North Dakota Administrative Code
Title 81 - Tax Commissioner
Article 81-05.1 - Motor Vehicle Excise Tax
Chapter 81-05.1-01 - Motor Vehicle Excise Tax
Section 81-05.1-01-04 - Leasing and rental companies

1. All motor vehicles leased for a period of one year or more and having an actual vehicle weight of ten thousand pounds [4535.92 kilograms] or less are subject to motor vehicle excise tax, at the time the owner of the vehicle titles the motor vehicle for use in this state, based on the total consideration of the lease at the time the lease is initiated. The motor vehicle excise tax will apply when additional charges are made after the inception of the lease, and may include excess mileage charges, excess wear charges, damage or repair charges, lease cancellation charges, option to renew charges, and end-of-the-lease payments. The subsequent purchase or buyout of a qualifying lease vehicle by the lessee will result in the payment of motor vehicle excise tax by the lessee on the purchase or buyout amount when titled or licensing the motor vehicle in this state.

Tax will apply to an end-of-the-lease payment if it is determined the lessee owes an additional charge based on the difference between the market value and the estimated residual value of the vehicle. No refund of tax is provided to the owner or lessee when the market value is greater than the estimated residual value.

2. All other motor vehicles placed into lease service will be subject to motor vehicle excise tax based on the purchase price of the vehicle at the time of titling or licensing the vehicle in this state. The subsequent purchase or buyout of the leased vehicle by the lessee will result in the payment of motor vehicle excise tax by the lessee on the purchase or buyout amount when titling or licensing the motor vehicle in this state unless the vehicle has been in continuous possession of the lessee for a period of one year or more.

Rental companies are responsible for payment of the motor vehicle excise tax to the motor vehicle division when titling vehicles for rental purposes.

When a dealer occasionally rents a vehicle on a daily basis and has not paid motor vehicle excise tax on the vehicle, such as one held for resale, the dealer is required to collect and remit sales tax at the current rate based on the daily rental charges.