2016 North Dakota Century Code Title 57 Taxation Chapter 57-65 Potash Taxes
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CHAPTER 57-65
POTASH TAXES
57-65-01. Definitions.
As used in this chapter:
1. "Byproducts" includes any mineral product, or combination or compound thereof,
produced during the processing of potash that is sold and includes aluminum,
antimony, arsenic, barium, beryllium, bismuth, boron, cadmium, calcium, cerium,
cesium, chromium, cobalt, columbium, copper, gallium, gemstones, germanium, gold,
gypsum, hafnium, indium, iridium, iron, lanthanum, lead, lithium, magnesium,
manganese, mercury, molybdenum, nickel, osmium, palladium, platinum,
praseodymium, rare earth metals, rhenium, rhodium, rubidium, ruthenium, samarium,
scandium, selenium, silicon, silver, sodium, strontium, tantalum, tellurium, thallium,
thorium, tin, titanium, tungsten, vanadium, yttrium, zinc, and zirconium. The term does
not include oil, natural gas, or liquid hydrocarbon, individually or in any combination,
coal, carbon dioxide, or severed sand or gravel subject to an extraction or severance
tax under any other provisions of this title.
2. "Commissioner" means the tax commissioner.
3. "Gross receipts" means all revenue valued in money, whether received in money or
otherwise, realized by the taxpayer for sale of potash or byproducts, whether the sale
is before or after transportation, manufacturing, and processing of the product.
4. "Mining facility" includes contiguous land and all structures and improvements on the
mining permit area used for mining potash and byproducts and includes the act,
process, or work of extracting potash from its naturally occurring environment and
transporting or moving potash or byproducts to the point of processing, use, or sale.
The term includes the process of leaching potash from its naturally occurring deposit.
The term also includes an "extraction facility" as defined in chapter 38-12.
5. "Mining permit area" means the area covered by a permit issued by the industrial
commission to mine potash and potash byproducts.
6. "Person" means every individual, partnership, firm, association, joint venture,
corporation, limited liability company, fiduciary, trustee, receiver, administrator,
representative of any kind, or any other group or combination acting as a unit.
7. "Potash" includes muriate of potash [the chemical compound potassium chloride, KCI],
sulfate of potash [the chemical compound sulfate, K2SO4], and langbeinite [the
chemical compound potassium magnesium sulfate, K2SO4●2MgSO4], or any other
potassium, magnesium, or mixed-potassium salts, and includes ores, intermediates,
products, and reaction products of such compounds.
8. "Processing" includes breaking, crushing, cleaning, drying, sizing, milling, treating,
heating, separating, compressing, beneficiation, or loading or unloading for any
purpose.
9. "Processing plant" means any facility in North Dakota in which potash or byproducts
are extracted, recovered, or produced from a mineral resource and includes any
facility in North Dakota associated with the mine in which the primary production from
the mining facility is processed or refined.
10. "Taxpayer" includes any person that is a producer of potash or potash byproducts
subject to the tax imposed under this chapter.
57-65-02. Imposition of tax on potash.
A tax at the rate of two percent is imposed upon all potash produced within this state. The
tax levied attaches to the whole production of potash except any byproducts of potash taxed
under section 57-65-03.
1. The tax on potash is assessed against the sales price of the potash in an arm's-length
contract between the taxpayer and the purchaser. If a potash sale or transfer is not the
result of an arm's-length contract, the tax is calculated by taking a ton of two thousand
pounds [907.18 kilograms] of potash produced times the potash tax rate times the
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annual average price of potash. The "annual average price of potash" for each
twelve-month period beginning July first is the potash producer price index (commodity
code PCU212391212391) as calculated and published by the United States
department of labor, bureau of labor statistics, for the previous calendar year. For
taxable production for the twelve months beginning July 1, 2011, the "annual average
price of potash" is three hundred fifty-seven dollars and ten cents.
The tax department shall provide the annual average price of potash for the fiscal year
to affected taxpayers by written notice mailed before June first.
