35 Miss. Admin. Code Pt. IV, Subpt. 1, Ch. 01 — Direct Payment of Sales or Use Tax to the State in Lieu of Payment to Seller

100 Statutory Authority
101 Miss. Code Ann. Section 27 -65-93 provides that the Commissioner may provide for the
issuance of a direct pay permit to manufacturers, utilities, construction contractors,
companies receiving bond financing, and other taxpayers where in those instances the
Commissioner determines that a permit will facilitate and expedite the collection of tax at
the proper rates.
102 Taxes levied under Miss. Code Ann. Sections 27 -65-17, 27-65-18, 27-65-19 (excluding
the taxes levied against telecommunications services), 27 -65-23, 27-65-24, 27-65-26 and
27-67-5 may be paid directly to the State by the holder of a direct pay permit. Taxes
levied under any other Sections are not covered with the use of a direct pay permit
including the contractor's tax levied under Miss. Code Ann. Section 27-65-21.
103 (Reserved)
200 Usage
201 The issuance of a direct pay permit transfers the liability of the tax directly to the permit
holder in lieu of payment to the vendor and relieves vendors of the liability for the tax.
The direct pay permit shall not be used to purchase telecommunications services exempt
from tax. The tax due from these services must be remitted by the telecommunications
provider due to the separate diversions for interstate and intrastate services.
202 If the permit holder continues to remit sales tax to the vendor rather than directly to state,
the permit holder will be required to contact the vendor for a credit or refund of any
overpayment resulting from this practice. This will be required even if the overpayment
is discovered during a sales or use tax audit where there will be an assessment of
additional tax made or in cases where the Statute of Limitation has run on a portion of the
overpayment.
203 Direct pay permits will be issued to qualified industries and to taxpayers eligible to
receive certain sales and use tax related incentives that will be project or special purpose
related. Permits issued to qualified industries will be active as long as the taxpayer
maintains the use tax account to which the permit is associated or until such time as the
Commissioner revokes the permit. Project and special purpose related permits will be
good only for the special purpose or for the eligible time frame associated with a specific
project.
204 (Reserved)
300 Qualified Industry Permits
301 Manufacturers. The Commissioner requires all manufacturers and custom processors,
with certain exceptions, to obtain a direct pay permit for purposes of accruing and paying
the applicable sales and use tax due on all purchases of tangible personal property,
utilities and services directly to the state in lieu of payment of the tax to the vendor.
302 Utilities. The Commissioner may also authorize or require any utility company to obtain
a direct pay permit for purposes of accruing and paying the applicable sales and use tax
on all purchases of tangible personal property and services directly to the state in lieu of
payment of tax to the vendor.
303 Telecommunications Enterprises. The Commissioner may authorize or require any entity
providing telecommunications services taxed under Miss. Code Ann. Section 27 -65-19 to
obtain a direct pay permit for purposes of accruing and paying the applicable sales and
use tax on all purchases of tangible personal property, utilities and services directly to the
state in lieu of payment of the tax to the vendor.
304 Floating Structures. The Commissioner requires the owners of casinos and other floating
structures taxable under Miss. Code Ann. Section 27 -65-18 to obtain a direct pay permit.
The direct pay permit holder is responsible for accruing and paying the applicable sales
and use tax on purchases of tangible personal property, utilities and services, as well as
sales of tangible personal property that become a component of the structure or
construction activities taxed under Miss. Code Ann. Section 27 -65-18. This section
requires that the owner furnish the permit to a seller or person performing construction
activities on the floating structure. However, in those instances where a contract is issued
covering both water based and land based construction activities taxed under Miss. Code
Ann. Sections 27-65-18 and 27-65-21 respectively, the contractor is permitted to qualify
the total contract and remit the 3½% contractor's tax due provided that the land based
construction activity is in excess of $10,000.
305 (Reserved)
400 Project Related and Special Purpose Permits
401 Contractor. A contractor may obtain a letter granting the authority to purchase free -
standing tangible personal property tax free to resell to an exempt entity in the
performance of its construction project or for jobs where the contractor is purchasing
manufacturing or process machinery for sale to an entity financing its project with bond
proceeds or for an entity holding a valid statutory exemption.
402 Bond Proceeds Project. The Commissioner requires any entity wishing to take advantage
of the sales tax exemptions provided for under Miss. Code Ann. Sections 57 -10-1 et seq.,
57-61-1 et. seq. and 57 -71-1 et seq. to obtain a direct pay permit. The direct pay permit
holder must present the permit to its vendors in order to purchase tangible personal
property and services exempt from tax. This direct pay permit is applicable only for
purchases made for the specified project. The direct pay permit holder must accrue and
pay the applicable sales and use tax on any purchases that are not made with or
reimbursed with bond proceeds. The exemption does not apply to any contractor's tax
levied under Miss. Code Ann. Section 27 -65-21 or vehicles tagged for highway use. The
direct pay permit for this exemption will stand rescinded when the bond money is
depleted and tax will once again be due to the vendor if the applicant is not a qualified
industry.
403 Motion Picture Production Companies. The Commissioner requires any entity wishing to
take advantage of the reduced manufacturing rate of tax provided for under Miss. Code
Ann. Section 27-65-17(e) to obtain a direct pay permit for use in purchasing equipment
used in the production of a motion picture, which shall not include the production of
television coverage of news and athletic events, or a film, video, television series or
commercial that contains any material or performance defined in Miss. Code Ann.
Section 97-29-103. The direct pay permit must be provided to vendors in order to make
purchases tax exempt. The holder of the permit is responsible for accruing and paying
the correct rate of tax on all purchases made which are not exempt. Any direct pay
permit issued to a motion picture production company will be production specific and
stand rescinded when the production is complete.
