PUBLICLAWNO.9-22NINTHNORTHERNMARIANASCOMMONWEALTHLEGISLATURESIXTHSPECIALSESSION,1994H.B.NO.9-250,H.D.4ANACTToimprovethetaxadministrationbyrepealingandreenacting4CMCDivisionI(RevenueandTaxation);andforotherpurposes.BEITENACTEDBYTHENINTHNORTHERNMARIANASCOMMONWEALTHLEGISLATURE:SectionI.RepealerandReenactment4CMCDivision1Chapters2through7areherebyrepealedandreenactedtoreadasfollows:"CHAPTER2WAGEANDSALARYANDEARNINGSTAXES§!201.§!202.§!203.§!204.§!205.§!206.WageandSalaryTaxEarningsTaxExemptionsAmmmtofTaxNon-refundableCreditFilingReturns§1201.WageandSalatvTax.Thereisimposedoneveryemployee,ayearlytaxontheemployee'stotalwagesandsalaries.§1202.EarningsTax.(a)Thereisimposedoneverypersonayearlytaxonsuchperson'stotaleanungs.(b)ForpurposesofthisChapter,'earnings'shallmean:(1)againasdetetn1inedunderNMTITsection1001receivedfromthesaleofpersonalproperty,tangibleorintangible,byaresidentthatwasnotinthecourseofcarryingonabusiness.(2)onehalfofthegainasdetenninedunderNMTITsectionl001receivedfromthesaleofrealpropertylocatedintheCommonwealththatwasnotinthecourseofcarryingonabusiness.(3)onehalfofthenetincomereceivedfromleasingofrealpropertylocatedintheCommonwealth,includingtheassignmentofanyleasethatwasnotinthecourseofcanyingonabusiness.Forpurposesoftillsparagraph,"netincomefromleasingrealpropertyincludingtheassignmentofanylease",meanstheincomelessexpensesfi:omtherentalofrealpropertyasdeterminedundertheNMTIT.(4)interest,dividends,rents,royalties,orsimilarincomeearnedinandderivedfmmapersonintheCommonwealthandreceivedbyaresidentnotinthecourseofcarryingonabusiness.(5)grosswinningsreceivedfromanygaming,lottery,raffleorothergamblingactivityintheCommonwealth.(6)allothertypesofincomethataresidentindividualmustreportindetermininghisNMTIT,except(A)paymentsreceivedbyanemployeeorhisbeneficiatyfromaretirementplan,includingtheCNMIretirementplan,orasunemploymentcompensation.Forpurposesofthisparagraph,thetenn'retirementplan',other.thantheCNMIretirementplanmeansaplanthatqualifiesunderSubchapterD,SubtitleAoftheNMTIT.(B)amountsreceivedasalimonyorseparatemaintenancepaymentsasdefinedundersection71ofNMTIT.(C)unemploymentcompensationasdefinedundersection85ofNMTIT.(D)socialsecuritybenefitsasde'finedundersection86ofNMTIT.Inadditiontotheitemsincludedwithinsubparagraphs(A)-(D)ofthisparagraph,theSecretarybymlingorregulationmayexemptotherincomewhentheSecretarydeterminesthatimposingtheEarningsTaxwouldresultinexcessivetaxation.(c)Thetaximposedunderthissectionshallnotapplytoearningsfromademinimistransaction.TheSecretruyshallprescriberegulationstodeterminewhetheratransactionisdeminimis.(d)Indetenniningthetotalearnings,apersonshallnotreduceanyeamingsbyanyloss.§1203.Exemptions.Section1202ofthisActshallnotapplyto:(a)ApersonexemptfromtheNMTIT,under NMTIT§§501(c)(3),50l(c)(4), 50l(c)(5),50l(c)(6), 50l(c)(8),501(c)(IO)orasaqualifiedplanunderNMTIT§40l(a).Thisexemption,however,shallnotapplyto:(1)earningsfromanytradeorbusiness,theconductofwhichisnotsubstantiallyrelated(asidefromtheneedofsuchorganizationforincomeorfundsortheuseitmakesoftheprofitsderived)totheexerciseorperfonnancebysuchorganizationofitscharitable,educational,orotherpurposeorfunctionconstitutingthebasisforitsexemption,exceptfortradeorbusinessescarriedonbytheorganizationprimarilyfortheconvenienceofitsmembers,student,patients,officers,oremployees,or(2)apersonwhodoesnotapplyforexemptstatusandcomplywiththeproceduresprescribedbytheSecretaryforexemptionsunderthissubsection.TheSecretarymayprescribebyregulationthatpersonsexemptundertheInternalRevenueCode(IRC)§§50l(c)(3), 50l(c)(4),50l(c)(5),50l(c)(6),50l(c)(8),50l(c)(10)shallalsobeexemptunderthissection.(b)EarningstotheextentthattheyaredeemedtobefromsourceswithouttheCommonwealthunderSection1712ofthisAct.§1204.AmountOfTax.TheamountoftaximposedbySections1201ancl1202ofthisActshallbedete1minedinaccordancewiththefollowingschedule:Ifthetotalyearlywagesortotalyearlyearningsare:Thetaxonthetotalyearlywagesandsalariesortotalyearlyearningsis:(a)SOto$1,000(b)$1,001to$5,000(c)$5,001to$7,000(d)$7,001to$15,000(e)$15,001to$22,000(f)$22,00Ito$30,000(g)$30,001to$40,000(h)$40,001to$50,000((k)over$50,000§1205.Non-refundableCredit.Notax2%oftheamountoverSO3%oftheamountover$04%oftheamountover$05%oftheamountover$06%oftheamountover$07%oftheamountover$08%oftheamountover$09%oftheamountover$0(a)Exceptasprovidedinsubsections(b)and(c)ofthissection,apersonmaytakeanyNMTITasanon-refundablecreditagainstthe taximposedonwagesandsalmiesoreamings,WlderthischapterbeforecalculationoftherebateallowedunderSection1708ofthisAct.(b)Theamountofthenon-refundablecreditshallbethelesserof:(1)theamountoftheNMTITpaidwithrespecttosuchwagesandsalariesorearningsandforwhicharebateisallowedunderthisAct,or(2)EarningsandWageandSalaryTaxesshownontheapplicabletaxreturn.(c)Apersonmaynottakethecreditallowedunderthissectioniftheperson.hasdeductedtheEarningsandWageandSala1yTaxesindeterminingthetaxableincomeundertheNMTIT.ThepersonmayelectanydeductionallowedundertheNMTITorthecreditallowedunderthissection.§1206.FilingReturns.AllpersonssubjecttotaxunderthisChaptershallfiletheappropriatereturninthemannerprescribedbytheSecretary.Therequiredfilingdateforsuchn::turnshallbenolaterthantheGJteenthdayofthefourthmonthfollowingthecloseofthetaxyear.TheretumshallincludeallinformationastheSecretarymayrequirebyregulation.CHAPTER3.GROSSREVENUETAX

# § !301. § 1302. § 1303. 

# § 1304. § 1305. §1306. 

# §!307.

Tax on Gross Revenue 

# Tax on Agricultural Producers
and Fishing Tax on Manufacturers

or Wholesalers 

# Tax on Banks, Banking Institutions, Building and Loan Associations,

and Other Financial Institutions Exemptions Returns and Payments ofT ax on Gross Revenue Gross Revenue Deduction § 

# 1301. Tax on Gross Revenue. (a) Except

as otherwise provided, there

is imposed

on every person,

a yearly tax on the person's total gross revenue. The tax shall be determined

in accordance with the following schedule: $0,

If the yearly total gross revenue

is between: (1) $0 

# to $5,000, (2) $5,001



# to $50,000 (3) $50,001



# to $100,000 (4) $100,001



# to $250,000 (5) $250,001



# to $500,000 (6) $500,001



# to $750,000 (7) $750,001 and over

The tax on the yearly total gross revenue

is: 

# No Tax 1.5%oftheamountover 

# 2.0% of 

# the amount over $0, 2.5% of the amountover

$0, 3.0% of the amount over $0, 4.0% of the amount over $0 5.0% of the amount over SO, 

# (b) A person who during the year conducts two or more separate and distinct businesses, sells more than one property

or is entitled

to distributive shares from more than one partnership, shall pay the yearly tax under this section
on the combined total gross revenue

of all the businesses,

all sales of property

or all the distributive shares that are otherwise subject

to Gross Revenue Tax for the year. 

