|(a) Qualified consumers may give a direct payment blanket
exemption certificate in lieu of the taxes imposed by the Tax Code,
Chapter 151, for taxable items which they purchase for their own use
and which items will not be resold in any manner.
(b) All applicants for a direct payment permit must
comply with the following conditions, prerequisites, and qualifications.
(1) The applicant must be annually purchasing at least
$800,000 worth of taxable items for the person's own use and not for
resale. A statement to this effect must be submitted to the comptroller.
Adequate records must be available to support this statement. The
statement must accompany the application for a direct payment permit.
(2) The applicant must be able to establish to the
satisfaction of the comptroller that the applicant is a responsible
person and that the applicant's accounting methods clearly distinguish
between taxable and nontaxable purchases. A clear statement of the
accounting method intended to be used must accompany the application
for a direct payment permit.
(3) The applicant must agree to accrue and pay all
taxes imposed by the Tax Code, §151.101, on the direct payment
return for items not specifically exempted and to make the payments
to the state on or before the 20th day of the month following each
monthly period in which the items become subject to the tax by reason
of use or consumption in this state. A written agreement to this effect
must be furnished to the comptroller, and it must be signed and returned
along with the application for a direct payment permit.
(4) The applicant must agree to give a resale certificate
(as opposed to a direct payment exemption certificate) for any taxable
item that will be resold as provided by the Tax Code, §151.054
(c) Applicants for a direct payment permit should write
to the Comptroller of Public Accounts of the State of Texas, Austin,
Texas 78774, requesting that an application be forwarded to them.
(d) Any consumer whose direct payment permit is either
voluntarily forfeited or canceled by action of the comptroller's office
must immediately notify all vendors from whom purchases of taxable
items are made advising them that the exemption certificate issued
to them pursuant to the direct payment permit is no longer valid.
Failure to give notification is a violation of the Limited Sales,
Excise, and Use Tax Act.
(e) A direct payment permit is issued to a legal entity,
including all branches and divisions purchasing taxable items. A direct
payment exemption certificate issued to a supplier by one branch or
division applies to purchases made by all branches or divisions from
the same supplier. Direct payment permit holders may not authorize
any other person or firm to purchase any taxable items under their
permit. Use by other persons may result in revocation of the permit.
(f) Direct payment exemption certificates may be issued
to contractors performing separated contracts. The contractor, in
this instance, will purchase the taxable items for resale and accept
the direct payment exemption certificate in lieu of charging tax.
The contractor may not accept a direct payment exemption certificate
in lieu of paying tax on consumables or equipment. In addition, under
no circumstances should a direct payment exemption certificate be
issued to a contractor performing a lump-sum contract. Direct payment
permit holders persisting in this practice may have their permits
revoked. For a discussion of lump-sum and separated contracts, see §3.291
of this title (relating to Contractors).
(g) Direct payment permit holders may not issue direct
payment exemption certificates to persons providing nontaxable services.
(h) When a direct payment permit holder is doing business
with a person who may be selling taxable items as well as nontaxable
services, the direct payment exemption certificate must indicate that
it does not cover any nontaxable services that the servicer may provide.
(i) If storage facilities contain taxable items purchased
under a direct payment exemption certificate and at the time of storage
it is not known whether the taxable items will be used in Texas, then
the taxpayer may elect to report the use tax either when the taxable
items are first stored in Texas or are first removed from inventory
for use in Texas, as long as use tax is reported in a consistent manner.
Use tax is not applicable to purchases of taxable items that are
to be transported outside Texas for use solely outside Texas or on
purchases of taxable items that are to be processed, fabricated,
or manufactured into other property or attached or incorporated into
other property and then transported outside Texas for use solely outside
Texas. See §3.325 of this title (relating to Refunds and Payments
under Protest) and §3.338 of this title (relating to Allowance
of Credit for Tax Paid to Suppliers) for refund and credit provisions.
See also §3.346 of this title (relating to Use Tax).
(j) All direct payment permit holders must file direct
payment returns, whether or not they have tax to report. If the permit
holder has no city, MTA/CTD, or county tax to report, a zero return
must be filed. A direct payment permit will be canceled when annual
purchases are less than the amount required. See §3.377 of this
title (relating to Divergent Use of a Direct Payment, Resale, or Exemption
Certificate) and §3.427 of this title (relating to Divergent
Use of a Direct Payment, Resale, or Exemption Certificate).
(k) A blanket exemption certificate described in this
section may be given by qualified consumers in lieu of the tax upon
purchases from their suppliers. Each exemption certificate must be
accompanied by a direct payment permit number.
(l) The holder of a direct payment permit may not make
an occasional sale of taxable items under the Tax Code, §151.304(b)(1).
See §3.316 of this title (relating to Occasional Sales).
|Source Note: The provisions of this §3.288 adopted to be effective January 1, 1976; amended to be effective May 25, 1979, 4 TexReg 1721; amended to be effective February 13, 1984, 9 TexReg 581; amended to be effective November 5, 1984, 9 TexReg 5929; amended to be effective August 25, 1988, 13 TexReg 3990; amended to be effective September 6, 1990, 15 TexReg 4902