AN ACT to amend and reenact subsection 4 of section 57-39.2-04 of the North Dakota Century Code, relating to exempt sales from educational, religious, or charitable activities conducted by a nonprofit organization in a publicly or privately owned facility; and to provide an effective date.
SB 2369 amends North Dakota’s sales tax exemption for educational, religious, and charitable activities conducted by nonprofit organizations. The bill keeps the general exemption for gross receipts used entirely for those purposes, but narrows it by adding conditions for certain events held in publicly owned facilities. Specifically, the exemption would not apply to taxable sales over $10,000 for an otherwise nonexempt event in a public facility unless fair market rent has been paid, and it would also not apply when the seller is operating like a retailer through regular inventory sales, permanent or seasonal retail locations, or a website used to solicit sales.
The bill also preserves and restates existing exemptions for receipts from institutions of higher education for student-centered athletic, musical, dramatic, or scholastic events; for public school districts when the receipts are used as required by law; and for nonprofit music or dramatic arts organizations that regularly present live public performances. The effective date applies to taxable events occurring after June 30, 2025.
The bill amends subsection 4 of section 57-39.2-04 of the North Dakota Century Code, which governs sales tax exemptions for certain nonprofit and educational activities. Its practical effect is to clarify and limit when nonprofit event sales in publicly or privately owned facilities qualify for exemption, especially where the event resembles ordinary retail activity or where a public facility is used without fair market rent. It affects nonprofits, schools, colleges, arts organizations, and event venues by tightening the criteria for tax-exempt treatment of admissions and sales.
The recorded vote history suggests broad support in the Senate, where the bill passed unanimously 47-0, and more divided support in the House, where it passed 67-26. With no committee transcripts available, the overall sentiment appears generally favorable toward preserving nonprofit and educational exemptions, but with some House opposition likely tied to the bill’s restrictions on when those exemptions apply. The final passage indicates the measure was ultimately accepted despite some concern about narrowing the exemption.
The main point of contention is the bill’s limitation on nonprofit exemption eligibility for events in publicly owned facilities, especially the $10,000 threshold and the fair market rent requirement. Opponents may have viewed these provisions as burdensome for nonprofits or as creating uncertainty for fundraising and community events, while supporters likely saw them as necessary to prevent abuse of the exemption and to distinguish true charitable activity from retail-like sales. The retail-competition language, which excludes sellers maintaining inventory or regular sales operations, is another likely source of debate because it draws a line between exempt nonprofit activity and taxable commercial activity.