If the potash producer price index is discontinued, a comparable index must be
adopted by the department by an administrative rule.
57-65-03. Imposition of tax on byproducts of potash production.
A subsurface mineral tax of four percent is imposed upon the gross value of all subsurface
mineral byproducts produced during the processing of potash produced within this state. The
tax levied attaches to the whole production of byproducts. Inventory is not taxable until it is sold.
The gross value at the processing plant is the price paid for the byproducts under an
arm's-length contract between the taxpayer and the purchaser. In the absence of an
arm's-length contract, the gross value at the processing plant is established by the price paid
under an arm's-length contract, to which the person paying the tax is a party, for the purchase or
sale of byproducts of like kind, character, and quality.
57-65-04. Type of tax.
For purposes of interpreting section 5 of article X of the Constitution of North Dakota,
relating to federal land bank taxation and to the taxation of other governmental entities if their
immunity from taxation has been waived, the tax under this chapter is a real property tax on
subsurface mineral-producing estates and interests.
57-65-05. Potash and byproducts tax to be in lieu of other taxes.
The payment of the taxes under this chapter must be in full and in lieu of all ad valorem
taxes by the state, counties, cities, school districts, and other taxing districts upon any property
rights attached to or inherent in the right to producing potash and potash byproducts; upon
producing potash and potash byproducts leases; upon machinery, appliances, and equipment
used in and around any well producing potash or potash byproducts and actually used in the
operation of the well; and upon any investment in property. The land and the processing plant,
mining facility, or satellite facility must be assessed and taxed as other property within the taxing
district in which the property is situated. The tax under this chapter is not in lieu of income taxes.
57-65-06. Duties of tax commissioner and state treasurer.
The tax commissioner shall deposit promptly with the state treasurer all moneys collected
under this chapter and accompany each remittance, when possible, with a certificate showing
the county where the potash and byproducts were processed. The state treasurer, no less than
monthly, shall pay over to the county treasurer of the several counties the money to which they
are entitled.
57-65-07. Allocation of revenue.
The tax collected as provided in this chapter is appropriated and must be apportioned as
determined by the sixty-third legislative assembly.
57-65-08. Returns and payment of tax on monthly basis - Due date - When delinquent
- Extensions.
1. Any person engaged in the production, within this state, of potash or byproducts shall
before the twenty-sixth day of the next succeeding month after production, file with the
tax commissioner a statement upon forms prescribed by the tax commissioner.
2. The tax under this chapter must be paid on a monthly basis. The tax is due and
payable on the twenty-fifth day of the month succeeding the month of production. If the
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tax is not paid as required by this section, the tax becomes delinquent and must be
collected as provided in this chapter.
The tax commissioner, upon request and a proper showing of good cause, may grant
an extension of time, not to exceed fifteen days, for paying the tax. When the request
is granted, the tax is not delinquent until the extended period has expired. A taxpayer
who is granted an extension of time for filing a return shall pay, with the tax, interest at
the rate of twelve percent per annum from the date the tax was due to the date the tax
is paid.
All calculations of the tax under this chapter, including production, distribution, and
claims for credit or refund, are based on the month of production and must be credited
to that month.
The tax commissioner may prescribe alternative methods for signing, subscribing, or
verifying a return filed by electronic means, including telecommunications, that shall
have the same validity and consequence as the actual signature and written
declaration for a paper return.
57-65-09. Tax commissioner to audit returns and correct tax.
1. The tax commissioner may determine whether a return required to be filed with the tax
commissioner under this chapter is a true and correct return of gross production, and
of the value, of the potash and byproducts. If a return required by this chapter is not
filed, or if a return when filed is incorrect or insufficient, the tax commissioner shall
determine the amount of tax due from any information the tax commissioner may be
able to obtain, and, if necessary, may estimate the tax on the basis of external indices.