# § 1302. Tax On Agriculture Producers And Fishing. (a) In lieu of the tax rates of Section 130l(a),
the tax imposed

on personsengagedinthebusinessofproducingagriculturalproductsintheCommonwealth,orfishingintheCommonwealth,oritswaters,fordietaryconsumption,shallbedetenninedinaccordancewiththefollowingschedule:IftheyearlytotalThetaxontheyearlygrossrevenueisbetween:(A)$0to$20,000,(B)over$20,000totalgrossrevenueis:notax1.0%oftotalgrossrevenuesmexcessof$20,000.(b)Subsection(b)ofSection1301shallapplyindetetminingtheyearlytotalgrossrevenueofpersonssubjecttosubsection(a)ofthissection.(c)AllpersonssubjecttothissectionshallfilethereturnsrequiredunderSection1306ofthisActwhetherornotanytaxisdue.§1303.TaxOnManufacturersorWholesalers.(a)InlieuofthetaxratesofSection130l(a),the taximposedonpersonsengagedinthebusinessofmanutacnningandsellingofgoodsshallbeinaccordancewiththefollowingschedule:Iftheyearlytotalgrossrevenueisbetween:(1)$0to$5,000,(2)$5,001to$50,000,Thetaxontheyearlytotalgrossrevenueis:notax.1.5%oftotalgrossrevenueinexcessof$0.(3)$50,001andover,2%oftotalgrossrevenueinexcessof$0.(b)Subsections(b)ofSection1301shallapplyindetetminingtheyearlytotalgrossrevenuesofpersonssubjecttosubsection(a)ofthissection.(c)Allpersonssubjecttothissectionshallmaintainseparaterecordsandaccounts,showingthegrossrevenuefrommanufacturingandselling,sellingalwholesale,sellingatretail,andotherbusinessactivities.§1304.TaxOnBanks.BankingInstitutions.BuildingandLoanAssociationsandOtherFinancialInstitutions.(a)InlieuofSection130l(a),thetaximposedonpersonsoperatinganybank,bankinginstitution,buildingandloanassociation,orotherfinancialinstitutionshallbethegreaterof5percentofthenetincomeearnedbysuchinstitutionsor3percentofthetotalgrossrevenueofsuchinstitutions.(b)ForpurposesofthisSection,'netincome'meansgrossrevenuefromallsourceslessthefollowingdeductions:(I)Salariesorbonusesandothercompensationpaidforpersonalservices;(2)Interestordiscountpaid;(3)Rentspaid;(4)Ordinaryoperatingexpensessuchassupplies,utilityservices,insurancepremiumsotherthanforlifeinsurance;Provided,thatanydeductibleinsuranceexpenseshallbeallowableonlytotheextentthatsuchapremiumisapplicabletothetaxperiodagainstwhichitisclaimed;(5)Loansorobligationschargedoffthebooksofthebankaslossesunlesschargedagainstreservestheninexistence;(6)Lossesotherthanloanlosses,suchasthoseoccasionedbyfireorothercasualty,theft,embezzlement,andthelike,butonlytotheextentnotcoveredbyinsuranceproceedscollected;(7)TransfersfromearningstoreserveforbaddebtsorothercontingenciesprovidedfortotheextentallowableundertheNMTIT;(8)Miscella,neousdirectexpensessuchaslegaladvertising,auditing,andthelike;and(9)Lossonprope11ysoldanddepreciationonpropertyo\.Vlled.(c)Alldeductionsallowedpursuanttosubdivision(b)shallbelimitedtotheportionattributabletogrossrevenueearnedoraccrued,whicheverisearlier,withintheCommonwealth.§1305.Exemptions.Notwithstandinganyotherprovision,Section1301(a),§1302,and§1303shallnotapplytothegrossrevenue:(a)derivedsolelyfromtheexpm1salesofgoods,resources,food,fishoragriculturalproductsproducedormanufacturedintheCommonwealthanddeliveredbythemanufacturerorproducertothebuyeroutsidetheCommonwealth.(b)fi:omthesaleofdieselfuelforuseinanyvessel'scommercialoperationsthatareprimarilyoutsidethetenitorialwatersoftheCommonwealth.(c)eamedbyaForeignSalesCmporation,fromitsoperations.(d)fromdeminimistransactionsasdeterminedbytheSecretarybyregulations.(e)earnedbybankingcorporations.(f)totheextentthattheyaretreatedassourcesfromwithouttheCommonwealthunderSection1712ofthisAct.(g)earnedbyapersonexemptfromtheNMTITunderNMTIT§§501(c)(3),50!(c)(4),50l(c)(5),50!(c)(6),50l(c)(8),or50l(c)(!O)orasaqualifiedplanunderNMTIT§401(a)andtotheextentallowedunder§527oftheNMTIT.Thisexemption,however,doesnotapply:(1)togrossrevenuefromanytradeorbusiness,theconductofwhichisnotsubstantiallyrelated(asidefromtheneedofsuchorganizationforincomeorfundsortheuseitmakesoftheprofitsderived)totheexerciseorperfonnancebysuchorganizationofitscharitable,educational,orotherpurposeorfunctionconstitutingthebasisforitsexemption,exceptfortradeorbusinessescarriedonbytheorganizationprimarilyfortheconvenienceofitsmembers,students,patients,officers,oremployees,or(2)toapersonwhodoesnotapplyforexemptstatusandcomplywiththeproceduresprescribedbytheSecretaryforthe_exemptionsunderthissubsection.TheSecretarymayprescribebyregulationthatpersonsexemptunderIRC§§501(c)(3),50J(c)(4),50l(c)(5),50l(c)(6),50I(c)(8),50I(c)(10)shallalsobeexemptunderthissection.§1306.ReturnsandPaymentofTaxonGrossRevenue.(a)InGeneraLEverypersonsubjecttothisChaptershallflleareturnandpaythetax,ifany,onaqumicrlybasis.TheSecretaryshallbyregulationprescribequarterlyratesnecessruytocarryouttheintentandpurposeofthissection.(b)FilingReturnsandPayment.Thequruierlyreturnsandtaxpaymentsundersubsection(a)shallbefiledandthetaxpaid,ifany,onorbeforethelastdayofthemonthfollowingthecloseofeachquarter,towit:onorbeforeApril30,July31,October31,

### January
31. The payment shall be based on the payor's gross revenue

of the preceding quarter, and the amount
of tax imposed

by Chapter

3 of this Act shall be paid
to the Commonwealth Govenunent tlu·ough
the Secretaty

or IUs appointee

or appointees. Each business shall, on or before the date provided

for payment

of tax under this section, make

a full, true, and correct return showing

all such gross revenue received, accrued,

or eamed, whichever

is earlier, and the amounts deducted and set aside on account during the preceding quarter. This retum shall be filed with the Secretaty
and include such other inf01mation

as may be required

or prescribed

by the Secretary.
The Secretary,

for good cause, may extend the time for making payments
and returns, but not beyond the last day of the first month succeeding

the regular due date. (c) Tax Returns
of Transferor.
The requirement

to deduct, withhold
and pay over tax for the account

of the transferor shall not relieve the transferor from the duty
to file any tax retums required
by law. (d) Penalty. Failure

to comply with the provisions ofthis section shall be punishable under the penalties prescribed

by this Act. § 

### 1307. Non-refundable Credit. (a) Except

as provided

in subsection

(c) of this section,

a person may take

anonrefundable credit against the tax imposed

on gross revenues under Section 1301 or any other Commonwealth

tax or fee imposed

in lieu of such tax (such
as 4 CMC 2202(h)), (b) For purposes

of this section, the amount
of the non-refundable
credit shall be the lesser of:
(I) The amount
of the NMTIT paid with respect

to gross revenues from sources within the Commonwealth;

or (2) The Gross Revenue Tax shown
on the retum. (c) A Person may not take the credit allowed under this section

if the person has deducted

the Gross Revenue Tax in determining taxable income under the NMTIT. The person may elect any deduction allowed under the NMTIT

or the credit allowed under this section. 

### CHAPTER4 ARTICLE

I§1401.§1402.§1403.§1404.§1405.§1406.§1407.§1408.§1409.§1410.§1411.EXCISETAXDefinitionsBusinessExciseTaxFuelTaxFuelTaxExemptionBeveragesContainerExciseTaxExemptionPaymentofTax;Time;ReleaseofGoodsExportsRefunds-LimitationPeriodDeclarationRequiredPenalties§1401.Definitions.ForpurposesofthisChapter:(a)'Advalorem'meansthevalueofgoods,commodities,resourcesormerchandise.(b)'AlcoholicBeverage'meansbeerorothermaltbeverage,distilledalcoholicbeverage,wineorsakeand anyotherbeverage,whichcontainsatleastone-halfofonepercent(0.5%)ofalcoholbyvolumeandwhichisfitforhumanconsumption.(c)'Beerandothermaltbeverage'meansanybeveragemadebythealcoholicfetmentationofaninfusionordecoction,orcombinationofboth,inpotablebrewingwater,ofmaltedbarleywithhops,ortheirp;;ui:s,ortheirproducts,andwithorwithoutothermaltedcereals,andwithorwithouttheadditionofurunaltedorpreparedcereals,othercarbohydratesorproductspreparedtherefrom,andwithorwithouttheadditionofcarbondioxide,andwithorwithoutotherwholesomeproductssuitableforhumanconsumption.(d)'Cigarette'meansandincludesanypreparationoffinelycuttobaccoorothersmokablesubstance,material,orproductrolledandenclosedsothatitisheldtogetherforsmoking.(e)'Constructionmaterial'meansmaterialswhicharepartofthebasiccomponentsofabuildingstructure.Thebasiccomponentsofabuildingstructureincludecement,gravel,lumber,nails,rebars,windows,doors,pipes,hollowblocks,electricalandplumbingsupplies,doorandwindowframes,doorknobs,ceramics,tiles,sinks,toilets,andpaint.(f) 'Distilled alcoholic beverage' means aggie, alcohol, brandy, whiskey, any liqueur or any substance !mown

as ethyl alcohol

or ethanol and evety product

of distillation

or other process

of any fennented liquid which

is fit for human consumption. (g) 'Foodstuff means any food which has nutritional value,
or is necessary

for the sustenance

of life, and suitable
for human consumption including dairy products, bottled drinking water, 100% fmit or vegetable juices, and any ingredient primarily used
in the preparation

of food. (h) 'Hygiene Products' means goods, merchandise

or products necessary

for the personal health, safety and cleanliness

of an individual; except
for child care products exempted under Section l402(b)(5)

of this Chapter. (i) '.Tcwehy' means
all articles made of precious metal
or precious

or **semi~precious** stones and capable
of being worn for personal adorrunent. G) 'Liquid fuel' means and includes

all liquids ordinarily, practically
and conunercially usable

in internal combustion

for the generation

of power and shall include
all distillates

of, and condensates from petroleum, natural gas, coal, coal tar and vegetable

or plant fennents, such distillates
and condensates being ordinarily designated

as gasoline, butane, naphtha, benzol, benzene, kerosene and alcohol

so usable but not restricted

to such designation. (k) 'Leather goods
or related products' means a11icles made of fur on the hide, pelts, or any animal skin dressed
for use or in which such article has as a component

fur on the hide, pelts or any animal skin. Leather goods
or related products does not include footwear. (l)

1 Passenger vehicle' means any vehicle
of four wheels

or more: (1) which

is manufactured primarily

for use on public streets, roads, and highways,
and (2) which

is rated

at 2.5 ton (or its metric equivalent) gross vehicle weight

or less. (m) 'Sake' means
an alcoholic beverage

of fermented rice which

is nola beer and does not contain malt. (n) 'Soft Drink' means any readily drinkable carbonated

or **non~carbonated**

**non~** alcoholic beverage, other than drinkable dairy products, 100% fruit or vegetable juices, and bottled drinking water.(o) 'Tobacco'

or 'tobacco substitute'

or 'chewable tobacco product'

or other smokable, or snuffable substance other than cigarettes shall mean and include
the product

or manufacture

of any tobacco substance, material

or product capable

of preparation

for smoking

or chewing

or snuffmg and the product

or the manufacture

of any non-tobacco substance, material

or product capable
of preparation

for smoking

or snuffing. (p) 'Wine' shall mean

a beverage
for human consumption consisting

of the product

of the normal alcoholic fennentation

of the juice of any fmit or any natural produce and not containing more than 24 percent (24%) alcohol
by volume. Wine shall not include any beverage which contains distilled alcohol such as liqueurs, cordials and similar compounds. The Secretaty may prescribe regulations which fwther define any of the above terms or define any other term necessary

for the administration

of this chapter. § 1402. Excise Tax. (a) **Gene~.·al.** For the ptivilege

of first sale, use, manufacture, lease or rental of goods, commodities, resources,

or merchandise

in the Commonwealth

for business purposes

or for personal use exceeding

the value specified

in subsection

(c), there

is imposed

an excise tax as follows:

