Panel adopts amendment, advances bill to exempt thrift-store clothing sales from sales tax

The Government Operations Division adopted an amendment to House Bill 1428 and voted to advance the measure as amended after members and testimony focused on definitions, compliance with the Streamlined Sales and Use Tax Agreement, and the bill's fiscal effects.

Senator Dean Rummel, sponsor of the amendment that committee members reviewed, told the panel the Tax Department drafted the change so the state remains in compliance with the Streamlined Sales and Use Tax Agreement. "If we're going to add that, we need to stay in compliance," a Tax Department associate director told the committee, explaining the agreement contains detailed clothing definitions and North Dakota would need an explicit definition if it creates an exemption.

The amendment replaces the word "used" with a broader approach (the amendment text is cited in testimony as adopting the streamlined definition) and limits the exemption to nonprofit (501(c)(3)) thrift stores, a point the Tax Department noted and witnesses supported. Senator Rummel said the streamlined clothing definition is four pages long and that the amendment makes implementation simpler for volunteer‑run thrift stores.

Nonprofit thrift store representatives testified they support the exemption because customers at thrift stores are frequently lower income and the exemption would reduce costs for those shoppers. The North Dakota Retail Association testified with concerns about organized retail theft and said for‑profit thrift stores exist and could complicate enforcement, urging caution.

Committee fiscal discussion cited an updated fiscal estimate: staff said the current fiscal note assumes about 50% of thrift store sales are clothing and that exempting all clothing at nonprofit thrift stores would reduce state revenues by roughly $650,000 and local revenues by roughly $300,000 per biennium; committee members discussed whether exempting all nonprofit store sales would roughly double that estimate.

Senator Sickler moved the amendment (01001) and Senator Eberly seconded. The committee adopted the amendment on a roll call. Senator Sickler then moved that the bill, as amended, receive a "do pass" recommendation; the committee approved the do‑pass motion on a roll call. Senators volunteering to carry the bill were identified for the next step.

Ending: The committee advanced HB 1428 as amended; it will proceed to the full Appropriations Committee and later floor consideration. The Tax Department said it drafted the amendment and will assist with implementation details if the law changes.