2. The tax commissioner shall have three years after the due date of the original return or
three years after the original return is filed, whichever period expires later, to assess
the tax and, if additional tax is due, provide notice of the determination of the additional
tax to the taxpayer. If there is a change in tax liability on any return by an amount in
excess of twenty-five percent of the amount of tax before any credits, any additional
tax determined to be due may be assessed anytime within six years after the due date
of the return or six years after the return was filed, whichever period expires later.
3. If a taxpayer files an amended return, the tax commissioner has two years after the
return is filed to audit the return and assess any additional tax attributable to the
changes or corrections even though other time periods prescribed in this section for
the assessment of tax may have expired. The provisions of this section do not limit or
restrict any other time period prescribed in this section for the assessment of tax that
has not expired as of the end of the two-year period prescribed in this section.
4. If false or fraudulent information is given in the return, or if the failure to file a return is
due to the fraudulent intent or the willful attempt of the taxpayer in any manner to
evade the tax, the time limitations in this section do not apply, and the tax may be
assessed at any time.
5. If before the expiration of the time periods prescribed in subsections 1, 2, and 3 the tax
commissioner and a person consent in writing to an extension of time for the
assessment of the tax, an assessment of additional tax may be made at any time prior
to the expiration of the period agreed upon. The period so agreed upon may be
extended by subsequent agreements in writing made before the expiration of the
period previously agreed upon. If a person refuses to consent to an extension of time
or a renewal thereof, the tax commissioner may make an assessment based on the
best information available. The period agreed upon in this subsection, including
extensions, expires upon issuance of an assessment by the tax commissioner.
6. Any person who consents to an extension of time for assessment of tax must be
presumed to have consented to a similar extension for refund.
57-65-10. Interest and penalties.
1. Reports from the taxpayer are delinquent after the last day fixed for their filing, and
every person required to file a report is subject to a penalty of twenty-five dollars per
day of delinquency for each property upon which the person fails or refuses to file the
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reports. The penalties under this subsection are for failure to file reports and are in
addition to the penalties imposed by subsection 2 and constitute a lien against the
assets of the person failing or refusing to file the reports. The penalties prescribed
under this section must be collected in the same manner as potash and byproducts
taxes and must be apportioned as other potash and byproducts tax penalties.
In addition to the tax and interest prescribed in this chapter, a taxpayer is subject to
penalties as follows:
a. If any taxpayer, without intent to evade any tax imposed by this chapter, fails to
pay the amount shown as tax due on any return filed on or before the due date or
extended due date prescribed, there must be added to the tax a penalty of five
percent of the tax due, or five dollars, whichever is greater.
b. If any taxpayer, without intent to evade any tax imposed by this chapter, fails to
file a return on or before the due date or extended due date prescribed, there
must be added a penalty equal to five percent of the tax required to be reported,
or five dollars, whichever is greater.
c. If upon audit of a taxpayer's return additional tax is found to be due, there must
be added to the tax the penalty provided in subdivision a or b.
In addition to other increases to tax and penalty provided in this chapter, a taxpayer is
subject to interest as follows:
a. Any taxpayer who requests and is granted an extension of time for filing a return
shall pay, with the tax, interest on the tax at the rate of twelve percent per annum
from the date the tax would have been due if the extension had not been granted
to the date the tax is paid.
b. If any amount of tax imposed by this chapter is not paid on or before the due date
or extended due date for the payment, there must be added to the tax interest at
the rate of one percent per month or fraction of a month during which the return
was required to be filed or the tax became due.
c. If upon audit an additional tax is found to be due, there must be added to the
additional tax due interest at the rate of one percent of the additional tax for each
month or fraction of a month during which the tax remains unpaid, computed from
the due date of the return to the date paid, excepting the month in which the
return was required to be filed or the tax became due.
d. If the mathematical verification of a taxpayer's return results in additional tax due,
there must be added to the additional tax interest at the rate of one percent of the
additional tax due for each month or fraction of a month during which the return
was required to be filed or the tax became due.
The tax commissioner, for good cause shown, may waive the penalty or the interest
provided in this section.
57-65-11. Refund claims.
