Direct Pay Permit for Sales and Use Taxes on Tangible Personal Property, Digital Property, and Services

A direct pay permit (DPP) authorizes its holder to purchase tangible personal property, digital property, and certain services 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.

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

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

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, Sales and Use Taxes for Tangible Personal Property, Digital Property, and Services. This authorization by the Secretary is conditioned upon full compliance with the provisions of the Sales and Use Tax Law, timely payment of all taxes due and provided the Secretary finds that the applicant's compliance burden will be greatly reduced by use of the permit.

A taxpayer authorized to discharge their liability in this manner is issued a numbered direct pay permit. The record of the permit or required data elements must be furnished to vendors as provided in Sales and Use Tax Bulletin Section 24 or maintained electronically by the vendors.

A business, which has been issued a permit must file sales and use tax returns, remit the sales and use taxes due, and maintain records that clearly reflect the tax liability.  See Sales & Use Directive SD-00-02  and Sales and Use Tax Bulletin Section 24 for more information concerning Direct Pay Permits.

The database at the following weblink 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

 

 

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