A direct pay permit (DPP) allows a business to make all of its purchases of tangible personal property without payment of sales and use tax to vendors. A business with a direct pay permit assumes responsibility for payment of all applicable taxes directly to the Department of Revenue.

A direct pay permit can be issued for the following reasons:

• The place of business where the property will be used is not known at the time of the purchase and a different tax consequence applies depending on where the property is used.
• The manner in which the property will be used is not known at the time of purchase and one or more of the potential uses are taxable but others are not taxable.

A business may request permission from the Secretary of Revenue to discharge its sales and use tax liability directly to the Department by completing Form E-595A, Application for Direct Pay Permit for Sales and Use Taxes on Tangible Personal Property. This authorization by the Secretary is conditioned upon full compliance with the provisions of the Sales and Use Tax Law and timely payment of all taxes due.

Taxpayers that have been authorized to discharge their liability in this manner are issued a numbered direct pay permit to buy tangible personal property subject to sales or use tax without payment of tax to vendors. The record of the permit must be furnished to vendors or maintained electronically. The permit must be maintained by the vendors as their authority to treat the transactions as exempt from tax. Only one copy of the direct pay permit is required for any vendor to thereafter sell tangible personal property to a valid permit holder without collecting the tax on its sales. A business, which has been issued a permit, as well as all other taxpayers, must file sales and use tax returns, remit the sales and use taxes due, and maintain records that clearly reflect the tax liability. See Directive SD-00-02 and Sales and Use Tax Technical Bulletin Section 46 for more information concerning Direct Pay Permits.

The following database contains the names and permit numbers of current Direct Pay Permit holders:

Firms Assigned Direct Pay Permits for Sales and Use Taxes on Tangible Personal Property

Last modified on: 10/31/07 03:54:06 PM.