2022
NORTH DAKOTA
CORPORATE INCOME
TAX CREDITS
Photo credit:
ND Tourism
Tax forms, guidelines, and more are
available at www.tax.nd.gov.
Email questions to corptax@nd.gov.
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2022
NORTH DAKOTA
CORPORATE INCOME
TAX CREDITS
Photo credit:
ND Tourism
Tax forms, guidelines, and more are
available at www.tax.nd.gov.
Email questions to corptax@nd.gov.
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|
Table of Contents
Form 40 Tax Credits Booklet
Schedule TC Page
Line 1 Contributions to nonprofit private colleges ...................................................................... 1
Line 2 Contributions to nonprofit private high schools ................................................................ 1
Line 3 Contributions to nonprofit private primary schools ........................................................... 1
Line 4 Geothermal, solar, wind or biomass energy device (carried forward) .................................. 2
Line 5 Employment of individuals with developmental disabilities or severe mental illness .............. 2
Line 6 Research and experimental expenditure credits generated by the taxpayer ......................... 2
Line 7 Research and experimental expenditure credits purchased by the taxpayer ......................... 3
Line 8 Renaissance zone ....................................................................................................... 3
Line 9 Biodiesel or green diesel production ............................................................................... 3
Line 10 Soybean and canola crushing equipment costs ................................................................ 4
Line 11 Seed capital business investment .................................................................................. 4
Line 12 Biodiesel or green diesel fuel blending ............................................................................ 4
Line 13 Biodiesel or green diesel fuel sales equipment costs ......................................................... 4
Line 14 Agricultural commodity processing facility investment ...................................................... 5
Line 15 Endowment fund contribution ....................................................................................... 5
Line 16 Internship employment ................................................................................................ 6
Line 17 Angel fund investment credit carried forward .................................................................. 6
Line 18 Workforce recruitment ................................................................................................. 6
Line 19 Wages paid to a mobilized military employee .................................................................. 7
Line 20 Housing incentive fund credit carried forward ................................................................. 7
Line 21 Automation manufacturing equipment purchase credit carried forward ............................... 7
Line 22 Automation manufacturing equipment purchase credit ..................................................... 7
Line 23 Rural leadership North Dakota program contributions ....................................................... 8
Appendix: Credit Features at a Glance
A quick reference guide to all of the credits described in this booklet. .............................9-14
Special Reminder
Note that when claiming certain credits, a taxpayer must complete and include with
its tax return a Property Tax Clearance Record form as certification that it is in good
standing with each county the corporation (and its responsible officers) own at least a
fifty percent interest in real property. The instructions in this booklet indicate which tax
credits include the requirement.
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2022 North Dakota Corporate Income Tax Credit Instructions Page 1
Lines 1, 2, and 3 Enter on line 1 the tax credit computed Shanley High-Sullivan Middle School
for contributions to nonprofit private (Fargo)
Contributions to nonprofit institutions of higher education (and Shiloh Christian School (Bismarck)
private colleges, high schools the North Dakota Independent College SonShine Elem. (Minot)
and primary schools Fund). St Alphonsus Elem. School (Langdon)
St Anne Elem. School (Bismarck)
North Dakota Century Code Enter on line 2 the tax credit computed
St Ann’s Catholic School (Belcourt)
(N.D.C.C.) § 57-38-01.7 for contributions to nonprofit private
St Bernard Mission School (Fort Yates)
institutions of secondary education.
Tax credits are allowed for contributions St Catherine Elem. School (Valley City)
to qualifying nonprofit private primary, Enter on line 3 the tax credit computed St John’s Academy (Jamestown)
secondary and higher education schools for contributions to nonprofit private St John’s Elem. School (Wahpeton)
located in North Dakota. A separate institutions of primary education. St Joseph Elem. School (Mandan)
credit is allowed for each category of St Joseph Elem. School (Devils Lake)
school. To qualify, a contribution must For each contribution, attach a copy St Joseph’s Elem. School (Williston)
be made directly to or specifically of a receipt from the nonprofit private St Mary’s Academy (Bismarck)
designated for the exclusive use of institution or a copy of a cancelled St Mary’s Elem. School (Bismarck)
a qualifying school. If a contribution check or a copy of donee statement St Michael’s Elem. School (Grand Forks)
is made to an account, fund, or (front and back). St Monica’s Montessori (Fargo)
entity benefiting both qualifying and The Innovation School (Bismarck)
nonqualifying schools, it qualifies for Following are the qualifying schools in Trinity Elem. East School (Dickinson)
the credit only if the entity provides the each category of institutions, but can be Trinity Elem. North School (Dickinson)
donor with a statement showing the subject to change: Trinity Elem. School (West Fargo)
amount specifically designated for the Trinity Elem. West School (Dickinson)
use of the qualifying school. Grade schools Trinity Jr/High School (Dickinson)
Anne Carlsen Center (Jamestown) Victory Christian School (Jamestown)
If a contribution is made to a qualifying Bishop Ryan Catholic School (Minot) Williston Trinity Christian School
school that provides education in one Brentwood Adventist Christian School (Williston)
or more grades in both the primary (Bismarck)
school category (K through 8th grades) Capstone Classical Academy (Fargo) High schools
and secondary school category (9th Cathedral of the Holy Spirit Elem. Anne Carlsen Center (Jamestown)
through 12th grades), a separate credit School (Bismarck) Bishop Ryan Catholic School (Minot)
is allowed for the amount contributed Christ the King Catholic Montessori Dakota Adventist Academy (Bismarck)
to each category of school. Unless School (Mandan) Dakota Memorial School (Minot)
the school provides the donor with Dakota Memorial School (Minot) Hope Christian Academy (Dickinson)
a statement showing the amount Dakota Montessori School (Fargo) Johnson Corners Christian Academy
specifically designated for the use of Forest River School (Fordville) (Watford City)
each category of school, one-half of Full Circle Academy (Fargo) New Testament Baptist Christian School
the contribution will be deemed to Grace Lutheran Elem. School (Fargo) (Larimore)
have been made to each category of Hillcrest SDA School (Jamestown) Oak Grove Lutheran Middle/High School
