Missing the August 1 Secretary of State annual report. It is an unusual, standalone date that lines up with neither the April 15 tax deadline nor the entity's formation anniversary, and it differs from the May 15 date that applies to FOREIGN corporations — so owners who registered in multiple states routinely apply the wrong deadline. The penalty escalates from Not Good Standing (which breaks loan, investor and vendor certificates of good standing) to involuntary termination of the corporation within 6 to 12 months.
Recognized automatically
S-corp election in North Dakota
In short
No franchise tax, net-worth tax or minimum tax. Form 60 is effectively an information/flow-through return; the only entity-level cash obligation is 2.5% withholding on nonresident shareholders (or composite tax).
Does North Dakota recognize the federal S election?
North Dakota automatically recognizes the federal S election: "A corporation that elects to be taxed as a subchapter S corporation for federal income tax purposes is taxed in the same manner for North Dakota income tax purposes." No separate state election exists. The S corp files Form 60 (S Corporation Income Tax Return) by April 15 and issues Schedule K-1 (Form 60) to shareholders. The entity must withhold on nonresident individual shareholders unless they are covered by a composite return or a Form PWE exemption.
Tax the entity still owes
North Dakota imposes no corporate franchise tax, no net-worth tax and no minimum tax on an S corporation. The corporation itself generally owes $0 in North Dakota income tax; income is reported by shareholders on their own North Dakota returns. The two entity-level cash obligations are: (1) mandatory withholding of North Dakota income tax at 2.5% from the year-end distributive share of North Dakota income of a NONRESIDENT member — 2.5% corresponds to North Dakota's top individual rate; a nonresident member can be released from withholding by filing Form PWE (Passthrough Entity Member Withholding Exemption and Certification), which stays effective until revoked; and (2) composite tax, if the S corp elects to include consenting nonresident shareholders on a composite filing in lieu of their filing individually. The only other recurring state-level cost is the Secretary of State annual report fee of $25.
Registering for payroll
Register for an income tax withholding account with the North Dakota Office of State Tax Commissioner (through the ND TAP system), and separately register for unemployment insurance (SUTA) with Job Service North Dakota. North Dakota has no state-run paid family leave payroll tax. Note the same 2.5% top rate drives both wage withholding tables and the nonresident pass-through withholding rate.
Annual filings
Form 60 (S Corporation Income Tax Return) — due April 15 for calendar-year filers; amended returns use the same form with the amended box marked. Schedule K-1 (Form 60) to each shareholder. Form PWE for nonresident members claiming withholding exemption. Periodic wage withholding returns to the Office of State Tax Commissioner and quarterly UI wage reports to Job Service North Dakota. NORTH DAKOTA SECRETARY OF STATE ANNUAL REPORT — for a DOMESTIC business corporation the deadline is AUGUST 1 and the fee is $25; for a FOREIGN business corporation the deadline is MAY 15. Missing it puts the entity into Not Good Standing, and failure to cure within 6 to 12 months results in involuntary termination (or revocation of authority, for foreign entities).
Pass-through entity tax
No. North Dakota has NOT enacted a pass-through entity tax / SALT-cap workaround. It is consistently identified as one of a small handful of states with a broad-based income tax that has never offered an entity-level election (alongside Delaware, Maine, Pennsylvania and Vermont). North Dakota S corp owners therefore have no state mechanism to convert individual state income tax into a federally deductible entity-level tax — their state income tax remains subject to the federal SALT cap at the individual level. This matters less than elsewhere because North Dakota's top individual rate is only 2.5%, so the amount at stake is small.
The mistake owners make most often in North Dakota
Filing your federal Form 2553
Businesses operating in North Dakota send Form 2553 to the IRS Ogden service center — fax 855-214-7520. Full address and filing checklist for North Dakota.
Frequently asked questions
Does North Dakota require a separate S-corporation election?
No. North Dakota does not require a separate state election. North Dakota automatically recognizes the federal S election: "A corporation that elects to be taxed as a subchapter S corporation for federal income tax purposes is taxed in the same manner for North Dakota income tax purposes." No separate state election exists.
What tax does an S corporation pay in North Dakota?
No franchise tax, net-worth tax or minimum tax. Form 60 is effectively an information/flow-through return; the only entity-level cash obligation is 2.5% withholding on nonresident shareholders (or composite tax).
Where do I file Form 2553 from North Dakota?
With the IRS Ogden service center. Fax 855-214-7520, or mail to Department of the Treasury, Internal Revenue Service, Ogden, UT 84201.
What is the most common S-corp mistake in North Dakota?
Missing the August 1 Secretary of State annual report. It is an unusual, standalone date that lines up with neither the April 15 tax deadline nor the entity's formation anniversary, and it differs from the May 15 date that applies to FOREIGN corporations — so owners who registered in multiple states routinely apply the wrong deadline. The penalty escalates from Not Good Standing (which breaks loan, investor and vendor certificates of good standing) to involuntary termination of the corporation within 6 to 12 months.
Compare with other states: Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina.
Sources
File your Form 2553 correctly
Scorply completes your federal election and includes a North Dakota guide in your packet, so you know exactly what else you owe here.
Start my Form 2553Researched from official North Dakota sources and verified July 30, 2026. State tax rules change. This is general information, not tax advice — confirm with the state or a CPA before you rely on it.