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 from those activities when all net receipts are used for the exempt purpose, but narrows the exemption in certain circumstances. In particular, it limits the exemption for events held in publicly owned facilities when taxable sales exceed $10,000 and fair market rent has not been paid, unless another existing exemption applies.
The bill also clarifies that the exemption does not apply when the seller is operating in a way that competes with retailers, such as maintaining inventory, conducting regular retail sales from a permanent or seasonal location, or soliciting sales through a seller-maintained website. At the same time, it preserves separate exemptions for higher education institutions, public school districts, and qualifying nonprofit music or dramatic arts organizations. The act applies to taxable events occurring after June 30, 2025.
SB 2369 amends subsection 4 of section 57-39.2-04 of the North Dakota Century Code, which governs sales tax exemptions for certain nonprofit and public-purpose activities. Its practical effect is to tighten eligibility for the exemption in some nonprofit fundraising and event-sale settings, especially where sales occur in publicly owned facilities or resemble ordinary retail activity, while leaving intact exemptions for schools, colleges, and certain performing arts nonprofits. The bill affects nonprofit organizations, event organizers, and sellers operating at fairs, performances, and similar activities, and it may increase taxable receipts for some events that previously qualified.
The bill appears to have been generally well received in the Senate, passing unanimously 47-0, but it drew more mixed support in the House, where it passed 67-26 with one absent member. That vote pattern suggests broad agreement on the need to clarify or narrow the exemption, but not complete consensus on how far the limitation should go. No committee transcript was provided, so the available record shows support overall with some House-level opposition.
The main point of contention is the scope of the sales tax exemption for nonprofit activities. Supporters likely viewed the bill as a clarification that prevents larger or more commercialized sales operations from using a charitable exemption, especially in publicly owned venues without fair market rent. Opponents in the House may have been concerned that the bill could burden nonprofits, churches, schools, or arts groups that rely on event sales and fundraising, particularly where sales exceed the $10,000 threshold or occur in mixed-use event settings. The distinction between exempt charitable activity and retail-like sales is the central issue.