Direct Pay Permit for Sales and Use Taxes on Certain Boat, Aircraft, or Qualified Jet Engine Charges and Services
General Information
A direct pay permit for sales and use taxes for certain installation charges or repair, maintenance, and installation services (RMI) for a boat, aircraft, or qualified jet engine allows a person to make certain purchases without payment of sales and use tax to sellers and authorizes the seller not to collect any tax on a sale to a permit holder. A direct pay permit issued for certain installation charges or RMI for a boat, aircraft, or qualified jet engine does not apply to the purchase of any tangible personal property or service other than the installation charges or RMI for a boat, aircraft, or qualified jet engine.
A permit holder is allowed a use tax exemption on one or more of the following:
- The installation charges that are a part of the sales price of tangible personal property or certain digital property purchased by the permit holder for a boat, an aircraft, or a qualified jet engine, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the permit holder at the time of the sale.
- The sales price of or gross receipts derived from repair, maintenance, and installation services provided for a boat, aircraft, or qualified jet engine.
The allowable amount of the use tax exemption is the amount of the installation charges and sales price of or gross receipts derived from the RMI for a boat, aircraft, or qualified jet engine that exceed twenty-five thousand dollars ($25,000).
Election to Have Retailer to Collect and Remit Use Tax
In lieu of obtaining a direct pay permit and making the purchase under the permit, a purchaser may elect to have the seller collect and remit the tax due on behalf of the purchaser. Where the purchaser elects for the seller to collect and remit the tax, an invoice given to the purchaser bearing the proper amount of tax on a retail transaction extinguishes the purchaser's liability for the tax on the transaction. Where a seller cannot or does not separately state installation charges that are a part of the sales price of tangible personal property or certain digital property for a boat, aircraft, or qualified jet engine on the invoice or other documentation given to the purchaser at the time of the sale, tax is due on the total purchase price.
A business or person who does not elect to have the seller collect and remit the tax due on behalf of the purchaser and applies for and is issued a direct pay permit for sales and use taxes for certain installation charges or RMI for a boat, aircraft, or qualified jet engine, must file applicable tax returns, remit the tax due, and maintain records that clearly reflect the tax liability.
Who Qualifies?
A person who plans to make a purchase where the specified installation charges or the sales price of or the gross receipts derived from RMI for a boat, aircraft, or qualified jet engine exceed twenty-five thousand dollars ($25,000) qualifies for the direct pay permit or the election to have the retailer collect and remit the use tax.
Application Process
A person may request permission from the Secretary of Revenue to discharge its sales and use tax liability on specified installation charges or RMI for a boat, aircraft, or qualified jet engine directly to the Department by completing Form E-595RMI, Application for Direct Pay Permit for Certain Boat, Aircraft, and Qualified Jet Engine Charges and Services. A person should not apply for a direct pay permit where the installation charges or the sales price of or the gross receipts derived from RMI for a boat, aircraft, or qualified jet engine do not exceed twenty-five thousand dollars ($25,000). The 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.