( 1) Soft drinks, one-half

of one cent ($0.005) per fluid ounce
or fractional equivalent thereof; (2) Foodstuffs,
one percent (I%) ad valorem; (3) Commodities
used in the production

of agricultural prodjlcts, including fertilizers, seed, animal feeds, pesticides
and herbicides, agiicultural equipment, machineiy, tools, irrigation equipment
and accessories intended specifically

for agricultural
use, one percent

(l %) ad valorem. (4) Perfumery, mticles
of perfumery including cologne and other fragrances whether

in sachets

or **othe~.wise,** thirty percent (30%)
ad valorem
for three years after the passage

of this Act into law; thereafter twenty percent (20%); (5) Cosmetics, including

all preparations
used as applications

to the hair or skin, lipsticks,
eye shadows, mascara, pomades, powders, makeup and other preparations

not having medicinal properties

or hygienic purposes, thirty percent (30%)

ad valorem
for three years after the passage

of this Act into law; thereafterfifteenpercent(15%);(6)HygieneProductsandToiletries,onepercent(1%)advalorem;(7)Prescriptiondrugsandmedicines,onepercent(1%)advalorem;(8)Constructionequipment,constructionmaterials,andconstructionmachinery,threepercent(3%)advalorem;(9)Leathergoodsorrelatedproducts,twenty-fivepercent(25%)advaloremforthreeyearsafterthepassageofthisActintolaw;thereaftertenpercent(10%);(I0)Jewelry,twentyfivepercent(25%)advaloremforthreeyearsafterthepassageofthisActintolaw;thereaftertenpercent(10%);(11)Preciousmetals,preciousorsemi-preciousstonesorrelatedcommodities,twentyfivepercent(25%)advaloremforthreeyearsafterthepassageofthisActintolaw;thereaftertenpercent(10%);(12)Passengervehiclehavingavaluenotexceeding$30,000perunit,fivepercent(5%)advalorem;(13)Passengervehiclehavingavalueinexcessof$30,000perunit,tenpercent(10%)advaloremforthreeyearsafterthepassageofthisActintolaw;thereafterfivepercent(5%);(14)Boatsandyachts,whethercapableofbeingpoweredbysailormotor,andhavingavaluenotexceeding$50,000perunit,fivepercent(5%)advalorem;(15)Boatsand.yachts,whethercapableofbeingpoweredbysailormotor,andhavingavalueinexcessof$50,000perunit,tenpercent(I0%)advaloremforthreeyearsafterthepassageofthisActintolaw;thereafterfivepercent(5%);(16)Goods,commodities,resources,ormerchandisemanufacturedgrownorentirelyderivedfromsourceswithintheCommonwealth,onepercent(1%)ofretailprice,unlessothetwisespecifiedwithinthisChapter.(17)Cigarettes,fifty(50)centspereverytwenty(20)cigarettesorfractionalequivalentthereofforthreeyearsafterthepassageoftlllsActintolaw;thereaftertwenty-five(25)centspereverytwenty(20)cigarettesorfractionalequivalentthereof;(18)Tobaccoortobaccosubstituteorchewabletobaccoproduct,orothertax: smokable

or snuffable substance, material

or product, other than cigarettes, fifty percent (50%) of the invoice **price~** (19) Beer and malt beverages
1.67 cents ($0.0167)
per fluid ounce
or fractional equivalent thereof; (20) Distilled alcoholic beverages,

12 cents per t1uid ounce
or fractional equivalent thereof; (21) Wine and sake,

3 cents per fluid ounce
or :fiactional equivalent thereof; (22) AU other goods, commodities, resources,

or merchandise

not otherwise provided

by law, five percent (5%) ad valorem; (b) Exemptions
from Excise Tax. The following items shall be exempt from excise (1) Capital equipment
and machinery used
in businesses primarily engaged

in manufacturing

for expott with

a fair market value exceeding $1,000 per unit and raw materials used
in businesses primarily engaged

in manufacturing

for expmt. (2) Sacramental wine for use in religious rites of
a religious organization. (3) Books and other educational materials purchased

for non-business

use by a public
or private school
or
a library open to the public. (4) Merchandise, equipment, devices, and other items, including wheelchairs, hearing aids, braille mate1ial, canes, walkers, prosthetic devices, braces, crutches,

or presctiption lenses and eye glasses brought

in by persons

to be used by handicapped individuals who are either residing

or visiting

in the Commonwealth, provided however, that such merchandise, equipment, devises and other items are not brought into the Commonwealth

for sale, lease,
or rent to the handicapped. (5) Merchandise, equipment, devices, hygiene products, cribs, strollers, diapers, lotions, creams, powders, and other products primarily intended
for use in the daily and ordinary care of children aged lwenty-four months

or less. (6) solar panels and other such devices for the conversion

of solar energy into heat or electricity. (7) Personal and office computer equipment having

a value of Jess than $5,000, including CPUs, monitors, keyboards,
and hard drives, but not including

### accessories, floppy disks,
or software. (8) Goods, commodities, resources,

or merchandise brought into the Commonwealth temporarily

and solely for the purpose

of display

or demonstration and not tOr the pmpose
of sale. Any goods, commodities, resources,

or merchandise temporarily imported under this subsection must be entered pursuant

to
a written application

as presctibed

by the Secretary and filed with the Secretary.
The Secretary may by regulation place restrictions

on any temporary impm1ation
free of tax under this section

to ensure that all relevant goods, commodities, resources,

or merchandise are in fact used only for temporary display

or demonstration. (6) The Secretary may prescribe regulations

to exempt any other goods, commodities, resom·ces,

or merchandise from taxation under this Chapter. (c) Non-business

use exemption.
Any person may bring for personal
use and consumption exempt from excise tax imposed

by this section the following goods, commodities, resources,

or merchandise: (1) any goods, commodities, resources

or merchandise (including those exempt) that do not exceed

a combined total value of $1000, except

as otherwise provided

in tills section. For purposes

of ascertaining which goods, conunodities, resources

or merchandise equal the first $1000
of exempted goods, commodities, resources

or merchandise,

the value of those goods, commodities, resources,

or meryhandise
with the lowest excise rate shall be included first. (2) An amoW1t

of cigarettes that are commercially packaged
and that do not exceed
30 packages of20 cigarettes
per package. (3) an amount
of tobacco

or tobacco substitute,

or chewable tobacco product or other smokable

or snuffable substance, material

or product other than cigarettes, not to exceed one pound, provided that such substance, mate1ial

or product

is not contraband.

( 4) an amount
of distilled alcoholic beverages
not to exceed **seventy~seven** 

### (77) ounces. (5) an amOW1t
of beer or other malt beverage
not to exceed 288 fluid ounces. (6) an amount
of wine and sake not to exceed 128 ounces.(d) Regulations.

The Secretary may by regulation require that persons importing quantities

of goods, commodities, resources,

or merchandise

in the Commonwealth which are not nonnally indicative

of
a non-business

use must supply proof of the non-business nature of the use intended
for the goods, commodities, resources,

or merchandise

in order
to avoid taxation under this section, The Secretary shall prescribe

by regulation
the nature
of the proof required

to show the non-business purpose. (e) Special Rule on Separate Purchases

of Articles and Parts and Accessories. Under regulations prescribed

by the Secretary; (1) In General. Except

as provided

by paragraph

(2) and (3), if: (A) the owner, Jessee,

or operator

of any passenger vehicle, boat or yacht taxable under Section l402(a)(I3)

& (15), (determined without regard to price) installs
(or causes

to be installed)
any part or accessmy

on such ruticle, and (B) such installation

is not later than the date

6 months after the date the article was first placed

in service, then there

is hereby imposed
on such first sale or use

a tax equal
to the sum of: (AA)
10 percent

of the total price of such part or accessory, plus (BB)

l 0 percent
of the atiicle taxable under this Chapter (detennined without regard
of price). (2) Limitation. "Where the article taxable under this section was previously taxed under subsection 1402(a), the tax imposed

by paragraph

(1) shall be reduce by that tax previously imposed and paid under subsection 1402(a). (3) Exceptions. Paragraph

(I) shall not apply
if: (A) the part or accessory installed

is a replacement
part or accessmy, or (B) the aggregate price of the parts and accessories described

in paragraph

(I) with respect

to the taxable mticle does not exceed $200 (or such other amount

or amounts

as the Secretrny may by regulation presctibe

). § 1403. Fuel Tax. (a) Liquid Fuel Tax. Except

as provided

in subsection

(b) and (c), for the privilege

### of first selling

or distributing liquid fuel
in the Commonwealth,

there

is imposed

an excise tax at the rate of fifteen (15) cents per gallon for three years after the passage

of this Act into law; thereafter

ten (I 

### 0) cents per gallon. (b) Aviation Fuel Tax. For the privilege

of first selling

or distributing aviation gas or other aviation fuel in the Commonwealth,

there

is imposed

an excise tax at the rate of three percent (3%) ad valorem. 

### § 1404. Fuel Tax Exemption.
The Secretary may by regulation reduce

or waive the fuel tax imposed **under~** 

### 1403 where: (a) The price of aviation fuel without the aviation fuel tax would
be more competitive than the price of aviation fuel elsewhere
and the airline would purchase
the aviation fuel in the Commonwealth. (b) the sale of diesel fuel for use in any vessel

1 

### s commercial operations
that are primarily outside the territorial waters
of the Commonwealth. 

### § 1406. Beverage Container Tax. (a) Soft Drink Beverage Containers. There

is imposed

a tax upon all soft drink beverage containers

in the amount
of five (5) cents per container. (b) Alcoholic Beverage Containers. There

is imposed

a tax upon each container

of any alcoholic beverage

in the amount
of five

( 5) cents per container. § 

### 1406. Exemption.
Any goods, commodities, resources,

or merchandise subject

to tax under this Chapter and requiring customs inspection
and clearance may be exempted from such tax if such goods, commodities, resources,

or merchandise

is certified

as damaged

or not received

by the carrier

or his agent. 

### § 1407. Payment ofT ax; Time: Release

of Goods: Container Tampering. (a) Generally.

All taxes required

by this Chapter shall

be paid within
30 calendar days after the first sale, use, completion

of manufacture, lease
or rental
in the Commonwealth

of goods, commodities, r<!sources,

or merchandise subject

to excise tax. (b) Customs Inspection
and Clearance Required.

In the case of those goods, commodities, resources,

or merchandise whose first use in the Corrunonwealth requires customs inspection
and clearance, payment shall be made within 30 days after entry. Such goods, commodities, resources,

or merchandise
may be released prior
to payment

of excisetax and upon the submission

of the Bill of Lading and/or Manifest

or invoice

or any other form prescribed

by the Secretary. Where the actual amount

of tax cannot
be determined within

7 calendar days after the entry,
an estimated
tax shall be paid within
30 days after entry, subject

to later adjustment. (c) Release
of Goods. No person

is allowed

to release

or deliver goods, commodities, resources,

or merchandise

to any person without prior Customs clearance when required. Any person who releases

or delivers any goods, commodities, resources,

or merchandise without prior Customs clearance shall be subject

to a civil penalty

of no more than $10,000 and any other applicable penalty under this Act. (d) Tampering With Containerized Cargo. Pursuant

to 6 CMC

§ 2305, no person

is allowed

to open or otherwise tamper with containerized cargo prior
to customs clearance. Any person who opens
or otherwise tampers with containerized cargo shall be subject

to
a civil penalty
of no more than $10,000 including any penalty under

6 CMC

§ 2301 (b) and any other applicable penalty under this Act. § 1408. Refunds- Expm1s. Upon application

to the Secretary,
any person who imports goods, commodities, resources,

or merchandise

into the customs tenito:ty

of the Commonwealth

for sale, use, lease
or rental and expm1s them
to
a buyer outside
of the customs territory

of the Commonwealth

shall be entitled

to a refund
of tax actually paid on those items, provided however, that such goods, commodities, resources,

or merchandise exported were not used, sold, leased
or rented within the Commonwealth
prior
to export. § 1409. Refunds-Limitation
Period. Application

for refund pursuant

to § 1408 of this Chapter shall be filed with the Secretary within one year from the date the tax was paid or required to be paid or goods, commodities, resources,

or merchandise entered the Commonwealth, whichever is earlier.

