Direct Pay Permit for Sales and Use Taxes on Telecommunications
A direct pay permit (DPP) for telecommunications service allows its holder to purchase telecommunications service and ancillary service without paying sales and use tax to a vendor and authorizes the vendor not to collect any tax on a sale to a permit holder.
A business with a direct pay permit assumes responsibility for
payment of all applicable sales and use taxes directly to the Department.
A direct pay permit can be issued to a call center for telecommunications
service. A call center that purchases interstate telecommunications
service that originates outside this State and terminates in this
State may apply for a direct pay permit for telecommunications
service and ancillary service. A call center is a business that is primarily engaged
in providing support service to customers by telephone to support
products or services of the business. A business is primarily
engaged in providing support services by telephone if at least
60% of its calls are incoming. The gross sales tax on telecommunications service that originates outside this State, terminates in this State, and is provided to a call center that has a direct pay permit issued by the Department under G.S. 105-164.27A may not exceed fifty thousand dollars ($50,000) a calendar year. This cap applies separately to each legal entity.
A business may request permission from the Secretary of Revenue
to discharge its sales and use tax liability on telecommunications service and ancillary service for its call
centers directly to the Department by completing Form
E-595B, Application for Direct Pay Permit for Sales and Use
Taxes on Telecommunications Service. 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.
A taxpayer authorized to discharge their sales and use tax liability on telecommunications service and ancillary service in this manner are issued a numbered
direct pay permit for telecommunications service.
A direct pay permit that is issued to a vendor providing interstate
telecommunications service and other telecommunications services
for the call center relieves the vendor from collecting and remitting
utility sales and use tax on the sale of all telecommunications
service to the call center. The vendor's liability is relieved when the vendor secures a copy of the direct pay permit or when the vendor secures the information as to a purchaser's name, address, type of business, reason for exemption, and exemption number.
A business, which has been issued a permit for telecommunications
service must file utility and
liquor sales and use tax returns, remit the utility and liquor
sales and use taxes due, and maintain records that clearly reflect
the tax liability.
The database at the following weblink contains the names and permit numbers
of current Direct Pay Permit holders:
Firms Assigned Direct Pay Permits
for Utility Sales and Use Taxes on Telecommunications Service
Last modified on:
05/20/12 08:56:38 AM.