A direct pay permit (DPP) for 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. 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 that exceed twenty-five thousand dollars ($25,000). In lieu of purchasing under a direct pay 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, an aircraft, or a 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 person with a DPP assumes responsibility for payment of all applicable taxes directly to the Department. A DPP issued for 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 person may request permission from the Secretary of Revenue to discharge its sales and use tax liability on 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 DPP where the installation charges or the sales price of or the gross receipts derived from RMI 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.
A person authorized to discharge their liability in this manner is issued a numbered DPP to purchase installation charges or RMI for a boat, aircraft, or qualified jet engine subject to sales or use tax and in excess of twenty-five thousand dollars ($25,000) without payment of tax to sellers. The seller’s liability is relieved when the seller secures a copy of the DPP or when the seller secures the purchaser's name, address, type of business, reason for exemption, and exemption number. A person, which has been issued a DPP for installation charges or RMI for a boat, aircraft, or qualified jet engine must file sales and use tax returns, remit the sales and use taxes due, and maintain records that clearly reflect the tax liability.
Refer to the Sales and Use Tax Bulletin for Direct Pay Permits
Important Notice: Purchasers May Elect to Have Seller Collect and Remit Sales and Use Tax on Certain Boat, Aircraft, and Qualified Jet Engine Charges and Services in Lieu of Obtaining a Direct Pay Permit Certificate