§ 1410. Declaration Required. Any person who imports any goods, commodities, resources, or merchandise limn outside the Conunonwealth

and
is subject

to excise tax imposed

on those goods, commodities, resources,

or merchandise

by this Chapter shall declare the entry of such goods, commodities, resomces,

or merchandise

on
a fonn prescribed

by the Secreta:ty. § 1411. Penalties.
The following penalties

for this Chapter
are in addition

to the other penalties provided

by this Act:

# (a) A penalty

of 100% of the value of the goods commodities, resources,

or merchandise
shall be imposed

on any person who imports any goods, commodities, resomces, or merchandise subject

to the excise taxation imposed

by this Chapter and who files

a false or misleading declaration,

bill of lading, manifest, airway bill, invoices, and/or other documentation which fails
to declare

to the Secretary goods, commodities, resources,

or merchandise subject

to tax, or under·declares,

or failed
to declare their correct amount

or value of such goods, commodities, resources,

or merchandise; (b) In the case of goods, commodities resources,

or merchandise subject

to excise tax 

# in the Conunonwealth

for which penalties
are assessed under this Act, the Secretary shall have the authority

to withhold
the release
of any and

all goods, commodities resources,

or merchandise
from the consignee

or owner until settlement

of the amount

of excise tax and penalty due and payment

is made
or adequate bond

is posted

to guarantee such payment. (c) Any tax, penalty,

or interest charge imposed
by this Chapter and unpaid,

or any violation

of any of the provisions

of this Act may result



# in the Secretary forfeiting
the affected goods, commodities, resomces,

or merchandise pursuant

to 6 CMC §2150. 

# ARTICLE

II 3.5 PERCENT CUSTOMS SERVICE CERTIFICATION. § 1421. User Fees § 

# 1422. § 

# 1423. Authorization Penalty 

# § 1421. User Fees. Any person requiring
the cet1ification

of the Department

of Finance
for country

of origin
or other purposes relating

to exports from the Commonwealth

shall be charged

a user fee. The user fee shall be three and one half percent (3.5%)
of the gross value
of the merchandise

to be ce11ified which shall become due and payable

to the Commonwealth Treasury upon certification.

Nu less than fin: percent (5%) of the amount collected shall be reserved
for usc 

# by the Division

of Customs Services without further approp1iation.

The Secretary shall impose the interest charge imposed

by Section 1819 of this Act on all user fees not paid when due. 

# § 1422. Authorization.

The Secretruy

or his designee

is hereby authorized

to collect the fees provided

in Section 1421 of this Chapter when due and collectible.§1423.Penalty.AnyfailwetocomplywiththeprovisionsofthisA11icleshallbesubjecttoacivilpenaltynottoexceed$10,000asmaybedetenninedbytheSecretary.ThispenaltyisinadditiontotheotherpenaltiesprovidedbythisAct,andisnotanassessablepenaltysubjecttothedeficiencyproceduresoftheAct.CHAPTERSMISCELLANEOUSTAXESANDLICENSEFEES§1501.Bat·Tax.§1501.§1502.§1503.§1504.§1505.§1506.§1507.§1508.BarTaxHotelOccupancyTaxAmusementMachinesLimitationonNumberofPokerMachineLicensesIssuedGamingMachineJackpotTaxCriminalPenaltyRegulationReservationofLicenseRevenue(a)ThereisimposeduponanypersondoingbusinessinanyestablislunentlocatedintheCommonwealthwhichislicensedtoservealcoholicbeveragesforconsumptiononthepremisesoftheestablishment,ataxintheamountoftenpercent(I0%)ofthetotalchargeforanybeveragesoldorconsumedattheestablishment.AfterthreeyearshavefromtheeffectivedateofthisAct,tillstaxshallbeintheamountofsixpercent(6%).(b)EverypersonsubjecttothetaximposedbythissectionshallmakeamonthlyreturntotheSecretaryofallamountsreceivedfromthesaleofbeveragesandshallpaythetaxesrequiredtobepaidonorbeforethe20thdayofthesucceedingmonth.§1502.HotelOccupancyTax.(a)Anoccupancytaxisimposedupontransiento<.:cupantsofaroomorroomsinahotel,lodginghouse,orsimilarfacilitylocatedintheCommonwealth.Thetaxshallbetenpercent(10%)oftheamountchargedorpaidfortheaccommodations.(b)Thetaximposedbythissectionshallbecollectedbythepersonwhooperates,ownsormanagesahotel,lodging houseorsimilarfacilityasandwhenpaidorchargedtothehotel, lodging house
or similar facility. (c) Evezy person required

to collect the tax imposed

by this section shall, on or before the 20th day of the succeeding month make

a monthly return

to the Secretary
and pay over the taxes required

to be collected
for the previous month. § 1503. Amusement Machines. (a) There

is imposed
the following annual license fees for the conunercial operation of amusement machines

in the Conunonwealth

as follows: (I
) For amusement machines (other than poker
or similar amusement machines) whose major element

is skill and whose only reward

or prize

is limited

to additional games
or other use of the machine (e.g., video games, pinball machines, pool tables, etc.), $150 per machine. (2) For amusement machines whose major element

is chance which provides a reward
or prize of value or for poker machines

or similar amusement machines
the fee is $7,500 per machine. After three years have passed from the effective date of this Act, this fee shall be $6,000 per year. (3) For all jukeboxes, coin-activated phonographs

CD players

or othercoinactivated music producing machines, $150 per machine. (4) For all coin-activated kiddie ride machines, designated

for children under the age of 16, $25 per machine. (b) The fee imposed
by this section shall be the liability

of any owner
or lessee
of the amusement device,

or any person operating

or managing
any business

at which such amusement machine

is offered
for patronage. (c) License fees shall be paid in full prior
to the issuance

of a license. (d) Every poker machine owner and operator

as a condition

of any license issued shall maintain and operate poker machines

in
a separate room. No minor shall be pennitted

to enter this room and no alcoholic beverages

or other intoxicants shall be allowed

in tills room. An owner
or operator who violates this subsection

or who allows

it to be violated and who knew or should have known that

a violation was taking place shall be guilty of
a misdemeanor punishable

by up to $500 fine and thirty days imprisonment,

and further shall be liable

to the revocation

of the licenses

of all poker machines that he may own, operate,

or control.§ 1504. Limitation

on Number

of Poker Machine Licenses Issued. (a) Except

as provided

in subsection

(c) or (d), the total number

of poker machine licenses issued under this Chapter shall not exceed 200 per each senatorial district. (b) A license application shall designate

the senatorial district

in which the machine shall be operated.
No machine shall be operated

in more than one district, and no machine shall be operated

in a district other than the one designated

on the license. (c) Notwithstanding

any other provision

of this section,

a senatorial district may by initiative, pursuant

to the Commonwealth Northern Mariana Islands' Constitution, legalize gambling

in that district, thus the number

of poker machines

in that district will not be restricted

by subsection

(a). (d) No additional poker machine licenses shall be issued

in Senatorial District No.3, unless the total number
of existing licenses

is less than that specified

in subsection

(a). (e) The renewal

of a license existing prior
to the effective date of this Act shall not be limited
by subsection

(a). Upon the failure
of any person

to renew

a license, that license shall not be reissued

to any other person

if it will cause the number

of such licenses

to exceed that amount provided

for in subsection

(a). § 1505. Gaming Machine Jackpot Tax.
A taxoflO%

is hereby levied on all jackpot winnings fi"om poker machines, pachinko machines,
slot machines, pachinko slot machines,
and similar gaming devices.

(a) 'Jackpot winnings'

are defined

as winnings where the machine pays back $1,000.00 and over. (b) The operator

of the machine shall be responsible

for collecting
this tax and for keeping

all applicable records, and may be held liable for all uncollected taxes. (c) The Secretary may promulgate appropriate regulations

to enforce this section. § 1505. Criminal Penalty. (a) A person commits

a criminal offense when he places
or causes

to be placed into operation

an unlicensed poker machine and, upon conviction, shall be punished

by
a fine not to exceed five thousand dollars ($5,000)

or six months imprisomnent,

or both. (b) A person, including

an owner,
or operator

of
a poker machine,

a parent
or
a legal

# guardian, commits

a criminal offense when he assists, encourages

or allows another person who

is less than
18 years old to use

a poker machine and upon conviction, shall be punished by
a fme not to exceed five thousand dollars ($5,000)

or one year imprisonment,

or both. 

# § 1506. Regulation. (a) The Secretruy

of Finance shall promulgate reasonable rules and regulations which shall provide for, inter alia, the issuance

of licenses, relocation

of amusement machines, temporary suspension

or pennanent revocation

of licenses, seizure
of amusement machines, to prohibit
the transfer
of
a license

to a replacement machine

in the event

a licensed machine is defective

or malfunctioning,

and regarding machines which are operated

on premises

on which any other business activity

is cunied on. (b) The Secretmy may by regulation provide that he shall be present

at all times when monies are withdrawn fi:om amusement machines. § 1507. Reservation

of License Revenue. (a) The Secretmy

of Finance shall deposit 10% of all revenues raised from the licensing

of amusement machines under Section 1503(a)(2)

in a separate trust account

in the General Fund to be known

as the Human Resources Development Trust Fund. The revenues deposited

in this account shall be reserved
for the Job Training Partnership
Act Progratn. (b) The Secretmy

of Finance shall reserve 90% of all revenues raised from the licensing

of amusement machines under Section 1503(a)(2)

for the Northern Mariana Islands Retirement Fund and shall promptly deposit such revenues with the Copunonwealth Treasury without further appropriation. 

# CHAPTER6. FOREIGN SALES TAX INCENTIVES § 1601. Definitions 

# § 1602. § 1603. § 1604. 

# § 1605. 

# § 1606. 

# § 1607.
Tax Exemptions FSC License Infonnational Returns License Revocation

or Cancellation Rebate Regulations§ 1601. Definitions.