404 Growth and Prosperity (GAP) Area Exemption. The Commissioner requires any entity
wishing to take advantage of the exemption from sales tax provided for under Miss. Code
Ann. Section 57-80-1 et seq. to obtain a direct pay permit. The direct pay permit holder
must present the permit to its vendors in order to purchase tangible personal property and
services exempt from tax. The GAP exemption is for a period of 10 years; however, the
sales and use tax com ponent of a GAP exemption covers only purchases of component
materials and purchases or leases of machinery and equipment used in the initial
construction or expansion of the business in the GAP area. The holder of the permit is
responsible for accruing and paying the correct rate of tax on all purchases made which
are not exempt. The exemption does not apply to any contractor's tax levied under Miss.
Code Ann. Section 27 -65-21 or vehicles tagged for highway use. The direct pay permit
for this exemption will stand rescinded when the project is complete and tax will once
again be due to the vendor if the applicant is not a qualified industry.
405 National or Regional Headquarters Exemption. The Commissioner requires any entity
wishing to take advantage of the exemption from sales tax provided for under Miss. Code
Ann. Section 27-65-101(1)(r) to obtain a direct pay permit. The direct pay permit holder
must present the permit to its vendors in order to purchase tangible personal property and
services exempt from tax. The holder of the permit is responsible for accruing and
paying the correct rate of tax on all purchases made which are not exempt. The
exemption does not apply to any contractor's tax levied under Miss. Code Ann. Section
27-65-21, vehicles tagged for highway use or on -going expense and supply items. The
direct pay permit for this exemption will stand rescinded three (3) months after the initial
startup date of the facility.
406 Broadband Technology. The Commissioner requires any telecommunications entity
wishing to take advantage of the sales tax exemption or reduced rate provided for under
Miss. Code Ann. Section 27 -65-101(5) to obtain a direct pay permit. The direct pay
permit holder must present the permit to its vendors in order to purchase qualified
equipment exempt from tax. The holder of the permit is responsible for accruing and
paying the correct rate of tax on all purchases made that are not exempt.
407 Major Economic Impact Project Exemption. The Commissioner requires any entity
establishing or operating as a Major Economic Impact Project, as defined by Miss. Code
Ann. Section 57-75-5(f), to obtain a direct pay permit. The direct pay permit holder must
present the permit to its vendors in order to purchase tangible personal property and
services exempt from tax. The holder of the permit is responsible for accruing and
paying the correct rate of tax on all purchases made which are not exempt. The
exemption does not apply to any contractor's tax levied under Miss. Code Ann. Section
27-65-21.
408 Data/Information and Technology Intensive Enterprises Exemption s. The Commissioner
requires any entity wishing to take advantage of the exemptions from sales tax provided
for under Miss. Code Ann. Sections 27 -65-101(1)(ff), 27 -65-101(1)(gg), 27 -65-101(3)
and 27 -65-101(4) to obtain a direct pay permit. The direct pay permit holder must
present the permit to its vendors in order to purchase tangible personal property and
services exempt from tax. The holder of the permit is responsible for accruing and
paying the correct rate of tax on all purchases made which are not exempt. The
exemption does not apply to any contractor's tax levied under Miss. Code Ann. Section
27-65-21, vehicles tagged for highway use or on -going expense and supply items. The
direct pay permit for this exemption will stand rescinded three (3) months after the initial
startup date of the facility.
409 Clean Energy Business Enterprise, Aerospace Industry Enterprise, and Data Center
Enterprise Exemptions. The Commissioner requires any entity wishing to take advantage
of the exemptions from sales tax provided for under Miss. Code Ann. Sections 27 -65-
101(1)(kk), 27-65-101(1)(ll), 27-65-101(1)(mm) and 27-65-101(1)(nn) to obtain a direct
pay permit. The direct pay permit holder must present the permit to its vendors in order
to purchase tangible personal property and services exempt from tax. The holder of the
permit is responsible for accruing and paying the correct rate of tax on all purchases
made which are not exempt. The exemption does not apply to any contractor's tax levied
under Miss. Code Ann. Section 27 -65-21, vehicles tagged for highway use or on -going
expense and supply items.
410 Health Care Industry Zone Exemption. The Commissioner requires any entity wishing to
take advantage of the exemptions from sales tax provided for under Miss. Code Ann.
Sections 27 -65-101(1)(kk) and 27 -65-101(1)(mm) to obtain a direct pay permit. The
direct pay permit holder must present the permit to its vendors in order to purchase
tangible personal property and services exempt from tax. The holder of the permit is
responsible for accruing and paying the correct rate of tax on all purchases made which
are not exempt. The exemption does not apply to any contractor's tax levied under Miss.
Code Ann. Section 27 -65-21, vehicles tagged for highway use or on -going expense and
supply items. The direct pay permit for this exemption will stand rescinded three (3)
months after the completion of the facility, addition or improvement.
411 In order to receive an exemption, the exempt items must be sold directly to, billed or
invoiced directly to and paid for directly by the entity receiving the exemption.
412 If a person improperly uses a direct pay permit or letter granting the authority to make tax
exempt purchases, that person may still be liable for tax that would normally have been
paid to the vendor.
413 (Reserved)
500 Filing Requirements
501 Use tax returns are required to be file d based upon the filing status assigned by the
Department. Any tax due on taxable purchases by the permit holder must be reported on
its return. Any other sales tax liability of the permittee shall be reported under a separate
account.
502 A direct pay permit is subject to revocation when the Commissioner determines that the
best interest of the state will be served in so doing.
503 (Reserved)
35.IV.01.01 revised effective April 1, 2018.