1. A taxpayer may file a claim for credit or refund of an overpayment of tax within three
years of the due date of the return or three years after the return was filed. However, if
there is a change in tax liability on any return by an amount in excess of twenty-five
percent of the amount of tax before any credits, a claim for refund of tax may be filed
within six years after the due date of the return or six years after the return was filed,
whichever period expires last.
2. If any taxpayer consents to an extension of time for the assessment of tax under
subsection 5 of section 57-65-09, the period of time for filing a claim for credit or
refund will be similarly extended. If an assessment is issued under this circumstance,
the taxpayer has sixty days from the assessment to file a claim for refund. If a claim for
refund is filed in any year extended by an agreement under subsection 5 of section
57-65-09, the tax commissioner may assess additional tax for any year extended by
the same agreement which has otherwise expired. The additional assessment is
limited to the issues raised in the claim for credit or refund.
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Every claim for credit or refund must be made by filing with the tax commissioner an
amended return, or other report as prescribed by the tax commissioner, accompanied
by a statement outlining the specific grounds upon which the claim is based.
In all cases of overpayment, duplicate payment, or payment made in error, the tax
commissioner shall issue a certificate containing the facts and the amount of the
refund to which the taxpayer may be entitled. Upon presentation of the certificate to
the office of management and budget, a warrant must be issued to the taxpayer for the
purpose of refunding any overpayment, duplicate payment, or payment made in error
out of the unapportioned potash and byproducts tax in the state treasury and a
pro rata share must be charged against the county entitled to share in the tax. Interest
arising from refunds of overpayments, duplicate payments, and erroneous payments
must be allowed and paid at the rate of ten percent per annum and accrues for
payment from sixty days after the due date of the return or after the return was filed or
after the tax was fully paid, whichever comes later.
57-65-12. Minimum refunds and collections.
1. A refund may not be made by the tax commissioner to any taxpayer unless the amount
to be refunded, including interest, is at least five dollars. The tax commissioner shall
transfer any amount that is not refunded to a taxpayer under this subsection to the
state treasurer for deposit in the same manner as other revenue under this chapter.
2. A remittance of tax need not be made and any assessment or collection of tax may not
be made unless the amount is at least five dollars, including penalties and interest.
57-65-13. Protest and appeal.
1. If upon audit the tax commissioner finds additional tax due or disallows a credit or a
claim for refund, the tax commissioner shall notify the person of that finding. The notice
must inform the person of the reasons for assessment of additional tax or the change
in refund or credit claimed. Notice of deficiency must be sent by first-class mail and
must set forth the reasons for the finding.
2. A person has thirty days, or ninety days if the person is outside the United States, to
file a written protest objecting to the tax commissioner's assessment of additional tax
due or disallowance of a credit or a claim for refund. The protest must set forth the
basis for the protest and any other information which may be required by the tax
commissioner. If a person fails to file a written protest within the time provided, the tax
commissioner's finding becomes finally and irrevocably fixed. If a person protests only
a portion of the tax commissioner's finding, the portion that is not protested becomes
finally and irrevocably fixed.
3. If a protest is filed, the tax commissioner shall reconsider the assessment of additional
tax due or disallowance of a credit or claim for refund. The reconsideration may
include further examination by the tax commissioner or the tax commissioner's
representative of a person's books, papers, records, or memoranda. The tax
commissioner, upon request, may grant the person an informal conference.
4. Within a reasonable time after protest, the tax commissioner shall notify the taxpayer
of the tax commissioner's reconsideration of assessment of additional tax due or
disallowance of a credit or claim for refund. The amount set forth in that notice
becomes finally and irrevocably fixed unless the person within thirty days commences
formal administrative review as provided for in chapter 28-32 by the filing of a
complaint. The complaint must be personally served on the tax commissioner or sent
by certified mail.
5. Upon written request, the tax commissioner may grant an extension of time to file a
protest as provided for in subsection 2 or an extension of time to commence formal
review as provided for in subsection 4.
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57-65-14. Lien for tax - Preservation of lien - Satisfaction of lien.