school. A corporation may elect to treat Holy Family – St. Mary’s Elem. School (Fargo)
a contribution as having been made (Grand Forks) Our Redeemer’s Christian School
during a tax year if made on or before Holy Spirit Elem. School (Fargo) (Minot)
the due date, including extensions, for Hope Christian Academy (Dickinson) Prairie Learning Education Center
filing Form 40 for that tax year. Invitation Hill Adventist School (Raleigh)
(Dickinson) School of the Holy Family (Mandan)
The tax credit for contributions made to Johnson Corners Christian Academy Shanley High-Sullivan Middle School
all eligible schools in each category of (Watford City) (Fargo)
institution is equal to the lesser of: Little Flower Elem. School (Rugby) Shiloh Christian School (Bismarck)
• 50% of the contributions but not Martin Luther School (Bismarck) St Mary’s Central High School
to exceed 50% of the total North Nativity Elem. School (Fargo) (Bismarck)
Dakota income tax due for each New Testament Baptist Christian School Trinity Jr/High School (Dickinson)
corporation; (Larimore) Williston Trinity Christian School
• $2,500. Any excess credit may not Oak Grove Lutheran Elem. School (Williston)
be carried forward. (Fargo)
Colleges
Our Redeemer’s Christian School-Minot
Jamestown College (Jamestown)
A corporation that holds an interest in Prairie Learning Education Center
Trinity Bible College (Ellendale)
a passthrough entity that qualifies for (Raleigh)
Turtle Mountain Community College
any of the three credits may claim its Prairie Voyager Adventist School
(Belcourt)
share of the tax credit in proportion (Grand Forks)
United Tribes Technical College
to its interest in the entity. The credit Red River Adventist Elem. School
(Bismarck)
must be claimed in the same taxable (Fargo)
University of Mary (Bismarck)
year in which the taxable year of the School of the Holy Family (Mandan)
passthrough entity ends. ND Independent College Fund
(Bismarck)
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Page 2 2022 North Dakota Corporate Income Tax Credit Instructions
Lines 4 Line 6 Corporate taxpayers in a consolidated
combined return may apply the credit
Geothermal, solar, wind Research and experimental against the aggregate tax liability on
or biomass energy device expenditure credits their North Dakota income tax return.
credits carried forward generated by the taxpayer NOTE: This provision does not apply to
tax credits received or purchased from
N.D.C.C. § 57-38-01.8 N.D.C.C. § 57-38-30.5 other taxpayers (see Line 7 below).
In prior years a corporation could earn Property Tax Clearance Record
a tax credit for the cost of acquisition A corporation that holds an interest in
and installation of a geothermal, Required a passthrough entity that qualifies for
solar, biomass, or wind energy device. A corporation incurring research and this credit may claim its share of the tax
Depending on the year of installation experimental expenditures within North credit in proportion to its interest in the
and the type of device, the credit Dakota may be entitled to a tax credit. entity. The credit must be claimed in the
same taxable year in which the taxable
carryover on the amount exceeding the The credit is based on the amount of
year of the passthrough entity ends.
tax liability for the year varies. Include qualified research expenses incurred
on this line any amount of credit that is in North Dakota in excess of the North
Alternative Simplified Computation
carried forward from a previous year to Dakota base amount. The amount of
Method
2022. the credit is 25% of the first $100,000
Beginning with tax year 2019, a
in excess of the base amount, plus 8%
taxpayer may elect to compute its
Attach a schedule showing the of the amount over $100,000 in excess
credit using the Alternative Simplified
calculation of the amount carried of the base amount. (Note that in prior
Computation (ASC) method. The ASC
over from prior years and claimed for tax years, different percentages were
method largely mirrors the ASC method
2022. applicable.)
included in federal law. A taxpayer may
For a taxpayer which first earned or elect to use the ASC method regardless
Line 5 claimed a credit in a tax year beginning of whether the ASC method is used on
Employment of individuals before January 1, 2007, the maximum its federal tax return. Under the ASC
with developmental credit that may be earned for a taxable method, the North Dakota credit is
year is $2 million. Any credit earned in equal to the sum of the following:
disabilities or severe mental
excess of $2 million may not be carried
- 17.5% of the first $100,000 of North
illness credit back or forward.
Dakota alternative excess research
N.D.C.C. § 57-38-01.16 “Base amount” means base amount as and development expenses for the
A tax credit is available to a corporation defined in section 41(c) of the I.R.C. year.
for employing an individual with a [26 U.S.C. 41(c)], except it does not - 5.6% of the North Dakota alternative
developmental disability or severe include research conducted or sales excess research and development
mental illness. To qualify, the outside the state of North Dakota. expenses in excess of $100,000 for
corporation must apply for and obtain “Qualified research” means qualified the year.
certification from the North Dakota
Department of Human Services, research as defined in section 41(d) of “North Dakota alternative excess
Vocational Rehabilitation Division, that the I.R.C. [26 U.S.C. 41(d)], except it research and development expenses”
the individual has a severe disability, is does not include research conducted means the amount by which qualified
eligible for the agency’s services, and outside the state of North Dakota. The research expenses incurred in North
requires customized employment to qualified research expenses may not Dakota exceed 50% of the average
become employed. The credit is equal to exceed 50% of the base amount. qualified research expenses incurred in
25% of the wages paid to the individual Tax credits that exceed the current North Dakota for the three tax years
during the tax year, up to a maximum income tax liability, must be carried preceding the tax year for which the
credit of $1,500 per employee. The back for three years and then carried credit is being determined. Under the
program’s provisions are limited to 100 forward for up to 15 years. A claim to ASC method, if zero qualified research
individuals for the two-year period of carry back credits must be filed within expenses were incurred in any of the
January 1, 2021 through December 31, three years of the due date or extended three preceding tax years, the North
2022, after which the program would due date of the return for the taxable Dakota credit for a tax year is equal to
revert to as it existed for 2018 and year in which the credit was earned. the sum of 7.5% of the first $100,000
prior. of qualified research expenses plus
If a taxpayer acquires or disposes of 2.4% of qualified research expenses in
Attach a copy of the certification the major portion of a trade or business excess of $100,000.
letter from Human Services. If or the major portion of a separate unit
of a trade or business in a transaction The ASC method may not be used to
the credit is received through a with another taxpayer, the taxpayer’s calculate the North Dakota research
passthrough entity, attach a copy qualified research expenses and base credit for any tax year prior to 2019.
of the statement received from the
passthrough entity. period must be adjusted in the manner
provided by I.R.C. § 41(f)(3).
