Rule 560-12-1-.16 - Direct Pay Reporting(1)Definition. "Direct payment 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.(2)Expiration of direct payment authorization.(a) All permits, letters, and certificates not issued through the Georgia Tax Center online application process will expire on and can no longer be used to make purchases after December 31, 2016.(b) Direct payment permits issued through the Georgia Tax Center online application process will be effective the later of January 1, 2017 or the date of issuance.(3)Application Process. (a) To obtain a direct payment permit that is effective on or after January 1, 2017, a taxpayer must 1. have purchased more than $2 million of tangible personal property in the twelve months prior to application or have purchased an annual average amount exceeding $2 million of tangible personal property during the thirty-six months prior to application;2. be classified on the taxpayer's previous year's federal income tax return under one of the following North American Industry Classification System (NAICS) codes: (i) National Industry Code 517110 - Wired Telecommunications Carriers,(ii) National Industry Code 517210 - Wireless Telecommunications Carriers (except Satellite),(iii) National Industry Code 517410 - Satellite Telecommunications,(iv) NAICS Industry Code 48111 - Scheduled Air Transportation,(v) NAICS Industry Code 48211 - Rail Transportation,(vi) Industry Group Code 4841 - General Freight Trucking,(vii) Economic Sector Code 21 - Mining, Quarrying, and Oil and Gas Extraction,(viii) Economic Sector Code 22 - Utilities, or(ix) Economic Sector Codes 31-33 - Manufacturing;3. fully and accurately complete a direct payment permit application online through the Georgia Tax Center;4. agree to waive interest on refunds of sales and use tax remitted for purchases made on or after January 1, 2017 without the payment of tax to a vendor; and5. attest that: (i) the applicant is able to comply with the sales and use tax laws and reporting and payment requirements;(ii) the applicant is not delinquent on any tax filings or payments in this state; and(iii) direct payment will benefit the applicant's tax compliance by accomplishing one or more of the following: (I) reduced administrative work in determining taxability or collecting, verifying, calculating, or remitting the tax;(II) improved compliance with the tax laws of this state;(III) improved compliance in circumstances where determination of taxability of the item is difficult or impractical at the time of purchase;(IV) more accurate calculation of the tax where new or electronic business processes such as electronic data interchange, evaluated receipts settlement, or procurement cards are utilized; or(V) more accurate determination and calculation of tax where significant automation and/or centralization of purchasing and/or accounting processes have occurred and the applicant must comply with the laws and regulations of multiple state and local jurisdictions.(b) The Department will issue one permit for each legal entity that meets the requirements of this Rule. The permit is valid for purchases of property delivered to any of the entity's locations.(c) Notwithstanding Subparagraphs (3)(a)1. and 2., the Department may grant a direct payment permit if the Department determines that granting the permit will facilitate and expedite the collection of tax at the proper rates.(4)Waiver of Interest.(a) In exchange for the privilege of making purchases with a direct payment permit, permit holders agree to waive interest on refunds of sales and use tax remitted for purchases made on or after January 1, 2017 without the payment of tax to a vendor.(b) Examples.1. A taxpayer makes purchases on January 1, 2017 without the payment of sales tax using a direct payment permit. In February 2017 the taxpayer remits taxes due on the purchases. On February 1, 2018 the taxpayer requests a refund for the overpayment of the taxes. Because the taxpayer made the purchases on or after January 1, 2017 without the payment of tax, the taxpayer will not receive interest on its tax refund.2. A taxpayer that holds a direct payment permit and qualifies for the manufacturing exemptions contained in O.C.G.A. § 48-8-3.2 purchases both taxable items and exempt items from a vendor in one transaction. The vendor charges the taxpayer sales tax on the entire purchase. The taxpayer submits a valid refund claim for the sales tax it paid to the vendor for the exempt items. The taxpayer is entitled to interest on the tax it paid to the vendor on the exempt items.3. A taxpayer that holds a direct payment permit and qualifies for the manufacturing exemptions contained in O.C.G.A. § 48-8-3.2 purchases both taxable items and exempt items from a vendor in one transaction. The taxpayer supplies the vendor with Sales and Use Tax Certificate of Exemption Form ST-5M. The vendor charges no sales tax on the entire purchase. The taxpayer correctly remits tax due on the taxable items directly to the Department and erroneously remits to the Department tax on the exempt items. When the taxpayer submits a claim for refund of the tax paid on the exempt items, the taxpayer is not entitled to interest on such tax.