Georgia Direct Pay Sales Tax

Georgia Direct Pay Sales Tax
Beginning January 1, 2017, a direct pay permit cannot be used for purchases of fuel subject to prepaid local tax, purchases of meals, beverages or tobacco; purchases of local telephone services or lodging and rental charges for periods of 31 days or less for GA titled motor vehicles.
Pursuant to GA Reg. Sec. 560-12-1-.16, “a direct pay permit means a permit issued by the Department of Revenue that allows the holder of such permit to accrue and pay state and local sales and use taxes directly to the Department”. The concept of a direct pay permit was developed to allow manufacturers to determine how a product will be used after it is purchased.
Simply stated, this means that the holder of a direct pay permit DOES NOT PAY state and local tax at the time of purchase. Use tax is accrued by the taxpayer and paid to the appropriate state and local jurisdictions if the tangible personal property purchased under a direct pay permit is used in a taxable manner. Direct pay permits are usually issued to manufacturers, but remember that manufacturers can include more than manufacturing plants. Businesses such as restaurants, grocery deli departments and even software companies can also be considered manufacturers. (BTW – That may be worth exploring in your state…)
Effective January 1, 2017, Reg. Sec. 560-12-1-.16 will be amended and cover areas such as the definition of a direct pay permit, expiration date of existing permits and the new application process and criteria a taxpayer must meet in order to apply for a new direct pay permit. One important thing to note that will be added to this regulation is that the taxpayer must agree to waive interest on refunds of sales and use tax remitted for purchases made under a direct pay permit issued on or after January 1, 2017.
All current permits, letters and certificates not issued through the Georgia Tax Center online application process will expire on December 31, 2016 and can no longer be used to make nontaxable purchases after that date. New permits effective January 1, 2017 or later (depending when issued) must be issued through the Georgia Tax Center online application process.
In order to secure a direct pay permit in Georgia on or after January 1, 2017:
1. The taxpayer must have purchased more than $2 million of tangible personal property in the 12 months prior to the application;
2. The taxpayer must be classified under specific NAICS codes;
3. The taxpayer must agree to waive interest on refunds of sales and use tax remitted for purchases made on or after January 1, 2017 without payment of tax to a vendor. NOTE: This requirement is new and effective January 1, 2017.
Georgia Direct Pay Sales Tax