For the purpose

of this Chapter: (a)
A 'foreign sales corporation'

or 'FSC' means

a Commonwealth domestic corporation which
is: (1)
a FSC or small FSC
as defined

in Section 922 of the United States Internal Revenue Code of 1986,
as the same may be amended from time
to time, and (2) the holder
of a valid FSC business license. (b) 'Foreign Trade Income' means income which

is foreign trade income

as defined

in Section 923 of the United States Internal Revenue Code of 1986,

as the same may be amended from time
to time. § 1602. Tax Exemptions. (a) In accordance with Section 927(e)(5)

of the United States Internal Revenue Code of 1986,

as amended,
and notwithstanding

any other law to the contrary,

no tax shall be imposed

by the Commonwealth

on any foreign trade income detived before Janumy

1, 1987. (b) Notwithstanding

any other provision

of law,

a FSC which qualifies under subsection

(c) of this section shall be exempt from the following taxes and fees: (1) Any and all tax on its business gross revenue under Chapter

3 of this Act, as the same may from time
to time be amended. (2) Any and all license fees except the FSC license fee as provided

in Section 1603 of this Chapter. (3) Any tax on any ir).come under the Covenant Section 601 minor image Northern Marianas Tenitorial Income Tax including
but not limited

to all interest, dividends, royalties, and other investment income, and all carrying charges, received or accrued

by
a FSC,
as defmed

in Sections
921

( d)(2)

& (3) and 92 7( c) & (d) of the U.S. Internal Revenue Code of 1986 as amended. (c) A FSC qualifies
for the exemptions under subsection

(b) of this Section only if it satisfiGs

all of the following conditions: ( 1) the FSC has obtained

a FSC business license required lUlder Section 1603 of this Chapter; (2) the FSC files the information returns required under Section 1604 of this Chapter;

### (3) the FSC
is incorporated

in the Commonwealth; (4) the FSC maintains, whether directly

or through

an independent agent, an office

in the Commonwealth;

and (5) at least one of its directors resides

in the Commonwealth. (d) The exemption provided

in subsection

(b) of this Section shall remain

in effect for so long as foreign sales corporations receive

a tax exemption

for foreign trade income under the United States Internal Revenue Code of 1986,
as amended. § 

### 1603. FSC License.

In order
to qualify for the tax exemptions

of Section 

### 1602(b

), a FSC shall first obtain

a license from the Secretary

of Finance. The FSC license shall be issued upon application

by the FSC and payment

of the annual license fee of $500. The initial application

to the Secretary shall be accompanied

by: (a) A copy of its articles
of incorporation

and bylaws
(A license shall not be delayed to a newly-organized
FSC, not yet chartered,

if its articles have been filed with the Registrar of Corporations). 

### (b) A copy of 

### its most recent election under the United States lntemal Revenue Code of 

### 1986,
as amended,

to be treated

as
a FSC and, if applicable,

to be treated

as
a small FSC; or if the applicant
has not yet made an election

it shall pledge

to finnish the Secretmy

a copy of its election within
90 days after making the election. (c) h1fom1ation identifying

its resident director and the location

of its Commonwealth office. The FSC license shall be renewed upon application
and payment

of the annual license fee. The FSC license may be revoked

or suspended

in accordance with the procedures

of Section 

### 1605. No other business license shall be required

of
a FSC license holder

if the activities undertaken

by the licensee

or its agents

in the Commonwealth

are related

to the eaming

of foreign trade income.

A FSC shall be required

to obtain business licenses
for conducting activities
not related

to emning foreign trade income and to pay all applicable taxes
in the same manner

as any other corporation doing business

in the Commonwealth. 

### § 1604. Informational Returns. Even
if no tax is due,

a FSC shall file an infonnational

tax return with the Chief of the Division

of Revenue and Taxation, Department

of Finance. Theinformational

tax retums shall be filed
at the same time the FSC's tax returns shall be filed with the United States Internal Revenue Service. The infonnational return shall consist
of
a copy of the Fonn 1120 and all schedules
and worksheets attached which are filed or to be filed by the FSC with the United States Internal Revenue Service, together with

a Form 1120 CM. The Chief may require any FSC
to submit additional infom1ation substantiating

its qualification

for tax exemption

of this Chapter or for FSC treatment under the United States Internal Revenue Code. The administrative provisions

of this Act, and of the Internal Revenue Code
as it applies

to the Commonwealth pursuant

to Covenant Section 601 as
a Territorial Income Tax shall apply
to FSCs.

§ 1605. License Revocation

or Cancellation. (a) So long
as a licensed FSC pays its annual license fee and otherwise complies with Section 1603,

a FSC shall be presumed

to be validly licensed. (b) In the event the Secretary

of Finance has any cause
to believe any FSC license was invalidly issued
or that any FSC license

is subject

to revocation

or cancellation because the holder

is not in compliance with applicable Commonwealth

law, then the Secretaty shall provide written notice
to the FSC, specifying

the grounds
for revocation

or cancellation

of the FSC license. The FSC shall then have

a period of90 days
to correct any deficiencies

and bring itself into compliance with the Commonwealth

law and cure any grounds
for revocation or cancellation.

In the event the Secreta1y

of Finance after such 90 day period believes
the FSC

is still not in **~ompliance** with the applicable Conunonwealth

law or otherwise
has not cured the grounds
for revocation

or cancellation,

the Secretary shall have the right upon not less than 30 days written notice

to the FSC
to conduct

a hearing and thereafter,

if the cause be found,

to revoke

or cancel the FSC license. (c) Any cancellation

or revocation order issued by the Secretary

of Finance shall be subject

to judicial review

in the Commonwealth Superior Court pursuant

to the Administrative Procedure
Ad (I CMC, Division

9). § 1606.

I 00% Rebate
of Mirror Tax Procedure. (a) Rebate.
To the extent any foreign trade income,

or interest, dividends, royalties and other investment income and carrying charges, received

or accrued
by
a FSC, as defined in Sections 92l(d)(2)

& (3) and 927(c)

& (d) of the U.S. Internal Revenue Code of 1986,
asamended, should

at anytime now or hereafter become includable within the gross income
of a FSC because

of the Northern Marianas Tenitorial Income Tax,

a rebate
of 100% of the foreign sale corporate income tax shall be allowed

to the extent authorized

by Section 602 of the Covenant. (b) Tax Return Filing Procedures. (1) A true copy of the FSC business license shall be attached

to any income tax return
of the FSC and the amount
of tax due prior
to rebate shall be paid by
a FSC. The amount paid shall not be placed

in the General Fund or commingled
with other fi.mds, but shall be deposited

by the Secretaty

of Finance

in special purpose ttust accounts

in one or more FDIC insured

or collateralized deposit banks with offices within the Commonwealth

and shall be withdrawn from such accounts only for the purpose

of: (A) making rebates

as provided herein,

or (B) payment into the General Fund after

a final detetmination, including

a judicial detennination

if requested

by the FSC taxpayer, that taxes are validly due and payable and that the FSC

is not entitled

to any rebate. (2) Upon filing by
a FSC of any tax return, the Secretaty

of Finance shall immediately thereafter cause the return
to be reviewed, and, if the rebate appears

to be in order shall cause the amount

of tax paid by the FSC
to be returned

to the FSC within 45 days from the !fate the return

is required

to be filed.
If for any reason **th~** amount

to be rebated

is not returned

to the FSC within
45 days from the date the return

is required

to be filed, the unreturned amount shall bear interest

at the rate detennined W1der Section 6611 of the United States Internal Revenue Code of 1986, as amended, from the date of payment

of the tax until the date oheturn

to the FSC of the money due to it. (3) In the event of any failure

to make the rebate provided
for herein within 90 days fi:om the date of payment

of the tax by
a FSC of the taxes due prior
to rebate, the Gove11U11ent

of the Commonwealth consents

to suit and consents

to
a decree
of specific performance being entered against

it for payments found
to be lawfully due. The 45 day review
by the Secretary

of Finance

of
a tax return
of
a FSC shall notconstituteanauditorfmaldeterminationbytheSecretmyoftaxesdue,buttherebateprovidedforhereinshallbemadenotwithstandingthatanauditorfinaldetenninationoftaxesduehasnotbeencompletedwiththe45dayperiod.AmountsrebatedtoaFSCasprovidedhereinshallnotconstituteincometosuchFSCandshallnotbeincludedwithinthegrossincomeoftheFSCfortaxpurposes.§1607.Regulations.TheSecretaryorhisdesigneemayissueregulationsconsistentwiththepurposesofthisChapter.CHAPTER?.NORTHERNMARIANASTERRITORIALINCOMETAX.§1701.ApplicationoftheIntemalRevenueCode§1702.§1703.§1704.§1705.§1706.§1707.§1708.§1709.§l7l0.§171L§1712.InternalRevenueCodeAdoptedNon-RetroactivityAnti-AvoidanceClarifyingProvisionsDisincentivestoOff-islandInvestmentPrivateLetterRulingProceduresTaxReliefTaxonOverpaymentsForeignSalesCorporationsRebateProcedureSpecialSourcingRulesofUnitedStatesPersons§1713.InterestonOverpayments§1701.ApplicationoftheInternalRevenueCode.InGeneral.(a)TheUnitedStatesInternalRevenueCodeCintemalRevenueCode'or'IRC'),madeapplicablebythisChapter,isastatuteadoptedasalocalterritorialincometax.TheIRCashereinismadeapartofCommonwealthlawandmaybecited,asthe'NorthernMarianasTerritorialIncomeTax'('NMTIT').(b)TheadministrationandenforcementoftheNMTITshallbeperfmmedbyorunderthesupervisionoftheGovernor.AnyfunctionneedfultotheadministrationandenforcementoftheNMTITshallbeperformedbyanyofficeroremployeeoftheGovernmentofthe

### Commonwealth

duly authorized

by the Govemor (either directly,

or indirectly

by one or more redelegations

of authority)

to perform such function. (c) The Governor

or his delegate shall have the same administrative

and enforcement powers with regard

to the NMTIT

as the Secretaty

of the Treasmy
and other United States officials

of the executive branch have with respect

to the United States income tax. Needful rules and regulations

for enforcement

of the NMTIT shall be prescribed

by the Governor

or his delegate pursuant

to Section 1820 of this Act. The Governor

or his delegate shall have authority

to issue, from time to time,
in whole
or in part, the text of the income tax laws in force
in the Commonwealth pursuant

to this Chapter. (d) Confidentiality, Disclosure,

and Coordination. (I) Returns and return infmmation
shall be confidential,

and except

as authorized

by NMTIT Section 6103 and

§ 

### l953(b)
of this Act, no officer
or employee of the Commonwealth

shall disclose any return
or return infonnation obtained

by him in any mallller

in COllllection with his seivices

as such an officer

or employee

or otherwise.
For purposes

of this subsection,

the term

1 

### officer

or employee' includes

a fmmer officer

or employee. (2) The Governor may enter into an agreement with the Secretary

of the United States Treasury,
the Governor

of Guam
or his delegate,

or the Executive Head
or his delegate

of any state, possession

or territory

of the United States,

to coordinate
tax administration programs

of the Commonwealth,

the United States
or any state, possession

or territory thereof, and Guam, including provisions

for exchanging information

and protecting

the confidentiality

of returns and return information. (e) In applying
the NMTIT
for any purpose contained within this Act, except where 

