A direct pay permit (DPP) authorizes its holder to purchase any tangible personal property, digital property, or 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 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 is 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, Digital Property, or Certain 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 Technical Bulletin 46-1 C.2. 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 Directive SD-00-02 and Sales and Use Tax Technical Bulletin Section 46 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

Last modified on: 05/20/12 08:56:40 AM.