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2022 North Dakota Corporate Income Tax Credit Instructions Page 3
A taxpayer may choose between the • The original purchaser of the tax North Dakota Department of Commerce
regular method and the ASC method credit may not sell, assign, or Division of Community Services. For
each tax year. However, the method of transfer the credit purchased. The more information, contact the local zone
computing the credit as shown on the purchaser is not allowed to carry authority, the Department of Commerce
tax return is binding for that tax year, back any unused credits. Division of Community Services, or the
so the method may not be changed with • If the amount of the credit Office of State Tax Commissioner.
a subsequent amended return.
available is changed as a result If a corporation is claiming a tax credit
of an amended return filed by the as a result of the Renaissance Zone Act,
A worksheet must be attached
transferor, or as the result of an enter the total amount of credits from
showing computation of the base
audit conducted by the IRS or the the summary part of Schedule RZ and
amount and credit.
Tax Commissioner, the transferor attach the Schedule RZ to the Form 40
shall report to the purchaser the when filed. Schedule RZ is available on
Line 7 adjusted credit amount within our website at
30 days of the amended return
Research and experimental or within thirty days of the final www.tax.nd.gov/incentives/
renaissance.
expenditures credit determination made by the IRS
purchased by the taxpayer or the Tax Commissioner. The tax A corporation that holds an interest in
credit purchaser is required to file a passthrough entity that qualifies for
Property Tax Clearance Record this credit may claim its share of the
amended returns reporting the
Required additional tax due or to claim a tax credit in proportion to its interest in
A taxpayer that is certified as a qualified refund. The Tax Commissioner may the entity. The credit must be claimed
research and development company audit these returns and assess or in the same taxable year in which the
may elect to sell, transfer or assign issue refunds, even though other taxable year of the passthrough entity
the unused research and experimental time periods prescribed may have ends. A copy of the statement received
expenditure tax credits earned. A expired for the purchaser. from the passthrough entity must be
qualified research and development attached to the Form 40 along with the
• Gross proceeds received by the tax
company is defined as a company that: Schedule RZ.
credit transferor must be assigned
• is a primary sector business, to North Dakota on Form 40, line 14. A corporation may also be eligible to
• has less than $750,000 in annual The amount assigned cannot be claim exempt income as a result of the
gross revenues, and reduced by the taxpayer’s income Renaissance Zone Act. See Schedule RZ
apportioned to North Dakota or any for more information on this exemption.
• has not previously conducted North Dakota net operating loss of
research and development in North the taxpayer.
Dakota. Line 9
• Net income recognized from the tax
For more information on the certification credit transfer should be excluded Biodiesel or green diesel
process or to apply for certification, from North Dakota apportionable production credit
contact the Director of the North Dakota income on Form 40, Schedule SA,
Department of Commerce Division of line 15. N.D.C.C. § 57-38-30.6
Economic Development and Finance at • The Tax Commissioner has four Property Tax Clearance Record
701-328-5300 or access their website at years after the date of the credit Required
www.commerce.nd.gov. Certification assignment to audit the returns
applications may be accessed on the of the credit transferor and the A corporation is allowed an income tax
Department of Commerce’s website. purchaser to verify the correctness credit equal to 10% per year for five
years of the direct costs incurred to
For the sale, transfer or assignment of the amount of the transferred adapt or add equipment to retrofit an
of the credits, the transferor and credit and if necessary assess the existing facility or to construct a new
transferee must jointly submit credit purchaser if additional tax is facility in North Dakota to produce or
Form CTS. Contact the Office of State found due. blend diesel fuel containing at least
Tax Commissioner for a Form CTS. The 2% biodiesel or green diesel volume.
form must be filed within 30 days after Line 8 “Biodiesel” means fuel meeting
the date of the transfer and is used to the specifications adopted by the
report the various information regarding Renaissance zone credits American Society for Testing and
the transaction as required by law. N.D.C.C. ch. 40-63 Materials. “Green diesel” means a fuel
• A taxpayer’s total credit assignment Property Tax Clearance Record produced from nonfossil renewable
may not exceed $100,000 over any resources, including agricultural
Required
combination of taxable years. or silvicultural plants, animal fats,
A corporation may qualify for a credit residue, and waste generated from the
• The purchaser of the tax credit production, processing, and marketing
for purchasing, leasing, or making
shall claim the credit beginning of agricultural products, silvicultural
improvements to real property located
with the taxable year in which the products, and other renewable
in a North Dakota renaissance zone. A
credit purchase agreement was fully resources, which meets applicable
renaissance zone is a designated area
executed by the parties. American society for testing and
within a city that is approved by the
materials specifications.