### it is manifestly otherwise required,
the applicable provisions

of the IRC shall

be read so as to substitute 'Commonwealth

of the Northern Mariana Islands'
for 'United States', 'Governor

or his delegate'
for 'Secretary

or his delegate', 'Governor

or his delegate'

for 'Conunissioner

of Internal Revenue'
and 'Collector

of Internal Revenue', 'Superior Court
of the Nmthem Mariana Islands'
for 'district court', Supreme Court of the Northern Mariana Islands'
for 'United States Courts
of Appeal', 'Attorney General'
for 'district counsel', 'Attorney General'sOffice'
for 'Depatiment

of Justice', and with other changes

in nomenclature

and other language, including
the omission

of inapplicable language, where necessary

to effect the intent of this Chapter. (f) All references

in the IRC to 'Guam' shall be deemed likewise

to refer
to the Commonwealth

of the Northem Mariana Islands. (g) The NMTIT,

as herein adopted,

is to be applied and construed

in all respects

in conformity with the Covenant
and this Chapter. (h) The Governor

or his delegate may by regulations inte1pret, modify,

or suspend any provision

of the NMTIT which

is manifestly inapplicable

or incompatible
with the intent of Article
VI of the Covenant

or with the intent of this Chapter,

so as to make the provision compatible therewith. Any such inapplicable

or incompatible provisions shall be without force or effect. (i) The Governor

or his delegate may waive any additions

to the tax, additional amounts,

or penalties

or any part thereof, attaching

to acts performed

or not perf01med

by any taxpayer acting

in reasonable reliance
on this Chapter

or on any rules and regulations promulgated hereunder. G) In addition

to such other jurisdiction

as the Superior Court of the Northern Mariana Islands has with respect

to the NMTIT under this Chapter,

it shall also have the same jurisdiction with regard

to the NMTIT

as the Tax Court of the United States has with respect to the United States Income Tax. The Superior Court of the Northern Mariana Islands shall implement
this jurisdiction,

as may be necessary,

by adopting
the United States Tax Comi Rules of Practice and Procedure

to the extent not inconsistent

or incompatible
with this Act. § 1702. Internal Revenue Code Adopted. (a) Definitions; 'Internal Revenue Code'. 'Internal Revenue Code' means the following provisions

of the Internal Revenue Code of 1986
as further amended

as below specified, where not manifestly inapplicable

or incompatible
with the intent of Lhe Covenant

or this Chapter and to the extent the IRC of 1954 remains applicable

as set forth
in the provisions under Subtitle

G of United States Public law 99-514: Subtitle

A (26 U.S.C.A.
sec.

I et seq.)(not including Chapter

2 (26 U.S.C.A.
sec. 1401 et seq.) and section 931 (26 U.S.C.A. sec. 93!)); chapters

24 and 25 of subtitle

C (26 U.S.C.A. sees. 2401
et seq. and 3501
et seq.)with references

to the collection

of income tax at source on wages; and all provisions

of Subtitle

F (26 U.S.C.A.
sec. 6001
et seq.) which apply
to the income tax, including provisions as to crimes, other offenses, and forfeitures contained

in Chapter

75 (26 U.S.C.A.
sec. 7201 et seq.). (b) Internal Revenue Code; Further Amendments Adopted. All amendments

to the Internal Revenue Code enacted into law after October
21, 1986 and before January

I, 1994 are adopted and incorporated

by reference into this Chapter. (c) Intemal Revenue Code; Future Amendments Adopted. Except

as otherwise provided,

all future an1endments

to the Internal Revenue Code (and the effective dates thereof)
are adopted and incorporated

by reference into this Chapter. (d) The following autho1i.ties

are to be treated
by the Govemor, when perfonning

his duties under this Chapter,

as authoritative interpretations

of the NMTIT: (I) all present and future US Federal court cases, including Tax Court cases, decided under the US income
tax Jaws adopted
by this Chapter

to the extent consistent with this Chapter; (2) all present and future Revenue Rulings, Revenue Procedures,
and Treasury Decisions

of the US Treasury Department, promulgated under US income tax laws adopted

by this Chapter

or regulations prescribed

by the Governor,

to the extent consistent with this Chapter, until such time as changed
by the Governor pursuant

to this Chapter; (3) all present and future regulations under the Internal Revenue Code, promulgated under US income tax laws adopted
by this Chapter,

to the extent consistent with this Chapter, until such time as changed
by the Governor pursuant

to this Chapter. § 1703. **Non~Retroactivitv**

ofT ax on CNMI Sourced Income.

In regard

to the taxation under the NMTIT

of income accming

on or prior
to January

1, 1985, the NMTIT shall
in all cases be interpreted

as subjecting

to the NMTIT only that income which

is not "CNMI Sourced Income". (a) The introductory section
of Section 6l(a) of the NMTIT shall be construed

asthoughitread:"GeneralDefinition.--Exceptasotherwiseprovidedinthissubtitle,grossincomemeansallincomerealizedandreceivedoraccruedunderthetaxpayer'smethodofaccountingexceptCNMIsourcedincomeaccmingonorbeforeJanuruyI,1985,withrespecttotransactions,events,orfi·omwhateverconducttakingplaceafterDecember31,1984,fromwhateversourcedetived,including(butnotlimitedto)thefollowingitems:"(b)EffectiveDate.ConfonningProvisions.(1)NMTITEffectiveDate.ConfmmingProvisions.Totheextentnecessarytoassurethat'CNMISourcedIncome'accruingpriortoJanuary1,1985,andafterFebruary28,1913,isnotretroactivelysubjecttotheNMTITandtotheextentallowedbysubsection(c)ofthissection,allInternalRevenueCodeprovisionsdraftedwithreferencetotheinceptiondateofanewtaxandintendedtoassurethattheIRCisnotretroactivelyapplied,andallauthoritiesinterpretingsuchprovisions,shallbeconstruedbyreplacingeachreferencetotheinceptiondateandthelastdayoftheoldU.S.taxregimewiththewords"Januaryl,1985"and"December31,1984",appropriately.(2)I.R.C.EffectiveDate.ConformingProvisions.TotheextentnecessmytoassurethatallsourcesofincomeaccruingpriortoFebruaty28,1913,arenotretroactivelysubjecttotheNrvtTIT,alll.R.C.provisionsdraftedwithreferencetotheinceptiondateofanewtaxandintendedtoassurethattheI.R.C.isnotretroactivelyappliedtoru1ysourceofincome,andallauthoritiesinterpretingsuchprovisi.ons,shallbeconstruedbyutilizingthedatesspecifiedwithintheI.R.C.codeprovisions,i.e.,March1,1913andFebruary28,1913.(3)I.R.C.SubpartFEffectiveDate.ConformingProvisions.TotheextentnecessarytoassuretaxesimposedbysubpartFandrelatedtaxesonUSownersofcertaincontrolledforeigncorporationsaccmingpriortoJanuary1,1962,arenotretroactivelysubjecttotbeNMTIT,allI.R.C.provisionsdraftedwithreferencetotheinceptiondateoftaxesimposedbysubpartFandrelatedtaxesonUSownersofcertaincontrolledforeigncorporationsandintendedtoassurethattaxesimposedbysubpartFandrelatedtaxesonUSownersofcertaincontrolledforeigncorporationsarenotretroactivelyappliedtoanysourceofincome,andallauthoritiesinterpreting

# such provisions, shall be construed

by utilizing
the dates specified within the I.R.C. code provisions,
i.e., December

31, 1984 and January

l, 1985. (c) Basis Limitation; Qualified Fresh-stru1 Assets. (I) 

# The basis for purposes

of detennining
gain and 

# allowance

for depreciation, amortization
and like purposes,

of all Qualified Fresh-Start Assets shall be the higher of their basis as detetmined under the NMTIT,

or their fair market value on January l, 1985. (2) 

# 'Qualified Fresh-start assets' 

# means: (A) all real property located

in the CNMI; (B) 

# all personal property owned, directly

or indirectly, immediately prior
to and on January



# I, 1985, by an individual bona fide resident

of the CNNll immediately prior
to and on January

1, 1985, the amount realized from the actual sale of which would have been CNMI Sourced Income

as determined

in subsection

(d) and would not have been subject

to income taxation

on December

31, 

# 1984 by any of the following jurisdictions:

the United States. the Virgin Islands, American Samoa, Puet1o Rico, and Guam; and (C) all personal property owned, directly

or indirectly immediately prior
to and on January

1, 1985, by
a corporation incorporated

in or under the laws of the CNMI, the amount realized from the actual sale of which would have been CNMI Sourced Income

as determined

in subsection

(d) and would not have been subject

to income taxation

on December

31, 

# 1984 by any of the following jurisdictions:

the United States, the Virgin Islands, Ametican Samoa, Puerto Rico, and Guam. (3) For purposes

of this section, personal property means
all personal propet1y wheresoever located, whether tangible

or intangible, (including,

bul not limited
to, installment sales contracts, annuity contracts, interests

in employee benefit plans, whether vested
or unvested,
and inventoty items). (4) The fair market value
of any Qualified Fresh-Start Asset shall be established

at the taxpayer's election


# by:{A) independent appraisal; (B) discounting

its ultimate sales price back
to the valuation date of January

1, 1985, using the appropriate discount factor,

to be specified

by the Governor,

by regulation; (C)

a pro-rata allocation

of the difference between

its cost basis,

as adjusted under NMTIT Sec. 1016, and its sales price, with respect

to the periods

it was held, before and after January

1, 1985, respectively;

or (D) any other method provided

by the Governor

by regulation. (d) Recapture.

If during any taxable year an asset
is disposed

of and

a portion

or all of the proceeds received from the disposition

of the asset

is not CNMI Sourced Income,
the benefit
of any deduction

for depreciation, am011ization,

and like purposes previously claimed under tllis section attributable

to such asset

is to be recaptured
and appropriately taxed. The Secretary shall presctibe

by regulations

the method and manner
by which any such deductions are to be recaptured

for purposes

of this subsection. § 1704. Anti-Avoidance. Deductions

and Credits.

