centennial Tree Trust Fund was added as an optional contribution. (Repealed in the 1991 Session.) 1991 Session
• The AMT was repealed, but the remaining AMT credit was allowed to be carried over for up to four years. A deduction was added for certain federal AMT disallowed on previous state returns.
• The legislature approved the Taxpayer Bill of Rights. • The income tax exemption for new or expanding
businesses was decoupled from the property tax exemption and was limited to value-added primary sector and tourism businesses.
1993 Session
• Limited liability companies (LLC), a new form of business entity, were legalized.
• The requirement to fi le informational returns was removed for tax exempt organizations and insurance
companies subject to the insurance premium tax (see page 58). Unrelated taxable income must be reported. • A credit was created for alternative fuel equipment
installed on motor vehicles. (This credit expired December 31, 1997.)
1994 Special Session
• Project size limitations were removed as qualifi cations for the new or expanding business tax exemption, allowing large projects to qualify.
1995 Session
• Corporations with parent and subsidiaries operating totally in the state were required to fi le a state consolidated corporation income tax return using the combined report method for tax years beginning after December 31, 1994.
1997 Session
• The law was changed for a single member LLC. A single member LLC will be treated as a corporation for North Dakota purposes if treated as a corporation for federal income tax purposes; otherwise it must be disregarded as an entity separate from its owner. If any LLC meets the defi nition of a fi nancial institution, as defi ned in N.D.C.C. ch. 57-35, it must fi le as a fi nancial institution.
• A corporation may elect to apply an overpayment of estimated tax to a specifi c estimated installment other than the fi rst quarter's installment.
• A number of changes were made affecting the interest calculation provisions.
1999 Session
• The interest rate on refunds was increased from 10% per year to 1% per month (or a fraction of a month), equalizing the rate of interest on a refund to the rate of interest charged on late payments or additional tax due. • Cities were provided authority to create "renaissance
zones." Various income exemptions and tax credits are allowed for investments in approved renaissance zones. 2001 Session
• For tax-exempt organizations, the due date to fi le returns reporting unrelated business taxable income was changed to the 15th day of the fi fth month following the tax year end.
• A change was made to extend the time period to assess tax. When a 25% understatement of taxable income or income tax exists, an extension may be entered into before the six-year assessment statute expires.
• The tax credit for geothermal, solar or wind energy devices was changed. Property leased in North