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Page 4 2022 North Dakota Corporate Income Tax Credit Instructions
The first taxable year in which the credit For an investment to qualify it must or silvicultural plants, animal fats,
may be claimed is the taxable year be made on or after the date the residue, and waste generated from the
in which the facility begins producing business was certified by the North production, processing, and marketing
or blending biodiesel or green diesel Dakota Department of Commerce for of agricultural products, silvicultural
fuel. Eligible costs incurred before the the program and must be claimed products, and other renewable
taxable year in which production or first in the taxable year in which the resources, which meets applicable
blending begins are taken into account investment is received by the qualified American society for testing and
in calculating the credit. business. The investment must be at materials specifications.
risk and must remain in the business
The credit may not exceed the The credit for blending biodiesel may
for at least three years. Investment
corporation’s tax liability in any year, only be earned on the initial blending of
monies placed in escrow are not at risk
but any unused portion of a taxable B100. Subsequent blending of gallons of
until paid out of escrow to the qualified
year’s credit may be carried forward for other than B100 does not earn a credit.
business for its use.
up to five taxable years. The maximum
If the credit exceeds the tax liability,
cumulative credit allowed to a taxpayer A corporation that holds an interest in
the unused portion of the credit may be
for all taxable years is limited to a passthrough entity that qualifies for
carried forward for five taxable years.
$250,000. this credit may claim its share of the tax
credit in proportion to its interest in the A corporation that holds an interest in
Attach a worksheet showing the entity. The credit must be claimed in the a passthrough entity that qualifies for
calculation of the credit. same taxable year in which the taxable this credit may claim its share of the tax
year of the passthrough entity ends. credit in proportion to its interest in the
entity. The credit must be claimed in the
Line 10 The amount of the allowable credit not
same taxable year in which the taxable
Soybean and canola crushing used in the taxable year the investment
year of the passthrough entity ends.
was made may be carried over to the
equipment costs credit following four taxable years.
Attach a worksheet showing the
N.D.C.C. § 57-38-30.6 The amount of tax credits allowed for calculation of the credit, or if
Property Tax Clearance Record all investments made in all qualified the credit is received through
Required businesses is limited to $3.5 million per passthrough entity, attach a
calendar year. statement showing the passthrough
Effective for tax years beginning after entity’s name and Federal Employer
December 31, 2008, the biodiesel fuel A copy of the completed qualified Identification Number and the
production credit (Line 9) was amended seed capital business investment corporation’s share of the credit.
to include direct costs incurred to adapt reporting form (www.tax.nd.gov/
or add equipment to retrofit an existing incentives/income) must be
facility or to construct a new facility attached to the Form 40 for each Line 13
for the purpose of producing crushed year the credit is claimed, or if Biodiesel or green diesel fuel
soybeans or canola. Refer to Line 9 for the credit is received through sales equipment costs credit
further instructions on claiming this a passthrough entity, a copy of
credit. the statement received from the N.D.C.C. § 57-38-01.23
passthrough entity must be attached. Property Tax Clearance Record
Line 11 Required
Seed capital business Line 12 A fuel seller (retailer) that incurs costs
investment tax credit Biodiesel or green diesel fuel to adapt or add equipment to a facility
N.D.C.C. ch. 57-38.5 blending credit licensed under North Dakota law to
enable the facility to sell diesel fuel
Property Tax Clearance Record N.D.C.C. § 57-38-01.22 containing at least 2% biodiesel fuel
by volume is entitled to an income
Required Property Tax Clearance Record
tax credit. “Biodiesel” means fuel
A tax credit is available to a corporation Required meeting the specifications adopted by
or a limited liability company treated A fuel supplier (wholesaler) licensed the American Society for Testing and
like a corporation for its investment in a under North Dakota law that blends Materials. “Green Diesel” means a fuel
qualified business certified to participate biodiesel fuel in North Dakota is entitled produced from nonfossil renewable
in the seed capital investment program. to an income tax credit equal to five resources, including agricultural
The amount of the allowable credit is cents for each gallon blended during the or silvicultural plants, animal fats,
equal to 45% of the amount invested taxable year. To qualify, the biodiesel residue, and waste generated from the
by the taxpayer in qualified businesses or green diesel fuel must have at least production, processing, and marketing
during the taxable year. The maximum a 5% blend (“B5”). “Biodiesel” means of agricultural products, silvicultural
annual credit a taxpayer may claim is fuel meeting the specifications adopted products, and other renewable
$112,500. The maximum cumulative by the American Society for Testing resources, which meets applicable
amount a qualified business may claim and Materials. “Green Diesel” means a American society for testing and
for all tax years is limited to $500,000. fuel produced from nonfossil renewable materials specifications.
resources, including agricultural
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2022 North Dakota Corporate Income Tax Credit Instructions Page 5
The credit is equal to 10% of the seller’s The allowable credit is equal to 30% of A taxpayer is allowed no more than
direct costs incurred to adapt or add the total amount invested in all qualified $250,000 in credits for all tax years
the equipment. The credit is allowed in agricultural commodity processing under this program.
each of five taxable years, beginning businesses during the taxable year.
A corporation that holds an interest in
with the taxable year in which the seller For an investment to qualify for the
a passthrough entity that qualifies for
begins selling the eligible biodiesel or credit, the processing facility must have
this credit may claim its share of the tax
green diesel fuel. The portion of the been previously certified for eligibility
credit in proportion to its interest in the
credit not used in each year may be by the North Dakota Department of
entity. The credit must be claimed in the
carried forward for five taxable years. A Commerce. The maximum allowable
same taxable year in which the taxable
seller may claim no more than $50,000 credit that may be used in any taxable
year of the passthrough entity ends.
in credits for all taxable years. Eligible year is $50,000 and the investment
costs incurred before the taxable year must be made on or after the effective
A copy of the completed ag
in which sales begin may be included in date in which the business became
commodity processing facility
the calculation of the credit. certified. The investment must be at
investment reporting form
risk and must remain in the business
A corporation that holds an interest in (www.tax.nd.gov/incentives/
for at least three years. Investment
a passthrough entity that qualifies for income) must be attached to the
monies placed in escrow are not at risk
this credit may claim its share of the tax Form 40 for each year the tax credit
until paid out of escrow to the qualified
credit in proportion to its interest in the is claimed, or if the credit is from
business for its use.