In order
to prevent the mismatching

of income and con-esponding deductions
and credits, which,

in
a stm1-up setting, would result
in complete avoidance
and not just defen-al: (a) NMTIT Section
161 shall be construed

as though

it contained

the following second sentence:
'No deduction shall, however,

be allowed
for any expenditure with respect to any transaction, event
or course
of conduct taking place prior
to January

l, 1985, unless it is established

to the satisfaction

of the Governor that such expenditure
was not deferred into 1985
as part of
a plan one of the principal purposes

of which was the avoidance

of income taxes under this Chapter.' (b) No credit against the tax shall be allowed
for any expenditure with respect

to any transaction, event or course
of conduct taking place prior
to January

I, 1985, unless

it is established

to the satisfaction

of the Governor
that such expenditure
was not deferred into 1985
as pa11 of
a plan one of the principal purposes

of which was the avoidance

of income taxes under this Chapter. § 1705. ClarifYin!I Provisions. (a) The Accelerated Cost Recovery System shall be applicable

to all Qualified **Fresh~**

### Start Assets, which shall be treated

as used property
for all NMTIT purposes. (b) No credit under N1viTIT Sec. 38, and no deduction under NMTIT Sec. 179, shall be allowed with respect

to any Qualified Fresh-Start Asset. ( c)All fonns, returns, statements

or any other document required

to be filed by reason of the NMTIT

or Regulations thereunder, shall be filed with the Division

of Revenue and Taxation. Any failure

to file such fonns, retums, statements,

or other documents shall be subject

to penalties

as provided

by the NMTIT. § 

### 1706. Disincentives

to Off-island Investment. (a) The amount
of any deduction allowed

to any taxpayer under the NMTIT sections enumerated

in subsection

(d) of this section shall be deemed additional gross business revenues,
and taxed accordingly under Chapter

3 of this Act. (b) A tax is imposed

on all taxpayers

in the amount

of any credit allowed

to such taxpayer under the NMTIT sections enwnerated

in subsection

(e) of this section. (c) Limitations. Such tax will be waived with respect

to any such deduction

or credit under subsections

(a) or (b) to the extent that
it is established

by mles and regulations
that such deduction

or credit resulted fi·om an expenditure with respect

to activities

or assets used predominantly within the CNMI,

or to the extent that the taxpayer receives

no tax benefit from such deduction

or credit. (d) NMTIT sections subject

to subsection

(a) are: taxes;
(1.) 

### Sec. 169, amortization

of pollution control facilities; (2) Sec. 179, election

to expense depreciable property; (3) Sec. 181, fanners' fertilizer expenditures; (4) Sec. 182, fanners' land clearing expenditures; (5) Sec. 184, amortization

of railroad rolling stock; (6) Sec. 185, amortization

of railroad grading and tunnel bores; (7) Sec. 188, child care facilities, amortization; (8) Sec. 189, amortization

of real propetty construction period interest and (9) Sec. 190, expensing

of removing

of barriers

to handicapped

and elderly; (10) Sec. 193, tetiiary injectants;(11)Sec.194,reforestationexpenditures;(12)Sec.195,start-upexpenditures;(13)Sec.243,dividendsreceivedfromdomesticcorporations;(14)Sec.244,dividendsreceivedonpublicutilitypreferredstock;(15)Sec.245,dividendsfromforeigncorporations;(16)Sec.248,organizationalexpenditures;(17)Sec.263(c),expensingofintangibledrillingcosts,totheextentinexcessofdepreciationandamortization;(18)Sec.613and613A,percentagedepletion,totheextentinexcessofcostdepletion;(l9)Sec.616(a),expensesofminingdevelopmentcosts,totheextentinexcessoftheamountdeductibletmderSec.616(b)asadefetTedexpense;(20)Sec.617,miningexplorationcosts,totheextentinexcessoftheamountallowableasadeductionhadthecostsbeencapitalizedanddeductedratablyoverI0years;and(21)Sec.631,specialrulesfortimber,coalandironore.(e)NMTITsectionssubjecttosubsection(b)are:(l)Sec.21,householdanddependentcare;(2)Sec.38,lTC;(3)Sec.39,gasandspecialfi+els;(4)Sec.40,workincentiveprograms;(5)Sec.44C,residentialenergycredit;(6)Sec.44D,nonconventionalsourcefuel;(7)Sec.44E,alcoholusedasfuel;(8)Sec.44F,increasingresearchactivities;(9)Sec.44G,employeestockownershipplan;and(l0)Sec.44H,clinicaltesting,rarediseasedrugs.§1707.PrivateLetterRulingProcedures.(a)ArulingisawrittenstatementissuedtoataxpayerorhisauthorizedrepresentativebytheSecretmyofFinancewhichinterpretsandappliesthetaxlawtoaspecificsetoffacts.(b) A request
for

a ruling by
a taxpayer

or his authorized representative should
be submitted

to the Chief of the Division

of Revenue and Taxation, Department

of Finance. Each request
for

a ruling shall include: ( 1)
a complete statement

of all relevant facts relating

to the transaction, including
the names, addresses,
and taxpayer identification numbers

of all interested parties;
(2)
a complete statement

of all the relevant laws and regulations relating

to the transaction including
the section numbers
and relevant text that the taxpayer seeks

to have applied

to the transaction; (3)

a full and precise statement

of the business reasons
for the transaction; ( 4) a detailed description

of the transaction including true copies
of all relevant documents relating

to the entire transaction must be submitted; (5) the text of the proposed ruling

to be issued

to the taxpayer

by the Secretruy

of Finance that interprets
and applies the tax laws to a specific
set of facts. The proposed text shall include: (A) taxpayer's views
on the results

of the transaction

and its suppmting authority,
and (B) information

and discussion

of any contrary authority

to the position advanced.

If no contrary authority exists,

a statement that none exists

is required; (6) Signature

of taxpayer

or authorized representative

of taxpayer;
and (7) A statement attesting

to the accuracy

of the request

or accuracy

of any additional statement

or statements

or documents subsequently submitted which declares: 'Under the penalties

of perjury,

I declare that

I have examined
this request, including accompanying documents
and to the best of my knowledge

and belief, the facts presented

in support

of the requested ruling m·e true, correct and complete.' This declaration must be signed
by the taxpayer,
not the taxpayer's representative. (c) Separate requests
for rulings are required
for issues under the NMTIT and for issues other than the NMTIT. (d) If a request does not comply with all the requirements

set forth herein, the requestwill be acknowledged

and requirements

not met will be pointed out. TI1e taxpayer will have 30 days in which

to complete
the request. Failure

to complete
the request closes the request. The late receipt alter closing will reopen the request and the request shall be treated

as a new request requiring payment

of a fee. (e) The Department

of Finance shall not issue rulings

in the following areas: ( l) Completed transactions after the return has been filed; (2) The transaction

is part of an integrated transaction; (3) Where there

is not

a bona fide business purpose
for the transaction; (4) Where the matter involved hypothetical situations; (5) Where the request involves
tax consequences

of proposed legislation; (6) Any matter where the dete1mination requested

is p1imarily one of fact (e.g. market value of property); (7) Tax effect of any transaction

to be consummated

at some indefinite future. (f) A taxpayer may not rely on
a ruling

in connection with another transaction. (g) The Secretary

of Finance shall determine

all ruling requests

as expeditiously

as possible.

A final detennination
shall be the binding position

of the Department

of Finance with respect

to the tax treatment

of the proposed transaction. (h) The non-refundable application

fee for

a letter ruling shall be
a minimum of$500. The Secretary may by regulation prescribe

a fee schedule which bears relationship

to the nature and complexity **of~he** issues. Upon payment cifthe application
fee, the fee shall be credited

to
a special fund that the Secretary

or his designee may expend without further appropriation solely for the pmpose

of effective administration

and enforcement

of tax laws applicable

in the Commonwealth. (i) Upon the deletion

of the names
of the taxpayers and any other personal facts that are not essential

to an understanding

of the ruling, the Department

of Finance shall make public any private letter ruling
that
it issues. All rulings shall be filed with the Conunonwealth Register within
60 days of the ruling's issuance. U) Request
for

a Conference.

To request

a conference

on the issues involved,

the taxpayer should indicate

in writing

at the time of filing the request

or within
30 days of filing the request.(k) Revocation
and Withdrawal

of
a Private Letter Ruling (I) A letter 

### 1111ing may be revoked

or modified
by: 

### (A)

a notice
to the taxpayer

to whom the letter ruling was issued; (B) the enactment

of legislation; (C)



### a decision

of the Commonwealth Superior Court;
or (D) the issuance

of temporary

or final regulations. (2) Except

in rare or unusual circumstances,

the revocation

or modification of a tener tuling will not be applied retroactively

to the taxpayer

for whom the letter ruling was issued
or to a taxpayer whose tax liability was directly involved

in the letter ruling provided that: (A) there has been no misstatement

or omission

of material facts; (B) the facts
at the time of the transaction

are not materially different from the facts on which the letter ruling was based; and (C) there has been no change

in the applicable
law or regulations; (D) the letter ruling was originally issued for

a prospective transaction; (E) the taxpayer directly involved

in the letter ruling acted
in good faith in relying
on the letter ruling, and revoking
the letter ruling retroactively would be to the taxpayer's detriment. 

### {3) Withdrawal ofReque.st

by Taxpayer.



### A taxpayer may withdraw

a request for

a letter ruling

at any time before the letter of reply

is signed
by the Secretaty. Correspondence

and exhibits relating

to
a request that
is withdrawn
will not be returned

to the taxpayer. The application

fee 

### will not be returned

to the taxpayer. 

### (l) The Secretary may prescribe regulations

to carry out the purpose and intent of this section. § 1708. Tax Rdicf. (a) General Rule. Every person subject

to the NMTIT shall be entitled

to
a rebate in the amotmt detennined under subsection

(b) of this section. Provided, however, that the taxpayer has paid the income tax reported

on the return before any rebate

is allowed. (b) Rebate Amount.(I)Therebateamountshallbe:(A)Inthecaseofataxpayerwhoisnotacorporation:Iftherebatebaseis:notover$1,000;over$1,000butnotover$2,500;over$2,500;Therebateamountis:90%oftherebatebase.$900plus70%oftherebatebaseover$1,000.$1,950plus50%oftherebatebaseover$2,500(B)Inthecaseofataxpayerwhoisacorporation:Iftherebatebaseis:notover$20,000;over$20,000butnotover$100,000;over$100,000;Therebateamountis:90%oftherebatebase.$18,000plus70%oftheexcessoftherebatebaseover$20,000.$74,000plus50%oftheexcessoftherebatebaseover$100,000.(2)TI1erebateamountforanypersonwhofailstotimelyfile(determinedwithregardtoanyextensionsoftimeforfiling)ataxreturnforthetaxableyearshallbetherebateamountdetenninedundersubsection(b)(1)ofthissectionminustenpercentoftherebateamountundersubsection(b)(l)foreachmont!1orpmtofamonththatthepersonhasnotfiledtheretum.Apersonwhohasfailedtofileataxretumformorethan180daysffomthedateonwhichthereturnshouldhavebeenfiledshallnotbeentitledtoanyrebateunderthissection.(3)Notwithstandingsubsection(a),apersonshallnotbeentitledtoanyrebateunderthissectionwithrespectto:(A)NMTlTtaxescollecteduponincomeeffectivelycmmededwiththesaleofdieselfuelforuseinanyvessel'scommercialoperationsthatareprimarilyoutsidetheterritorialwatersoftheConunonwealth;(B)TheamountofanyunderpaymentofNMTITtaxesasdefinedinNMTIT§6664,exceptthatthissubparagraphshallnotapplytoan

