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|MAINE REVENUE SERVICES||
24 STATE HOUSE STATION
AUGUSTA, MAINE 04333
OF ADMINISTRATIVE AND FINANCIAL SERVICES
Rule No. 308 (18-125 CMR 308)
DIRECT PAY PERMITS
SUMMARY: Establishes a system for combined reporting of purchases by manufacturers and utilities under a direct payment permit.
SECTION 1. Introduction
Many manufacturers and utilities routinely acquire large quantities of tangible personal property under circumstances that make it impractical to determine, at the time of purchase, the manner in which property will be used. It is impractical in these circumstances to determine whether the purchase or use of the property will be taxable or exempt. Holders of direct payment permits are authorized to purchase most items of tangible personal property without payment of the tax to their vendors, and may instead report and pay tax directly to the State.
SECTION 2. General Requirements
The following requirements must be met by a taxpayer in order to be eligible to receive a direct pay permit:
1. A permit application must be filed with the Bureau of Revenue Services (“the bureau”) on a special form provided by the Bureau.
2. The applicant must hold a valid Maine Retailer Certificate.
3. The applicant must routinely purchase large quantities of tangible personal property under circumstances that make it impractical to determine, at the time of purchase, whether the purchase or use of the property will be taxable or exempt.
4. The applicant must establish to the satisfaction of the State Tax Assessor that its accounting methods will clearly reflect the proper amount of tax due and that payment of sales or use taxes to the State will not be jeopardized by permitting sales and use taxes to be reported directly.
5. The applicant must make purchases in sufficient volume to justify the expense of regular audits by the Bureau.
6. The applicant must be either a manufacturer or a utility.
SECTION 3. Manner in Which Direct Payment Permit is to be used by Taxpayer
Each holder of a direct payment permit must file a copy of the permit with each of its vendors and ensure that the permit number is placed on all purchase orders or contracts covering the purchase of tangible personal property, in lieu of payment of tax to the retailer, except in those transactions excluded in Section 4 below. The holder of direct payment permits shall not authorize anyone to whom they have issued a direct payment permit to file the direct payment permit or permit number with a third party.
Sales tax registrations held by holders of direct payment permits will be placed on an inactive basis and accrued sales and use tax liabilities will be reported on sales and use tax returns which will be issued under the direct payment permit number.
SECTION 4. Exceptions and Restrictions
1. Sales tax shall be paid to the retailer on the following types of purchases:
A. Purchases of prepared food;
B. Purchases of taxable services;
D. Interim rentals under Section 1758.
2. A permit holder may not authorize a contractor or lessor to use its permit for the purposes described in Paragraphs A and B below. Any such authorization constitutes grounds for revocation of the permit in accordance with Section 5, Subsection 2.
SECTION 5. Revocation of Direct Payment Permit
1. The holder of a direct payment permit who wishes to surrender such permit voluntarily must provide the State Tax Assessor with 30 days notice.
2. The State Tax Assessor may revoke a direct payment permit at any time for failure of the taxpayer to comply with the conditions under which the permit was granted, or for any improper use of the permit.
3. Within 30 days after receipt by a permit holder of notice of revocation by the State Tax Assessor or within 30 days after receipt of the Assessor's permission for discontinuance of the direct payment permit by the taxpayer, the permit holder must:
SECTION 6. Form of Permit
The direct payment permit will be issued by the State Tax Assessor in the form prescribed below:
STATE OF MAINE
It having been determined that the conduct of the business of the taxpayer noted below is such that it would be impractical for it to pay sales and use taxes separately under the Maine Sales and Use Tax Law on purchases made by it, that payment of sales and use taxes to the State would not be jeopardized by permitting the taxpayer to report and pay sales and use taxes directly, and the taxpayer having obligated itself to report and pay sales and use taxes directly, retailers selling to the taxpayer named below are hereby relieved of collecting sales and use taxes from it.
Except as noted below, the taxpayer shall file a copy of this permit with each retailer and shall place the direct payment permit number on all purchase orders and contracts covering the purchase of tangible personal property; which shall be sufficient evidence to retailers to relieve them from collecting sales or use taxes thereon.
Name of Taxpayer ______________________________________________________________
Address of Taxpayer ____________________________________________________________
State Tax Assessor
Copies of this permit or the permit number shall not be used in connection with:
A. The purchase of tangible personal property by other than the holder of this permit.
B. The purchase of prepared food;
C. The purchase of taxable services;
D. The purchase of services subject to the Service Provider Tax;
E. Rentals or leases, other than leases in lieu of purchase, of tangible personal property; or
F. The purchase of tangible personal property which will become incorporated into the real estate of the permit holder prior to passage of title.
AUTHORITY: 36 MRSA §112
AMENDED: January 29, 2007