entity. The credit must be claimed in the a passthrough entity, a copy of
same taxable year in which the taxable A qualified investment may include a the statement received from the
year of the passthrough entity ends. transfer of a fee simple interest in real passthrough entity must be attached.
property. In that case, the following
Attach a worksheet showing the conditions apply:
Line 15
calculation of the credit, or if
the credit is received through • Personal property that becomes a Endowment fund contribution
a passthrough entity, attach a fixture to the real property after the
transfer of the real property to the credit
statement showing the passthrough
entity’s name and Federal Employer qualified business is not a qualified N.D.C.C. § 57-38-01.21
Identification Number and the investment. A tax credit is available for a corporation
corporation’s share of the credit. • The value of the contribution may that makes a charitable contribution to
not exceed the appraised value as a qualified endowment fund.
established by a licensed or certified
Line 14 appraiser. Qualified endowment fund. A
qualified endowment funds means a
Agricultural commodity
• The value of the contribution must permanent, irrevocable fund that meets
processing facility be approved by the governing all of the following:
investment credit body of the qualified business,
subject to the standards for valuing 1. It is held by a qualified nonprofit
N.D.C.C. ch. 57-38.6 consideration for shares under North organization (defined below) or by a
Dakota corporation law. bank or trust company on behalf of
Property Tax Clearance Record
• The qualified business is required a qualified nonprofit organization.
Required
to provide to the Tax Commissioner 2. It is comprised of cash, securities,
A tax credit is available to a corporation a copy of the appraised valuation, mutual funds, or other investment
or a limited liability company treated a copy of the governing body’s assets.
like a corporation for its investment in a
qualified business certified or recertified resolution approving the value of 3. It is established for a specific
to participate in the agricultural the contribution, and a copy of the religious, educational, or other
commodity processing facility statement of full consideration within charitable purpose.
investment tax credit program. thirty days after the instrument 4. It may expend only the income
transferring title to the real property generated by, or the increase in
An agricultural commodity processing is recorded with the recorder. value of, the assets contributed to
facility means “a facility that through • The tax credit is allowed in the it.
processing involving the employment tax year in which the instrument
of knowledge and labor adds value to transferring title to the real property Qualified nonprofit organization. A
an agricultural commodity capable of is recorded with the recorder. qualified nonprofit organization means:
being raised in this state” and includes
The tax credit must be claimed first 1. An organization incorporated or
a livestock feeding, handling, milking,
in the taxable year in which the established in North Dakota and
or holding operation that uses as part
of its operation a by-product produced investment is received by the qualified has a physical presence in North
at a biofuels production facility. A business. The credit cannot exceed Dakota; and
biofuels production facility is a North the taxpayer’s tax liability and any tax is a tax-exempt organization
Dakota business that produces diesel credit not used in the taxable year the under I.R.C. § 501(c) that
fuel containing at least 5% biodiesel investment was made may be carried qualifies as a charitable
or green diesel, produces corn-based over to the following 10 taxable years. organization under I.R.C. § 170;
or cellulose-based ethanol, or crushes or
soybeans or canola.
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Page 6 2022 North Dakota Corporate Income Tax Credit Instructions
2. An organization incorporated or Line 16 Line 17
established in a state bordering
North Dakota that: Internship employment Angel fund investment credit
credit
is a tax-exempt organization carried forward
under I.R.C. § 501(c) that N.D.C.C. § 57-38-01.24 N.D.C.C. § 57-38-01.26
qualifies as a charitable (Effective through June 30, 2017)
Property Tax Clearance Record
organization under I.R.C. § 170;
and Required Property Tax Clearance Record
supports or benefits a hospital, A corporation who is an employer in Required
nursing home, or medical center, this state may take a tax credit for Effective for investments made prior to
or any combination of these, that qualified compensation paid to an intern July 1, 2017, a corporation was entitled
is located outside North Dakota employed by the taxpayer in this state. to a tax credit for an investment made
but within five miles of a North For the internship to qualify for the to a qualified angel fund which is
Dakota city with a population of credit: incorporated in North Dakota.
5,000 or more that does not have After June 30, 2017, a corporation
a hospital. • The intern must be an enrolled may no longer earn an angel fund
student in an institution of higher
The credit is equal to 40% of the education or vocational technical investment credit, but may continue to
contribution and the maximum education program, seeking a carryover any unused credit that was
allowable credit for a tax year is degree or certification in a major previously earned. Any unused credit
$10,000. field of study closely related to the may be carried forward to each of the
internship work experience; seven succeeding taxable years.
North Dakota taxable income must
be increased by the amount of the • The internship must be taken for
contribution upon which the credit is academic credit or count toward Line 18
computed to the extent the contribution the completion of the vocational Workforce recruitment credit
reduced federal taxable income. If technical education program;
claiming the credit, enter the amount • The intern must be supervised and N.D.C.C. § 57-38-01.25
of the contribution related to the credit evaluated by the taxpayer; and Property Tax Clearance Record
claimed on line 5 of the Form 40, • The internship must be located in
Schedule SA. North Dakota. Required
A corporation that is an employer in
A corporation that holds an interest in The credit is 10% of the stipend or North Dakota is entitled to a credit for
a passthrough entity that qualifies for salary paid to the intern employed by costs incurred during the tax year to
this credit may claim its share of the tax the taxpayer and the credit cannot recruit and hire employees for hard-to-
credit in proportion to its interest in the be claimed for more than five interns fill employment positions for which the
entity. The credit must be claimed in the employed at the same time. A taxpayer annual salary for the position meets or
same taxable year in which the taxable may not claim more than $3,000 in exceeds the state average wage.
year of the passthrough entity ends.
