A major revamping of the state’s Direct Pay Permit regulations has been recommended by the Georgia Department of Revenue (GDOR). These proposed changes will significantly impact Georgia companies, especially manufacturers, currently using Direct Pay Permits. Here’s a summary of the amendment, as well as steps you can take to voice your opinion about the changes.
Explanation of Proposed Changes
The proposed changes include more stringent requirements to obtain direct pay permits (as well as new restrictions on their use) and more complicated compliance guidelines.
The most impactful change would eliminate interest paid on tax refunds issued to taxpayers for overpayments. Currently, the state is mandated to pay a fixed interest rate of 12% per year in interest on overpayments. The amendment will not affect the 12% interest owed to the state for underpaid sales and use taxes.
How Changes Would Be Implemented
To implement these recommended changes, GDOR wants to revoke all current direct pay permits and require taxpayers to apply for new permits. One of the requirements to be granted a new direct pay permit is the applicant must waive the right to earn interest on all future overpayments of taxes paid with the permit.
Participate in the Public Hearing
GDOR is holding an open public hearing about the proposed amendment to Rule 560-12-1-.16 on December 7, 2015 at 10am at DOR headquarters in Atlanta. If your company will be impacted by this proposed amendment, I encourage you to submit comments to GDOT prior to December 7 and attend the hearing.
Direct Pay Permit Basics
Currently, approximately 200 Direct Pay Permits have been issued in Georgia and most of the permit holders are manufacturers. The permit allows the taxpayer to pay all taxes due on purchases as use tax, in lieu of paying some taxes directly to suppliers. Direct pay permits help make tax compliance easier. Fewer mistakes are made since the permit holder understands how the purchases will be used and if they are taxable. GDOR benefits because during an audit all records regarding sales and use taxability are at one central location instead of being scattered among vendors.
Share Your Opinion!
What is your position on these proposed changes to Direct Pay Permits? As a permit holder, how would you be impacted? Have you ever considered applying for a Direct Pay Permit? If passed, would the revised regulation change your mind?
Other recent “Georgia (GA)” posts by Lauren Stinson, CMI:
- A Review of Georgia's Sales Tax Exemption Certificates
- Georgia's New Rule for Itemization of Sales and Use Tax
- Georgia FBA Sellers: Your Sales Tax Registration Obligations
- Georgia DOR Is Making Big Changes to Direct Pay Permit Rules
- Do Georgia Not-For-Profit Organizations Pay Sales Tax on Purchases?