(5)Reporting of Tax. Each holder of a valid direct payment permit must accrue and pay directly to the Department the taxes due for all taxable property and services purchased without the payment of tax. Such taxes are due and payable on the sales and use tax return next due following the date on which a determination of taxability is, or in the exercise of reasonable care should be, made for a given transaction.(6)Certain Transactions Not Permitted. Effective January 1, 2017, the use of a direct payment permit is prohibited for(a) purchases of fuels subject to "prepaid local tax" as defined in O.C.G.A. § 48-8-2;(b) purchases of meals, beverages, or tobacco;(c) purchases of local telephone services, transportation of persons, or lodging accommodations and ancillary charges associated with lodging accommodations;(d) purchases of admissions to places of amusement, entertainment, or athletic events; admissions to displays or exhibitions; participation in games or sports; or charges for the use of amusement devices; and(e) rental charges for periods of 31 or fewer consecutive days of motor vehicles required to be titled in this state.(7)Permit Holder's Duties. Beginning January 1, 2017, the holder of a direct payment permit must (a) furnish to each vendor from which the holder makes purchases without a charge for tax a copy of the holder's direct payment permit, unless the holder has previously furnished a direct payment permit to that vendor and such permit is valid at the time of re-application; however, the holder must furnish a copy of the permit upon request of any of its vendors;(b) abide by the terms and conditions of this Rule for all purchases made without the payment of tax;(c) accrue and remit state and local sales and use tax directly to the Department on all taxable property and services not taxed at the time of sale;(d) maintain and make available upon Department request all records that are necessary to determine the correct tax liability;(e) file sales and use tax returns and pay any sales and use tax due on a monthly basis unless otherwise permitted by the Department; and(f) not be delinquent with respect to any taxes administered by the Department.(8)Vendor's Responsibilities.(a) Beginning January 1, 2017, a vendor is relieved of the responsibility of collecting sales tax on all transactions, except for those transactions listed in Paragraph (6), with a purchaser who has provided a direct payment permit, even if the permit expired before January 1, 2017, unless the seller has received notice of the revocation or voluntary surrendering of the permit.(b) Vendors who make sales on which the tax is not collected by reason of the provisions of this Rule must maintain records for a minimum of three years.(9)Nontransferable. A direct payment permit is not transferable; therefore, the use of a direct payment permit may not be transferred or assigned to a third party (including but not limited to a subsidiary, affiliate, or new business entity created in a restructuring).(10)Business Restructuring. In the case of a business restructuring that requires a new Employer Tax Identification Number or Federal Tax Identification Number, the permit holder must apply for a new permit.(11)Revocation of Permit. Effective January 1, 2017, direct payment permits may be denied or revoked by the Department at any time the Department determines that the taxpayer holding the permit has not complied with the provisions of this Rule or that the revocation would be in the best interests of the state. The notice of revocation must be in writing and effective as of the end of the direct payment permit holder's normal reporting period. Any taxpayer whose direct payment permit is either voluntarily forfeited or revoked by action of the Department must return the permit to the Department and immediately notify all vendors to which the taxpayer furnished the permit that such taxpayer's direct payment permit is no longer valid.Ga. Comp. R. & Regs. R. 560-12-1-.16
O.C.G.A. §§ 48-2-7, 48-2-12.
Original Rule entitled "Dual Operations" adopted. F. and eff. June 30, 1965.Repealed: New Rule entitled "Direct Pay Reporting" adopted. F. Aug. 26, 1974; eff. Sept. 15, 1974.Amended: New title "Direct Pay Reporting." F. Apr. 4, 2016; eff. Apr. 24, 2016.Amended: F. May 6, 2016; eff. May 26, 2016.