credits for all tax years combined. • “Hard-to-fill employment position”
The credit may not exceed the A corporation that holds an interest in means a job that requires the
taxpayer’s income tax liability. Any a passthrough entity that qualifies for employer to use extraordinary
unused credit may be carried forward this credit may claim its share of the tax recruitment methods and for which
for three taxable years. credit in proportion to its interest in the the employer’s recruitment efforts
If the contribution is recovered, the tax entity. The credit must be claimed in the for the specific position have been
credit must be added to tax due in the same taxable year in which the taxable unsuccessful for six consecutive
year recovery occurs. Contact our office year of the passthrough entity ends. calendar months.
for instructions on how to report the • “State average wage” means 125%
recovery of the contribution. Attach a schedule listing the names of the state average wage published
of the employees, their social security annually by Job Service North
Attach a copy of the front and back of number and wages paid. If the credit Dakota and which is in effect at the
the cancelled check, or a receipt from is received through a passthrough time the employee is hired.
the qualified nonprofit organization entity, attach a copy of the statement • “Extraordinary recruitment methods”
acknowledging its I.R.C. § 501(c)(1) received from the passthrough entity. means using all of the following:
status and the date and amount of
the eligible contribution. If the credit A person with the exclusive
is received through a passthrough business purpose of recruiting
entity, attach a copy of the statement employees and for which a fee is
received from the passthrough entity. charged by the recruiter.
An advertisement in a
professional trade journal,
magazine, or other publication,
the main emphasis of which
is providing information to a
particular trade or profession.
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2022 North Dakota Corporate Income Tax Credit Instructions Page 7
A website, the sole purpose of paid had there been no mobilization Line 21
which is to recruit employees and over the total military compensation
for which a fee is charged by the paid because of the mobilization. Automation manufacturing
website. In determining the amount of equipment purchase credit
Payment of a signing bonus, compensation the employer would carried forward
moving expenses, or nontypical have paid, the amount may include the
employer’s portion of any voluntary or N.D.C.C. § 57-38-01.33
fringe benefits.
matching contributions paid, or that Property Tax Clearance Record
A credit may be claimed for 5% of would have been paid, into a defined
Required
the salary paid to an employee in contribution plan. In determining the
a qualified hard-to-fill position for reduction in compensation, the civilian For taxable years prior to 2018 a tax
the first 12 consecutive months of and military compensation must be credit was available to a corporation for
that employee’s employment in that compared for the same time period. If purchases of equipment for the purpose
position. the military compensation is equal to of automating a manufacturing process.
The credit may be claimed in the first or more than the civilian compensation, A credit that exceeded the tax liability
tax year beginning after the employee the reduction in compensation is zero for the year the credit was earned may
filling the hard-to-fill position has and no credit is allowed. be carried over for up to five years.
completed their first 12 consecutive The maximum credit allowed per eligible Include on this line any amount of credit
months of employment in the hard-to- employee is $1,000, and the credit that was earned prior to 2018 and
fill position. may not exceed the taxpayer’s income carried over to 2022.
tax liability. Any unused credit may be
Also enter on line 18, the number of carried foward for five taxable years. Attach a schedule showing the
qualified employees hired to claim calculation of the amount carried
the credit. Any unused credit may be A corporation that holds an interest in over from prior years and claimed for
carried forward for four succeeding a passthrough entity that qualifies for 2022.
taxable years. this credit may claim its share of the tax
A corporation that holds an interest in credit in proportion to its interest in the Line 22
a passthrough entity that qualifies for entity. The credit must be claimed in the Automation manufacturing
this credit may claim its share of the tax same taxable year in which the taxable
year of the passthrough entity ends. equipment purchase credit
credit in proportion to its interest in the
entity.The credit must be claimed in the N.D.C.C. § 57-38-01.36
same taxable year in which the taxable To claim this credit, attach a copy of A tax credit is available to a corporation
year of the passthrough entity ends. the completed Schedule ME, Credit for purchases of equipment for the
for Wages Paid to Mobilized Employee purpose of automating a manufacturing
Attach a schedule listing the names (www.tax.nd.gov/incentives/ process. To qualify for the credit, the
of the employees, their social income) to the Form 40. If the credit corporation must be certified as a
security numbers, wages paid and is received through a passthrough primary sector business and timely
employment start date. entity, a copy of the statement file an application with the North
received from the passthrough entity Dakota Department of Commerce.
must be attached. Visit the Department of Commerce
Line 19
website www.commerce.nd.gov
Wages paid to a mobilized for application information including
military employee credit Line 20 deadlines and includable costs. The
Housing incentive fund credit credit includes the following provisions:
N.D.C.C. § 57-38-01.31
A tax credit is available to an employer carried forward The credit is first allowed in the tax
of an employee in the National Guard or year in which the taxpayer takes title
a reserve component of the U.S. armed N.D.C.C. § 57-38-01.32 to the machinery and equipment. For
forces who is mobilized for federal (Effective through 2016) purposes of this credit, a purchase
active duty under Title 10 of the U.S. For taxable years prior to 2017, a tax includes equipment acquired with a
Code. credit could be earned for a contribution capital lease.
to the Housing Incentive Fund. A credit The credit is up to 20% of the cost
The credit is equal to 25% of the lesser that exceeded the tax liability for the of qualifying new or used equipment
of: year of the contribution may be carried purchased, as approved by the
• the amount of compensation the forward up to 10 years. Include on this Department of Commerce.
employer continues to pay during line any amount of credit that is carried The equipment must result in
the period of mobilization; or forward from a previous year to 2022.
either improved job quality or
increased productivity. Improved
• the reduction in compensation. Attach a schedule showing the
job quality means either a 5%
Reduction in compensation is defined calculation of the amount carried
increase in average wages or a 5%
as the excess of the amount of over from prior years and claimed for
improvement in workplace safety as
compensation the employer would have 2022.