1. The tax, penalty, and interest assessed under this chapter is, at all times, a first and
paramount lien against the taxpayer's property, both real and personal. The provisions
of this chapter requiring the taxpayer to pay the tax do not release the taxpayer from
that liability. If the tax, penalty, and interest are not paid, the tax, penalty, and interest
may be recovered at the suit of the state, upon relation to the tax commissioner, in any
court of competent jurisdiction of the county where any such property, assets, and
effects are located.
2. Any judgment creditor or lien claimant acquiring any interest in or lien on any property
situated in this state, before the tax commissioner files in the central indexing system
maintained by the secretary of state a notice of the lien provided for in this section,
takes free of or has priority over the lien. The tax commissioner shall index in the
central indexing system the following data:
a. The name of the taxpayer.
b. The tax identification number or social security number of the taxpayer.
c. The name "State of North Dakota" as claimant.
d. The date and time the notice of lien was indexed.
e. The amount of the lien. The notice of the lien is effective as of eight a.m. of the
first day following the indexing of the notice.
3. Upon payment of tax, penalty, and interest, if applicable, or a penalty assessed under
section 57-65-10, as to which the tax commissioner has indexed a notice in the central
indexing system, the tax commissioner shall index a satisfaction of the lien in the
central indexing system.
4. The tax commissioner is exempt from the payment of the fees otherwise provided for
by law for the indexing of the lien or satisfaction.
57-65-15. Delinquent taxes - Sale of property.
When any tax provided for in this chapter becomes delinquent, the tax commissioner shall
issue warrants directed to the sheriff of any county where the tax is due, or any part of the tax
accrued, for the collection of the tax, interest, and penalty. The sheriff to whom the warrant is
directed shall proceed to levy upon the property, assets, and effects of the person liable for such
tax and shall sell the same and make return upon execution. The state of North Dakota, through
the tax commissioner, is authorized to make bids at any such sale to the amount of tax, penalty,
and costs accrued.
57-65-16. Bond - Reports - Actions.
1. The tax commissioner may require a sufficient bond from any person charged with the
making and filing of reports and the payment of the taxes imposed under this chapter.
The bond must run to the state of North Dakota and must be conditioned upon the
making and filing of reports as required by law, upon compliance with the rules and
regulations of the tax commissioner, and for the prompt payment by the principal of all
taxes justly due the state under this chapter.
2. When any reports required have not been filed, or may be insufficient to furnish all the
information required by the tax commissioner, the tax commissioner shall institute in
the name of the state of North Dakota upon relation of the tax commissioner any
necessary action or proceedings in the courts having jurisdiction to enjoin such person
from continuing operations until such reports have been filed as required. In all proper
cases an injunction must issue without bond from the state of North Dakota. Upon
showing that the state is in danger of losing its claims or the property is being
mismanaged, dissipated, or concealed, a receiver must be appointed.
57-65-17. Penalty.
Any person intentionally violating this chapter is guilty of a class A misdemeanor.
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57-65-18. Powers of tax commissioner.
The tax commissioner is charged with the administration of this chapter and shall enforce
the assessment, levy, and collection of taxes imposed under this chapter. The tax commissioner
may require any person engaged in the production of subsurface minerals or byproducts to
furnish any additional information the tax commissioner determines necessary for the purpose
of correctly computing the amount of potash and byproducts tax. The tax commissioner may
examine the books, records, and files of such person, and conduct hearings and compel the
attendance of witnesses, the production of books, records, and papers of any person, and may
make any investigation or hold any inquest determined necessary to a full and complete
disclosure of the facts as to the amount of production from any potash mining facility, processing
plant, or satellite facility, or of any company or other producer for taxing purposes.
57-65-19. Rules - Legislative intent.
It is the intention of the legislative assembly that potash mining, environmental protection,
and reclamation rules, at a minimum, must establish a high degree of protection for surface
owners, surface and underground water, productive capacity of soils, and public health and
safety and that the adopting agency will promote participation of public officials and members of
the public in counties in which potash mining will be conducted.
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