# underpayment

that does not exceed $100 or 10 percent

of the income tax imposed

by Subtitle

A of the NMTIT, whichever

is greater. (C) 

# T11e amount
of the total tax liability for such taxable year as stated in the taxpayer's retum which was not paid by the date the tax was required to be paid. (c) Rebate Base. The rebate base 

# is: (1) 

# the income tax under Subtitle

A 

# of the NMTIT imposed

on income derived from sources within the Commonwealth

and paid by the person, less (2) 

# the amount
of non-refundable credit allowable under Section 1205 

# of this Act. (d) Limitations.

( l) Notwithstanding subsection

(a) of this section, (A)
A person

is not entitled

to any rebate with respect

to any accumulated earnings
tax paid by the person pursuant

to Section 531 

# of the NMTIT. 

# (B)

a person, who has any income from sources within the Commonwealth

that
is not subject

to any taxes under Chapter

2 or 3, shall not be entitled

to any rebate under this section with respect

to the tax
on such mcome. This paragraph shall not apply

to income: (i) exempted from the definition

of eamings under section 1103 (!)(8). (ii) 

# exempted from the Gross Revenues Tax under section 1305 

# (a) or (d) 

# of this Act. 

# (iii) taxed under Article

2 of Chapter

4 of this Act. (2) Notwithstanding paragraph (l)(B) of this subsection,

a person, who has any income from sources within the Cmmnonwealth

that
is not subject

to any **tax~s** 

# under Chapter

2 or 3 of this Act, may elect to have that income taxed

as if it were subject

to the applicable

tax under Chapter

2 or 3 of this Act. If a person

so elects and pays the applicable
tax, such person shall be entitled

to the rebate allowed under subsection

(a) of this section.

A person shall make the election

in a manner and ona fonn prescribed

by the Secretmy. This paragraph shall not apply
to income: (A) exempted from the definition

of Eamings under section 1103(!)(8). (B) exempted finn the Gross Revenue Tax under section 1305(a) or (d) of this Act. (c) taxed under article

2 of Chapter

4 of this Act. (3) No portion
of the User Fee may be subject

to credit, deduction

or rebate. (e) Sources within the Commonwealth.

For purposes

of dete1mining

the rebate, the tenn "Sources within the Commonwealth",
except

as provided

in §1712
of this Act, shall be determined

by Regulations prescribed

by the Secrctmy. Such regulations prescribed shall be similar

to those sourcing rules of the NMTIT

in §861 et. seq. ([) The rebate allowed under this section shall not be used
as
a credit against

the income tax shown
or required

to be shown
on an income tax return under the NMTIT. § 1709. Tax On Overpavments.
There

is imposed

on every person who
is subject

to the NMTIT and who has an overpayment arising from any excessive credit, other than

a credit relating to taxes withheld, estimated taxes paid or earned income credit claimed
by individuals with qualifying children,

a separate additional

tax fof such taxable year equal

to the amount

of the excess credit. § 1710. **Forei~n** Sales Cot:porations Special Rule. To the extent provided

in Chapter

6 of this Act,

a Foreign Sales Corporation

is exempt from taxation under this Chapter. § 1711. Rebate Procedure. (a) Amounts properly subject

to rebate under Section 1708 of this Act, shall be rebated
by filing

a timely income tax return which includes
the claim for rebate fonn for the taxable year to -which the rebate relates. However, claims for rebate under this Act shall not be subject

to
1 CMC

§ 2553(k). (b) The amounl

of the rebate shall be made
as .soon
as practicable,

but no later than 6 months from the due date of the return
or the date of filing, whichever

is later. § 1712. Special **Sourcin~** Rules of Certain United States Individual. (a) For any United States individual moving

to the Commonwealth

from Guam, American Samoa, and/or the United States, irrespective

of any other provision

of law, thefollowingsourcingmlewillapplyifaUnitedStatesindividualwasaresidentoftheUnitedStates,Guam,orAmericanSamoaandthenbecomesaresidentoftheCNMI:therulesfoundinInternalRevenueCodeSection877(c)withoutregardto§877(a)or(b),shallapplytosuchaindividualfora10yearpe1iodbeginningwhensuchapersonbecomesaresidentofGuam,AmericanSamoa,ortheCommonwealth.(b)Ifsuchaindividualduringa10yearperiodwasaresidentoftheUnitedStatesand/orGuamand/orAmericanSamoaandthensuchindividualthereaftermovedtotheCNMIandbecamearesident,therulesfoundiniRCSection877(c)withoutregardto877(a)or(b)willapplytobothmovesasfollows:(1)FortenyearsafterleavingtheUnitedStatesforGuamorAmericanSamoa,IRCSection877(c)withoutregardto877(a)or(b)willapplytoallitemsofgrossmcome.(2)TenyearsafterleavingGuamorAmericanSamoa,IRCSection877(c)withoutregardto877(a)or(b)willapplyasamended,tomirrorthetennGuamorAmericanSamoawherethetermUnitedStatesappearsinthatstatute.(c)EverytaxpayerhavingincomesubjecttothesesomcingrulesshallfileandpaytheappropriatetaxpursuanttoSection935oftheIntemalRevenueCodewithoutaforeigntaxcredit.(d)ThisSectionshallapplytodispositionsafterDecember31,1985,intaxableyearsendingaftersuchdate.§1713.InterestonOverpaymentsInterestasallowedbyNMTIT§6611onanoverpaymentshallbecalculatedonlyontheamountnotalreadyrebated.Section2.TaxTaskForce.AspecialTaxTaskForceisherebycreated.(a)Purpose.ThepmposeandfunctionofthisTaxTaskForcewillbetostudyexistingtaxlawandtaxregulationsandtomakerecommendationstotheGovernorandtheCommonwealthLegislatureonwayssuchlaw:;andregulationsmaybeimproved.TheTaskForceshallreviewthemannerinwhichtaxrevenuesarebeingspent,andshallconsidertheamountofrevenueswithoutsignificantadverseeffectsonbusinessesandindividualtaxpayers.TheTaskForcewillrecommendreformsafterappraisingandassessinghowtheproposedreformswillaffecttheeconomy.Dueconsiderationwillbegiventodifferentsectorsoftheeconomyandhowreformscanbetailoredtobe both fair and enforceable. (b) Membership.

The Tax Task Force shall be comprised

of 13 members.

l CMC Section 2901 shall not apply

to the Task Force. Members shall hold three-year tenus. The members shall be:

1. The Secretary

of Finance, 2. The Governor's Special Assistant

for Management

and Budget, 3. A person appointed

by the President

of the Senate, 4. A person appointed

by the Speaker

of the House, 5. A person appointed

by the Saipan Chamber

of Commerce, 6. A person appointed

by the Saipan Garment Manufacturer's Association, 7. A person appointed

by the Hotel Association

of the Northern Mariana Islands, 8. A person appointed

by the CNMI Bar Association, 9. A person appointed

by the CNMI Contractor's Association, 10. The following persons

to be appointed

by majority vote of the above nine members;

a tax accountant;

a person representing small businesses, and

two persons from the previous CNM1 Tax Task Force." Section

3. Business License Fees.

4 CMC Division

5 is amended

to add

a new "Chapter

6" to read
as follows:

"Chapter

6 . Business License Fees § 5611. Business License Fees. (a) Business License Required. Before engaging

in or continuing

in a business,

a person shall first obtain from the Secretary

of the Department

of Commerce

a license

to engage

in or conduct that business. (b) In no event shall

a business

be required

to purchase more than one general business license
LOr **th~** same line of business

for any location

or locations

in the Commonwealth. (c) Tetms. Licenses issued under this section
are valid for one year and are not transferable.
(d) Fees. The following rumual fees shall be paid to the Secretary

of the Department

# of Commerce

for the respective license

at the time of issuance

or renewal: (1) Banks, $500; (2) Offshore banking corpmations; $1,000; (3) Securities dealers, $300; (4) Insurance companies, $300; ( 5) Insurance brokers,



# $1 00; (6) Insurance agents, $75; (7) Public utilities, $300; (8) Manufacturers,

$50; (9) Wholesalers,
$50; (1 

# 0) Roadside vendors selling local agricultural
and fishety products,

$5; (II) Scuba instruction
and scuba diving tour operations,



# $1 00; (12) 

# General business license covering

all other businesses unless othen:vise provided

by this Act, $50. (e) Renewal.

A licensee may renew

a license upon its expiration

by the payment

of the annual license fee. (f) 

# Conditions

for Revocation

or Suspension. (1) 

# The Secreta1y

of the Depru_1ment

of Commerce may revoke
or suspend any license issued under this section upon finding after two weeks public notice and

a hearing conducted pursuant

to


# 1 CMC


# §§ 9108-9111 that (A) The application

of the licensee contained false or fraudulent infonnation; (B) The licensee b1ibed
or othetwise unlawfully influenced
any person to issue the permit other than on the merits
of the application; (C) The licensee presented false or fraudulent information

to any person

in support
of his application;

or (D) The licensee violated any provision

of Commonwealth

law or any rule or regulation issued thereunder. (2) Any person aggrieved

by

a license suspension

ot revocation shall be entitled

to a review
of the same by the Commonwealth Superior Court upon writtenappeal made within
30 days from the date the license suspension

or revocation decision

is issued. Such review shall be brought pursuant

to

1 CMC

§ § 9112 and 9113. (g) Upon request,
the Secretmy

of the Department

of Commerce shall transmit

a listing, and monthly update,
of all business licenses issued

to the Department

of Finance. (h) Unless the Secreta1y

of Commerce provides otherwise,
this section shall not effect public health
or alcoholic beverage control licensing." Section

4. Severability.

If any provision

of this Act or the application

of any such provision to any person

or circumstance should
be held invalid
by

a com1 of competent jurisdiction,

the remainder

of this Act or the application

of its provisions

to persons

or circumstances
other than those to which

it is held invalid shall not be affected thereby. Section

5. Savings Qause. This Act and any repealer contained herein shall not be construed as affecting any existing right acquired under contract

or acquired under statutes repealed

or under any rule, regulation

or order adopted under the statutes. Repealers contained

in this Act shall not affect any proceeding instituted under
or pursuant

to prior law. The enactment

of this Act shall not have the effect of terminating,

or in any way modifYing,

any liability civil or criminal, which shall already

be in existence

at the date this Act becomes effective. Section

6. Effective Date. This Act shall take effect on January

I, 1995 upon approval

by the Governor

or upon

it becoming
law without such approval. CERTIFIED

BY: Is/ Diego

T. Benavente DIEGO

T. BENAVENTE Speaker House
of Representatives _ _..oA.._PLPR"'O"V.LC<ED.,_ __ this 24th lsi Jesus
C. Borja ATTESTED

BY: Is/ Evelyn

C. Fleming EVELYN

C. FLEMING House Clerk day of JANUARY

, I 995 FROILAN

C. TENORIO JESUS

C. BORJA Acting Governor

### Conunonwealth

of the Northern Mariana Islands