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Page 8 2022 North Dakota Corporate Income Tax Credit Instructions
documented through participation in Line 23
a ND Workforce Safety & Insurance Rural leadership
safety incentive program. Increased North Dakota program
productivity means a 5% or more contributions credit
increase in either output or number
of units produced per automated line N.D.C.C. § 57-38-01.34
per time period. A tax credit is available to a corporation
Within one year after earning a for contributions to the Rural Leadership
credit, a business is required to file North Dakota Program conducted by the
a report with the Office of State NDSU Extension Service. The credit is
Tax Commissioner documenting the equal to 50% of the total contributions
improved job quality or increased made during the tax year. Contributions
productivity. The report is available may be designated for a specific
on our website at www.tax.nd.gov. individual. Any unused credit may not
Search “job quality.” be carried over to subsequent tax years.
If the credit exceeds the tax liability,
the excess may be carried over for Enclose a copy of a receipt for each
up to five years. qualifying contribution or a cancelled
check (front and back) with Form 40.
The total credit allowed for all
qualifying purchases by all taxpayers
is limited to $1 million for each
calendar year. If the statewide limit
for a year is met, credits are allowed
to each taxpayer in proportion of all
the approved credits for that year.
If the statewide limit for any year
is not met, the amount of unused
credits are rolled over and added to
the available statewide credits for
the following year.
Corporate taxpayers in a
consolidated combined return
may apply the credit against the
aggregate tax liability on their North
Dakota tax return.
In current law, the credit is set to
expire December 31, 2022.
A corporation that holds an interest in
a passthrough entity that qualifies for
this credit may claim its share of the tax
credit in proportion to its interest in the
entity. The credit must be claimed in the
same taxable year in which the taxable
year of the passthrough entity ends.
Also include on this line the amount
carried forward from a prior year.
The Office of State Tax Commissioner
issues a final notification of credit
to the taxpayer. To claim this credit,
attach to the return a copy of that
letter indicating the amount of credit
allowed to the taxpayer. If the credit
is received through a passthrough
entity, a copy of the statement
received from the passthrough entity
must be attached.
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2022 North Dakota Corporate Income Tax Credit Instructions Page 9
Unused Credit Options 10-year carryforward 5-year carryforward 5-year carryforward 5-year carryforward 5-year carryforward 5-year carryforward
ND Commerce $1 million of
Other Limitations / Provisions Program limit: Department may certify up to 10 qualified businesses (facilities) each calendar year. • Must improve job quality or increase productivity by statutory percentage. Credit may be used to reduce the tax of an affiliate in a ND consolidated return. Credit expires after 2022. Program limit (all taxpayers): credits per calendar year for 2019-22.
• • •
Lifetime $250,000 $250,000 $50,000 $250,000
Taxpayer
Credit Limit Per
Per Tax Year $50,000
Rate / Amount of Credit 30% of eligible investment 20% of purchase price $0.05 per gallon blended • 10% of eligible costs Allowed in each of first 5 tax years upon production start 10% of eligible costs Allowed in each of first 5 tax years upon sales start 10% of eligible costs Allowed in each of first 5 tax years upon production start
• • • • •
Years…
Applies to Tax 2005 and after (see Notes) 2019-2022 only 2005 and after 2003 and after 2005 and after 2009 and after
Name of Credit
North Dakota Corporate Income Tax Credits – Credit Features at a Glance Agricultural commodity processing facility investment credit NDCC ch. 57-38.6 Automation manufacturing machinery and equipment credit NDCC § 57-38-01.36 Biodiesel fuel blending credit NDCC § 57-38-01.22 Biodiesel fuel production facility credit NDCC § 57-38-30.6 Biodiesel fuel sales equipment costs credit NDCC § 57-38-01.23 Canola or soybean crushing facility credit NDCC § 57-38-30.6
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Page 10 2022 North Dakota Corporate Income Tax Credit Instructions
Unused Credit Options 5-year carryforward 3-year carryforward
Only 100
Other Limitations / Provisions • Employee must meet eligibility criteria, as certified by ND Vocational Rehabilitation Division. Program limit: individuals, 2021 through 2022 may be certified as eligible.
• ND taxable income must be increased to extent contribution reduced federal taxable income.
Lifetime
Taxpayer
Credit Limit Per
Per Tax Year $1,000 per eligible employee 50% of tax 50% of tax 50% of tax $10,000
Rate / Amount of Credit 25% of the lesser of: • actual civilian compensation paid in tax year while mobilized, or civilian compensation employee would have received if not mobilized in excess of military compensation paid in tax year while mobilized
• 5% of first $6,000 of wages paid during first 12 months of employment 25% of up to $6,000 of wages paid in tax year 5% of first $6,000 of wages paid during first 12 months of employment 40% of contributions
Years…
Applies to Tax 2009 and after 1987-2018 2019-2022 2023 and after 2007 and after
Name of Credit
North Dakota Corporate Income Tax Credits – Credit Features at a Glance Credit for wages paid to mobilized employee NDCC § 57-38-01.31 Developmentally disabled or severely mentally ill person employment credit NDCC § 57-38-01.16 Endowment fund contribution credit NDCC § 57-38-01.21
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2022 North Dakota Corporate Income Tax Credit Instructions Page 11
Unused Credit Options All devices—If installed in tax years 2005-08 (before 10/1/2008): 5-year carryover. Biomass, geothermal, and solar devices—If installed after 9/30/2008 and before 1/1/2015: 10-year carryover. Wind device—If installed after 9/30/2008 and before 1/1/2012: 30-year carryover. Wind device—If installed after 12/31/2011 and before 1/1/2015 (or 1/1/2017, if construction began before 1/1/2015): 10-year carryover. 10-year carryforward
$30 million of
Other Limitations / Provisions • Except for certain wind devices, device must be installed before 1/1/2015, to qualify. For a wind device only, if construction began before 1/1/2015, it is eligible for the credit if installed before 1/1/2017. Credit may be used to reduce the tax of an affiliate in a ND consolidated return. ND taxable income must be increased to extent contribution reduced federal taxable income. Program limit (all taxpayers): credits for 2015-16 tax years.
• • • • Limited to 5 interns per year.
