Idaho Admin. Code r. 35.01.02.112 - DIRECT PAY AUTHORITY

Sections 63-3624, 63-3629, 63-3631, Idaho Code

01. In General. A Direct Pay Authority is granted to certain taxpayers where it is to the mutual convenience of the Commission, the taxpayer, and the taxpayer's vendors to have the sales and use tax liability upon the taxpayer's purchases determined by the taxpayer and reported directly to the state in the form of a use tax. This authorization allows vendors to sell all items of tangible personal property to the taxpayer without charging any sales tax. The only effect of this arrangement is to shift the reporting responsibility to the taxpayer holding the authorization. (3-31-22)

02. Taxable Purchases. If the particular transaction would have been taxable without the authorization, then the taxpayer holding the authorization pays sales tax to the state even if the use of the item is not subject to use tax. For example, if the taxpayer holding the authorization buys goods from a retailer holding an Idaho seller's permit, then the taxpayer pays sales tax on the transaction even if the goods are intended for use solely outside the state. (3-31-22)

03. Documentation. To purchase tangible personal property without paying sales tax to the vendor, the taxpayer holding an authorization provides a copy of that authorization to each vendor. (3-31-22)

04. Holder's Responsibilities. The authorization is granted only to those taxpayers who have demonstrated, to the Commission's satisfaction, the accounting and technical capability to comply with the Sales Tax Act. Direct pay authority holders make all purchases of tangible personal property tax exempt and all taxes due as required by the Idaho Sales Tax Act will be remitted directly to the Commission by the direct pay authority holder. Vendors will be allowed to sell all items of tangible personal property to the direct pay authority holder without charging sales tax provided they obtain and keep on file a copy of the letter granting the direct pay authority. (3-31-22)

05. Revocation. The Commission may revoke an authorization if it determines that the taxpayer is not complying with this rule or if the taxpayer is allowing contractors or other third parties to make exempt purchases under its authority. Notice of revocation will be given in the manner provided for deficiencies in taxes in Section 633629, Idaho Code, and is subject to review as provided in Section 63-3631, Idaho Code. Should the Commission revoke a taxpayer's direct pay authority it will be the taxpayer's responsibility to notify his vendors of the revocation. (3-31-22)

06. Tax Imposed by Hotel/Motel Room Sales Tax. The authorization can't be used for taxes imposed on lodging accommodations. State sales tax, Travel and Convention tax, and Auditorium or Community Center District tax, when applicable, is charged by and paid to the retailer by the direct pay permittee. (3-31-22)

07. Valid Only on Purchases of Tangible Personal Property. The authorization is valid only on purchases of tangible personal property. The taxpayer can't use the authorization when engaging contractors involved in improving real property. Special rules apply to contractors. Refer to Rules 012 through 015, and 066 of these rules. (3-31-22)

08. Expiration. Direct Pay Authority is granted for a period of five (5) years. If the authorization is not renewed at the end of the expiration period, the authorization will expire automatically. (3-31-22)

Notes

Idaho Admin. Code r. 35.01.02.112