NDAC 81-03-09-13
Taxable in another state - When a state has jurisdiction to subject a taxpayer to a net income tax
Cite as N.D. Admin. Code ยง 81-03-09-13
The second test, that of either subsection 2 of North Dakota Century Code section 57-38.1-03 or
article IV(3)(b) of North Dakota Century Code section 57-59-01 applies if the taxpayer's business
activity is sufficient to give the state jurisdiction to impose a net income tax by reason of such business
activity under the constitution and statutes of the United States. Jurisdiction to tax is not present where
the state is prohibited from imposing the tax by reason of the provisions of Public Law 86-272, 15
U.S.C. 381-385. In the case of any "state" as defined in either subsection 8 of North Dakota Century
Code section 57-38.1-01 or article IV(1)(h) of North Dakota Century Code section 57-59-01, other than
a state of the United States or political subdivisions of such state, the determination of whether such
"state" has jurisdiction to subject the taxpayer to a net income tax shall be made as though the
jurisdiction standards applicable to a state of the United States applied in that "state". If jurisdiction is
otherwise present, such "state" is not considered as without jurisdiction by reason of the provisions of a
treaty between that state and the United States.
Example: Corporation X is actively engaged in manufacturing farm equipment in state A
and in foreign country B. Both state A and foreign country B impose a net income tax but
foreign country B exempts corporations engaged in manufacturing farm equipment.
Corporation X is subject to the jurisdiction of state A and foreign country B.