Section 81-04.1-01-05 - Direct payment permitsThe direct payment permit authorizes the applicant to make direct payment of sales or use tax to the tax commissioner.
An applicant electing to pay taxes directly to the tax commissioner must issue a direct payment certificate to the retailer in the form prescribed by the tax commissioner. The certificate exempts the retailer from liability for sales or use tax and obligates the applicant to pay taxes directly to the tax commissioner.
1. To qualify for a direct payment permit, a business must demonstrate to the satisfaction of the tax commissioner that: a. The person purchases substantial amounts of tangible personal property for business use under circumstances which make it difficult or impractical at the time of purchase to determine whether such property is subject to sales or use tax. b. The person holds or has applied for a sales and use tax permit. c. The direct payment method will materially reduce the administrative work of collecting the tax. d. The firm's accounting system will clearly reflect the proper amount of tax due. e. The firm makes taxable purchases in sufficient volume to justify the expense of regular tax department audits. 2. Application for a direct payment permit must be submitted to the tax commissioner. The application must be a letter containing the applicant's name, address, sales and use tax account number, description of the business, the accounting system used, volume of purchases, and justification for adopting the direct payment method. 3. Each application accepted will receive a direct payment permit numbered, dated, and signed by the tax commissioner or the commissioner's representative. The tax commissioner will issue a direct payment permit only when, in the tax commissioner's judgment, it is in the best interest of the state to do so. 4. Each person issued a direct payment permit must keep a list of all vendors from whom purchases are made under the direct payment method and must submit such list for examination upon the tax commissioner's request. 5. The holder of a direct payment permit must either issue the permit to all vendors required to collect North Dakota sales and use taxes and accrue all liability as a use tax, or maintain accounting records sufficient to show the amount of sales tax paid to vendors in each reporting period. 6. If the holder of the permit chooses the latter alternative, all purchases from any one supplier must be made either exempt or taxable. The vendor may not assess the sales tax on only selected transactions. 7. A direct payment permit may not be used in connection with:a. Purchases of taxable food or beverages. b. Purchases of taxable lodging or related services. c. Purchases of admissions to places of amusement or athletic events, or the use of amusement devices. 8. A direct payment permit is not transferable. The tax commissioner may revoke a direct payment permit at any time with or without cause. N.D. Admin Code 81-04.1-01-05
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-14.1, 57-40.2-13