Lifetime $3,000
Taxpayer
Credit Limit Per of tax
Per Tax Year Lesser of $2,500 or 50%
Rate / Amount of Credit • 3% of eligible costs Allowed in each of first 5 tax years, starting in year installed
• 100% of contribution 10% of wages 50% of contributions
Years…
Applies to Tax Solar and wind: 1977- 2014 (see “Other Limitations / Provisions” for exception for wind device) Geothermal: 1981-2014 Biomass: 2007-2014 2011-2016 2007 and after 2021 and after
Name of Credit
North Dakota Corporate Income Tax Credits – Credit Features at a Glance Energy device credit—biomass, geothermal, solar, or wind device carried forward NDCC § 57-38-01.8 Housing incentive fund credit NDCC § 57-38-01.32 Internship employment credit NDCC § 57-38-01.24 Nonprofit private primary school contribution credit (Grades K – 8) NDCC § 57-38-01.7
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Page 12 2022 North Dakota Corporate Income Tax Credit Instructions
Unused Credit Options 5-year carryforward 5-year carryforward 5-year carryforward • 3-year carryback required 15-year carryforward (after first being carried back) If eligible, up to $100,000 may be transferred to another taxpayer.
• •
Other Limitations / Provisions $250,000 of credits per project Program limit (all taxpayers): $10.5 million of credits for all years. • Taxpayer may choose on a year-to-year basis to use either the regular method or the alternative simplified method, which is then binding for that year. If certified by ND Commerce Dept. as qualified research and development company, up to $100,000 of credit may be
•
Lifetime
Taxpayer
Credit Limit Per of tax of tax
Per Tax Year Lesser of $2,500 or 50% Lesser of $2,500 or 50% $2 million, if ND research started before 2007
Rate / Amount of Credit 50% of contributions 50% of contributions 50% of eligible costs 100% of approved costs 50% of cash investment For 2020—Expenses in excess of base amount: •25% of first $100,000 of excess, plus 8% of excess over $100,000.
• Note: Different rates applied in prior years, depending on when research in ND first began.
Years…
Applies to Tax 2021 and after 2021 and after 1999 and after 1999 and after 1999 and after 1987 and after
Name of Credit
Historic property preservation or renovation credit Nonparticipating property owner credit Renaissance fund organization investment credit Regular method
North DakotaNonprofitcontributionCorporate(GradesNDCCprivate9Nonprofitcredit–§contribution12)high57-38-01.7NDCCIncomeschoolprivateRenaissance§credit57-38-01.7collegeNDCCTaxzone:RenaissanceCredits§ 40-63-06NDCCzone:–Renaissance§Credit 40-63-04NDCCzone:FeaturesResearch§expenditure40-63-07NDCC• & experimental §at57-38-30.5credit—a Glance
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2022 North Dakota Corporate Income Tax Credit Instructions Page 13
Unused Credit Options 4-year carryforward 4-year carryforward
Other Limitations / Provisions • Credit may be used to reduce the tax of an affiliate in a ND consolidated return. Program limit per business: Credit limited to first $500,000 of investments received in all years. Program limit (all investors): $3.5 million of credits per year.
transferred to another taxpayer.
• • Allowed in year following the year in which the 12th month of employment falls.
Lifetime
Taxpayer
Credit Limit Per
Per Tax Year $112,500
Rate / Amount of Credit Alternative excess expenses: • 17.5% of first $100,000 of excess, plus 5.6% of excess over $100,000.
• Rates are 7.5% and 2.4%, respectively, if no qualified expenses in any of the 3 preceding years. 50% of contributions 45% of cash investment 5% of wages paid in first 12 months of employment
Years…
Applies to Tax 2019 and after 2013 and after 2005 and after (see Notes) 2007 and after
Name of Credit If more than one credit applies in a given year, apply the credits in the order that is most advantageous. Generally, this means applying the credits in the following order: (1) Credits with no carryback or carryforward feature. (2) Credits with a carryback feature. (3) Credits with a carryforward feature. N.D. Admin. Code § 81-03-01.1-08 If a credit is limited based on a percentage of the tax, apply the percentage to the tax before any credits are subtracted. The agricultural commodity processing facility investment credit was created in 2001, but it was not available to a C corporation until 2005. The seed capital business investment credit was created in 1993, but it was not available to a C corporation until 2005. Information reflects North Dakota law as it exists in 2022.
Alternative simplified method • • •• •• •• ••
North Dakota• Corporate Income RuralcontributionsTaxleadershipNDCCCreditsSeed§credit capital57-38-30.5creditNDNDCCprogrambusiness–ch.Credit57-38.5investmentWorkforceFeaturesNDCCrecruitmentNotes ch. 57-38-01.25atcredita Glance
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Taxpayer Bill of Rights
You may obtain a copy of the North Dakota Taxpayer
Bill of Rights by contacting the Office of State Tax
Commissioner or visiting our website at
www.tax.nd.gov
Need forms or assistance?
If you need a North Dakota form or schedule, or if you have a question about preparing your North
Dakota return . . .
Call Walk-in or appointment service
Questions: 701-328-1249 Services are available Monday through
Forms Requests: 701-328-1243 Friday from 8:00 am to 5:00 pm, in our
Bismarck office located at
If speech or hearing impaired, 600 E. Boulevard Avenue.
call us through Relay North Dakota:
Corporate Income Tax Section
1-800-366-6888
State Capitol, 8th Floor
Visit our website
On our website, you will find the following Write
resources: Office of State Tax Commissioner
600 E. Boulevard Ave. Dept. 127
• Tax forms Bismarck, ND 58505-0599
• Electronic payment information
• Income tax statutes and regulations Email us
• Calendar of due dates, public meetings, and Request forms, ask us a question, or
workshops send a message to us via email at:
• Press releases
corptax@nd.gov
• On-line message service
Our website address is: Fax
You may fax your request or question to
tax.nd.gov 701-328-1942
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